EXHIBIT 1.2
Exhibit 1.2
80,617,347 Shares
(subject to increase up to 92,709,949
shares
in the event of an increase in the pro forma
market
value of the Company’s Common
Stock)
TFS Financial Corporation
(a federally chartered mid-tier stock holding
company)
Common Stock
(par value $.01 per share)
AGENCY AGREEMENT
, 2007
S ANDLER O’N EILL & P ARTNERS ,
L.P.
919 Third Avenue, 6
th
Floor
New York, New York 10022
Ladies and Gentlemen:
TFS Financial Corporation, a
federally chartered mid-tier stock holding company (the
“Company”), Third Federal Savings and Loan Association
of Cleveland, MHC, a federally chartered mutual holding company
(the “MHC”), and Third Federal Savings and Loan
Association of Cleveland, a federally chartered savings and loan
association (the “Bank”), hereby confirm their
agreement with Sandler O’Neill & Partners, L.P.
(“Sandler O’Neill” or the “Agent”)
with respect to the offer and sale by the Company of up to
80,617,347 shares (subject to increase up to 92,709,949 shares in
the event of an increase in the pro forma market value of the
Company’s common stock) of the Company’s common stock,
par value $.01 per share (the “Common Stock”). The
shares of Common Stock to be sold by the Company in the Offerings
(as defined below) are hereinafter called the
“Securities.” In addition, as described herein, the
Bank will contribute $5.0 million in cash and Company will
contribute up to 5,000,000 of Common Stock, to Third Federal
Foundation, a charitable foundation (the “Foundation”),
such shares hereinafter being referred to as the “Foundation
Shares.” In addition, as described herein, the Company will
issue up to 182,732,653 shares (subject to increase of up to
210,142,551 shares in the event of an increase in the pro forma
market value of the Company’s Common Stock) of Common Stock
to the MHC, such shares hereafter being referred to as the
“MHC Shares.”
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The Securities are being offered for
sale, the Foundation Shares are being contributed and the MHC
Shares are being issued all in accordance with the Stock Issuance
Plan (the “Plan”) adopted by the Boards of Directors of
the Company, the MHC and the Bank, which provides for a stock
offering, in compliance with regulations of the Office of Thrift
Supervision (the “OTS”), of up to 49.9% of the Common
Stock of the Company. However, the Company currently plans to sell
approximately 30.0% of its Common Stock in accordance with the Plan
and contribute 2.0% of its Common Stock to the Foundation. As a
result of the sale of its Common Stock under the Plan and
contribution of its Common Stock to the Foundation, the Company
will be approximately 68.0% owned by the MHC.
Pursuant to the Plan, the Company
will offer to certain depositors of the Bank and to the
Bank’s tax qualified employee benefit plans, including the
Bank’s employee stock ownership plan (the “ESOP”)
(collectively, the “Employee Plans”), rights to
subscribe for the Securities in a subscription offering (the
“Subscription Offering”). To the extent Securities are
not subscribed for in the Subscription Offering, such Securities
may be offered to certain members of the general public and to
other persons in a community offering (the “Community
Offering”), with preference given first to natural persons
residing in the State of Ohio, the Kentucky counties of Boone,
Kenton and Campbell, and the Florida counties of Broward,
Charlotte, Citrus, Collier, Hernando, Hillsborough, Lake, Lee,
Manatee, Martin, Miami-Dade, Orange, Osceola, Palm Beach, Pasco,
Pinellas, Polk, Sarasota, Seminole, St. Lucie and Volusia, and
second to other persons to whom the Company delivers a Prospectus
(as hereinafter defined). The Community Offering, which together
with the Subscription Offering, as each may be extended or reopened
from time to time, are herein referred to as the
“Subscription and Community Offering,” may be commenced
concurrently with, during or after, the Subscription Offering. It
is currently anticipated by the Bank and the Company that any
Securities not subscribed for in the Subscription and Community
Offering will be offered, subject to Section 2 hereof, in a
syndicated community offering (the “Syndicated Community
Offering”). The Subscription and Community Offering and the
Syndicated Community Offering are hereinafter referred to
collectively as the “Offerings.” The Securities may be
offered to the general public in a public offering (the
“Public Offering”) in lieu of or subsequent to the
Syndicated Community Offering. If there is a Public Offering, the
Public Offering will be governed by a separate definitive purchase
agreement as described in Section 2 hereof. It is acknowledged
that the number of Securities to be sold in the Offerings may be
increased or decreased as described in the Prospectus. If the
number of Securities is increased or decreased in accordance with
the Plan, the term “Securities” shall mean such greater
or lesser number, where applicable.
In connection with the Offerings and
pursuant to the terms of the Plan as described in the Prospectus,
the Company will establish the Foundation. Immediately following
the consummation of the Offerings, subject to compliance with
certain conditions as may be imposed by regulatory authorities, the
Bank will contribute to the Foundation $5.0 million in cash and the
Company will contribute to the Foundation newly issued shares of
Common Stock in an amount equal to 2.0% of the number of shares of
Common Stock that will be outstanding following the Offerings, or
between 3,972,449 and 5,000,000 shares of Common Stock.
In connection with the Offerings and
pursuant to terms of the Plan as described in the Prospectus, the
Company will issue shares to the MHC. The Company will issue shares
of Common Stock in an amount equal to 68.0% of the number of shares
of Common Stock that will
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be outstanding following the Offerings, or
between 135,063,265 and 182,732,653 shares of Common Stock (subject
to increase in certain circumstances to 210,142,551
shares).
The Company has filed with the
Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-1 (No. 333-
), including a related prospectus, for the registration of the
Securities under the Securities Act of 1933, as amended (the
“Securities Act”), has filed such amendments thereto,
if any, and such amended prospectus as may have been required to
the date hereof by the Commission in order to declare such
registration statement effective, and will file such additional
amendments thereto and such amended prospectuses and prospectus
supplements as may hereafter be required. Such registration
statement (as amended to date, if applicable, and as from time to
time amended or supplemented hereafter) and the prospectus
constituting a part thereof (including in each case all documents
incorporated or deemed to be incorporated by reference therein and
the information, if any, deemed to be a part thereof pursuant to
the rules and regulations of the Commission under the Securities
Act, as from time to time amended or supplemented pursuant to the
Securities Act or otherwise (the “Securities Act
Regulations”)), are hereinafter referred to as the
“Registration Statement” and the
“Prospectus,” respectively, except that if any revised
prospectus shall be used by the Company in connection with the
Subscription and Community Offering or the Syndicated Community
Offering which differs from the Prospectus on file at the
Commission at the time the Registration Statement becomes effective
(whether or not such revised prospectus is required to be filed by
the Company pursuant to Rule 424(b) of the Securities Act
Regulations), the term “Prospectus” shall refer to such
revised prospectus from and after the time it is first provided to
the Agent for such use.
Concurrently with the execution of
this Agreement, the Company is delivering to the Agent copies of
the Prospectus of the Company to be used in the Offerings. Such
Prospectus contains information with respect to the Bank, the
Company, the MHC and the Common Stock.
SECTION 1. R
EPRESENTATIONS
AND W ARRANTIES .
(a) The Company, the Bank and the
MHC jointly and severally represent and warrant to the Agent as of
the date hereof as follows:
(i) The Registration Statement has
been declared effective by the Commission, no stop order has been
issued with respect thereto and no proceedings therefor have been
initiated or, to the knowledge of the Company, the MHC and the
Bank, threatened by the Commission. At the time the Registration
Statement became effective and at the Closing Time referred to in
Section 2 hereof, the Registration Statement complied and will
comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Prospectus, at the
date hereof does not and at the Closing Time referred to in
Section 2 hereof will not, include an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided,
however , that the representations and warranties in this
subsection shall not apply to statements in or omissions from the
Registration
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Statement or Prospectus made in
reliance upon and in conformity with information with respect to
the Agent furnished to the Company in writing by the Agent
expressly for use in the Registration Statement or Prospectus (the
“Agent Information”), which the Company, the MHC and
the Bank acknowledge appears only on the cover page of the
Registration Statement, in the second sentence of the section
“Summary – Market for the Shares of Common Stock”
and in the first paragraph of the section “Market for the
Common Stock.”
(ii) At the time of filing the
Registration Statement relating to the offering of the Securities
and at the date hereof, the Company was not, and is not, an
ineligible issuer, as defined in Rule 405 of the Securities Act
Regulations. At the time of the filing of the Registration
Statement and at the time of the use of any issuer free writing
prospectus, as defined in Rule 433(h) of the Securities Act
Regulations, the Company met the conditions required by Rules 164
and 433 of the Securities Act Regulations for the use of a free
writing prospectus. If required to be filed, the Company has filed
any issuer free writing prospectus related to the offered
Securities at the time it is required to be filed under Rule 433 of
the Securities Act Regulations and, if not required to be filed,
will retain such free writing prospectus in the Company’s
records pursuant to Rule 433(g) of the Securities Act Regulations
and if any issuer free writing prospectus is used after the date
hereof in connection with the offering of the Securities the
Company will file or retain such free writing prospectus as
required by Rule 433 of the Securities Act Regulations.
(iii) As of the Applicable Time,
neither (i) the Issuer-Represented General Free Writing
Prospectus(es) issued at or prior to the Applicable Time and the
Statutory Prospectus, all considered together (collectively, the
“General Disclosure Package”), nor (ii) any
individual Issuer-Represented Limited-Use Free Writing Prospectus
issued at or prior to the Applicable Time, when considered together
with the General Disclosure Package, included any untrue statement
of a material fact or omitted to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements or omissions made
in reliance upon and in conformity with written information
furnished to the Company by the Agent expressly for use therein. As
used in this paragraph and elsewhere in this Agreement:
1. “Applicable Time”
means __:00 p.m. of the date of this Agreement.
2. “Statutory
Prospectus,” as of any time, means the most recent Prospectus
that is included in the Registration Statement immediately prior to
the Applicable Time, including any document incorporated by
reference therein.
3. “Issuer-Represented Free
Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 of the Securities
Act Regulations, relating to the offered Securities in the form
filed or required to be filed with the Commission or, if not
required to be filed, in
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the form retained in the
Company’s records pursuant to Rule 433(g) under the
Securities Act Regulations.
4. “Issuer-Represented General
Free Writing Prospectus” means any Issuer-Represented Free
Writing Prospectus that is intended for general distribution to
prospective investors.
5. “Issuer-Represented
Limited-Use Free Writing Prospectus” means any
Issuer-Represented Free Writing Prospectus that is not an
Issuer-Represented General Free Writing Prospectus. The term
Issuer-Represented Limited-Use Free Writing Prospectus also
includes any “bona fide electronic road show,” as
defined in Rule 433 of the Securities Act Regulations, that is
made available without restriction pursuant to
Rule 433(d)(8)(ii) of the Securities Act Regulations or
otherwise, even though not required to be filed with the
Commission.
(iv) Each Issuer-Represented Free
Writing Prospectus, as of its date of first use and at all
subsequent times through the completion of the Offerings and sale
of the offered Securities or until any earlier date that the
Company notified or notifies the Agent (as described in the next
sentence), did not, does not and will not include any information
that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, including any document
incorporated by reference therein that has not been superseded or
modified. If at any time following the date of first use of an
Issuer-Represented Free Writing Prospectus there occurred or occurs
an event or development as a result of which such
Issuer-Represented Free Writing Prospectus conflicted or would
conflict with the information contained in the Registration
Statement relating to the offered Securities or included or would
include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances prevailing at
that subsequent time, not misleading, the Company has notified or
will notify promptly the Agent so that any use of such
Issuer-Represented Free-Writing Prospectus may cease until it is
amended or supplemented and the Company has promptly amended or
will promptly amend or supplement such Issuer-Represented Free
Writing Prospectus to eliminate or correct such conflict, untrue
statement or omission. The foregoing two sentences do not apply to
statements in or omissions made in reliance upon and in conformity
with information furnished in writing to the Company by the Agent
expressly for use therein.
(v) Pursuant to the rules and
regulations of the OTS, as from time to time amended or
supplemented (the “OTS Regulations”), the Company has
filed with the OTS an Application for Approval of a Minority Stock
Issuance by a Savings Bank Subsidiary of a Mutual Holding Company
(Form MHC-2), and has filed such amendments thereto and
supplementary materials as may have been required to the date
hereof (the Form MHC-2, as amended to date, if applicable, and
referred to as the “MHC Application”). The Board of
Directors of the Company, the Bank and the MHC have duly adopted
the Plan and such adoption has not since been rescinded or revoked.
The MHC Application has been approved by the OTS, such approval
remains in full force and effect and no order has been issued by
the OTS suspending or revoking such approval and no
5
proceedings therefore have been
initiated or, to the knowledge of the Company, the Bank or the MHC,
threatened by the OTS. At the date of such approval and at the
Closing Time referred to in Section 2, the MHC Application
complied and will comply in all material respects with the
applicable provisions of the OTS Regulations and the MHC
Application is truthful and accurate in all material
respects.
(vi) The Company filed the
Prospectus and any supplemental sales literature with the
Commission and the OTS. The Prospectus and all supplemental sales
literature, as of the date the Registration Statement became
effective and at the Closing Time referred to in Section 2,
complied and will comply in all material respects with the
applicable requirements of the OTS Regulations and, at or prior to
the time of their first use, will have received all required
authorizations of the OTS for use in final form.
(vii) None of the Commission, the
OTS or any state securities (“Blue Sky”) authority has,
by order or otherwise, prevented or suspended the use of the
Prospectus or any supplemental sales literature authorized by the
Company, the MHC or the Bank for use in connection with the
Offerings, and no proceedings for such purposes are pending or, to
the knowledge of the Company, the MHC or the Bank,
threatened.
(viii) The Offerings and other
transactions contemplated hereby do not and will not require any
material consent, approval, authorization or permit or filing with
any other governmental agency or regulatory authority other than
the OTS and the Commission, except as disclosed in the
Prospectus.
(ix) At the Closing Time referred to
in Section 2, the Company, the Bank and the MHC will have
completed the conditions precedent to the establishment of the
Foundation in accordance with the Plan, the applicable OTS
Regulations and all other applicable laws, regulations, decisions
and orders, including all material terms, conditions, requirements
and provisions precedents to the establishment of the Foundation
imposed upon the Company, the Bank or the MHC by the OTS or any
other regulatory authority, other than those which the regulatory
authority permits to be completed after the Offerings. At the
Closing Time referred to in Section 2, the Offerings and
establishment of the Foundation will have been effected in all
material respects in the manner described in the Prospectus and in
accordance with the Plan, the OTS Regulations and all other
applicable material laws, regulations, decisions and orders,
including in compliance in all material respects with all terms,
conditions, requirements and provisions precedent to the Offerings
imposed upon the Company, the Bank or the MHC by the Commission,
the OTS or any other regulatory or Blue Sky authority.
(x) FinPro, Inc., (the
“Appraiser”), which prepared the valuation of the
common stock of the Company as part of the Plan, has advised the
Company, the MHC and the Bank in writing that it satisfies all
requirements for an appraiser set forth in the OTS Regulations and
any interpretations or guidelines issued by the OTS or its staff
with respect thereto.
(xi) Deloitte & Touche LLP,
the accountants who audited and reported on the consolidated
financial statements and supporting schedules of the Company and
its
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subsidiaries included in the
Registration Statement, has advised the Company, the MHC and the
Bank in writing that they are independent public accountants within
the meaning of the Code of Ethics of the American Institute of
Certified Public Accountants (the “AICPA”), that they
are registered with the Public Company Accounting Oversight Board
(“PCAOB”) and such accountants are, with respect to the
Company, the MHC and the Bank, independent certified registered
public accountants as required by, and are not in violation of the
auditor independence requirements of, the Securities Act, the
Securities Act Regulations and OTS Regulations and each accountant
is not in violation of the auditors independence requirements of
the Sarbanes-Oxley Act of 2002.
(xii) The only direct subsidiaries
of the Company are the Bank and Third Capital, Inc.; the only
direct and indirect subsidiaries of the Bank are FBE Inc., Broadway
Realty Holding Company and Third Fed Insurance Agency, Inc.; the
only direct and indirect subsidiaries of Third Capital, Inc. are
Third Capital Mortgage, Inc., Third Cap Association, Inc., Third
Capital Mortgage Insurance Company, Hazelmere Investment Group and
Hazelmere of California Limited Partnership (collectively, the
“Subsidiaries”). Except for the Subsidiaries and except
as set forth in the Prospectus, none of the Company, the MHC or the
Bank, directly or indirectly, controls any other corporation,
limited liability company, partnership, joint venture, association,
trust or other business organization.
(xiii) The consolidated financial
statements and the related schedules and notes thereto included in
the Registration Statement and the Prospectus present fairly the
financial position of the Company and its subsidiaries at the dates
indicated and the results of operations, changes in equity and cash
flows for the periods specified, and comply as to form with the
applicable accounting requirements of the Securities Act
Regulations and the OTS Regulations; except as otherwise stated in
the Registration Statement and Prospectus, said financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis; and the
supporting schedules and tables included in the Registration
Statement and Prospectus present fairly the information required to
be stated therein. The other financial, statistical and pro forma
information and related notes included in the Prospectus present
fairly the information shown therein on a basis consistent with the
audited and unaudited financial statements included in the
Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been consistently applied on the basis described
therein.
(xiv) Since the respective dates as
of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein (A) there has
been no material adverse change in the financial condition, results
of operations, business affairs or prospects of the Company, the
MHC, the Bank and the Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business and
(B) except for transactions specifically referred to or
contemplated in the Registration Statement and Prospectus, there
have been no transactions entered into by the Company, the MHC, the
Bank or the Subsidiaries, other than those in the ordinary course
of business consistent with past practice, which are material with
respect to the Company, the MHC, the Bank and the Subsidiaries,
considered as one enterprise. The capitalization, liabilities,
assets, properties and business of the Company, the MHC and the
Bank
7
conform in all material respects to
the descriptions contained in the Prospectus and none of the
Company, the MHC or the Bank has any material liabilities of any
kind, contingent or otherwise, except as disclosed in the
Registration Statement or the Prospectus and none of the Company,
the MHC or the Bank have issued any securities or incurred any
liability or obligation, direct or contingent, or borrowed money,
except borrowings in the ordinary course of business consistent
with past practice from the same or similar sources and in similar
amounts as indicated in the Prospectus.
(xv) The Company has been duly
organized and is validly existing as a stock holding company
chartered under the laws of the United States of America with full
corporate power and authority to own, lease and operate its
properties, to conduct its business as described in the
Registration Statement and the Prospectus, and to enter into and
perform its obligations under this Agreement and the transactions
contemplated hereby; and the Company is duly qualified to transact
business and is in good standing under the laws of the United
States of America and in each other jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on
the financial condition, results of operations or business affairs
of the Company, the MHC, the Bank and the Subsidiaries, considered
as one enterprise (a “Material Adverse Effect”). The
Company conducts business exclusively in the States of Ohio,
Kentucky and Florida.
(xvi) Upon completion of the
Offerings, the contribution of the Foundation Shares and the
issuance of the MHC Shares as described in the Prospectus, the
issued and outstanding capital stock of the Company will be within
the range as set forth in the Prospectus under
“Capitalization” (except for subsequent issuances, if
any, pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus). The authorized capital stock of the
Company consists of 700,000,000 shares of Common Stock and
100,000,000 shares of serial preferred stock, par value $.01 per
share, and the issued and outstanding capital stock of the Company
at the date hereof is, and immediately prior to the Closing Time
will be, 1,000 shares of Common Stock, all of which are
beneficially owned and of record by the MHC free and clear of any
security interest, mortgage, pledge, lien, encumbrance or legal or
equitable claim; at the date hereof and at the Closing Time, the
Securities, the Foundation Shares and the MHC Shares will have been
duly authorized for issuance and, in the case of the Securities,
when issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth in the
Plan and stated on the cover page of the Prospectus, in the case of
the Foundation Shares, when contributed by the Company pursuant to
the Plan and, in the case of the MHC Shares, when issued by the
Company pursuant to the Plan, will be duly and validly issued and
fully paid and nonassessable; the terms and provisions of the
Common Stock and the other capital stock of the Company conform in
all material respects to all statements relating thereto contained
in the Prospectus; the certificates representing the shares of
Common Stock will conform to the requirements of applicable law and
regulations; and the issuance of the Securities, the Foundation
Shares and the MHC Shares is not subject to preemptive or other
similar rights, except for subscription rights granted pursuant to
the Plan in accordance with the OTS Regulations.
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(xvii) The MHC has been duly
organized and is validly existing as a mutual holding company
chartered under the laws of the United States of America with full
corporate power and authority to own, lease and operate its
properties, to conduct its business as described in the
Registration Statement and the Prospectus, and to enter into and
perform its obligations under this Agreement and consummate the
transactions contemplated hereby; and the MHC is duly qualified to
transact business and is in good standing under the laws of the
United States of America and in any other jurisdiction in which
such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure to so qualify would not have a Material Adverse
Effect.
(xviii) The MHC has no capital
stock. All holders of the savings, demand or other authorized
accounts of the Bank are members of the MHC. The MHC does not own
any equity securities or any equity interest in any business
enterprise except as described in the Prospectus.
(xix) The Bank has been duly
organized and is validly existing as a savings and loan association
chartered under the laws of the United States of America with full
corporate power and authority to own, lease and operate its
properties, to conduct its business as described in the
Registration Statement and the Prospectus, and to enter into and
perform its obligations under this Agreement and the transactions
contemplated hereby; and the Bank is duly qualified to transact
business and is in good standing under the laws of the State of the
United States of America and in any other jurisdiction in which
such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure to so qualify would not have a Material Adverse
Effect.
(xx) The authorized capital stock of
the Bank consists of
shares of common stock, par value $
per share (“Bank Common Stock”), and the issued and
outstanding capital stock of the Bank is
shares of Bank Common Stock, all of which are owned beneficially
and of record by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance or legal or equitable
claim. All of the issued and outstanding Bank Common Stock has been
duly authorized, validly issued and fully paid and nonassessable;
the terms and provisions of the Bank Common Stock conform to all
statements relating thereto contained in the Prospectus, and the
certificates representing the shares of the Bank Common Stock
comply with the requirements of applicable laws and regulations;
the issuance of Bank Common Stock is not subject to preemptive or
similar rights; and there are no outstanding warrants, options or
rights of any kind to acquire additional shares of Bank Common
Stock.
(xxi) The Company, the MHC, the Bank
and the Subsidiaries have each obtained all licenses, permits and
other governmental authorizations currently required for the
conduct of their respective businesses, except where the failure to
obtain such licenses, permits or other governmental authorizations
would not have a Material Adverse Effect; all such licenses,
permits and other governmental authorizations are in full force and
effect and the Company, the MHC, the Bank and the Subsidiaries are
in all material respects in compliance therewith; none of the
Company, the MHC, the Bank or
9
any Subsidiary has received notice
of any proceeding or action relating to the revocation or
modification of any such license, permit or other governmental
authorization which, singularly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, might have a
Material Adverse Effect.
(xxii) Each Subsidiary has been duly
organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has full
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and Prospectus, and is duly qualified as a
foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify would not have a
Material Adverse Effect; the activities of each Subsidiary are
permitted to subsidiaries of a federally chartered savings and loan
association, in the case of the Bank, and a federally chartered
stock holding company, in the case of the Company, by the rules,
regulations and practices of the Federal Deposit Insurance
Corporation (“FDIC”) and the OTS in the case of the
Bank, and the OTS, in the case of the Company; all of the issued
and outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and nonassessable and
is owned by the Company or the Bank, as the case may be, free and
clear of any security interest, mortgage, pledge, lien, encumbrance
or legal or equitable claim; and there are no warrants, options or
rights of any kind to acquire shares of capital stock of any
Subsidiary.
(xxiii) The Bank is a member in good
standing of the Federal Home Loan Bank of Cincinnati; the deposit
accounts of the Bank are insured by the FDIC up to the applicable
limits. The Bank is a “qualified thrift lender” within
the meaning of 12 U.S.C. Section 1467a(m).
(xxiv) The Company, the MHC and the
Bank have taken all corporate action necessary for them to execute,
deliver and perform this Agreement and the transactions
contemplated hereby, and this Agreement has been duly executed and
delivered by, and is the valid and binding agreement of, the
Company, the MHC and the Bank, enforceable against each of them in
accordance with its terms, except as may be limited by bankruptcy,
insolvency or other laws affecting the enforceability of the rights
of creditors generally and judicial limitations on the right of
specific performance and except as the enforceability of
indemnification and contribution provisions may be limited by
applicable securities laws.
(xxv) No approval of any regulatory
or supervisory or other public authority is required in connection
with the execution and delivery of this Agreement or the issuance
of the Securities that has not been obtained and a copy of which
has been delivered to the Agent, except as may be required under
the “Blue Sky” or securities laws of various
jurisdictions.
(xxvi) None of the Company, the MHC,
the Bank or any of the Subsidiaries is in violation of their
respective certificate of incorporation, organization
certificate,
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articles of incorporation or
charter, as the case may be, or bylaws or other written corporate
governance requirements or guidelines; and none of the Company, the
MHC, the Bank or any of the Subsidiaries is in default (nor has any
event occurred which, with notice or lapse of time or both, would
constitute a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the MHC, the Bank or any of the
Subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company, the MHC,
the Bank or any of the Subsidiaries is subject, except for such
defaults that would not, individually or in the aggregate, have a
Material Adverse Effect; and there are no contracts or documents of
the Company, the MHC or the Bank which are required to be filed as
exhibits to the Registration Statement or the MHC Application which
have not been so filed.
(xxvii) The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated herein, have been duly authorized by all
necessary corporate action on the part of the Company, the MHC and
the Bank, and do not and will not conflict with or constitute a
breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company, the MHC or the Bank pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the MHC or the Bank is a party or
by which it or any of them may be bound, or to which any of the
property or assets of the Company, the MHC or the Bank is subject,
except for such conflicts, breaches or defaults that would not,
individually or in the aggregate, have a Material Adverse Effect,
nor will such action result in any violation of the provisions of
the respective charter or bylaws of the Company, the MHC or the
Bank, or any applicable law, administrative regulation or
administrative or court decree.
(xxviii) No labor dispute with the
employees of the Company, the MHC, the Bank or the Subsidiaries
exists or, to the knowledge of the Company, the MHC, the Bank or
the Subsidiaries, is imminent or threatened; and the Company, the
MHC and the Bank are not aware of any existing or threatened labor
disturbance by the employees of any of its principal suppliers or
contractors which might be expected to have a Material Adverse
Effect.
(xxix) Each of the Company, the MHC,
the Bank and the Subsidiaries has good and marketable title to all
of their properties and assets for which ownership is material to
the business of the Company, the MHC, the Bank or the Subsidiaries
and to those properties and assets described in the Prospectus as
owned by them, free and clear of all liens, charges, encumbrances
or restrictions, except as such are described in the Prospectus or
are not material in relation to the business of the Company, the
MHC, the Bank or the Subsidiaries, considered as one enterprise;
and all of the leases and subleases material to the business of the
Company, the MHC, the Bank or the Subsidiaries under which the
Company, the MHC, the Bank or the Subsidiaries hold properties,
including those described in the Prospectus, are valid and binding
agreements of the Company, the MHC, the Bank or the Subsidiaries,
in full force and effect, enforceable in accordance with their
terms except as may be limited by bankruptcy, insolvency or other
laws
11
affecting the enforceability of the
rights of creditors generally and judicial limitations on the right
of specific performance and except as the enforceability of
indemnification and contribution provisions may be limited by
applicable securities laws.
(xxx) None of the Company, the MHC
or the Bank is in violation of any order or directive from the OTS,
the FDIC, the Commission or any regulatory authority to make any
material change in the method of conducting its respective
businesses; the Company, the MHC, the Bank and each of the
Subsidiaries have conducted and are conducting their respective
businesses so as to comply with all applicable statutes,
regulations and administrative and court decrees (including,
without limitation, all regulations, decisions, directives and
orders of the OTS, the FDIC and the Commission). Except as
disclosed in the Registration Statement, neither the Company, the
MHC, the Bank nor any of the Subsidiaries is subject or is party
to, or has received any notice or advice that any of them may
become subject or party to, any investigation with respect to any
cease-and-desist order, agreement, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or
order with or by, or is a party to any commitment letter or similar
undertaking to, or is subject to any directive by, or has been a
recipient of any supervisory letter from, or has adopted any board
resolutions at the request of, any Regulatory Agency (as defined
below) that currently restricts the conduct of their business or
that in any manner relates to their capital adequacy, their credit
policies, their management or their business (each, a
“Regulatory Agreement”), nor has the Company, the MHC,
the Bank or any of the Subsidiaries been advised by any Regulatory
Agency that it is considering issuing or requesting the issuance of
any additional Regulatory Agreement; and there is no unresolved
violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of
the Company, the MHC, the Bank or any of the Subsidiaries which is
expected to have a Material Adverse Effect, or which might
materially and adversely affect the properties or assets thereof or
which might adversely affect the consummation of the Offerings or
the performance of this Agreement. As used herein, the term
“Regulatory Agency” means any federal or state agency
charged with the supervision or regulation of depositary
institutions or holding companies of depositary institutions, or
engaged in the insurance of depositary institution deposits, or any
court, administrative agency or commission or other governmental
agency, authority or instrumentality having supervisory or
regulatory authority with respect to the Company, the MHC, the Bank
or any of the Subsidiaries.
(xxxi) There is no action, suit or
proceeding before or by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the
Company, the MHC or the Bank, threatened, against or affecting the
Company, the MHC or the Bank which is required to be disclosed in
the Registration Statement (other than as disclosed therein), or
which might result in any material adverse change in the financial
condition, results of operations, business affairs or prospects of
the Company, the MHC, the Bank and the Subsidiaries, considered as
one enterprise, or which might materially and adversely affect the
properties or assets thereof, or which might adversely affect the
consummation of the Offerings, or the performance of this
Agreement; all pending legal or governmental proceedings to which
the Company, the MHC, the Bank or any Subsidiary is a party or of
which any of their respective property or assets is the
12
subject which are not described in
the Registration Statement, including ordinary routine litigation
incidental to their business, are in the aggregate not
material.
(xxxii) The Company, the MHC and the
Bank have obtained an opinion of its counsel, Luse Gorman
Pomerenk & Schick, P.C., with respect to (i) the
legality of the Securities, the Foundation Shares and the MHC
Shares to be issued and certain federal income tax consequences of
the Offerings and the Plan, copies of which are filed as exhibits
to the Registration Statement; all material aspects of the
aforesaid opinion is accurately summarized in the Prospectus under
“The Stock Offering—Tax Effects of the Stock
Offering,” the facts and representations upon which such
opinion is based are truthful, accurate and complete in all
material respects, and neither the Company, the MHC, nor the Bank
has taken or will take any action inconsistent
therewith.
(xxxiii) The Company is not and,
upon completion of the Offerings and sale of the Securities and the
application of the net proceeds therefrom, will not be, required to
be registered as an “investment company” as that term
is defined under the Investment Company Act of 1940, as
amended.
(xxxiv) All of the loans represented
as assets on the most recent consolidated financial statements or
consolidated selected financial information of the Company included
in the Prospectus meet or are exempt from all requirements of
federal, state or local law pertaining to lending, including
without limitation truth in lending (including the requirements of
Regulations Z and 12 C.F.R. Part 226 and Section 563.99), real
estate settlement procedures, consumer credit protection, equal
credit opportunity and all disclosure laws applicable to such
loans, except for violations which, if asserted, would not result
in a Material Adverse Effect.
(xxxv) To the knowledge of the
Company, the MHC and the Bank, with the exception of the intended
loan to the Bank’s ESOP by the Company to enable the ESOP to
purchase securities in an amount up to 3.92% of the Common Stock
outstanding after the Offerings (including the Foundation Shares
and MHC Shares), none of the Company, the MHC, the Bank or their
employees has made any payment of funds of the Company, the MHC or
the Bank as a loan for the purchase of the Common Stock or made any
other payment of funds prohibited by law, and no funds have been
set aside to be used for any payment prohibited by law.
(xxxvi) Each of the Company, the MHC
and the Bank maintains a system of internal accounting controls
sufficient to provide reasonable assurance that
(a) transactions are executed in accordance with
management’s general or specific authorizations;
(b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset
accountability; (c) access to assets is permitted only in
accordance with management’s general or specific
authorization; and (d) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
13
(xxxvii) The Company, the MHC, the
Bank and each Subsidiary are in compliance in all material respects
with the applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transaction Reporting Act
of 1970, as amended, and the rules and regulations thereunder. The
Bank has established compliance programs and is in compliance in
all material respects with the requirements of the USA Patriot Act
and all applicable regulations promulgated thereunder. There is no
charge, investigation, action, suit or proceeding before any court,
regulatory authority or governmental agency or body pending or, to
the best knowledge of the Company, the MHC and the Bank, threatened
regarding the Bank’s compliance with the USA Patriot Act or
any regulations promulgated thereunder.
(xxxviii) None of the Company, the
MHC, the Bank or any Subsidiary nor any properties owned or
operated by the Company, the MHC, the Bank or any Subsidiary is in
violation of or liable under any Environmental Law (as defined
below), except for such violations or liabilities that,
individually or in the aggregate, would not result in a Material
Adverse Effect. There are no actions, suits or proceedings, or
demands, claims, notices or investigations (including, without
limitation, notices, demand letters or requests for information
from any environmental agency) instituted or pending, or to the
knowledge of the Company, the MHC or the Bank, threatened, relating
to the liability of any property owned or operated by the Company,
the MHC, the Bank or any Subsidiary, under any Environmental Law,
except for such actions, suits or proceedings, or demands, claims,
notices or investigations that, individually or in the aggregate,
would not have a Material Adverse Effect. For purposes of this
subsection, the term “Environmental Law” means any
federal, state, local or foreign law, statute, ordinance, rule,
regulation, code, license, permit, authorization, approval,
consent, order, judgment, decree, injunction or agreement with any
regulatory authority relating to (i) the protection,
preservation or restoration of the environment (including, without
limitation, air, water, vapor, surface water, groundwater, drinking
water supply, surface soil, subsurface soil, plant and animal life
or any other natural resource), and/or (ii) the use, storage,
recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of any
substance presently listed, defined, designated or classified as
hazardous, toxic, radioactive or dangerous, or otherwise regulated,
whether by type or by quantity, including any material containing
any such substance as a component.
(xxxix) The Company, the MHC, the
Bank and each Subsidiary have timely filed all federal, state and
local income and franchise tax returns required to be filed and
have made timely payments of all taxes shown as due and payable in
respect of such returns, and no deficiency has been asserted with
respect thereto by any taxing authority. No tax deficiency has been
asserted, and the Company, the MHC and the Bank have no knowledge
of any tax deficiency which could be asserted against the Company,
the MHC, the Bank or the Subsidiaries.
(xl) The Company has received all
approvals required to consummate the Offerings and to have the
Securities listed on the Nasdaq Global Select Market effective as
of the Closing Time referred to in Section 2
hereof.
(xli) [Reserved]
14
(xlii) There are no affiliations or
associations (as such terms are defined by the National Association
of Securities Dealers, Inc. (“NASD”)) between any
member of the NASD and any of the Company’s, the MHC’s
or the Bank’s officers or directors.
(xliii) The Company, the MHC, the
Bank and each Subsidiary carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct
of their respective businesses and the value for their respective
properties as is customary for companies engaged in similar
industries.
(xliv) The Company, the MHC and the
Bank have not relied on Agent or its counsel for any legal, tax or
accounting advice in connection with the Offerings.
(xlv) The records of eligible
account holders, supplemental eligible account holders, and other
depositors are accurate and complete in all material
respects.
(xlvi) The Company, the MHC, the
Bank and each Subsidiary is each in compliance in all material
respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder
(“ERISA”); no “reportable event” (as
defined in ERISA) has occurred with respect to any “pension
plan” (as defined in ERISA) for which the Company, the MHC,
the Bank or any Subsidiary, respectively, would have any liability;
each of the Company, the MHC, the Bank and each Subsidiary has not
incurred and does not expect to incur liability under
(i) Title IV of ERISA with respect to termination of , or
withdrawal from, any “pension plan” or
(ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published
interpretations thereunder (the “Code”); and each
“pension plan” for which the Company, the MHC, the Bank
and any Subsidiary would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified and
nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(xlvii) The Company has established
and maintains disclosure controls and procedures (as such term is
defined in Rule 13a-14 and 15d-14 under the Exchange Act), which
(i) are designed to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made
known to the Company’s principal executive officer and its
principal financial officer by others within those
