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3,048,075 Shares
(subject to increase up to 3,505,286 shares
in the event of an increase in the pro forma market
value of the Company's Common Stock)
SOUND FEDERAL BANCORP
(a federal stock corporation)
Common Stock
(par value $1.00 per share)
AGENCY AGREEMENT
August __, 1998
SANDLER O'NEILL & PARTNERS, L.P.
Two World Trade Center, 104th Floor
New York, New York 10048
Ladies and Gentlemen:
Sound Federal, MHC, a federal mutual holding company (the "MHC"), Sound
Federal Bancorp, a federal stock corporation (the "Company"), and Sound Federal
Savings and Loan Association, a federally chartered mutual savings association
(the "Association"), 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 3,048,075 shares, subject to increase up to 3,505,286
shares in the event of an increase in the pro forma market value of the
Company's Common Stock, par value $1.00 per share (the "Common Stock"). The
Common Stock will be offered in connection with the reorganization of the
Association into the MHC (the "Reorganization"). The Common Stock is being
offered for sale and the Charitable Foundation Shares (defined hereinafter) are
being contributed in accordance with the plan of reorganization and stock
issuance (the "Plan") adopted by the Board of Directors of the Association. As
part of the Reorganization, the Association will convert to a stock savings
association and will become a wholly owned subsidiary of the Company. The
Company will become the majority-owned subsidiary of the MHC. The Common Stock
will be offered in a subscription offering to qualifying depositors and
borrowers, the Association's tax qualified employee stock benefit plans,
including the Association's employee stock ownership plan, and to employees,
officers and directors of the Association (the "Subscription Offering"). Any
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unsubscribed shares may be offered for sale to the public in a community
offering or syndicated community offering. The Subscription Offering, the
community offering and the syndicated community offering are referred to
collectively as the "Offering". The shares of Common Stock to be sold by the
Company in the Offering are hereinafter called the "Securities." In addition, as
part of the Reorganization, and subject to compliance with certain conditions as
may be imposed by regulatory authorities, the Company will contribute newly
issued shares of Common Stock in an amount equal to 2% of its issued and
outstanding shares to the Sound Federal Savings and Loan Association Charitable
Foundation (the "Charitable Foundation"), such shares hereinafter being referred
to as the "Charitable Foundation Shares." The Securities offered for sale in the
Offering and the Charitable Foundation Shares will represent a minority
ownership interest of 45% of the Company's total outstanding shares of Common
Stock.
The Reorganization and Offering are being made pursuant to the terms of
the Plan of reorganization which must be approved by a majority of the eligible
votes of members of the Association and by the Office of Thrift Supervision (the
"OTS"). The Reorganization will not go forward if the Association does not
receive these approvals and the Company does not sell at least 2,252,925 shares
of Common Stock.
It is acknowledged that the number of Securities to be sold in the
Offerings may be increased or decreased as described in the Prospectus (as
hereinafter defined). 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.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-_______) including a
prospectus for the registration of the Securities and the Charitable Foundation
Shares under the Securities Act of 1933, as amended (the "1933 Act"), has filed
such amendments thereto, if any, and such amended prospectuses 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 part thereof pursuant to the rules and
regulations of the Commission under the 1933 Act, as from time to time amended
or supplemented pursuant to the 1933 Act or otherwise (the "1933 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 Offering which differs from the
Prospectus on file with 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 1933 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 to be used in the Offering.
Such Prospectus contains information with respect to the Association, the
Company and the Common Stock.
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SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company, the Association 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 Association and the MHC,
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 1933 Act and the 1933 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 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 Prospectus (the "Agent
Information," which the MHC, the Company and the Association
acknowledge appears only in the first two paragraphs and the
last paragraph of the section captioned "THE REORGANIZATION
AND OFFERING - Marketing Agent" of the Prospectus).
(ii) The Company has filed with the Office of Thrift Supervision,
Department of the Treasury (the "OTS") the Company's
application for approval of its acquisition of the Association
(the "Holding Company Application") on Form H-(e)1 promulgated
under the savings and loan holding company provisions of the
Home Owners' Loan Act, as amended ("HOLA") and the regulations
promulgated thereunder. The Company has received written
notice from the OTS of its approval of the acquisition of the
Association, such approval remains in full force and effect
and no order has been issued by the OTS suspending or revoking
such approval and no proceedings therefor have been initiated
or, to the knowledge of the Company, the Association or the
MHC, threatened by the OTS. At the date of such approval, the
Holding Company Application complied in all material respects
with the applicable provisions of HOLA and the regulations
promulgated thereunder.
(iii) The Association has filed with the OTS a Notice of Mutual
Holding Company Reorganization on Form MHC-1 and Application
for Approval of an Issuance by a Subsidiary of a Mutual
Holding Company on Form
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MHC-2, including exhibits and any amendment or amendments
thereto (together, the "MHC Application"). The MHC Application
will have been approved by the OTS prior to the consummation
of the Offering. No order has been issued by the OTS
preventing or suspending the use of the Prospectus and no
action by or before the OTS to revoke such approval is pending
or threatened. The Offering and Plan have been duly adopted by
the Board of Directors of the Association and such adoption
has not since been rescinded or revoked. At the time the MHC
Application was approved, the MHC Application, including the
Prospectus contained therein, complied in all respects with
the requirements for an MHC-1 and an MHC-2 established by the
OTS, and the MHC Application, any preliminary or final
Prospectus, and any Blue Sky application(s) authorized by the
Association for use in connection with the Offering did not
contain an untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they are made, not misleading. At the Closing Time, the
MHC Application, any preliminary or final Prospectus, any Blue
Sky application (as such terms are defined herein) authorized
by the Association for use in connection with the Offering
will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they are made, not misleading, provided, however, that
the representations and warranties in this Section 1 (a) (iii)
shall not apply to statements in or omissions from such MHC
Application, Prospectus or Blue Sky application made in
reliance upon and in conformity with any Agent Information.
(iv) At the time of their use, the Proxy Statement and any other
proxy solicitation materials will comply in all material
respects with the applicable provisions of the Reorganization
Regulations and 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 the light of the
circumstances under which they were made, not misleading. The
Company, the MHC and the Association will promptly file 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 Reorganization
Regulations and, at or prior to the time of their first use,
will have received all required authorizations of the
Commission and the OTS for use in final form.
(v) Neither the Commission nor the OTS has, by order or otherwise,
prevented or suspended the use of the Prospectus or any
supplemental sales literature authorized by the Company, the
Association and the MHC for use in connection with the
Offering.
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(vi) At the Closing Time referred to in Section 2, the Company, the
Association, and the MHC will have completed the conditions
precedent to the Reorganization and the establishment of the
Charitable Foundation in accordance with the Plan, the
applicable Reorganization Regulations and all other applicable
laws, regulations, decisions and orders, including all
material terms, conditions and requirements precedent to the
Reorganization imposed upon the Company, the Association or
the MHC by the OTS or any other regulatory authority, other
than those which the regulatory authority permits to be
completed after the Reorganization.
(vii) FinPro, which prepared the valuation of the Association as
part of the Reorganization, satisfies all requirements for an
appraiser set forth in the Reorganization Regulations and any
interpretations or guidelines issued by the OTS with respect
thereto.
(viii) The accountants who certified the financial statements and
supporting schedules of the Association included in the
Registration Statement have advised the Company, the
Association and the MHC that they are independent public
accountants within the meaning of the Code of Ethics of the
American Institute of Certified Public Accountants; and such
accountants are, with respect to the Company, the Association
and the MHC, independent certified public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(ix) The Association has no subsidiaries.
(x) The consolidated financial statements and the related notes
thereto included in the Registration Statement and the
Prospectus present fairly the consolidated financial position
of the Association as at the dates indicated and the results
of operations, retained earnings and cash flows for the
periods specified and comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act Regulations and the Reorganization Regulations;
except as otherwise stated in the Registration Statement, 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 present fairly the
information required to be stated therein.
(xi) 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 or business of the Company, the Association and the
MHC, taken as a whole, whether or not arising in the ordinary
course of business, and (B) except for transactions
specifically referred to or contemplated in the Prospectus,
there have been no transactions entered into by the Company,
the Association or the MHC,
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other than those in the ordinary course of business, which are
material with respect to the Company, the Association and the
MHC, taken as a whole.
(xii) The Company has been duly incorporated and is validly existing
as a federal corporation in good standing with corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to
transact business and is in good standing in the State of New
York 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 of the Company, the Association and the
MHC, taken as a whole.
(xiii) Upon consummation of the Reorganization and the contribution
of the Charitable Foundation Shares as described in the
Prospectus, the authorized, 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); no
shares of Common Stock have been or will be issued and
outstanding prior to the Closing Time referred to in Section
2; at the time of Reorganization, the Securities will have
been duly authorized for issuance and, when issued and
delivered by the Company pursuant to the Plan against payment
of the consideration calculated as set forth in the Plan, will
be duly and validly issued and fully paid and non-assessable;
the terms and provisions of the Common Stock and the capital
stock of the Company conform to all statements relating
thereto contained in the Prospectus; the certificates
representing the shares of Common Stock will conform with the
requirements of applicable laws and regulations; and the
issuance of the Securities is not subject to preemptive or
other similar rights.
(xiv) The Association, as of the date hereof, is a federally
chartered mutual savings association, and upon consummation of
the Reorganization will be a stock savings association, in
both instances with full corporate power and authority to own,
lease and operate its properties and to conduct its business
as described in the Prospectus; the Company, the Association
and the MHC have obtained all licenses, permits and
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other governmental authorizations currently required for the
conduct of their respective businesses or required for the
conduct of their respective businesses as contemplated by the
Holding Company Application and the Reorganization
Application, except where the failure to obtain such licenses,
permits or other governmental authorizations would not have a
material adverse effect on the financial condition, results of
operations or business of the Company, the Association and the
MHC, taken as a whole; all such licenses, permits and other
governmental authorizations are in full force and effect, and
the Company, the Association and the MHC are in all material
respects in compliance therewith; neither the Company, the
Association, nor the MHC have received notice of any
proceeding or action relating to the revocation or
modification of any such license, permit or other governmental
authorization which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might
have a material adverse effect on the financial condition,
results of operations or business of the Company, the
Association and the MHC, taken as a whole; and the Association
is in good standing under the laws of the United States and is
qualified to do business in any 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 of the Company, the Association and the
MHC, taken as a whole.
(xv) The deposit accounts of the Association are insured by the
FDIC up to the applicable limits and, upon consummation of the
Reorganization, the liquidation account for the benefit of
eligible account holders will be duly established in
accordance with the requirements of the Reorganization
Regulations. The Association is a "qualified thrift lender"
within the meaning of 12 U.S.C. Section 1467a(m).
(xvi) Upon consummation of the Reorganization, the authorized
capital stock of the Company will be 20,000,000 shares of
common stock, par value $.10 per share (the "Company Common
Stock"), and [________] shares of preferred stock (the
"Company Preferred Stock"), and the issued and outstanding
capital stock of the Company will be [_____________] shares of
Company Common Stock; no shares of Company Common Stock or
Company Preferred Stock have been or will be issued and
outstanding prior to the Closing Time referred to in Section
2; the shares of Company Common Stock to be issued to the MHC
will have been duly authorized for issuance and, when issued
and delivered by the Company pursuant to the Plan against
payment of the consideration calculated as set forth in the
Plan and as described in the Prospectus, will be duly and
validly issued and fully paid and nonassessable, and all such
Company Common Stock will be owned beneficially and of record
by the MHC free and clear of any security interest, mortgage,
pledge, lien, encumbrance or legal or equitable claim; the
terms and provisions of the Company Common Stock and the
Company Preferred Stock conform to all statements relating
thereto contained in the Prospectus, and the certificates
representing the shares of Company Common Stock will conform
with the requirements of applicable laws and regulations; and
the issuance of the Company Common Stock is not subject to
preemptive or similar rights.
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(xvii) Upon consummation of the Reorganization, the authorized
capital stock of the Association will be [_______] shares of
common stock, par value $[___] per share (the "Association
Common Stock"), and [______] shares of preferred stock (the
"Association Preferred Stock"), and the issued and outstanding
capital stock of the Association will be [_______] shares of
Association Common Stock; no shares of Association Common
Stock or Association Preferred Stock have been or will be
issued and outstanding prior to the Closing Time referred to
in Section 2; the shares of Association Common Stock to be
issued to the Company will have been duly authorized for
issuance and, when issued and delivered by the Association
pursuant to the Plan against payment of the consideration
calculated as set forth in the Plan and as described in the
Prospectus, will be duly and validly issued and fully paid and
nonassessable, and all such Association Common Stock will be
owned beneficially and of record by the Company free and clear
of any security interest, mortgage, pledge, lien, encumbrance
or legal or equitable claim; the terms and provisions of the
Association Common Stock and the Association Preferred Stock
conform to all statements relating thereto contained in the
Prospectus, and the certificates representing the shares of
Association Common Stock will conform with the requirements of
applicable laws and regulations; and the issuance of the
Association Common Stock is not subject to preemptive or
similar rights.
(xviii) The Charitable Foundation has been duly incorporated and is
validly existing as a non-stock corporation in good standing
under the laws of the State of Delaware with corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; the
Charitable Foundation will not be a savings and loan holding
company within the meaning of 12 C.F.R. Section 574.2(q) as a
result of the issuance of shares of Common Stock to it in
accordance with the terms of the Plan and in the amounts as
described in the Prospectus; no approvals are required to
establish the Charitable Foundation and to contribute the
shares of Common Stock thereto as described in the Prospectus
other than those imposed by the OTS and the FDIC; except as
specifically disclosed in the Prospectus and the Proxy
Statement, there are no agreements and/or understandings,
written or oral, between the Company, the Association and/or
the MHC and the Charitable Foundation with respect to the
control, directly or indirectly, over the voting and the
acquisition or disposition of the Charitable Foundation
Shares; at the time of the Reorganization, the Charitable
Foundation Shares will have been duly authorized for issuance
and, when issued and contributed by the Company pursuant to
the Plan, will be duly and validly issued and fully paid and
non-assessable; and the issuance of the Charitable Foundation
Shares is not subject to preemptive or similar rights.
(xix) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein have
been duly
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authorized by all necessary corporate action of the Company,
the Association and the MHC, and this Agreement has been duly
executed and delivered by, and is the valid and binding
agreement of, the Company, the Association and the MHC,
enforceable 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.
(xx) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein 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 Association or the MHC pursuant to, any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the Association and the MHC
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
Association and the MHC is subject, except for such conflicts,
breaches or defaults that would not, individually or in the
aggregate, have a material adverse effect on the financial
condition, results of operations or business of the Company,
the Association and the MHC, taken as whole, nor will such
action result in any violation of the provisions of the
certificate of incorporation, organization certificate,
articles of incorporation or charter, as the case may be, or
bylaws of the Company, the Association or the MHC or any
applicable law, regulation or administrative or court decree.
(xxi) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus and
prior to the Closing Time, except as otherwise may be
specifically described or contemplated therein, none of the
Company, the Association or the MHC will have (A) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except borrowings in the
ordinary course of business from the same or similar sources
indicated in the Prospectus, or (B) entered into any
transaction or series of transactions which is material in
light of the business of the Company, the Association or the
MHC, taken as a whole, excluding the origination, purchase and
sale of loans or the purchase or sale of investment securities
or mortgage- backed securities in the ordinary course of
business.
(xxii) 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
and the Charitable Foundation Shares (except for the
declaration of effectiveness of any required post effective
amendment to the Registration Statement by the Commission,
approval
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thereof by the OTS, which has not been obtained and a copy of
which has been delivered to the Agent, except for the issuance
of the restated organization certificate by the OTS and as may
be required under the securities laws of various
jurisdictions.
(xxiii) Neither the MHC, the Company nor the Association is in
violation of its certificate of incorporation, restated
organization certificate, articles of incorporation, charter
or bylaws, as the case may be (and the Association will not be
in violation of its restated organization certificate or
bylaws in stock form upon consummation of the Reorganization);
neither the Company, the Association nor the MHC
Reorganization 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 Association or the MHC 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
Association or the MHC, except for such defaults that would
not, individually or in the aggregate, have a material adverse
effect on the financial condition, results of operations or
business of the Company, the MHC and the Association, taken as
a whole; and there are no contracts or documents of the
Company, the MHC and the Association which are required to be
filed as exhibits to the Registration Statement or the
Reorganization Application which have not been so filed.
(xxiv) No labor dispute with the employees of the Company, the
Association or the MHC exists or, to the knowledge of the
Company, the Association or the MHC, is threatened; and the
Company, the Association and the MHC are not aware of any
existing or threatened labor disturbance by the employees of
any of their principal suppliers or contractors which might be
expected to result in any material adverse change in the
financial condition, results of operations or business of the
Company, the Association and the MHC, taken as a whole.
(xxv) Each of the Company, the Association and the MHC has good and
marketable title to all properties and assets for which
ownership is material to its business and to those properties
and assets described in the Prospectus as owned by it, free
and clear of all liens, charges, encumbrances or restrictions,
except such as are described in the Prospectus or are not
material in relation to the business of the Company, the
Association and the MHC, taken as a whole; and all of the
leases and subleases material to the business of the Company,
the Association and the MHC, taken as a whole, under which the
Company, the Association and the MHC holds properties,
including those described in the Prospectus, are the legal,
valid and binding agreements of the Company, the Association
or the MHC, enforceable in accordance with their terms.
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(xxvi) Neither the Company, the Association nor the MHC is in
violation of any directive from the OTS or the FDIC to make
any material change in the method of conducting its business;
the Association has conducted and is conducting its business
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 and the FDIC) except in such respects as would not
have a material adverse effect upon the Company, the
Association and the MHC, taken as a whole.
(xxvii) 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 Association
or the MHC, threatened, against or affecting the Company, the
Association or the MHC which is required to be disclosed in
the Registration Statement (other than as disclosed therein),
or any action, suit or proceeding which might result in any
material adverse change in the financial condition, results of
operations or business of the Company, the Association and the
MHC, taken as a whole, or which might materially and adversely
affect the properties or assets thereof, the performance of
this Agreement or the consummation of the Reorganization; all
pending legal or governmental proceedings to which the
Company, the Association or the MHC is a party or of which any
of their respective properties or assets is the subject which
are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material.
(xxviii) The Association has obtained opinions of its counsel, Luse
Lehman Gorman Pomerenk & Schick, P.C., with respect to the
legality of the Securities and the Charitable Foundation
Shares to be issued and the federal income tax consequences of
the Reorganization, copies of which are filed as exhibits to
the Registration Statement; all material aspects of the
aforesaid opinions that are required to be disclosed are
accurately summarized in the Prospectus; the facts and
representations upon which such opinions are based are
truthful, accurate and complete in all material respects, and
neither the Association, the Company nor the MHC has taken or
will take any action inconsistent therewith.
(xxix) The Association has obtained an opinion of KPMG Peat Marwick
LLP, with respect to certain New York State tax consequences
of the Reorganization (relating to banking franchise tax,
sales or use tax, license fee on foreign corporations, stock
transfer tax, real property transfer gains tax and real estate
transfer tax) and to the federal income tax consequences of
the Charitable Foundation, copies of which are filed as
exhibits to the Registration Statement; all material aspects
of the aforesaid opinions that are required to be disclosed
are accurately summarized in the Prospectus; the facts and
representations upon which such opinions are based are
truthful, accurate and complete in all material respects, and
neither the
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Association, the Company nor the MHC has taken or will take
any action inconsistent therewith which would in any way
affect the aforesaid opinions.
(xxx) The Company is not required to be registered under the
Investment Company Act of 1940, as amended.
(xxxi) All of the loans represented as assets on the most recent
financial statements or selected financial information of the
Association included in the Prospectus meet or are exempt from
all requirements of federal, state and local law pertaining to
lending, including, without limitation, truth in lending
(including the requirements of Regulations Z and 12 C.F.R.
Part 226 and 12 C.F.R. 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 on the financial condition, results
of operations or business of the Company, the Association and
the MHC, taken as a whole.
(xxxii) With the exception of the Company's intended loan to the ESOP
for the purpose of enabling the Association's tax qualified
employee benefit plans, including the ESOP, to purchase shares
of Common Stock in an amount up to 10% of the Minority
Ownership Interest (as defined in the Prospectus), to the
knowledge of the Company, the Association and the MHC, none of
the Company, the Association or the MHC or any employee of the
Association has made any payment of funds of the Company, the
Association or the MHC 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.
(xxxiii) The Company, the Association and the MHC 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, and the lending practices of
the Association are and have been in conformity with the Real
Estate Settlement Procedures Act, as amended, and the rules
and regulations thereunder.
(xxxiv) Neither the Company, the Association nor the MHC nor any
properties owned or operated by the Company, the Association
or the MHC, 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 have a material adverse effect on the
financial condition, results of operations or business of the
Company, the Association and the MHC, taken as a whole. There
are no actions, suits or proceedings, or demands, claims,
notices or investigations (including, without limitation,
notices,
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demand letters or requests for information from any
environmental agency) instituted or pending or, to the
knowledge of the Company, the Association or the MHC,
threatened relating to the liability of any property owned or
operated by the Company, the Association or the MHC under any
Environmental Law. 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.
(xxxv) The Company, the Association and the MHC have filed all
federal income and state and local 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.
(xxxvi) The Company has received approval, subject to issuance, to
have the Common Stock quoted on the Nasdaq Stock Market (the
"Nasdaq National Market") effective at the Closing Time
referred to in Section 2 hereof.
(xxxvii) The Company has filed a registration statement for the Common
Stock under Section 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act Registration Statement")
and has requested that such registration statement be declared
effective concurrently with the effectiveness of the
Registration Statement.
(b) Any certificate signed by any officer of the Company, the
Association or the MHC and delivered to either of the Agent or counsel for the
Agent shall be deemed a representation and warranty by the Company, the
Association or the MHC as to each of the matters covered thereby.
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SECTION 2. APPOINTMENT OF SANDLER O'NEILL; SALE AND DELIVERY OF THE SECURITIES;
CLOSING.
On the basis of the representations and warranties herein contained and
subject to the terms and conditions herein set forth, the Company hereby
appoints Sandler O'Neill as its Agent to consult with and advise the Company,
and to assist the Company with the solicitation of subscriptions and purchase
orders for Securities, in connection with the Company's sale of the Securities
in the Offering. On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, Sandler
O'Neill accepts such appointment and agrees to use its best efforts to assist
the Company with the solicitation of subscriptions and purchase orders for
Securities in accordance with this Agreement; provided, however, that the Agent
shall not be obligated to take any action which is inconsistent with any
applicable laws, regulations, decisions or orders. The services to be rendered
by Sandler O'Neill pursuant to this appointment include the following: (i)
consulting as to the securities marketing implications of any aspect of the Plan
or related corporate documents; (ii) reviewing with the Association's Board of
Directors the independent appraiser's appraisal of the Common Stock,
particularly with regard to aspects of the appraisal involving the methodology
employed; (iii) reviewing all offering documents, including the Prospectus,
stock order forms and related offering materials (it being understood that the
preparation and filing of such documents are the sole responsibility of the
Company, the Association and the MHC and their counsel); (iv) assisting in the
design and implementation of a marketing strategy for the Offerings; (v)
assisting in obtaining all requisite regulatory approvals (vi) assisting in
connection with listing the Company's common stock on the Nasdaq Stock Market
(vii) assisting Association management in preparing for meetings with potential
investors and broker-dealers; and (viii) providing such other general advice and
assistance as may be requested to promote the successful completion of the
Offerings.
The appointment of the Agent hereunder shall terminate upon the
earliest to occur of (a) forty-five (45) days after the last day of the
Subscription Offering, unless the Company and the Agent agree in writing to
extend such period and the OTS agree to extend the period of time in which the
Securities may be sold, (b) the receipt and acceptance of subscriptions and
purchase orders for all of the Securities or (c) the completion of the
syndicated community offering.
If any of the Securities remain available after the expiration of the
Subscription Offering and, if held, the community offering, at the request of
the Company, the Association and the MHC, the Agent will seek to form a
syndicate of registered brokers or dealers ("Selected Dealers") to assist in the
solicitation of purchase orders of such Securities on a best efforts basis,
subject to the terms and conditions set forth in a selected dealers' agreement
(the "Selected Dealers' Agreement"), in substantially the form set forth as
Exhibit A to this Agreement. The Agent will endeavor to limit the aggregate fees
to be paid by the Company, the Association and the MHC under any such Selected
Dealers' Agreement to an amount competitive with gross underwriting discounts
charged at such time for underwritings of comparable amounts of stock sold at a
comparable price per share in a similar market environment; provided, however,
that the aggregate fees payable to the Agent and Selected Dealers shall not
exceed 5% of the actual purchase price of the Securities sold by such Selected
Dealers. The Agent will endeavor to distribute the Securities among the Selected
Dealers in a fashion which best meets the distribution objectives of the
Company, the Association and the MHC and the requirements of the Plan and
applicable law, which may result in limiting the
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allocation of stock to certain Selected Dealers. It is understood that in no
event shall the Agent be obligated to act as a Selected Dealer or to take or
purchase any Securities.
In the event the Company is unable to sell at least the minimum number
of Securities, as disclosed on the cover of the Prospectus, within the period
herein provided, this Agreement shall terminate, and the Company shall refund to
any persons who have subscribed for any of the Securities the full amount which
it may have received from them, together with interest as provided in the
Prospectus, and no party to this Agreement shall have any obligation to the
others hereunder, except for the obligations of the Company and the Association
as set forth in Sections 4, 6(a) and 7 hereof and the obligations of the Agent
as set forth in Sections 6(b) and 7 hereof. Appropriate arrangements for placing
the funds received from subscriptions for Securities or other offers to purchase
Securities in special interest-bearing accounts with the Association until all
Securities are sold and paid for were made prior to the commencement of the
Offering, with provision for refund to the purchasers as set forth above, or for
delivery to the Company if all Securities are sold.
If at least the minimum number of Securities, as disclosed on the cover
of the Prospectus, are sold, the Company agrees to issue or have issued the
Securities sold and to release for delivery certificates for such Securities at
the Closing Time against payment therefor by release of funds from the special
interest-bearing accounts referred to above. The closing shall be held at the
offices of [_________________] at [____], [New York] time, or at such other
place and time as shall be agreed upon by the parties hereto, on a business day
to be agreed upon by the parties hereto. The Company shall notify the Agent by
telephone, confirmed in writing, when funds shall have been received for all the
Securities. Certificates for Securities shall be delivered directly to the
purchasers thereof according to the addresses specified in properly completed
Order Forms (as defined in the Prospectus). Notwithstanding the foregoing,
certificates for Securities purchased through Selected Dealers shall be made
available to the Agent for inspection at least 48 hours prior to the Closing
Time at such office as the Agent shall designate. The hour and date upon which
the Company shall release for delivery all of the Securities, in accordance with
the terms hereof, are herein called the "Closing Time."
The Company will pay any stock issue and transfer taxes which may be
payable with respect to the sale of the Securities.
In addition to reimbursement of the expenses specified in Section 4
hereof, the Agent will receive the following compensation for its services
hereunder:
(a) one and one-half percent (1.5%) of the aggregate Purchase Price (as
defined in the Prospectus) of the Securities sold in the Subscription Offering
and in the Community Offering, excluding in each case shares purchased by (i)
any employee benefit plan of the Association established for the benefit of
their respective directors, officers and employees, (ii) any director, officer
or employee of the Company, the Association or the MHC or members of their
immediate families (which term shall mean parents, grandparents, spouse,
siblings, children and grandchildren) or any partner or employee of the
Association's general counsel; and
(b) with respect to any Securities sold by an NASD member firm (other
than Sandler O'Neill) under the Selected Dealers' Agreement in the Syndicated
Community Offering, (i)
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the sales commission payable to Selected Dealers under any Selected Dealers'
Agreement, (ii) any sponsoring dealer's fees and (iii) a management fee to
Sandler O'Neill of one and one-half percent (1.5%) of the aggregate Purchase
Price of such Securities sold under such agreement. Any fees payable to Sandler
O'Neill for Securities sold by Sandler O'Neill under any such agreement shall be
limited to an aggregate of five percent (5%) of the aggregate Purchase Price of
such Securities.
If this Agreement is terminated by the Agent in accordance with the
provisions of Section 9(a) hereof or the Reorganization is terminated by the
Company, the Association or the MHC, no fees shall be payable by the Company,
the Association or the MHC to Sandler O'Neill; however, the Association shall
reimburse Sandler O'Neill for its reasonable out-of-pocket expenses incurred
prior to termination, including the reasonable fees and disbursements of counsel
for the Agent, in accordance with the provisions of Section 4 hereof.
All fees payable to the Agent hereunder shall be payable in immediately
available funds at Closing Time, or upon termination of this Agreement, as the
case may be. In recognition of the long lead times involved in the conversion
process, the Association agrees to make advance payments to the Agent in the
aggregate amount of $50,000, $20,000 of which was paid upon execution of the
engagement letter, dated April 14, 1998, and the remaining $30,000 of which
shall be payable upon commencement of the Subscription Offering, which shall be
credited against any fees or reimbursement of expenses payable under this
Section.
SECTION 3. COVENANTS OF THE COMPANY, THE ASSOCIATION AND THE MHC.
The Company, the Association and the MHC covenant with the Agent as
follows:
(a) The Company, the Association and the MHC will prepare and file such
amendments or supplements to the Registration Statement, the Prospectus, the
Reorganization Application and the Proxy Statement as may hereafter be required
by the 1933 Act Regulations or the Reorganization Regulations or as may
hereafter be reasonably requested by the Agent. Following completion of the
Offering, in the event of a Syndicated Community Offering, the Company, the
Association and the MHC will (i) promptly prepare and file with the Commission a
post-effective amendment to the Registration Statement relating to the results
of the Offering, any additional information with respect to the proposed plan of
distribution and any revised pricing information or (ii) if no such
post-effective amendment is required, will file with, or mail for filing to, the
Commission a prospectus or prospectus supplement containing information relating
to the results of the Offering and pricing information pursuant to Rule 424(c)
of the 1933 Act Regulations, in either case in a form acceptable to the Agent.
The Company, the Association and the MHC will notify the Agent immediately, and
confirm the notice in writing, (i) of the effectiveness of any post-effective
amendment of the Registration Statement, the filing of any supplement to the
Prospectus or the filing of any amendment to the Reorganization Application,
(ii) of the receipt of any comments from the OTS or the Commission with respect
to the transactions contemplated by this Agreement or the Plan, (iii) of any
request by the Commission or the OTS for any amendment to the Registration
Statement or the Reorganization Application or the Holding Company Application
or any amendment or supplement to the Prospectus or for additional information,
(iv) of the issuance by the OTS of any order suspending the Offerings or the use
of the Prospectus or the initiation of any proceedings for that purpose, (v) of
the issuance by the Commission of any stop order suspending
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the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, and (vi) of the receipt of any notice with respect
to the suspension of any qualification of the Securities for offering or sale in
any jurisdiction. The Company, the Association and the MHC will make every
reasonable effort to prevent the issuance of any stop order and, if any stop
order is issued, to obtain the lifting thereof at the earliest possible moment.
(b) The Company, the Association and the MHC will give the Agent notice
of its intention to file or prepare any amendment to the Reorganization
Application, Holding Company Application or Registration Statement (including
any post-effective amendment) or any amendment or supplement to the Prospectus
(including any revised prospectus which the Company proposes for use in
connection with the Syndicated Community Offering of the Securities 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 pursuant to Rule 424(b) of the 1933 Act Regulations),
will furnish the Agent with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case may
be, and will not file any such amendment or supplement or use any such
prospectus to which the Agent or counsel for the Agent may object.
(c) The Company, the Association and the MHC will deliver to the Agent
as many signed copies and as many conformed copies of the Conversion Application
and the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) as the
Agent may reasonably request, and from time to time such number of copies of the
Prospectus as the Agent may reasonably request.
(d) During the period when the Prospectus is required to be delivered,
the Company, the Association and the MHC will comply, at their own expense, with
all requirements imposed upon them by the OTS and the FDIC, by the applicable
Reorganization Regulations, as from time to time in force, and by the 1933 Act,
the 1933 Act Regulations, the Securities Exchange Act of 1934, as amended (the
"1934 Act") and the rules and regulations of the Commission promulgated
thereunder, including, without limitation, Regulation M under the 1934 Act, so
far as necessary to permit the continuance of sales or dealing in shares of
Common Stock during such period in accordance with the provisions hereof and the
Prospectus.
(e) If any event or circumstance shall occur as a result of which it is
necessary, in the opinion of counsel for the Agent, to amend or supplement the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, the Company,
the Association and the MHC will forthwith amend or supplement the Prospectus
(in form and substance satisfactory to counsel for the Agent) so that, as so
amended or supplemented, the Prospectus 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 existing at the time it is
delivered to a purchaser, not misleading, and the Company, the Association and
the MHC will furnish to the Agent a reasonable number of copies of such
amendment or supplement. For the purpose of this subsection, the Company, the
Association and the MHC will each furnish such information with respect to
itself as the Agent may from time to time reasonably request.
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(f) The Company, the Association and the MHC will take all necessary
action, in cooperation with the Agent, to qualify the Securities for offering
and sale under the applicable securities laws of such states of the United
States and other jurisdictions as the Reorganization Regulations may require and
as the Agent and the Company have agreed; provided, however, that neither the
Company, the Association nor the MHC shall be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. In each jurisdiction in which the
Securities have been so qualified, the Company, the Association and the MHC will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not less
than one year from the effective date of the Registration Statement.
(g) The Company authorizes Sandler O'Neill and any Selected Dealer to
act as agent of the Company in distributing the Prospectus to persons entitled
to receive subscription rights and other persons having record addresses in the
states or jurisdictions set forth in a survey of the securities or "blue sky"
laws of the various jurisdictions in which the Offerings will be made (the "Blue
Sky Survey").
(h) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning
not later than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration Statement.
(i) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to its stockholders as soon as
practicable after the end of each fiscal year in such period an annual report
(including consolidated statements of financial condition and consolidated
statements of income, stockholders' equity and cash flows of the Company, the
Association and the MHC, certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year in such period (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary financial
information of the Company, and the Association and the MHC for such quarter in
reasonable detail. In addition, such annual report and quarterly consolidated
summary financial information shall be made public through the issuance of
appropriate press releases at the same time or prior to the time of the
furnishing thereof to stockholders of the Company.
(j) During the period ending on the third anniversary of the expiration
of the fiscal year during which the closing of the transactions contemplated
hereby occurs, the Company will furnish to the Agent (i) as soon as available, a
copy of each report or other document of the Company furnished generally to
stockholders of the Company or 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 and (ii) from time to time, such other
information concerning the Company as the Agent may reasonably request.
(k) Each of the Company, the Association and the MHC will use the net
proceeds received by it from the sale of the Securities and the purchase of the
Common Stock by the
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Company, as the case may be, in the manner specified in the Prospectus under
"Use of Proceeds." The Company, the Association and the MHC will conduct the
Reorganization (including the formation and operation of the Charitable
Foundation) in all material respects in accordance with the Plan and, to the
extent not waived by the provisions of any order of the OTS, the Reorganization
Regulations and all other applicable regulations, decisions and orders
thereunder, including all applicable terms, requirements and conditions
precedent to the Reorganization imposed upon the Company, the Association or the
MHC by the FDIC or the OTS.
(l) The Company will maintain the effectiveness of such registration
for not less than three years. The Company will file with the Nasdaq Stock
Market, Inc. all documents and notices required by the Nasdaq Stock Market, Inc.
of companies that have issued securities that are traded in the over-the-counter
market and quotations for which are reported by the Nasdaq National Market.
(m) During the period beginning on the date hereof and ending on the
later of the third anniversary of the Closing Time or the date on which the
Agent receives full payment in satisfaction of any claim for indemnification or
contribution to which it may be entitled pursuant to Sections 6 or 7,
respectively, neither the Company, the Association nor the MHC shall, without
the prior written consent of the Agent, which consent shall not be unreasonably
withheld, take or permit to be taken any action that could result in any Company
Common Stock, Company Preferred Stock, Association Common Stock or Association
Preferred Stock, becoming subject to any security interest, mortgage, pledge,
lien or encumbrance; provided, however, that this covenant shall be null and
void if the Board of Governors of the Federal Reserve System, or any other
federal agency having jurisdiction over the Association, by regulation, policy
statement or general or specific interpretive release or letter, permits
indemnification of the Agent by the Association as contemplated by Section 6(a)
hereof.
(n) The Company, the Association and the MHC 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 National Association of Securities
Dealers, Inc.'s "Interpretation Relating to Free-Riding and Withholding."
(o) The Company, the Association or the MHC will furnish to Sandler
O'Neill as early as practicable prior to the Closing Date, but no later than two
(2) full business days prior thereto, a copy of the latest available unaudited
interim consolidated financial statements of the Association which have been
read by KPMG Peat Marwick LLP, as part of the procedures referred to in their
letters to be furnished pursuant to subsections (e) and (f) of Section 5 hereof.
(p) The Company, the Association and the MHC will comply with the
conditions imposed by or agreed to with the OTS in connection with its approval
of the Holding Company Application and the Reorganization Application including
those conditions relating to the establishment and the operation of the
Charitable Foundation; the Company, the Association and the MHC shall use their
best efforts to ensure that the Charitable Foundation submits within the time
frames required by applicable law a request to the Internal Revenue Service to
be recognized as a tax-exempt organization under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended (the "Code"); the Company, the
Association and the MHC will take no action which will result in
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the possible loss of the Charitable Foundation's tax-exempt status; and neither
the Company, the Association nor the MHC will contribute any additional assets
to the Charitable Foundation until such time that such additional contributions
will be deductible for federal and state income tax purposes.
(q) During the period ending on the first anniversary of the Closing
Time, the Association will comply with all applicable law and regulation
necessary for the Association to continue to be a "qualified thrift lender"
within the meaning of 12 U.S.C. Section 1467a(m).
(r) Other than in connection with any employee benefit plan or
arrangement described in the Prospectus, the Company will not, without the prior
written consent of the Agent, sell or issue, contract to sell or otherwise
dispose of, any shares of Common Stock other than the Securities or the
Charitable Foundation Shares for a period of 180 days following the Closing
Time.
SECTION 4. PAYMENT OF EXPENSES.
The Company, the Association and the MHC jointly and severally agree to
pay all expenses incident to the performance of their obligations under this
Agreement, including, but not limited to, (i) the cost of obtaining all
securities and bank regulatory approvals, (ii) the printing and filing of the
Registration Statement and the Reorganization Application as originally filed
and of each amendment thereto, (iii) the preparation, issuance and delivery of
the certificates for the Securities to the purchasers in the Offerings, (iv) the
fees and disbursements of the Company's, the Association's and the MHC's
counsel, accountants, conversion agent, appraiser and other advisors, (v) the
qualification of the Securities under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the fees and
disbursements of counsel in connection therewith and in connection with the
preparation of the Blue Sky Survey, (vi) the printing and delivery to the Agent
of copies of the Registration Statement as originally filed and of each
amendment thereto and the printing and delivery of the Prospectus and any
amendments or supplements thereto to the purchasers in the Offerings and the
Agent, (vii) the printing and delivery to the Agent of copies of a Blue Sky
Survey and (viii) the fees and expenses incurred in connection with the listing
of the Common Stock on the Nasdaq Stock Market. In the event the Agent incurs
any such fees and expenses on behalf of the Association, the Company or the MHC,
the Association will reimburse the Agent for such fees and expenses whether or
not the Reorganization is consummated; provided, however, that the Agent shall
not incur any substantial expenses on behalf of the Association, the Company or
the MHC pursuant to this Section without the prior approval of the Association,
the Company or the MHC.
The Company, the Association and the MHC jointly and severally agree to
pay certain expenses incident to the performance of the Agent's obligations
under this Agreement, including (i) all reasonable out-of-pocket expenses
incurred by the Agent relating to the Offerings, including, without limitation,
advertising, promotional, syndication and travel expenses and fees and expenses
of the Agent's counsel (up to a maximum of $45,000), provided, however, that
Sandler O'Neill shall document such expenses to the reasonable satisfaction of
the Association; and (ii) the filing fees paid or incurred by the Agent in
connection with all filings with the National Association of Securities Dealers,
Inc. All fees and expenses to which the Agent is entitled to reimbursement under
this paragraph of this Section 4 shall be due and payable upon receipt by the
Company, the Association
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or the MHC of a written accounting therefor setting forth in reasonable detail
the expenses incurred by the Agent.
SECTION 5. CONDITIONS OF AGENT'S OBLIGATIONS.
The Company, the Association, the MHC and the Agent agree that the
issuance and sale of the Securities and all obligations of the Agent hereunder
are subject to the accuracy of the representations and warranties of the
Company, the Association and the MHC herein contained as of the date hereof and
the Closing Time, to the accuracy of the statements of officers and directors of
the Company, the Association and the MHC made pursuant to the provisions hereof,
to the performance by the Company, the Association and the MHC of their
obligations hereunder and to the following further conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, no order suspending the Offerings or
authorization for final use of the Prospectus shall have been issued or
proceedings therefor initiated or threatened by the OTS and no order suspending
the sale of the Securities in any jurisdiction shall have been issued.
(b) At Closing Time, the Agent shall have received:
(1) The favorable opinion, dated as of Closing Time, of
Luse Lehman Gorman Pomerenk & Schick, P.C., special
counsel for the Company, the Association and the MHC,
in form and substance satisfactory to counsel for the
Agent, to the effect that:
(i) The Company has been duly incorporated and is validly existing
as a federal stock corporation under the laws of the United
States; the MHC has been duly incorporated and is validly
existing as a federally-chartered mutual corporation under the
laws of the United States.
(ii) Each of the MHC and the Company 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 to enter into and perform its
obligations under this Agreement.
(iii) Each of the MHC and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in
the State of New York 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 be so qualified would not have a
material adverse effect upon the financial condition, results
of operations or business of the Company, the Association and
the MHC, taken as a whole.
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(iv) Upon consummation of the Reorganization and the issuance of
Charitable Foundation Shares to the Charitable Foundation
immediately upon completion thereof, subject to compliance
with all conditions imposed upon the formation and
contribution thereof by the OTS under the terms of any written
notice or order of approval of the Reorganization Application
or the Holding Company Application, in an amount as described
in the Prospectus, the authorized, issued and outstanding
capital stock of the Company will be within the range as set
forth in the Prospectus under "Capitalization," and no shares
of Common Stock have been issued and outstanding prior to the
Closing Time.
(v) The Securities and the Charitable Foundation Shares have been
duly and validly authorized for issuance and sale and, when
issued and delivered by the Company pursuant to the Plan
against payment of the consideration calculated as set forth
in the Plan, or contributed by the Company pursuant to the
Plan in the case of the Charitable Foundation Shares, will be
duly and validly issued and fully paid and non-assessable.
(vi) The issuance of the Securities and the Charitable Foundation
Shares is not subject to preemptive or other similar rights
arising by operation of law or, to the best of such counsel's
knowledge, otherwise.
(vii) The Association has been at all times since the date hereof
and prior to the Closing Time organized, and is validly
existing as a federal stock savings association under the laws
of the United States, and, at Closing Time, has become duly
organized and validly existing as a federal stock savings
association, in both instances with full corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement and the Prospectus; and the Association is duly
qualified as a foreign corporation 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 upon the financial condition, results
of operations or business of the Association.
(viii) The deposit accounts of the Association are insured by the
FDIC up to the applicable limits.
(ix) The Charitable Foundation has been duly incorporated and is
validly existing as a non-stock corporation in good standing
under the laws of the State of Delaware with corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus; the
Charitable Foundation is not a savings and loan holding
company within the meaning of 12 C.F.R. Section 574.2(q) as a
result of the issuance of shares of Common Stock to it in
accordance with the terms of the Plan and in the amounts as
described in the Prospectus; no approvals
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are required to establish the Charitable Foundation and to
contribute the shares of Common Stock thereto as described in
the Prospectus other than those set forth in any written
notice or order of approval or non-objection of the
Reorganization, Reorganization Application or the Holding
Company Application copies of which were provided to the Agent
prior to the Closing Time.
(x) Upon consummation of the Reorganization, all of the issued and
outstanding capital stock of the Association will be duly
authorized and validly issued and fully paid and
nonassessable, and all such capital stock will be owned by the
Company free and clear of any security interest, mortgage,
pledge, lien, encumbrance or claim.
(xi) The OTS has approved the Holding Company Application and the
Reorganization Application, and no action is pending or, to
the best of such counsel's knowledge, threatened respecting
the Holding Company Application or the Reorganization
Application (including therewith, the establishment of the
Charitable Foundation and the contribution of shares of Common
Stock thereto) or the acquisition by the Company of all of the
Association's issued and outstanding capital stock; the
Holding Company Application complies as to form in all
material respects with the applicable requirements of the OTS,
and the Reorganization Application complies as to form in all
material respects with the applicable requirements of the OTS,
except as compliance therewith is specifically waived in
writing by the OTS, as the case may be, and, to the best of
such counsel's knowledge, include all documents required to be
filed as exhibits thereto and are complete as to form in all
material respects, excluding the Prospectus and any related
marketing materials filed as a part of the Holding Company
Application or the Reorganization Application as to which no
opinion need be given; the Company is duly authorized to
become a federal stock corporation and is duly authorized to
own all of the issued and outstanding capital stock of the
Association to be issued pursuant to the Plan; the MHC is duly
authorized to be a federal mutual holding company, and the MHC
is duly authorized to own a majority of the issued and
outstanding capital stock of the Company.
(xii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby,
including the establishment of the Charitable Foundation and
the contribution thereto of the Charitable Foundation Shares,
(A) have been duly and validly authorized by all necessary
action on the part of each of the Company, the Association and
the MHC, and this Agreement constitutes the legal, valid and
binding agreement of each of the Company, the Association and
the MHC, enforceable in accordance with its terms, except as
rights to indemnity and contribution hereunder may be limited
under applicable law (it being understood that such counsel
may avail itself of customary exceptions
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concerning the effect of bankruptcy, insolvency or similar
laws and the availability of equitable remedies), (B) will not
conflict with or constitute a breach of, or default under, and
no default exists and no event has occurred which, with notice
or lapse of time or both, would constitute a default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the
Association or the MHC pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to
which the Company, the Association or the MHC is a party or by
which any of them may be bound, or to which any of the
property or assets of the Company, the Association or the MHC
is subject that, individually or in the aggregate, would have
a material adverse effect on the financial condition, results
of operations or business of the Company, the Association and
the MHC, taken as a whole, and (C) will not result in any
violation of the provisions of the certificate of
incorporation, organization certificate, articles of
incorporation or charter, as the case may be, or bylaws of the
Company, the Association or the MHC.
(xiii) The Prospectus has been duly authorized by the OTS for final
use pursuant to the Reorganization Regulations, and no action
has been taken or is pending, or, to the best of such
counsel's knowledge, threatened, by the OTS to revoke such
authorization.
(xiv) The Registration Statement is effective under the 1933 Act,
and, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings therefore
initiated or, to the best of such counsel's knowledge,
threatened by the Commission.
(xv) No further approval, authorization, consent or other order of
any public board or body is required in connection with the
execution and delivery of this Agreement, the issuance of the
Securities and the Charitable Foundation Shares and the
consummation of the Reorganization, except as may be required
under the securities or Blue Sky laws of various jurisdictions
as to which no opinion need be rendered.
(xvi) At the time the Registration Statement became effective, the
Registration Statement (except for the appraisal, financial
statements and schedules and other financial or statistical
data included therein, as to which counsel need make no
statement) complied as to form in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations
and the Reorganization Regulations.
(xvii) The Common Stock conforms to the description thereof contained
in the Prospectus, and the form of certificate used to
evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
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(xviii) There are no legal or governmental proceedings pending or
threatened against or affecting the Company, the Association,
the MHC or the Charitable Foundation which are required,
individually or in the aggregate, to be disclosed in the
Registration Statement and Prospectus, other than those
disclosed therein, and all pending legal or governmental
proceedings to which the Company, the Association or the MHC
is a party or to which any of their property is subject which
are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, are,
considered in the aggregate, not material.
(xix) The information in the Prospectus under "RISK FACTORS"
BUSINESS OF THE ASSOCIATION - Legal Proceedings," "TAXATION,"
"REGULATION," "THE REORGANIZATION AND OFFERING - Establishment
of the Charitable Foundation," "- [Effects of Conversion]," "-
[Liquidation Rights]" and "- Tax Considerations,"
"RESTRICTIONS ON THE ACQUISITION OF THE COMPANY," "DESCRIPTION
OF CAPITAL STOCK," to the extent that it constitutes matters
of law, summaries of legal matters, documents or proceedings,
or legal conclusions, has been reviewed by them and is
complete and accurate in all material respects and to the
extent it constitutes summaries of written legal opinions
rendered by a person or entity other than such counsel, has
been reviewed by such counsel and is a complete and accurate
summary of such opinions in all material respects.
(xx) To the best of such counsel's knowledge, there are no
contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto, and the descriptions
thereof or references thereto are correct.
(xxi) The Plan has been duly authorized by the Boards of Directors
of the Company, the Association and the MHC and the OTS's
approval of the Plan remains in full force and effect; the
Association's charter has been amended and restated, effective
upon consummation of the Reorganization and the filing of such
amended and restated charter with the OTS, to authorize the
issuance of permanent capital stock; to the best of such
counsel's knowledge, the Company, the Association and the MHC
have conducted the Reorganization and the establishment and
funding of the Charitable Foundation in all material respects
in accordance with applicable requirements of the
Reorganization Regulations (except as compliance therewith is
specifically waived in writing by the OTS as the case may be),
the Plan and all other applicable regulations, decisions and
orders thereunder, including all material applicable terms,
conditions, requirements and conditions precedent to the
Reorganization imposed upon the Company or the Association by
the OTS, and no order has been issued
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by the OTS to suspend the Reorganization or the Offerings, and
no action for such purpose has been instituted or, to the best
of such counsel's knowledge, threatened by the OTS; and, to
the best of such counsel's knowledge, no person has sought to
obtain review of the final action of the OTS in approving the
Reorganization Application (which includes the Plan which
provides for the establishment of the Charitable Foundation)
or of the OTS in approving the Holding Company Application.
(xxii) To the best of such counsel's knowledge, the Company, the
Association and the MHC have obtained all licenses, permits
and other governmental authorizations currently required for
the conduct of their respective businesses as described in the
Registration Statement and Prospectus, except for such
licenses, approvals or authorizations the failure of which to
have would not result in a material adverse change in the
financial condition, results of operations or the business of
the Company, the Association and the MHC, taken as a whole,
all such licenses, permits and other governmental
authorizations are in full force and effect, and the Company,
the Association and the MHC are in all material respects
complying therewith.
(xxiii) Neither the Company, the Association nor the MHC is in
violation of its certificate of incorporation, organization
certificate, articles of incorporation or charter, as the case
may be, or bylaws (and the Association will not be in
violation of its organization certificate and bylaws in stock
form upon consummation of the Reorganization); and to the best
of such counsel's knowledge, the Company, the Association and
the MHC are not 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 Association or the MHC is
a party or by which the Company, the Association or the MHC or
any of their property may be bound in any respect that would
have a material adverse effect upon the financial condition,
results of operations or business of the Company, the
Association and the MHC taken as a whole.
(2) The favorable opinion, dated as of Closing Time, of Thacher
Proffitt & Wood, counsel for the Agent, with respect to the
matters set forth in Section 5(b)(1)(i), (iv), (v), (vi)
(solely as to preemptive rights arising by operation of law),
(xvii) and (xviii) and such other matters as the Agent may
reasonably require.
(3) In giving their opinions required by subsections (b)(l) and
(b)(2), respectively, of this Section, Luse Lehman Gorman
Pomerenk & Schick, P.C. and Thacher Proffitt & Wood shall each
additionally state that nothing has come to their attention
that would lead them to believe that the
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Registration Statement (except for the appraisal, financial
statements and schedules and other financial or statistical
data included therein, as to which counsel need make no
statement), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading or that the
Prospectus (except for the appraisal, financial statements and
schedules and other financial or statistical data included
therein, as to which counsel need make no statement), at the
time the Registration Statement became effective or at Closing
Time, included an untrue statement of a material fact or
omitted 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. In giving their
opinions, Luse Lehman Gorman Pomerenk & Schick, P.C. and
Thacher Proffitt & Wood may rely as to matters of fact on
certificates of officers and directors of the Company, the
Association and the MHC and certificates of public officials,
and as to matters of Delaware law upon the opinion of
[___________], which opinions shall be in form and substance
satisfactory to the Agent, and Thacher Proffitt & Wood may
state that they have not independently verified the
information with respect to the Company, the MHC and the
Association contained in the Registration Statement, the
Prospectus and the Reorganization Application and may also
rely as to certain matters on the opinion of Luse Lehman
Gorman Pomerenk & Schick, P.C.
(c) At the Closing Time referred to in Section 2, the Company, the
Association and the MHC will have completed in all material respects the
conditions precedent to the Reorganization in accordance with the Plan, the
applicable Reorganization Regulations and all other applicable laws,
regulations, decisions and orders, including all terms, conditions, requirements
and provisions precedent to the Reorganization imposed upon the Company, the
Association or the MHC by the OTS, or any other regulatory authority other than
those which the OTS permit to be completed after the Reorganization.
(d) At the Closing Time, there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
financial condition, results of operations or business of the Company, the
Association and the MHC, taken as a whole, whether or not arising in the
ordinary course of business, and the Agent shall have received a certificate of
the Chief Executive Officer and President of the Company and of the Association
and the chief financial or chief accounting officer of the Company, the
Association and the MHC, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, (ii) there has been no material
transaction entered into by the Company, the Association or the MHC from the
latest statement of financial condition of the Company, the Association or the
MHC as set forth in the Registration Statement and the Prospectus other than
transactions referred to or contemplated therein and transactions in the
ordinary course of business, (iii) neither the Company, the Association nor the
MHC has received from the OTS any direction (oral or written) to make any
material change in the method of conducting its business with which it has not
complied (which direction, if any, shall have
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been disclosed to the Agent) or which materially and adversely would affect the
financial condition, results of operations or business of the Company, the
Association and the MHC, taken as a whole, (iv) the representations and
warranties in Section 1 hereof are true and correct with the same force and
effect as though expressly made at and as of the Closing Time, (v) the Company,
the Association and the MHC have complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to Closing
Time, (vi) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission and (vii) no order suspending the
Offerings or the authorization for final use of the Prospectus has been issued
and no proceedings for that purpose have been initiated or threatened by the OTS
and no person has sought to obtain regulatory or judicial review of the action
of the OTS in approving the Plan in accordance with the Reorganization
Regulations, nor has any person sought to obtain regulatory or judicial review
of the action of the OTS in approving the Holding Company Application.
(e) At the time of the execution of this Agreement, the Agent shall
have received from KPMG Peat Marwick LLP a letter (the "Comfort Letter") dated
such date, in form and substance satisfactory to the Agent, to the effect that
(i) they are independent certified public accountants with respect to the
Company, the Association and the MHC within the meaning of the Code of Ethics of
the American Institute of Certified Public Accountants, the 1933 Act, the rules
and regulations adopted by the SEC and the Reorganization Regulations; (ii) it
is their opinion that the financial statements and supporting schedules included
in the Prospectus and covered by their opinion therein comply as to form in all
material respects with the applicable accounting requirements of the 1933 Act,
the related rules and regulations adopted by the SEC and the Reorganization
Regulations; (iii) based upon limited procedures as agreed upon by the Agent and
KPMG Peat Marwick LLP and set forth in detail in such letter, nothing has come
to their attention which causes them to believe that (A) the unaudited financial
statements and supporting schedules of the Company, the Association and the MHC
included in the Prospectus do not comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act, the 1933 Act
Regulations and the Reorganization Regulations or are not presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements included
in the Prospectus, (B) the unaudited amounts included under the captions
"Selected Consolidated Financial and Other Data of the Bank" and "Recent
Developments" in the Prospectus do not agree with the amounts set forth in the
unaudited consolidated financial statements as of and for the dates and periods
presented under such captions or such unaudited amounts were not determined on a
basis substantially consistent with that used in determining the corresponding
amounts in the audited financial statements included in the Prospectus, (C) at a
specified date not more than five days prior to the date of this Agreement,
there has been any increase in the consolidated long term or short term debt of
the Association or any decrease in consolidated total assets, allowance for loan
losses, total deposits or retained earnings of the Association, in each case as
compared with the amounts shown in the [March 31, 1998] balance sheet included
in the Registration Statement or, (D) during the period from [March 31, 1998] to
a specified date not more than five days prior to the date of this Agreement,
there was any increase in borrowings or decrease, as compared with the
corresponding amounts shown in the March 31, 1998 balance sheet included in the
Prospectus, in the Association's total assets, allowance for loan losses, total
deposits or total equity and (iv) in addition to the examination referred to in
their opinion and the limited procedures referred to in clause (iii) above, they
have carried out certain specified
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procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information which are included in the Prospectus and
which are specified by the Agent and have found such amounts, percentages and
financial information to be in agreement with the relevant accounting, financial
and other records of the Company, the Association and the MHC identified in such
letter.
(f) At Closing Time, the Agent shall have received from KPMG Peat
Marwick LLP a letter, dated as of Closing Time, to the effect that they reaffirm
their statements made in the letter furnished pursuant to subsection (e) of this
Section, except that the specified date referred to shall be a date not more
than five days prior to Closing Time.
(g) At Closing Time, the Common Stock shall have been approved for
listing on the Nasdaq Stock Market upon notice of issuance.
(h) At Closing Time, the Agent shall have received a letter from
FinPro, dated as of the Closing Time, confirming its appraisal.
(i) At Closing Time, counsel for the Agent shall have been furnished
with such documents and opinions as they may require for the purpose of enabling
them to pass upon the issuance and sale of the Securities and the Charitable
Foundation Shares as herein contemplated and related proceedings, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company in connection with the issuance and sale of the Securities
and the Charitable Foundation Shares as herein contemplated shall be
satisfactory in form and substance to the Agent and counsel for the Agent.
(j) At any time prior to Closing Time, (i) there shall not have
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effects of which, in the judgment of the Agent, are
so material and adverse as to make it impracticable to market the Securities or
to enforce contracts, including subscriptions or orders, for the sale of the
Securities, and (ii) trading generally on either the American Stock Exchange or
the New York Stock Exchange or the Nasdaq Stock Market shall not have been
suspended, and minimum or maximum prices for trading shall not have been fixed,
or maximum ranges for prices for securities have been required, by either of
said Exchanges or the Nasdaq Stock Market or by order of the Commission or any
other governmental authority, and a banking moratorium shall not have been
declared by either Federal or New York authorities.
SECTION 6. INDEMNIFICATION.
(a) The Company, the Association and the MHC, jointly and severally,
agree to indemnify and hold harmless the Agent, each person, if any, who
controls the Agent, within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act, and its respective partners, directors, officers, employees
and agents as follows:
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(i) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, related to or arising out
of the Reorganization (including the establishment of the
Charitable Foundation and the contribution of the Charitable
Foundation Shares thereto by the Company) or any action taken
by the Agent where acting as agent of the Company, the
Association and the MHC or otherwise as described in Section 2
hereof;
(ii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, based upon or arising out
of any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Proxy Statement
or the Prospectus (or any amendment or supplement thereto) or
the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;
(iii) from and against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
described in clauses (i) or (ii) above, if such settlement is
effected with the written consent of the Company, the
Association or the MHC, which consent shall not be
unreasonably withheld; and
(iv) from and against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the fees and
disbursements of counsel chosen by the Agent), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation, proceeding or inquiry by any
governmental agency or body, commenced or threatened, or any
pending or threatened claim whatsoever described in clauses
(i) or (ii) above, to the extent that any such expense is not
paid under (i), (ii) or (iii) above;
provided, however, that the indemnification provided for in this paragraph (a)
shall not apply to any loss, liability, claim, damage or expense (i) to the
extent arising out of any untrue statement or alleged untrue statement of a
material fact or omission or alleged omission of a material fact required to be
stated therein or necessary to make not misleading any statements contained in
the Prospectus (or any amendment or supplement thereto) made in reliance upon
and in conformity with the Agent Information or (ii) found in a final judgement
by a court of competent jurisdiction to have resulted primarily from bad faith,
willful misconduct or gross negligence of the Agent seeking indemnification
hereunder. Notwithstanding the foregoing, the indemnification provided for in
this paragraph (a) shall not apply to the Association to the extent that such
indemnification by the Association in the event that it is found in a final
judgment by a court of competent jurisdiction to constitute an impermissible
covered transaction under Section 23A of the Federal Reserve Act, as amended.
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(b) The Agent agrees to indemnify and hold harmless the Company, the
Association, the MHC, their directors and trustees, each of their officers who
signed the Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (a) of this Section, as
incurred, but only with respect to untrue statements or alleged untrue
statements of a material fact or omissions or alleged omissions of a material
fact, made in the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with the Agent Information.
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action. In no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel (in addition to no more than one local counsel
in each separate jurisdiction in which any action or proceeding is commenced)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
(d) The Company, the Association and the MHC also agree that the Agent
shall not have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Association, the Company, the MHC, its security holders or the
Association's or the Company's or the MHC's creditors relating to or arising out
of the engagement of the Agent pursuant to, or the performance by the Agent of
the services contemplated by, this Agreement, except to the extent that any
loss, claim, damage or liability is found in a final judgment by a court of
competent jurisdiction to have resulted primarily from the Agent's bad faith,
willful misconduct or gross negligence.
(e) In addition to, and without limiting, the provisions of Section
6(a)(iv) hereof, in the event that the Agent, any person, if any, who controls
the Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act or any of its partners, directors, officers, employees or agents is
requested or required to appear as a witness or otherwise gives testimony in any
action, proceeding, investigation or inquiry brought by or on behalf of or
against the Company, the Association, the MHC, the Agent or any of its
respective affiliates or any participant in the transactions contemplated hereby
in which the Agent or such person or agent is not named as a defendant or the
subject of an investigation or inquiry, the Company, the Association and the MHC
jointly and severally agree to reimburse the Agent for all reasonable and
necessary out-of-pocket expenses incurred by it in connection with preparing or
appearing as a witness or otherwise giving testimony and to compensate the Agent
in an amount to be mutually agreed upon.
SECTION 7. CONTRIBUTION.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 6 hereof
is for any reason held to be unenforce able by the indemnified parties although
applicable in accordance with its terms, the Company, the Association, the MHC
and the Agent shall contribute to the aggregate losses, liabilities, claims,
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damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company, the Association or the MHC and the Agent, as incurred,
in such proportions (i) that the Agent is responsible for that portion
represented by the percentage that the maximum aggregate marketing fees
appearing on the cover page of the Prospectus bears to the maximum aggregate
gross proceeds appearing thereon and the Company, the Association and the MHC
are jointly and severally responsible for the balance or (ii) if, but only if,
the allocation provided for in clause (i) is for any reason held unenforceable,
in such proportion as is appropriate to reflect not only the relative benefits
to the Company, the Association and the MHC on the one hand and the Agent on the
other, as reflected in clause (i), but also the relative fault of the Company,
the Association and the MHC on the one hand and the Agent on the other, as well
as any other relevant equitable considerations; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person, if any, who controls the Agent within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Agent, and each director of the Company, the Association and
the MHC, each officer of the Company who signed the Registration Statement and
each person, if any, who controls the Company, the Association or the MHC within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company, the Association and the
MHC. Notwithstanding anything to the contrary set forth herein, to the extent
permitted by applicable law, in no event shall the Agent be required to
contribute an aggregate amount in excess of the aggregate marketing fees to
which the Agent is entitled and actually paid pursuant to this Agreement.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company, the
Association or the MHC submitted pursuant hereto, shall remain operative and in
full force and effect, regardless of any investigation made by or on behalf of
the Agent or any controlling person, or by or on behalf of the Company, and
shall survive delivery of the Securities.
SECTION 9. TERMINATION OF AGREEMENT.
(a) The Agent may terminate this Agreement, by notice to the Company,
at any time at or prior to Closing Time (i) if there has been, since the date of
this Agreement or since the respective dates as of which information is given in
the Registration Statement, any material adverse change in the financial
condition, results of operations or business of the Company, the Association or
the MHC, or of the Company, the Association and the MHC, taken as a whole,
whether or not arising in the ordinary course of business; (ii) if there has
occurred any material adverse change in the financial markets in the United
States or elsewhere or any outbreak of hostilities or escalation thereof or
other calamity or crisis the effects of which, in the judgment of the Agent, are
so material and adverse as to make it impracticable to market the Securities or
to enforce contracts, including subscriptions or orders, for the sale of the
Securities; (iii) if trading generally on either the Nasdaq Stock Market or the
New York Stock Exchange has been suspended, or minimum or maximum
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prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by either of said Exchanges or by order of the Commission or
any other governmental authority, or if a banking moratorium has been declared
by either Federal or New York authorities; (iv) if any condition specified in
Section 5 shall not have been fulfilled when and as required to be fulfilled;
(v) if there shall have been such material adverse change in the condition or
prospects of the Company, the Association or the MHC or the prospective market
for the Company's securities as in the Agent's good faith opinion would make it
inadvisable to proceed with the offering, sale or delivery of the Securities;
(vi) if, in the Agent's good faith opinion, the price for the Securities
established by FinPro is not reasonable or equitable under then prevailing
market conditions; or (vii) if the Reorganization is not consummated prior to
[December 31], 1998.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party except
that the provisions of Section 4 relating to reimbursement of expenses and the
provisions of Sections 6 and 7 hereof shall survive any termination of this
Agreement.
SECTION 10. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Agent shall be directed to the Agent
at Two World Trade Center, 104th Floor, New York, New York 10048, attention of
Catherine A. Lawton, Principal, with a copy to Robert C. Azarow, Esq., Thacher
Proffitt & Wood at Two World Trade Center, 38th Floor, New York, New York 10048;
notices to the Company, the Association and the MHC shall be directed to either
of them at 300 Mamaroneck Avenue, Mamaroneck, NY 10543, attention of Richard P.
McStravick, President and Chief Executive Officer, with a copy to Alan Schick,
Esq., Luse Lehman Gorman Pomerenk & Schick, 5335 Wisconsin Avenue, N.W. Suite
400, Washington, D.C. 20015.
SECTION 11. PARTIES.
This Agreement shall inure to the benefit of and be binding upon the
Agent, the Company, the Association and the MHC and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Agent, the
Company, the Association and the MHC and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the Agent, the
Company, the Association and the MHC and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation.
SECTION 12. ENTIRE AGREEMENT; AMENDMENT.
This Agreement represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and supersedes any
and all other oral or written
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agreements heretofore made, except for the engagement letter, dated April 14,
1998, by and between the Agent and the Association, relating to the Agent's
providing conversion agent services and proxy solicitation services to the
Company, the Association and the MHC in connection with the Reorganization,
which engagement letter shall be governed solely by its terms. No waiver,
amendment or other modification of this Agreement shall be effective unless in
writing and signed by the parties hereto.
SECTION 13. GOVERNING LAW AND TIME.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to agreements made and to be
performed in said State without regard to the conflicts of laws provisions
thereof. Specified times of day refer to Eastern time.
SECTION 14. SEVERABILITY.
Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broad as is enforceable.
SECTION 15. HEADINGS.
Sections headings are not to be considered part of this Agreement, are
for convenience and reference only and are not to be deemed to be full or
accurate descriptions of the contents of any paragraph or subparagraph.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Agent, the Company, the Association and the MHC in accordance with
its terms.
Very truly yours,
SOUND FEDERAL SAVINGS AND LOAN ASSOCIATION
By:__________________________________________________
Richard P. McStravick
President and Chief Executive Officer
SOUND FEDERAL BANCORP
By:__________________________________________________
Richard P. McStravick
President and Chief Executive Officer
SOUND FEDERAL, MHC
By:__________________________________________________
Richard P. McStravick
President and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANDLER O'NEILL & PARTNERS, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By:__________________________________
Catherine A. Lawton
Vice President
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