SOUND FEDERAL BANCORP
(a Delaware corporation)
6,765, 910 Shares
(Subject to an Increase Up to 7,788,737 Shares)
COMMON SHARES
(Par Value $0.01 Per Share)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
November __, 2002
Keefe, Bruyette & Woods, Inc.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
Sound Federal Bancorp, a newly formed Delaware corporation (the
"Company"), Sound Federal, MHC, a federally chartered mutual holding company
(the "MHC"), Sound Federal Bancorp, a federally chartered stock holding
corporation (the "Mid-Tier Holding Company"), and Sound Federal Savings & Loan
Association, a federally chartered stock savings bank (the "Bank"), hereby
confirm, jointly and severally, their agreement with Keefe, Bruyette & Woods,
Inc. ("KBW" or the "Agent"), as follows:
SECTION 1. THE OFFERING. In accordance with a Plan of Conversion and
Reorganization and Plan of Reorganization (the "Plan" or "Plan of Conversion")
adopted by the Boards of Directors of the MHC, the Mid-Tier Holding Company and
the Bank, the MHC will convert from a federally chartered mutual holding company
to a Delaware-chartered stock corporation. As part of the Plan, the following
steps will be effectuated: (i) the Bank's establishment of the Company as a
Delaware-chartered corporation; (ii) the conversion of the MHC to an interim
federal stock savings bank ("Interim One"); (iii) the conversion of the MHC's
subsidiary stock holding company, the Mid-Tier Holding Company, to an interim
federal stock savings bank ("Interim Two") and its simultaneous merger with and
into the Bank; (iv) the merger of Interim One (formerly the MHC) with and into
the Bank, whereupon the outstanding common stock of the Mid-Tier Holding Company
held by the MHC will be cancelled; (v) the establishment by the Company of a
third interim federal stock savings bank ("Interim Three"); (vi) the merger of
Interim Three with and into the Bank, with the Bank as the surviving entity; and
(vii) the sale and exchange of the Common Shares (as herein defined) of the
Company pursuant to the Plan of Conversion and Office of Thrift Supervision (the
"OTS") regulations. As a result of the merger
of Interim Three with and into the Bank, the Bank will become a wholly owned
subsidiary of the Company. The outstanding shares of common stock par value per
share $0.10 of the Mid-Tier Holding Company ("Mid-Tier Holding Company Common
Stock") by persons other than the MHC will be converted into the Common Shares
of the Company pursuant to an exchange ratio as defined in the Plan, which will
result in the holders of such shares receiving and owning in the aggregate
approximately the same percentage of the Common Shares to be outstanding upon
the completion of the Conversion (as herein defined) as the percentage of
Mid-Tier Holding Company Common Stock owned by them in the aggregate immediately
prior to the consummation of the conversion.
Pursuant to the Plan, the Company will offer and sell up to 6,765,910 of
its Common Shares, in a subscription offering (the "Subscription Offering") to:
(1) depositors of the Bank with Qualifying Deposits, as defined in the Plan, as
of May 31, 2001 ("Eligible Account Holders"); (2) Tax-Qualified Employee Stock
Benefit Plan of the Bank (as defined in the Plan); (3) depositors of the Bank
with Qualifying Deposits as of September 30, 2002 ("Supplemental Eligible
Account Holders"); and (4) Voting Members, as defined in the Plan, who are not
an Eligible Account Holders or a Supplemental Eligible Account Holders ("Other
Members"). The Common Shares to be sold by the Company in the Offering (as
defined below) are hereinafter called the "Shares." Subject to the prior
subscription rights of the above-listed parties, the Company is offering for
sale in a direct community offering (the "Community Offering," or "Direct
Community Offering," and when referred to together with the Subscription
Offering, the "Subscription and Community Offering") which may be commenced
concurrently with, during, or after the Subscription Offering, the Shares not
subscribed for or ordered in the Subscription Offering to members of the general
public to whom a copy of the Prospectus (as hereinafter defined) is delivered
with a preference given to natural persons residing in the New York counties of
Westchester, Rockland and Putnam and the Connecticut county of Fairfield
("Preferred Subscribers"). It is anticipated that shares not subscribed for in
the Subscription and Community Offering will be offered to certain members of
the general public on a best efforts basis through a selected dealers agreement
(the "Syndicated Community Offering") (the Subscription Offering, Community
Offering and Syndicated Community Offering are collectively referred to as the
"Offering"). It is acknowledged that the purchase of Shares in the Offering is
subject to the maximum and minimum purchase limitations as described in the Plan
and that the Company may reject, in whole or in part, any orders received in the
Community Offering or Syndicated Community Offering. Collectively, these
transactions are referred to herein as the "Conversion."
The Company has filed with the United States Securities and Exchange
Commission (the "SEC") a registration statement on Form S-1 (File No. _________)
(the "Registration Statement") containing a prospectus relating to the Offering
for the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof and such amended prospectuses as
may have been required to the date hereof. The term "Registration Statement"
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the SEC at the time the Registration
Statement initially became effective is hereinafter called the "Prospectus,"
except that if any Prospectus is filed by
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the Company pursuant to Rule 424(b) or (c) of the rules and regulations of the
SEC under the 1933 Act (the "1933 Act Regulations") differing from the
prospectus on file at the time the Registration Statement initially becomes
effective, the term "Prospectus" shall refer to the prospectus filed pursuant to
Rule 424(b) or (c) from and after the time said prospectus is filed with the
SEC.
In accordance with Title 12, Parts 575 and 563b of the Code of Federal
Regulations (the "Conversion Regulations"), the MHC filed with the OTS an
Application for Approval of Conversion on Form AC, and has filed such amendments
thereto and supplementary materials as may have been required to the date hereof
and amendments thereto as required by the OTS including applications to form and
merge Interim One, Interim Two and Interim Three (the "Conversion Application").
The Company has also filed with the OTS an application for approval to acquire
the Bank and to become a registered savings and loan holding company on Form
H-(e) 1-S (the "Holding Company Application") under the Home Owners' Loan Act of
1933, as amended, and the regulations promulgated thereunder (the "HOLA").
SECTION 2. RETENTION OF AGENT; COMPENSATION; SALE AND DELIVERY OF THE
SHARES. Subject to the terms and conditions herein set forth, the Company, the
MHC, the Mid-Tier Holding Company and the Bank hereby appoint the Agent as their
exclusive financial advisor and marketing agent to utilize its best efforts to
solicit subscriptions for Shares and to advise and assist the Company, the MHC,
the Mid-Tier Holding Company and the Bank with respect to the Company's sale of
the Shares in the Offering.
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, the Agent
accepts such appointment and agrees to consult with and advise the Company, the
MHC, the Mid-Tier Holding Company and the Bank as to the matters set forth in
the letter agreement, dated June 6, 2002, between the MHC, the Mid-Tier Holding
Company, the Bank and KBW. It is acknowledged by the Company, the MHC, the
Mid-Tier Holding Company and the Bank that the Agent shall not be required to
purchase any Shares or be obligated to take any action that is inconsistent with
all applicable laws, regulations, decisions or orders.
The obligations of the Agent pursuant to this Agreement shall terminate
upon the completion or termination or abandonment of the Plan by the Company,
the MHC, the Mid-Tier Holding Company, or the Bank or upon termination of the
Offering, but in no event later than 45 days after the completion of the
Subscription Offering (the "End Date"). All fees or expenses due to the Agent
hereunder but unpaid will be payable to the Agent in next day funds at the
earlier of the Closing Date (as hereinafter defined) or the End Date. In the
event the Offering is extended beyond the End Date, the Company, the MHC, the
Mid-Tier Holding Company, the Bank and the Agent may agree to renew this
Agreement under mutually acceptable terms.
In the event the Company is unable to sell a minimum of 5,000,890 Shares
within the period herein provided, this Agreement shall terminate and the
Company shall refund to any persons who have subscribed for any of the Shares
the full amount that it may have received from them plus accrued interest, as
set forth in the Prospectus, and none of the parties to this
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Agreement shall have any obligation to the other parties hereunder, except as
set forth in this Section 2 and in Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable to
the action or inaction of the Agent, the Agent shall be paid the fees due to the
date of such termination pursuant to subparagraphs (a) and (d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan; provided, however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of the Agent and its counsel.
The release of Shares against payment therefor shall be made on a date and at a
place acceptable to the Company, the MHC, the Mid-Tier Holding Company, the Bank
and the Agent. Certificates for Shares shall be delivered directly to the
purchasers in accordance with their directions. The date upon which the Company
shall release or deliver the Shares sold in the Offering, in accordance with the
terms herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services
hereunder:
(a) A management fee of $50,000, payable in four consecutive monthly
installments of $12,500 of which $37,500 has been paid. Such fees
shall be deemed to have been earned when due. Should the Conversion
be terminated for any reason not attributable to the action or
inaction of the Agent, the Agent shall have earned and be entitled
to be paid fees accruing through the stage at which the termination
occurred, including any accrued legal fees expended by the Agent.
(b) A Success Fee upon completion of the Offering of 1.35% of the
aggregate purchase price of the Common Stock sold in the
Subscription Offering and Community Onfering excluding shares
purchased by the officers, directors or employees (or members of
their immediate families) of the Company, the MHC, the Mid-Tier
Holding Company or the Bank plus any ESOP, tax-qualified or stock
based compensation plans (except IRAs) or similar plan created by
the Bank for some or all of its directors or employees. The
management fee described in subparagraph 2(a) shall be applied
against the Success Fee described in this subparagraph 2(b).
(c) If any of the Common Shares remain available after the Subscription
Offering, at the request of the Company, KBW will seek to form a
syndicate of registered broker-dealers ("Selected Dealers") to
assist in the sale of such Common Shares on a best efforts basis,
subject to the terms and conditions set forth in the selected
dealers agreement. KBW will endeavor to distribute the Common Shares
among the Selected Dealers in a fashion which best meets the
distribution objectives of the Company, the MHC, the Mid-Tier
Holding Company, the Bank and the Plan.
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KBW will be paid a fee not to exceed 5.5% of the aggregate purchase
price of the shares sold by the Selected Dealers. From this fee, KBW
will pass onto the Selected Dealers who assist in the Syndicated
Community Offering an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of stock sold
at a comparable price per share in a similar market environment.
Fees with respect to purchases affected with the assistance of
Selected Dealers other than KBW shall be transmitted by KBW to such
Selected Dealers. The decision to utilize Selected Dealers will be
made by the Company, the MHC, the Mid-Tier Holding Company and the
Bank upon consultation with KBW. In the event, with respect to any
stock purchases, fees are paid pursuant to this subparagraph 2(c),
such fees shall be in lieu of, and not in addition to, payment
pursuant to subparagraphs 2(a) and 2(b).
(d) The Agent shall be reimbursed for reasonable out-of-pocket expenses,
including costs of travel, meals and lodging, photocopying,
telephone, facsimile and couriers. Reimbursement of the Agent's
total out-of-pocket expenses shall not exceed $15,000 without the
prior consent of the Bank. In addition, the Bank will reimburse KBW
for the fees and expenses of its counsel, which will not exceed
$35,000. The Company, the MHC, the Mid-Tier Holding Company and the
Bank will bear the expenses of the Offering customarily borne by
issuers including, without limitation, regulatory filing fees, SEC,
"Blue Sky," and NASD filing and registration fees; the fees of the
Company, the MHC's, the Mid-Tier Holding Company's and Bank's
accountants, attorneys, appraiser, transfer agent and registrar,
printing, mailing and marketing and syndicate expenses associated
with the Conversion; the fees set forth under this Section 2; and
fees for "Blue Sky" legal work. The Company, the MHC, the Mid-Tier
Holding Company and the Bank will reimburse KBW for such expenses
incurred by KBW on their behalf.
Full payment of Agent's fees and expenses, as described above, shall be
made in next day funds on the earlier of the Closing Date or a determination by
the Company, the MHC, the Mid-Tier Holding Company or the Bank to terminate or
abandon the Plan.
SECTION 3. PROSPECTUS; OFFERING. The Shares are to be initially offered in
the Offering at the purchase price set forth on the cover page of the
Prospectus.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
(a) The Company, the MHC, the Mid-Tier Holding Company and the Bank
jointly and severally represent and warrant to and agree with the Agent as
follows:
(i) The Registration Statement, which was prepared by the Company, the
MHC, the Mid-Tier Holding Company and the Bank and filed with the
SEC, was declared effective by the SEC on November ___, 2002. At the
time the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement), became effective,
the Registration Statement contained all statements that were
required to be stated therein in accordance with the 1933 Act
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and the 1933 Act Regulations, complied in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations, and
the Registration Statement, including the Prospectus contained
therein (including any amendment or supplement thereto), and any
information regarding the Company, the MHC, the Mid-Tier Holding
Company or the Bank contained in Sales Information (as such term is
defined in Section 8 hereof) authorized by the Company, the MHC, the
Mid-Tier Holding Company or the Bank for use in connection with the
Offering, did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the
time any Rule 424(b) or (c) Prospectus was filed with the SEC and at
the Closing Date referred to in Section 2, the Registration
Statement, including the Prospectus contained therein (including any
amendment or supplement thereto), will contain all statements that
are required to be stated therein in accordance with the 1933 Act
and the 1933 Act Regulations and such Registration Statement and any
information regarding the Company, the MHC, the Mid-Tier Holding
Company or the Bank contained in the Sales Information authorized by
the Company, the MHC, the Mid-Tier Holding Company or the Bank for
use in connection with the Offering will not contain an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section
4(a)(i) shall not apply to statements or omissions made in reliance
upon and in conformity with written information furnished to the
Company, the MHC, the Mid-Tier Holding Company or the Bank by the
Agent or its counsel expressly regarding the Agent for use in the
Prospectus under the caption "The Conversion - Plan of Distribution;
Selling Agent Compensation" or in any Sales Information.
(ii) The Conversion Application, including the Prospectus and the proxy
statement for the solicitation of proxies from members of the MHC
for the special meeting to approve the Plan (the "Members' Proxy
Statement") and the proxy statement for the solicitation of proxies
from stockholders of the Mid-Tier Holding Company for the special
meeting to approve the Plan (the "Stockholders' Proxy Statement"),
which was prepared by the Company, the MHC, the Mid-Tier Holding
Company and the Bank and filed with the OTS, was approved by the OTS
on November __, 2002 and the Prospectus and Members' Proxy Statement
have been authorized for use by the OTS. At the time of the approval
of the Conversion Application, including the Prospectus, the
Members' Proxy Statement and the Stockholders' Proxy Statement
(including any amendment or supplement thereto), by the OTS and at
all times subsequent thereto until the Closing Date, the Conversion
Application, including the Prospectus, the Members' Proxy Statement
and the Stockholders' Proxy Statement (including any amendment or
supplement thereto), will comply in all material respects with the
Conversion Regulations, except to the extent waived in writing by
the OTS and with all applicable provisions of the Securities
Exchange Act of 1934, as amended (the
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"1934 Act") and the regulations of the SEC under the 1934 Act (the
"1934 Act Regulations"). The Conversion Application, including the
Prospectus, the Members' Proxy Statement and the Stockholders' Proxy
Statement (including any amendment or supplement thereto), does not
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the
representations and warranties in this Section 4(a)(ii) shall not
apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company, the
MHC, the Mid-Tier Holding Company or the Bank by the Agent or its
counsel expressly regarding the Agent for use in the Prospectus
contained in the Conversion Application under the caption "The
Conversion - Plan of Distribution; Selling Agent Compensation" or in
any Sales Information.
(iii) The Holding Company Application has been prepared by the Company in
material conformity with the requirements of the OTS and approved by
the OTS. A conformed copy of the Holding Company Application has
been delivered to the Agent and its counsel, receipt of which is
hereby acknowledged by the Agent.
(iv) No order has been issued by the OTS, the SEC, any state securities
administrator or the Federal Deposit Insurance Corporation (the
"FDIC") preventing or suspending the use of the Prospectus or any
supplemental sales literature authorized by the Company, the MHC,
the Mid-Tier Holding Company or the Bank for use in connection with
the offering and no action by or before any such government entity
to revoke any approval, authorization or order of effectiveness
related to the Conversion is pending or, to the best knowledge of
the Company, the MHC, the Mid-Tier Holding Company or the Bank,
threatened.
(v) Pursuant to the Conversion Regulations, the Plan has been approved
by the Boards of Directors of the MHC, the Mid-Tier Holding Company
and the Bank; at the Closing Date, the offer and sale of the Shares
will have been conducted in all material respects in accordance with
the Plan, the Conversion Regulations, and all other applicable laws,
regulations, decisions and orders, including all terms, conditions,
requirements and provisions precedent to the Conversion imposed upon
the MHC, the Mid-Tier Holding Company or the Bank by the OTS, the
SEC or any other regulatory authority, other than those which the
regulatory authority permits to be completed after the Conversion
and in the manner described in the Prospectus. No person has sought
to obtain review of the final action of the OTS in approving the
Plan or in approving the Conversion or the Holding Company
Application pursuant to HOLA or any other statute or regulation.
(vi) The Bank has been duly organized and is a validly existing federally
chartered savings association in the stock form of organization and
upon the Conversion will become a wholly-owned subsidiary of the
Company, in both instances duly authorized to conduct its business
and own its property as described in the
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Registration Statement and the Prospectus; the Bank has obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of its business, except those that
individually or in the aggregate would not materially adversely
affect the financial condition, earnings, capital, assets,
properties or business of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, taken as a whole; all such licenses, permits
and governmental authorizations are in full force and effect, and
the Bank is in compliance with all material laws, rules, regulations
and orders applicable to the operation of its business; the Bank is
existing under the laws of the federal government and is duly
qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which its ownership of
property or leasing of property or the conduct of its business
requires such qualification, unless the failure to be so qualified
in one or more of such jurisdictions would not individually or in
the aggregate have a material adverse effect on the financial
condition, earnings, capital, assets, properties or business of the
Bank. The Bank does not own equity securities or any equity interest
in any other active business enterprise except as described in the
Prospectus or as would not be material to the operations of the
Bank. Upon completion of the Conversion, (i) all of the authorized
and outstanding capital stock of the Bank will be owned by the
Company and (ii) the Company will have no direct subsidiaries other
than the Bank. At the Closing Date, the Conversion will have been
effected in all material respects in accordance with all applicable
statutes, regulations, decisions and orders; and, except with
respect to the filing of certain post-sale, post-Conversion reports,
and documents in compliance with the 1933 Act Regulations, all
terms, conditions, requirements and provisions with respect to the
Conversion imposed by the OTS, if any, will have been complied with
by the Company, the MHC, the Mid-Tier Holding Company and the Bank
in all material respects or appropriate waivers will have been
obtained and all material notice and waiting periods will have been
satisfied, waived or elapsed.
(vii) The Mid-Tier Holding Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the United States of America with 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; the
Mid-Tier Holding Company is qualified to do business as a foreign
corporation in each jurisdiction in which the conduct of its
business requires such qualification, except where the failure to so
qualify would not have a material adverse effect on the financial
condition, earnings, capital, assets, properties or business of the
Mid-Tier Holding Company. The Mid-Tier Holding Company has obtained
all licenses, permits and other governmental authorizations
currently required for the conduct of its business except those that
individually or in the aggregate would not materially adversely
affect the financial condition, earnings, capital, assets,
properties or business of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, taken as a whole; all such licenses, permits
and governmental authorizations are in full force and effect, and
the Mid-Tier Holding Company is in all material respects complying
with all laws, rules, regulations and orders applicable to the
operation of its business; upon consummation of the Conversion, the
Mid-
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Tier Holding Company will convert into Interim Two, which will merge
with and into the Bank, with the Bank as the surviving institution.
(viii) The authorized capital stock of the Mid-Tier Holding Company
consists of 20,000,000 shares of common stock, par value $0.10 per
share (the "Mid-Tier Holding Company Common Stock") and 10,000,000
shares of preferred stock, par value $0.10 per share (the "Mid-Tier
Preferred Stock"), of which 4,778,292 shares of Mid-Tier Holding
Company Common Stock and no shares of Mid-Tier Holding Company
Preferred Stock are issued and outstanding as of the date hereof; no
additional shares of Mid-Tier Holding Company and no shares of
Mid-Tier Holding Company Preferred Stock will be issued and
outstanding shares of Mid-Tier Holding Company Common Stock have
been duly authorized and validly issued and are fully paid and
nonassessable and have been issued in compliance with all federal
and state securities laws; the MHC owns 2,810,510 shares of Mid-Tier
Holding Company Common Stock beneficially and of record free and
clear of any security interest, mortgage, pledge, lien, encumbrance,
claim or equity; the terms and provisions of the Mid-Tier Holding
Company Common Stock conform to all statements relating thereto
contained in the Prospectus; at the time of the consummation of the
Conversion, immediately following the mergers of Interim One and
Interim Two with and into the Bank, the Bank shall merge with
Interim Three, with the Bank being the surviving institution, and
the shares of common stock of Interim Three held by the Company
shall be converted into shares of Bank common stock on a one-to-one
basis, and all such Bank common stock will be owned beneficially and
of record by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity.
(ix) The MHC has been duly chartered and is validly existing as a mutual
holding company in good standing under the laws of the United States
of America with 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; the MHC is qualified
to do business as a foreign corporation in each jurisdiction in
which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material
adverse effect on the financial condition, earnings, capital,
assets, properties or business of the MHC. The MHC has obtained all
licenses, permits and other governmental authorizations currently
required for the conduct of its business except those that
individually or in the aggregate would not materially adversely
affect the financial condition, earnings capital, assets, properties
or business of the Company, the MHC, the Mid-Tier Holding Company
and the Bank, taken as a whole; all such licenses, permits and
governmental authorizations are in full force and effect, and the
MHC is in all material respects complying with all laws, rules,
regulations and orders applicable to the operation of its business;
upon consummation of the
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Conversion, the MHC will convert into Interim One, which will merge
with and into the Bank, with the Bank being the surviving
institution.
(x) The Company has been duly incorporated and is validly existing as a
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
Registration Statement and the Prospectus; the Company is qualified
to do business as a foreign corporation in each jurisdiction in
which the conduct of its business requires such qualification,
except where the failure to so qualify would not have a material
adverse effect on the financial condition, earnings, capital,
assets, properties or business of the Company. The Company has
obtained all licenses, permits and other governmental authorizations
currently required for the conduct of its business except those that
individually or in the aggregate would not materially adversely
affect the financial condition, earnings, capital, assets,
properties or business of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, taken as a whole; all such licenses, permits
and governmental authorizations are in full force and effect, and
the Company is in all material respects complying with all laws,
rules, regulations and orders applicable to the operation of its
business.
(xi) The Bank is a member of the Federal Home Loan Bank of New York
("FHLB-New York"). The deposit accounts of the Bank are insured by
the FDIC up to the applicable limits, and no proceedings for the
termination or revocation of such insurance are pending or, to the
best knowledge of the Company, the MHC and the Mid-Tier Holding
Company or the Bank, threatened. Upon consummation of the
Conversion, the liquidation account for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders will be
duly established in accordance with the requirements of the
Conversion Regulations.
(xii) The only direct subsidiary of the MHC is the Mid-Tier Holding
Company. The only direct subsidiary of the Mid-Tier Holding Company
is the Bank. The only active subsidiaries of the Bank are Sound
REIT, Inc., First Federal REIT, Inc. and Mamaroneck Advisors, Inc.
(the "Subsidiaries"). The Subsidiaries are organized, validly
existing and in good standing under the laws of the State of New
York; with full power and authority to own its property and conduct
business; the Subsidiaries are duly qualified as foreign corporation
to transact business in each jurisdiction in which failure to so
qualify would have a material adverse effect on the financial
condition, earnings, capital, assets or properties of the Bank and
the Subsidiaries, taken as a whole; the Subsidiaries hold all
licenses, certificates and permits from governmental authorities
necessary for the conduct of business, except where failure to hold
such licenses, permit or authorizations would not have a material
adverse effect on the financial condition, earnings, capital, assets
or properties of the Bank and the Subsidiaries, taken as a whole;
all of the outstanding capital stock of the Subsidiaries has been
duly authorized and is fully
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paid and non-assessable, and is owned directly or indirectly by the
Bank, free and clear of any liens or encumbrances.
(xiii) The Company, the MHC, the Mid-Tier Holding Company and the Bank
have good and marketable title to all real property and good title
to all other assets material to the business of the Company, the
MHC, the Mid-Tier Company and the Bank, taken as a whole, and to
those properties and assets described in the Registration Statement
and Prospectus as owned by them, in each case free and clear of all
liens, charges, encumbrances or restrictions, except such as are
described in the Registration Statement and Prospectus, or are not
material to the business of the Company, the MHC, the Mid-Tier
Holding Company and the Bank, taken as a whole; and all of the
leases and subleases material to the business of the Company, the
MHC and the Mid-Tier Holding Company and the Bank, taken as a whole,
under which the Company, the MHC, the Mid-Tier Holding Company or
the Bank hold properties, including those described in the
Registration Statement and Prospectus, are in full force and effect.
(xiv) The Company, the MHC, the Mid-Tier Holding Company and the Bank have
received an opinion of their special counsel, Luse Gorman Pomerenk &
Schick, P.C., with respect to the federal income tax consequences of
the Conversion and an opinion from KPMG LLP with respect to the New
York income tax consequences of the Conversion; all material aspects
of the opinions of Luse Gorman Pomerenk & Schick and KPMG LLP are
accurately summarized in the Registration Statement and Prospectus;
the facts upon which such opinions are based are truthful, accurate
and complete.
(xv) The Company, the MHC, the Mid-Tier Holding Company and the Bank have
all such power, authority, authorizations, approvals and orders as
may be required to enter into this Agreement, to carry out the
provisions and conditions hereof and to issue and sell the Shares to
be sold by the Company as provided herein and as described in the
Prospectus, except approval or confirmation by the OTS of the final
appraisal of the Bank. The consummation of the Conversion, the
execution, delivery and performance of this Agreement and the
consummation of the transactions herein contemplated have been duly
and validly authorized by all necessary corporate action on the part
of the Company, the MHC, the Mid-Tier Holding Company and the Bank
and this Agreement has been validly executed and delivered by the
Company, the MHC, the Mid-Tier Holding Company and the Bank and is
the valid, legal and binding agreement of the Company, the MHC, the
Mid-Tier Holding Company and the Bank enforceable in accordance with
its terms (except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, the Conversion or similar laws
relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of bank holding companies, the
accounts of whose subsidiaries are insured by the FDIC, or by
general equity principles, regardless of whether such enforceability
is considered in a proceeding in equity or at law, and except to the
extent, if any,
-11-
that the provisions of Sections 8 and 9 hereof may be unenforceable
as against public policy).
(xvi) None of the Company, the MHC, the Mid-Tier Holding Company or the
Bank is in violation of any directive received from OTS, the SEC, or
any other agency to make any material change in the method of
conducting their businesses so as to comply in all material respects
with all applicable statutes and regulations (including, without
limitation, regulations, decisions, directives and orders of the OTS
or the SEC) and, except as set forth in the Registration Statement
and the Prospectus, there is no suit, proceeding, charge or action
before or by any court, regulatory authority or governmental agency
or body, pending or, to the best knowledge of the Company, the MHC,
the Mid-Tier Holding Company or the Bank, threatened, which might
materially and adversely affect the Conversion, the performance of
this Agreement or the consummation of the transactions contemplated
in the Plan and as described in the Registration Statement and the
Prospectus or which might result in any material adverse change in
the financial condition, earnings, capital, assets, properties or
business of the Company, the MHC, the Mid-Tier Holding Company and
the Bank, taken as a whole.
(xvii) The financial statements, schedules and notes related thereto that
are included in the Prospectus fairly present the financial
condition, results of operations, equity and cash flows of the
Company, the MHC, the Mid-Tier Holding Company and the Bank at the
respective dates indicated and for the respective periods covered
thereby and comply as to form in all material respects with the
applicable accounting requirements of Title 12 of the Code of
Federal Regulations, Regulation S-X of the SEC and generally
accepted accounting principles (including those requiring the
recording of certain assets at their current market value). Such
financial statements, schedules and notes related thereto have been
prepared in accordance with generally accepted accounting principles
consistently applied through the periods involved (except as noted
in the Notes to the financial statements) present fairly in all
material respects the information required to be stated therein and
are consistent with the most recent financial statements and other
reports filed by the Company, the MHC, the Mid-Tier Holding Company
and the Bank with the OTS and the SEC, and any other applicable
regulatory authority, except that accounting principles employed in
such regulatory filings conform to the requirements of the OTS and
the SEC and not necessarily to GAAP. The other financial,
statistical and pro forma information and related notes included in
the Prospectus present fairly the information shown therein on a
basis consistent with the audited and unaudited financial statements
of the MHC, the Mid-Tier Holding Company and the Bank included in
the Prospectus, and as to the pro forma adjustments, the adjustments
made therein have been properly applied on the basis described
therein.
(xviii) Since the respective dates as of which information is given in the
Registration Statement including the Prospectus: (i) there has not
been any material adverse
-12-
change in the financial condition, earnings, capital, assets,
properties or business of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, taken as a whole, whether or not arising in
the ordinary course of business; (ii) there has not been any
material increase in the long-term debt of the Bank or in the
principal amount of the Bank's assets that are classified by the
Bank as substandard, doubtful or loss or in loans past due 90 days
or more or real estate acquired by foreclosure, by deed-in-lieu of
foreclosure or deemed in-substance foreclosure or any material
decrease in equity capital or total assets of the Bank, nor has the
Company, the MHC, the Mid-Tier Holding Company or the Bank issued
any securities or incurred any liability or obligation for borrowing
other than in the ordinary course of business; (iii) there have not
been any material transactions entered into by the Company, the MHC,
the Mid-Tier Holding Company or the Bank; (iv) there has not been
any material adverse change in the aggregate dollar amount of the
Bank's deposits or its consolidated net worth; (v) there has been no
material adverse change in the Company's, the MHC's, the Mid-Tier
Holding Company's or the Bank's relationship with its insurance
carriers, including, without limitation, cancellation or other
termination of the Company's, the MHC's, the Mid-Tier Holding
Company's or the Bank's fidelity bond or any other type of insurance
coverage; (vi) except as disclosed in the Prospectus, there has been
no material change in management of the Company, the MHC, the
Mid-Tier Holding Company or the Bank, neither of which has any
material undisclosed liability of any kind, contingent or otherwise;
(vii) none of the Company, the MHC, the Mid-Tier Holding Company, or
the Bank has sustained any material loss or interference with its
respective business or properties from fire, flood, windstorm,
earthquake, accident or other calamity, whether or not covered by
insurance; (viii) none of the Company, the MHC, the Mid-Tier Holding
Company, or the Bank is in default in the payment of principal or
interest on any outstanding debt obligations; (ix) the
capitalization, liabilities, assets, properties and business of the
Company, the MHC, the Mid-Tier Holding Company and the Bank conform
in all material respects to the descriptions thereof contained in
the Prospectus; and (x) none of the Company, the MHC, the Mid-Tier
Holding Company, or the Bank has any material contingent
liabilities, except as set forth in the Prospectus.
(xix) All documents made available to or delivered or to be made available
to or delivered by the Company, the MHC, the Mid-Tier Holding
Company or the Bank or their representatives in connection with the
issuance and sale of the Shares, including records of account
holders, depositors and borrowers of the Bank, or in connection with
the Agent's exercise of due diligence, except for those documents
which were prepared by parties other than the Company, the MHC, the
Mid-Tier Holding Company or the Bank or their representatives, to
the best knowledge of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, were on the dates on which they were
delivered, or will be on the dates on which they are to be
delivered, true, complete and correct in all material respects.
-13-
(xx) None of the Company, the MHC, the Mid-Tier Holding Company, or the
Bank is (i) in violation of their respective certificate of
incorporation, charters or bylaws, as applicable or (ii) in default
in the performance or observance of any material obligation,
agreement, covenant, or condition contained in any material
contract, lease, loan agreement, indenture or other instrument to
which it is a party or by which it or any of its property may be
bound. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated will not: (i)
conflict with or constitute a breach of, or default under, or result
in the creation of any material lien, charge or encumbrance upon any
of the assets of the Company, the MHC, the Mid-Tier Holding Company
or the Bank pursuant to their respective certificate of
incorporation, charter or bylaws, as applicable, or any material
contract, lease or other instrument in which the Company, the MHC,
the Mid-Tier Holding Company or the Bank has a beneficial interest,
or any applicable law, rule, regulation or order; (ii) violate any
authorization, approval, judgment, decree, order, statute, rule or
regulation applicable to the Company, the MHC, the Mid-Tier Holding
Company or the Bank, except for such violations which would not have
a material adverse effect on the financial condition and results of
operations of the Company, the MHC, the Mid-Tier Holding Company and
the Bank on a consolidated basis; or (iii) result in the creation of
any material lien, charge or encumbrance upon any property of the
Company, the MHC, the Mid-Tier Holding Company or the Bank.
(xxi) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of
the Company, the MHC, the Mid-Tier Holding Company or the Bank in
the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan
or credit agreement or any other instrument or agreement to which
the Company, the MHC, the Mid-Tier Holding Company or the Bank is a
party or by which any of them or any of their property is bound or
affected, except such defaults which would not have a material
adverse effect on the financial condition or results of operations
of the Company, the MHC, the Mid-Tier Holding Company and the Bank
on a consolidated basis; such agreements are in full force and
effect; and no other party to any such agreements has instituted or,
to the best knowledge of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, threatened any action or proceeding wherein
the Company, the MHC, the Mid-Tier Holding Company or the Bank would
or might be alleged to be in default thereunder, where such action
or proceeding, if determined adversely to the Company, the MHC, the
Mid-Tier Holding Company or the Bank, would have a material adverse
effect on the financial condition, earnings, capital, assets,
properties or business of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, taken as a whole.
(xxii) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be within the range
set forth in the Prospectus under the captions "Capitalization" and
"Pro Forma Data" and no Common
-14-
Shares have been or will be issued and outstanding prior to the
Closing Date; the Shares will have been duly and validly authorized
for issuance and, when issued and delivered by the Company pursuant
to the Plan against payment of the consideration calculated as set
forth in the Plan and in the Prospectus, will be duly and validly
issued, fully paid and non-assessable, except for shares purchased
by the Tax-Qualified Employee Stock Benefit Plan with funds borrowed
from the Company to the extent payment therefor in cash has not been
received by the Company; except to the extent that subscription
rights and priorities pursuant thereto exist pursuant to the Plan,
no preemptive rights exist with respect to the Shares; and the terms
and provisions of the Common Shares conform in all material respects
to the description thereof contained in the Registration Statement
and the Prospectus. To the best knowledge of the Company, the MHC,
the Mid-Tier Holding Company and the Bank, upon the issuance of the
Shares, good title to the Shares will be transferred from the
Company to the purchasers thereof against payment therefor, subject
to such claims as may be asserted against the purchasers thereof by
third-party claimants.
(xxiii) 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 Shares, except for the
approval of the OTS and the SEC, and any necessary qualification,
notification, registration or exemption under the securities or blue
sky laws of the various states in which the Shares are to be
offered, and except as may be required under the rules and
regulations of the National Association of Securities Dealers, Inc.
("NASD") and/or The Nasdaq Stock Market.
(xxiv) KPMG LLP, which has certified the audited financial statements and
schedules of the Mid-Tier Holding Company and the Bank included in
the Prospectus, has advised the Company, the MHC, the Mid-Tier
Holding Company and the Bank in writing that they are, with respect
to the Company, the MHC, the Mid-Tier Holding Company and the Bank,
independent public accountants within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public
Accountants and applicable regulations of the SEC and the OTS.
(xxv) FinPro, Inc., which has prepared the Bank's Independent Appraisal as
of _______, 2002, and updated on _________, 2002 (as amended or
supplemented, if so amended or supplemented) (the "Appraisal"), has
advised the Company in writing that it is independent of the
Company, the MHC, the Mid-Tier Holding Company and the Bank within
the meaning of the Conversion Regulations.
(xxvi) The Company, the MHC, the Mid-Tier Holding Company and the Bank
have timely filed all required federal, state and local tax returns;
the Company, the MHC, the Mid-Tier Holding Company and the Bank have
paid all taxes that have become due and payable in respect of such
returns, except where permitted to be extended, have made adequate
reserves for similar future tax liabilities and no deficiency has
been asserted with respect thereto by any taxing authority.
-15-
(xxvii) The Bank is in compliance in all material respects with the
applicable financial record-keeping and reporting requirements of
the Currency and Foreign Transactions Reporting Act of 1970, as
amended, and the regulations and rules thereunder.
(xxviii) To the knowledge of the Company, the MHC, the Mid-Tier Holding
Company and the Bank, with the exception of the ESOP to purchase
securities in an amount up to 8.0% of the securities sold in the
Conversion, none of the Company, the MHC, the Mid-Tier Holding
Company, the Bank or employees of the Company, the MHC, the Mid-Tier
Holding Company or the Bank has made any payment of funds of the
Company, the MHC, the Mid-Tier Holding Company or the Bank as a loan
for the purchase of the Shares 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.
(xxix) None of the Company, the MHC and the Mid-Tier Holding Company or
the Bank has: (i) issued any securities within the last 18 months
(except for (a) notes to evidence bank loans and reverse repurchase
agreements or other liabilities in the ordinary course of business
or as described in the Prospectus, (b) shares issued in connection
with the incorporation of the Company, and (c) shares issued upon
the exercise of options pursuant to the Mid-Tier Holding Company's
existing stock option plan); (ii) had any material dealings within
the 12 months prior to the date hereof with any member of the NASD,
or any person related to or associated with such member, other than
discussions and meetings relating to the proposed Offering and
routine purchases and sales of United States government and agency
and other securities in the ordinary course of business; (iii)
entered into a financial or management consulting agreement except
as contemplated hereunder; and (iv) engaged any intermediary between
the Agent and the Company, the MHC, the Mid-Tier Holding Company and
the Bank in connection with the offering of the Shares, and no
person is being compensated in any manner for such service.
Appropriate arrangements have been made for placing the funds
received from subscriptions for Shares in a special interest-bearing
account with the Bank until all Shares are sold and paid for, with
provision for refund to the purchasers in the event that the
Conversion is not completed for whatever reason or for delivery to
the Company if all Shares are sold.
(xxx) The Company, the MHC, the Mid-Tier Holding Company and the Bank have
not relied upon the Agent or its legal counsel or other advisors to
the Agent for any legal, tax or accounting advice in connection with
the Conversion.
(xxxi) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
(xxxii) Any certificates signed by an officer of the Company, the MHC, the
Mid-Tier Holding Company or the Bank pursuant to the conditions of
this Agreement and delivered to the Agent or their counsel that
refers to this Agreement shall be
-16-
deemed to be a representation and warranty by the Company, the MHC,
the Mid-Tier Holding Company or the Bank to the Agent as to the
matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
(b) The Agent represents and warrants to the Company that:
(i) KBW is a corporation validly existing in good standing under the
laws of the State of New York and licensed to conduct business in
the State of New York with full power and authority to provide the
services to be furnished to the Company, the MHC, the Mid-Tier
Holding Company and the Bank hereunder.
(ii) The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Agent, and
this Agreement has been duly and validly executed and delivered by
the Agent and is a legal, valid and binding agreement of the Agent,
enforceable in accordance with its terms (except as the
enforceability thereof may be limited by bankruptcy, insolvency,
moratorium, the Conversion or similar laws relating to or affecting
the enforcement of creditors' rights generally, or by general equity
principles, regardless of whether such enforceability is considered
in a proceeding in equity or at law, and except to the extent, if
any, that the provisions of Sections 8 and 9 hereof may, with
respect to the Agent, be unenforceable as against public policy).
(iii) Each of the Agent and its employees, agents and representatives who
shall perform any of the services hereunder shall be duly authorized
and empowered, and shall have all licenses, approvals and permits
necessary to perform such services; and the Agent is a registered
selling agent in each of the jurisdictions in which the Shares are
to be offered by the Company in reliance upon the Agent as a
registered selling agent as set forth in the blue sky memorandum
prepared with respect to the Offering.
(iv) The execution and delivery of this Agreement by the Agent, the
consummation of the transactions contemplated hereby and compliance
with the terms and provisions hereof will not conflict with, or
result in a breach of, any of the terms, provisions or conditions
of, or constitute a default (or an event which with notice or lapse
of time or both would constitute a default) under, the Certificate
of Incorporation or Bylaws of the Agent or any material agreement,
indenture or other instrument to which the Agent is a party or by
which it or its property is bound.
(v) No approval of any regulatory or supervisory or other public
authority is required in connection with the Agent's execution and
delivery of this Agreement, except as may have been received.
(vi) There is no suit or proceeding or charge or action before or by any
court, regulatory authority or government agency or body or, to the
knowledge of the
-17-
Agent, pending or threatened, which might materially adversely
affect the Agent's performance of this Agreement.
SECTION 5. COVENANTS OF THE COMPANY, THE MHC, THE MID-TIER HOLDING COMPANY
AND THE BANK. The Company, the MHC, the Mid-Tier Holding Company and the Bank
hereby jointly and severally covenant with the Agent as follows:
(a) The Company will not file any amendment or supplement to the
Registration Statement without providing the Agent and its counsel
an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent
or its counsel shall reasonably object.
(b) The MHC will not file any amendment or supplement to the Conversion
Application without providing the Agent and its counsel an
opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent
or its counsel shall reasonably object.
(c) The Company will not file any amendment or supplement to the Holding
Company Application without providing the Agent and its counsel an
opportunity to review the nonconfidential portions of such amendment
or supplement or file any amendment or supplement to which amendment
or supplement the Agent or its counsel shall reasonably object.
(d) The Company, the MHC, the Mid-Tier Holding Company and the Bank will
use their best efforts to cause any post-effective amendment to the
Registration Statement to be declared effective by the SEC and any
post-approval amendment to the Conversion Application to be approved
by the OTS and will immediately upon receipt of any information
concerning the events listed below notify the Agent: (i) when the
Registration Statement, as amended, has become effective; (ii) when
the Conversion Application, as amended, has been approved by the
OTS; (iii) when the Company, the MHC, the Mid-Tier Holding Company
or the Bank receives any comments from the OTS, the SEC, or any
other governmental entity with respect to the Conversion or the
transactions contemplated by this Agreement; (iv) when the OTS, the
SEC, or any other governmental entity requests any amendment or
supplement to the Registration Statement, the Conversion Application
or any additional information; (v) the issuance by the OTS, the SEC,
or any other governmental entity of any order or other action
suspending the Offering or the use of the Registration Statement or
the Prospectus or any other filing of the Company, the MHC, the
Mid-Tier Holding Company or the Bank under the Conversion
Regulations, or other applicable law, or the threat of any such
action; (vi) the issuance by the OTS, the SEC, or any authority of
any stop order suspending the effectiveness of the Registration
Statement or of the initiation or threat of initiation or threat of
any proceedings for that purpose; or (vii) the occurrence of any
event mentioned in paragraph (h) below. The Company, the MHC, the
Mid-Tier Holding Company and the Bank will make every reasonable
effort (x) to prevent the issuance by the OTS, the SEC or any
-18-
other regulatory authority of any such order and, if any such order
shall at any time be issued, (y) to obtain the lifting thereof at
the earliest possible time.
(e) The Company, the MHC, the Mid-Tier Holding Company and the Bank will
deliver to the Agent and to its counsel two conformed copies of the
Registration Statement, the Conversion Application and the Holding
Company Application, as originally filed and of each amendment or
supplement thereto, including all exhibits. Further, the Company,
the MHC, the Mid-Tier Holding Company and the Bank will deliver such
additional copies of the foregoing documents to counsel to the Agent
as may be required for any NASD filings.
(f) The Company, the MHC, the Mid-Tier Holding Company and the Bank will
furnish to the Agent, from time to time during the period when the
Prospectus (or any later prospectus related to this offering) is
required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of such Prospectus (as amended or supplemented) as
the Agent may reasonably request for the purposes contemplated by
the 1933 Act, the 1933 Act Regulations, 1934 Act or the 1934 Act
Regulations. The Company authorizes the Agent to use the Prospectus
(as amended or supplemented, if amended or supplemented) in any
lawful manner contemplated by the Plan in connection with the sale
of the Shares by the Agent.
(g) The Company, the MHC, the Mid-Tier Holding Company and the Bank will
comply with any and all material terms, conditions, requirements and
provisions with respect to the Conversion and the transactions
contemplated thereby imposed by the OTS, SEC or the Conversion
Regulations, and by the 1933 Act, the 1933 Act Regulations, the 1934
Act and the 1934 Act Regulations to be complied with prior to or
subsequent to the Closing Date and when the Prospectus is required
to be delivered, and during such time period, the Company, the MHC,
the Mid-Tier Holding Company and the Bank will comply, at their own
expense, with all material requirements imposed upon them by the
OTS, the SEC or the Conversion Regulations, and by the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act regulations,
including, without limitation, Rule 10b-5 under the 1934 Act, in
each case as from time to time in force, so far as necessary to
permit the continuance of sales or dealing in the Common Shares
during such period in accordance with the provisions hereof and the
Prospectus.
(h) If, at any time during the period when the Prospectus is required to
be delivered, any event relating to or affecting the Company, the
MHC, the Mid-Tier Holding Company or the Bank shall occur, as a
result of which it is necessary or appropriate, in the reasonable
opinion of the Agent's counsel, to amend or supplement the
Registration Statement or Prospectus in order to make the
Registration Statement or Prospectus not misleading in light of the
circumstances existing at the time the Prospectus is delivered, the
Company, the MHC, the Mid-Tier Holding Company and the Bank will at
their own expense, prepare and file with the OTS, the SEC and
furnish to the Agent a reasonable number of copies of an amendment
or amendments of, or a supplement or supplements to, the
-19-
Registration Statement or Prospectus (in form and substance
reasonably satisfactory to the Agent and its counsel after a
reasonable time for review) which will amend or supplement the
Registration Statement or Prospectus so that as amended or
supplemented it will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances existing at the
time the Prospectus is delivered to a purchaser, not misleading. For
the purpose of this Agreement, the Company, the MHC, the Mid-Tier
Holding Company and the Bank each will timely furnish to the Agent
such information with respect to itself as the Agent may from time
to time reasonably request.
(i) The Company, the MHC, the Mid-Tier Holding Company and the Bank will
take all necessary actions in cooperating with the Agent and furnish
to whomever the Agent may direct such information as may be required
to qualify or register the Shares for offering and sale by the
Company or to exempt such Shares from registration, or to exempt the
Company as a broker-dealer and its officers, directors and employees
as broker-dealers or agents under the applicable securities or blue
sky laws of such jurisdictions in which the Shares are required
under the Conversion Regulations to be sold or as the Agent and the
Company, the MHC, the Mid-Tier Holding Company and the Bank may
reasonably agree upon; provided, however, that the Company shall not
be obligated to file any general consent to service of process, to
qualify to do business in any jurisdiction in which it is not so
qualified, or to register its directors or officers as brokers,
dealers, salesmen or agents in any jurisdiction. In each
jurisdiction where any of the Shares shall have been qualified or
registered as above provided, the Company will make and file such
statements and reports in each fiscal period as are or may be
required by the laws of such jurisdiction.
(j) The Company and the Bank shall duly establish and maintain the
liquidation account for the benefit of Eligible Account Holders and
Supplemental Eligible Account Holders in accordance with the
requirements of the Conversion Regulations and such Eligible Account
Holders and Supplemental Eligible Account Holders who continue to
maintain their savings accounts in the Bank will have an inchoate
interest in their pro rata portion of the liquidation account, which
shall have a priority superior to that of the holders of the Common
Shares in the event of a complete liquidation of the Company or the
Bank.
(k) The Company and the Bank will not sell or issue, contract to sell or
otherwise dispose of, for a period of 90 days after the Closing
Date, without the Agent's prior written consent, any of their
capital stock, other than in connection with any plan or arrangement
described in the Prospectus or upon the exercise of any option
issued pursuant to the Mid-Tier Holding Company's existing stock
option plan.
(l) The Company shall register its Common Shares under Section 12(g) of
the 1934 Act during the Offering and shall request that such
registration be effective prior
-20-
to or upon completion of the Conversion. The Company shall maintain
the effectiveness of such registration for not less than three years
or such shorter period as may be required by applicable law.
(m) During the period during which the Common Shares are registered
under the 1934 Act or for three (3) years from the date hereof,
whichever period is greater, the Company will furnish to its
shareholders as soon as practicable after the end of each fiscal
year an annual report of the Company in accordance with the 1934 Act
Regulations (including a consolidated balance sheet and statements
of consolidated income, shareholders' equity and cash flows of the
Company and its subsidiaries as at the end of and for such year,
certified by independent public accountants in accordance with
Regulation S-X under the 1933 Act and the 1934 Act).
(n) During the period of three years from the date hereof, the Company
will furnish to the Agent: (i) as soon as practicable after such
information is publicly available, a copy of each report of the
Company furnished to or filed with the SEC under the 1934 Act or any
national securities exchange or system on which any class of
securities of the Company is listed or quoted (including, but not
limited to, reports on Forms 10-K, 10-Q and 8-K and all proxy
statements and annual reports to stockholders), (ii) a copy of each
other non-confidential report of the Company mailed to its
shareholders or filed with the OTS, the SEC or any other supervisory
or regulatory authority or any national securities exchange or
system on which any class of securities of the Company is listed or
quoted, each press release and material news items and additional
documents and information with respect to the Company or the Bank as
the Agent may reasonably request; and (iii) from time to time, such
other nonconfidential information concerning the Company or the Bank
as the Agent may reasonably request.
(o) The Company and the Bank will use the net proceeds from the sale of
the Shares in the manner set forth in the Prospectus under the
caption "How We Intend to Use The Proceeds From the Offering."
(p) Other than as permitted by the Conversion Regulations, the HOLA, the
1933 Act, the 1933 Act Regulations and its rules and regulations and
the laws of any state in which the Shares are registered or
qualified for sale or exempt from registration, none of the Company,
the MHC, the Mid-Tier Holding Company or the Bank will distribute
any prospectus, offering circular or other offering material in
connection with the offer and sale of the Shares.
(q) The Company will use its best efforts to list and maintain its
listing of the Shares on the Nasdaq National Market effective on or
prior to the Closing Date.
(r) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to
purchase Shares in the Offering on an interest-bearing basis at the
rate described in the Prospectus
-21-
until the Closing Date and satisfaction of all conditions precedent
to the release of the Bank's obligation to refund payments received
from persons subscribing for or ordering Shares in the Offering in
accordance with the Plan and as described in the Prospectus or until
refunds of such funds have been made to the persons entitled thereto
or withdrawal authorizations canceled in accordance with the Plan
and as described in the Prospectus. The Bank will maintain such
records of all funds received to enable the Bank to make the
appropriate refunds of such funds in the event that such refunds are
required to be made in accordance with the Plan and as described in
the Prospectus.
(s) The Company will promptly take all necessary action to register as
an unitary savings and loan holding company under HOLA.
(t) The Company, the MHC, the Mid-Tier Holding Company and the Bank will
take such actions and furnish such information as are reasonably
requested by the Agent in order for the Agent to ensure compliance
with the NASD's "Interpretation Relating to Free Riding and
Withholding."
(u) None of the Company, the MHC, the Mid-Tier Holding Company or the
Bank will amend the Plan of Conversion without notifying the Agent
prior thereto.
(v) The Company shall assist the Agent, if necessary, in connection with
the allocation of the Shares in the event of an oversubscription and
shall provide the Agent with any information necessary to assist the
Company in allocating the Shares in such event and such information
shall be accurate and reliable in all material respects.
(w) Prior to the Closing Date, the Company, the MHC, the Mid-Tier
Holding Company and the Bank will inform the Agent of any event or
circumstances of which it is aware as a result of which the
Registration Statement and/or Prospectus, as then amended or
supplemented, would contain an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein not misleading.
(x) Subsequent to the date the Registration Statement is declared
effective by the SEC and prior to the Closing Date, except as
otherwise may be indicated or contemplated therein or set forth in
an amendment or supplement thereto, none of the Company, the MHC,
the Mid-Tier Holding Company or the Bank will have: (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money, except borrowings from the same or
similar sources indicated in the Prospectus in the ordinary course
of its business, or (ii) entered into any transaction which is
material in light of the business and properties of the Company, the
MHC, the Mid-Tier Holding Company and the Bank, taken as a whole.
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SECTION 6. PAYMENT OF EXPENSES. Whether or not the Conversion is completed
or the sale of the Shares by the Company is consummated, the Company, the MHC,
the Mid-Tier Holding Company and the Bank jointly and severally agree to pay or
reimburse the Agent for: (a) all filing fees in connection with all filings
related to the Offering with the NASD; (b) any stock issue or transfer taxes
which may be payable with respect to the sale of the Shares; (c) all reasonable
expenses of the Conversion, including but not limited to the Company's, the
MHC's, the Mid-Tier Holding Company's and the Bank's and the Agent's attorneys'
fees (subject to Section 2 of this Agreement) and expenses, blue sky fees,
transfer agent, registrar and other agent charges, fees relating to auditing and
accounting or other advisors and costs of printing all documents necessary in
connection with the Conversion. In the event the Company is unable to sell a
minimum of 5,000,890 Shares or the Conversion is terminated or otherwise
abandoned, the Company, the MHC, the Mid-Tier Holding Company and the Bank shall
promptly reimburse the Agent in accordance with Section 2(d) hereof.
SECTION 7. CONDITIONS TO THE AGENT'S OBLIGATIONS. The obligations of the
Agent hereunder are subject, to the extent not waived in writing by the Agent,
to the condition that all representations and warranties of the Company, the
MHC, the Mid-Tier Holding Company and the Bank herein are, at and as of the
commencement of the Offering and at and as of the Closing Date, true and correct
in all material respects, the condition that the Company, the MHC, the Mid-Tier
Holding Company and the Bank shall have performed all of their obligations
hereunder to be performed on or before such dates, and to the following further
conditions:
(a) At the Closing Date, the Company, the MHC, the Mid-Tier Holding
Company and the Bank shall have conducted the Conversion in all
material respects in accordance with the Plan, the Conversion
Regulations and all other applicable laws, regulations, decisions
and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon them by the OTS,
the SEC or any other authority government.
(b) The Registration Statement shall have been declared effective by the
SEC and the Conversion Application approved by the OTS not later
than 5:30 p.m. on the date of this Agreement, or with the Agent's
consent at a later time and date; and at the Closing Date, 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 SEC or any state authority, and no
order or other action suspending the authorization of the Prospectus
or the consummation of the Conversion shall have been issued or
proceedings therefor initiated or, to the Company's, the MHC's, the
Mid-Tier Holding Company's or the Bank's knowledge, threatened by
the OTS, the SEC or any other governmental authority.
(c) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to the Agent and for its benefit, of Luse Gorman Pomerenk
& Schick, P.C., special
-23-
counsel for the Company, the MHC, the Mid-Tier Holding Company and
the Bank, in form and substance to the effect that:
(i) The Company has been duly incorporated and is
validly existing in good standing as a corporation under the
laws of the State of Delaware; the MHC has been duly organized
and is validly existing in good standing as a federal mutual
holding company under the laws of the United States of
America; the Mid-Tier Holding Company has been duly
incorporated and is validly existing as a federally-chartered
holding company in good standing under the laws of the United
States of America.
(ii) Each of the Company, the MHC and the Mid-Tier
Holding Company have full corporate power and authority to
own, lease and operate their respective properties and to
conduct their business as described in the Registration
Statement and the Prospectus.
(iii) The Bank is a validly existing federally-chartered
savings association in stock form duly authorized to conduct
its business and own its property as described in the
Registration Statement and the Prospectus. All of the capital
stock of the Bank to be outstanding upon completion of the
Conversion will be duly authorized and will be validly issued,
fully paid and non-assessable and will be owned by the
Company, to such counsel's Actual Knowledge, free and clear of
any liens, encumbrances, claims or other restrictions.
(iv) The Bank is a member in good standing of the
FHLB-New York. The deposit accounts of the Bank are insured by
the FDIC up to the maximum amount allowed under law and no
proceedings for the termination or revocation of such
insurance are pending or, to such counsel's Actual Knowledge,
threatened; the description of the liquidation account as set
forth in the Prospectus under the captions "The Conversion -
Effects of Conversion on Depositors, Borrowers and Members -
Effect on Liquidation Rights" and "Liquidation Rights" to the
extent that such information constitutes matters of law and
legal conclusions, has been reviewed by such counsel and is
accurately described in all material respects.
(v) Immediately following the consummation of the
Conversion, the authorized, issued and outstanding Common
Shares of the Company will be within the range set forth in
the Prospectus under the captions "Capitalization," and except
for shares issued upon incorporation of the Company, no Common
Shares have been issued prior to the Closing Date; the Shares
subscribed for pursuant to the Offering have been duly and
validly authorized for issuance, and when issued and delivered
by the Company pursuant to the Plan against payment of the
consideration calculated as set forth in the Plan and the
Prospectus, will be duly and
-24-
validly issued and fully paid and non-assessable, except for
Shares purchased by the Tax-Qualified Employee Stock Benefit
Plan with funds borrowed from the Company to the extent
payment therefor in cash has not been received by the Company,
the issuance of the Shares is not subject to preemptive rights
and the terms and provisions of the Common Shares conform in
all material respects to the description thereof contained in
the Prospectus. The form of certificate used to evidence the
Common Shares complies with applicable laws. To such counsel's
Actual Knowledge, upon the issuance of the Shares, good title
to the Shares will be transferred from the Company to the
purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by
third-party claimants.
(vi) The Company, the MHC, the Bank and the Mid-Tier
Holding Company have full corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and by the Plan. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary action on the part of the Company,
the MHC, the Mid-Tier Holding Company and the Bank; and this
Agreement is a valid and binding obligation of the Company,
the MHC, the Mid-Tier Holding Company and the Bank,
enforceable against the Company, the MHC, the Mid-Tier Holding
Company and the Bank in accordance with its terms, except as
the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, conservatorship,
receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights
generally, (ii) general equitable principles, (iii) laws
relating to the safety and soundness of insured depository
institutions, and (iv) applicable law or public policy with
respect to the indemnification and/or contribution provisions
contained herein, including without limitation the provisions
of Sections 23A and 23B of the Federal Reserve Act and except
that no opinion need be expressed as to the effect or
availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(vii) The Conversion Application and Holding Company
Application have been approved by OTS and the Prospectus and
Members' Proxy Statement have been authorized for use by the
OTS, and no action has been taken or is pending, or to the
best of such counsel's Actual Knowledge, none is pending or
threatened to revoke any such authorization or approval.
(viii) Pursuant to the Conversion Regulations, the Plan
has been approved by the MHC's members and duly adopted by the
required vote
-25-
of the directors of the Company, the MHC, the Mid-Tier Holding
Company and Bank.
(ix) Subject to the satisfaction of the conditions to
the OTS of the Conversion, no further approval, registration,
authorization, consent or other order of any federal or state
regulatory agency is required in connection with the execution
and delivery of this Agreement, the issuance of the Common
Shares and the consummation of the Conversion, except as may
be required under the securities or blue sky laws of various
jurisdictions (as to which no opinion need be rendered) and
except as may be required under the rules and regulations of
the NASD and/or The Nasdaq Stock Market (as to which no
opinion need by rendered).
(x) The Registration Statement is effective under the
1933 Act and no stop order suspending the effectiveness has
been issued under the 1933 Act or proceedings therefor
initiated or, to such counsel's Actual Knowledge, threatened
by the SEC.
(xi) At the time the Conversion Application, including
the Prospectus and Members' Proxy Statement and Stockholders'
Proxy Statement contained therein, was approved by the OTS,
the Conversion Application, including the Prospectus and
Members' Proxy Statement and Stockholders' Proxy Statement
contained therein, complied as to form in all material
respects with the requirements of the Conversion Regulations,
the 1934 Act Regulations, federal and state law and all
applicable rules and regulations promulgated thereunder (other
than the financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data included
therein, as to which no opinion need be rendered).
(xii) At the time that the Registration Statement became
effective, (i) the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, the notes thereto, and other tabular,
financial, statistical and appraisal data included therein, as
to which no opinion need be rendered), complied as to form in
all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations, and (ii) the Prospectus (other
than the financial statements, the notes thereto, and other
tabular, financial, statistical and appraisal data included
therein, as to which no opinion need be rendered) complied as
to form in all material respects with the requirements of the
1933 Act, the 1933 Act Regulations, the Conversion Regulations
and federal law.
(xiii) To such counsel's Actual Knowledge, there are no
legal or governmental proceedings pending or threatened which
are required to be
-26-
disclosed in the Registration Statement and Prospectus, other
than those disclosed therein.
(xiv) To such counsel's Actual Knowledge, there are no
material contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or
referred to in the Conversion Application, the Registration
Statement or the Prospectus or required to be filed as
exhibits thereto other than those described or referred to
therein or filed as exhibits thereto in the Conversion
Application, the Registration Statement or the Prospectus. The
description in the Conversion Application, the Registration
Statement and the Prospectus of such documents and exhibits is
accurate in all material respects and fairly presents the
information required to be shown.
(xv) The Plan complies in all material respects with
all applicable laws, rules, regulations, decisions and orders
including, but not limited to, the Conversion Regulations; no
order has been issued by the OTS, the SEC or any other
governmental authority to suspend the Offering or the use of
the Prospectus, and no action for such purposes has been
instituted, or to such counsel's Actual Knowledge, threatened
by the OTS, the SEC or any other governmental authority and,
to such counsel's Actual Knowledge, no person has sought to
obtain regulatory or judicial review of the final action of
the OTS approving the Plan, the Conversion Application, the
Holding Company Application or the Prospectus.
(xvi) To such counsel's Actual Knowledge, the Company,
the MHC, the Mid-Tier Holding Company and the Bank have
obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their
businesses and all such licenses, permits and other
governmental authorizations are in full force and effect, and
the Company, the MHC, the Mid-Tier Holding Company and the
Bank are in all material respects complying therewith.
(xvii) To such counsel's Actual Knowledge, none of the
Company the MHC, the Mid-Tier Holding Company or the Bank is
in violation of its Certificate of Organization and Bylaws or
its Charter and Bylaws, as appropriate or, to such counsel's
Actual Knowledge, in default or violation of any obligation,
agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other
instrument to which it is a party or by which it or its
property may be bound, except for such defaults or violations
which would not have a material adverse impact on the
financial condition or results of operations of the Company,
the MHC, the Mid-Tier Holding Company and the Bank on a
consolidated basis; the execution and delivery of this
Agreement, the incurrence of the obligations herein set forth
and the consummation of the transactions contemplated herein
do not (a), to such counsel's Actual
-27-
Knowledge, conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the
Company, the MHC, the Mid-Tier Holding Company or the Bank
pursuant to any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Company, the MHC, the Mid-Tier Holding Company or the Bank is
a party or by which any of them may be bound, or to which any
of the property or assets of the Company, the MHC, the
Mid-Tier Holding Company or the Bank are subject (other than
the establishment of the liquidation account), (b) result in
any violation of the provisions of the Certificate of
Incorporation or Bylaws of the Company or the Charter or the
Bylaws of the MHC, the Mid-Tier Holding Company or the Bank
or, (c) result in any violation of any applicable federal or
state law, act, regulation (except that no opinion with
respect to the securities and blue sky laws of various
jurisdictions or the rules or regulations of the NASD and/or
The Nasdaq Stock Market need be rendered) or order or court
order, writ, injunction or decree.
(xviii) The Company's Certificate of Incorporation and
Bylaws comply in all material respects with the laws of the
State of Delaware. The MHC's, the Mid-Tier Holding Company's
and the Bank's respective Charter and Bylaws comply in all
material respects with federal law.
(xix) To such counsel's Actual Knowledge, none of the
Company, the MHC, the Mid-Tier Holding Company or the Bank is
in violation of any directive from the OTS and the SEC to make
any material change in the method of conducting its respective
business.
(xx) The information in the Prospectus under the
captions "Our Dividend Policy," "Supervision and Regulation,"
"Taxation," "The Conversion," "Restrictions on Acquisition of
Sound Federal Bancorp," and "Description of Capital Stock of
Sound Federal Following the Conversion" to the extent that
such information constitutes matters of law, summaries of
legal matters, documents or proceedings, or legal conclusions,
has been reviewed by such counsel and is correct in all
material respects. The description of the Conversion process
in the Prospectus under the caption "The Conversion" to the
extent that such information constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and fairly
describes such process in all material respects. The
descriptions in the Prospectus of statutes or regulations are
accurate summaries and fairly present the information required
to be shown. The information under the caption "The Conversion
- Effects of Conversion on Depositors, Borrowers and Members -
Tax Effects" and "- Tax Aspects" have been reviewed by such
counsel and fairly describes the opinions
-28-
rendered by them to the Company, the MHC, the Mid-Tier Holding
Company and the Bank with respect to such matters.
In addition, such counsel shall state that during the
preparation of the Conversion Application, the Registration
Statement, the Prospectus, the Members' Proxy Statement and
the Stockholders' Proxy Statement, they participated in
conferences with certain officers of, the independent public
and internal accountants for, and other representatives of,
the Company, the MHC, the Mid-Tier Holding Company and the
Bank, at which conferences the contents of the Conversion
Application, the Registration Statement, the Prospectus, the
Members' Proxy Statement and Stockholders' Proxy Statement,
and related matters were discussed and, while such counsel
have not confirmed the accuracy or completeness of or
otherwise verified the information contained in the Conversion
Application, the Registration Statement, the Prospectus,
Members' Proxy Statement, or the Stockholders' Proxy
Statement, and do not assume any responsibility for such
information, based upon such conferences and a review of
documents deemed relevant for the purpose of rendering their
opinion (relying as to materiality as to factual matters on
certificates of officers and other factual representations by
the Company, the MHC, the Mid-Tier Holding and the Bank),
nothing has come to their attention that would lead them to
believe that the Conversion Application, the Registration
Statement, the Prospectus, the Members' Proxy Statement or the
Stockholders' Proxy Statement, or any amendment or supplement
thereto (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and
appraisal data included therein as to which no view need be
rendered) 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, in light of the
circumstances under which they were made, not misleading.
In giving such opinion, such counsel may rely as to
all matters of fact on certificates of officers or directors
of the Company, the MHC, the Mid-Tier Holding Company and the
Bank and certificates of public officials. Such counsel's
opinion shall be limited to matters governed by federal laws
and by the laws of the State of Delaware. The term "Actual
Knowledge" as used herein shall have the meaning set forth in
the Legal Opinion Accord of the American Bar Association
Section of Business Law. For purposes of such opinion, no
proceedings shall be deemed to be pending, no order or stop
order shall be deemed to be issued, and no action shall be
deemed to be instituted unless, in each case, a director or
executive officer of either of the Company, the MHC, the
Mid-Tier Holding Company or the Bank shall have received a
copy of such proceedings, order, stop order or action. In
addition, such opinion may be limited to present statutes,
regulations and judicial interpretations and to
-29-
facts as they presently exist; in rendering such opinion, such
counsel need assume no obligation to revise or supplement it
should the present laws be changed by legislative or
regulatory action, judicial decision or otherwise; and such
counsel need express no view, opinion or belief with respect
to whether any proposed or pending legislation, if enacted, or
any proposed or pending regulations or policy statements
issued by any regulatory agency, whether or not promulgated
pursuant to any such legislation, would affect the validity of
the Conversion or any aspect thereof. Such counsel may assume
that any agreement is the valid and binding obligation of any
parties to such agreement other than each of the Company, the
MHC, the Mid-Tier Holding Company or the Bank.
(d) At the Closing Date, the Agent shall receive a certificate of the
Chief Executive Officer and the principal accounting officer of each
of the Company, the MHC, the Mid-Tier Holding Company and the Bank
in form and substance reasonably satisfactory to the Agent's
Counsel, dated as of such Closing Date, to the effect that: (i) they
have carefully reviewed the Prospectus, the Members' Proxy Statement
and the Stockholders' Proxy Statement, and, in their opinion, at the
time the Prospectus and the Members' Proxy Statement and the
Stockholders' Proxy Statement became authorized for final use, the
Prospectus and the Members' Proxy Statement and the Stockholders'
Proxy Statement did not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading; (ii) since the date the Prospectus became
authorized for final use, no event has occurred which should have
been set forth in an amendment or supplement to the Prospectus which
has not been so set forth, including specifically, but without
limitation, any material adverse change in the condition, financial
or otherwise, or in the earnings, capital, properties or business of
the Company, the MHC, the Mid-Tier Holding Company or the Bank and
the conditions set forth in this Section 7 have been satisfied;
(iii) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has been no
material adverse change in the condition, financial or otherwise, or
in the earnings, capital or properties of the Company, the MHC, the
Mid-Tier Holding Company or the Bank independently, or of the
Company, the MHC, the Mid-Tier Holding Company and the Bank
considered as one enterprise, whether or not arising in the ordinary
course of business; (iv) the representations and warranties in
Section 4 are true and correct with the same force and effect as
though expressly made at and as of the Closing Date; (v) the
Company, the MHC, the Mid-Tier Holding Company and the Bank have
complied in all material respects with all agreements and satisfied
all conditions on their part to be performed or satisfied at or
prior to the Closing Date and will comply in all material respects
with all obligations to be satisfied by them after the Conversion;
(vi) no stop order suspending the effectiveness of the Registration
Statement has been initiated or, to the best knowledge of the
Company the MHC, the Mid-Tier Holding Company or the Bank,
threatened by
-30-
the OTS, the SEC or any state authority; (vii) no order suspending
the Offering, the Conversion, the acquisition of all of the
outstanding capital stock of the Bank by the Company or the
effectiveness of the Prospectus has been issued and no proceedings
for that purpose are pending or, to the best knowledge of the
Company, the Company, the MHC, the Mid-Tier Holding Company or the
Bank, threatened by the SEC, or any governmental authority; and
(viii) to the best knowledge of the Company, the MHC, the Mid-Tier
Holding Company and the Bank, no person has sought to obtain review
of the final action of the OTS approving the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable opinion of
the Agent, there shall have been no material adverse change in the
condition, financial or otherwise, or in the earnings or business of
the Company, the MHC, the Mid-Tier Holding Company or the Bank
independently, or of the Company, the MHC, the Mid-Tier Holding
Company and the Bank considered as one enterprise, from that as of
the latest dates as of which such condition is set forth in the
Prospectus, other than transactions referred to or contemplated
therein; (ii) the Company, the MHC, the Mid-Tier Holding Company or
the Bank shall not have received from the OTS any direction (oral or
written) to make any material change in the method of conducting
their business with which it has not complied (which direction, if
any, shall have been disclosed to the Agent) or which materially and
adversely would affect the business, operations or financial
condition or income of the Company, the MHC, the Mid-Tier Holding
Company and the Bank taken as a whole; (iii) none of the Company,
the MHC, the Mid-Tier Holding Company or the Bank shall have been in
default (nor shall an event have occurred which, with notice or
lapse of time or both, would constitute a default) under any
provision of any agreement or instrument relating to any outstanding
indebtedness; (iv) no action, suit or proceeding, at law or in
equity or before or by any federal or state commission, board or
other administrative agency, shall be pending or, to the knowledge
of the Company, the MHC, the Mid-Tier Holding Company or the Bank,
threatened against the Company, the MHC, the Mid-Tier Holding
Company or the Bank or affecting any of their properties wherein an
unfavorable decision, ruling or finding would materially and
adversely affect the business, operations, financial condition or
income of the Company, the MHC, the Mid-Tier Holding Company and the
Bank taken as a whole; and (v) the Shares shall have been qualified
or registered for offering and sale or exempted therefrom under the
securities or blue sky laws of the jurisdictions as the Agent shall
have reasonably requested and as agreed to by the Company, the MHC,
the Mid-Tier Holding Company and the Bank.
(f) Concurrently with the execution of this Agreement, the Agent shall
receive a letter from KPMG LLP dated as of the date of the
Prospectus and addressed to the Agent: (i) confirming that KPMG LLP
is a firm of independent public accountants within the meaning of
Rule 101 of the Code of Professional Ethics of the American
Institute of Certified Public Accountants and applicable regulations
-31-
of the SEC and stating in effect that in their opinion the financial
statements, schedules and related notes of the MHC, the Mid-Tier
Holding Company and the Bank as of March 31, 2002 and 2001, and for
each of the three years in the period ended March 31, 2002, included
in the Prospectus and covered by their opinion included therein,
comply as to form in all material respects with the applicable
accounting requirements and related published rules and regulations
of the 1933 Act; (ii) stating in effect that, on the basis of
certain agreed upon procedures (but not an audit in accordance with
generally accepted auditing standards) consisting of a reading of
the latest available unaudited interim financial statements of the
Mid-Tier Holding Company and the Bank prepared by the Mid-Tier
Holding Company and the Bank, a reading of the minutes of the
meetings of the Boards of Directors of the Mid-Tier Holding Company
and the Bank and consultations with officers of the MHC, the
Mid-Tier Holding Company and the Bank responsible for financial and
accounting matters, nothing came to their attention which caused
them to believe that: (A) the unaudited financial statements
included in the Prospectus are not in conformity with the 1933 Act,
and generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements included in the Prospectus; or (B) during the period from
the date of the latest unaudited financial statements included in
the Prospectus to a specified date not more than three business days
prior to the date of the Prospectus, except as has been described in
the Prospectus, there was any increase in borrowings, other than
normal deposit fluctuations, the Mid-Tier Holding Company and the
Bank; or (C) there was any decrease in the net assets or retained
earnings of the Mid-Tier Holding Company and the Bank at the date of
such letter as compared with amounts shown in the latest unaudited
balance sheets included in the Prospectus or there was any decrease
in net income or net interest income of the Mid-Tier Holding Company
and the Bank for the number of full months commencing immediately
after the period covered by the latest audited income statement
included in the Prospectus and ended on the latest month end prior
to the date of the Prospectus as compared to the corresponding
period in the preceding year; and (iii) stating that, in addition to
the audit referred to in their opinion included in the Prospectus
and the performance of the procedures referred to in clause (ii) of
this subsection (f), they have compared with the general accounting
records of the Mid-Tier Holding Company and the Bank, which are
subject to the internal controls of the Mid-Tier Holding Company and
the Bank, the accounting system and other data prepared by the
Mid-Tier Holding Company and the Bank, directly from such accounting
records, to the extent specified in such letter, such amounts and/or
percentages set forth in the Prospectus as the Agent may reasonably
request, and they have found such amounts and percentages to be in
agreement therewith.
(g) At the Closing Date, the Agent shall receive a letter dated the
Closing Date, addressed to the Agent, confirming the statements made
by KPMG LLP in the letter delivered by it pursuant to subsection (f)
of this Section 7, the "specified date" referred to in clause (ii)
of subsection (f) to be a date specified in the letter
-32-
required by this subsection (g) which for purposes of such letter
shall not be more than three business days prior to the Closing
Date.
(h) At the Closing Date, the Agent shall receive a letter from FinPro,
Inc., dated the Closing Date and addressed to the Agent (i)
confirming that said firm is independent of the Company, the MHC,
the Mid-Tier Holding Company and the Bank and is experienced and
expert in the area of corporate appraisals within the meaning of the
Conversion Regulations stating in effect that the Appraisal prepared
by such firm complies in all material respects with the applicable
requirements of the Conversion Regulations, and (iii) further
stating that its opinion of the aggregate pro forma market value of
the Company, the MHC, the Mid-Tier Holding Company and the Bank
expressed in its Appraisal, as most recently updated, remains in
effect.
(i) The Company, the MHC, the Mid-Tier Holding Company and the Bank
shall not have sustained since the date of the latest financial
statements included in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Registration Statement and
Prospectus and since the respective dates as of which information is
given in the Registration Statement and Prospectus, there shall not
have been any change in the long-term debt of the Company, the MHC,
the Mid-Tier Holding Company or the Bank other than debt incurred in
relation to the purchase of Shares by the Bank's eligible plans, or
any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company, the
MHC, the Mid-Tier Holding Company or the Bank, otherwise than as set
forth or contemplated in the Registration Statement and Prospectus,
the effect of which, in any such case described above, is in KBW's
reasonable judgment sufficiently material and adverse as to make it
impracticable or inadvisable to proceed with the Subscription
Offering or the delivery of the Shares on the terms and in the
manner contemplated in the Prospectus.
(j) At or prior to the Closing Date, the Agent shall receive: (i) a copy
of the letters from the OTS approving the Conversion Application and
authorizing the use of the Prospectus; (ii) a copy of the order from
the SEC declaring the Registration Statement effective; (iii) a
certificate of good standing from the Secretary of the State of
Delaware evidencing the good standing of the Company; (iv) a
certificate of good standing from the OTS evidencing the good
standing of the MHC, the Mid-Tier Holding Company and the Bank; (v)
a certificate from the FDIC evidencing the Bank's insurance of
accounts; (vi) a certificate from the FHLB-New York evidencing the
Bank's membership in good standing therein; (viii) a copy of the
letter from the OTS approving the Company's Holding Company
Application; (ix) a certified copy of the Company's Certificate of
Incorporation
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and Bylaws and the MHC's, the Mid-Tier Holding Company's and the
Bank's Charter and Bylaws and (x) any other documents that the Agent
shall reasonably request.
(k) Subsequent to the date hereof, there shall not have occurred any of
the following: (i) a suspension or limitation in trading in
securities generally on the New York Stock Exchange, American Stock
Exchange or in the over-the-counter market, or quotations halted
generally on The Nasdaq Stock Market, or minimum or maximum prices
for trading have been fixed, or maximum ranges for prices for
securities have been required by either of such exchanges or the
NASD or by order of the SEC or any other governmental authority;
(ii) a general moratorium on the operations of commercial banks, or
federal savings institutions or a general moratorium on the
withdrawal of deposits from commercial banks or federal savings
institutions declared by federal or state authorities; (iii) the
engagement by the United States in hostilities which have resulted
in the declaration by the U.S. Congress, on or after the date
hereof, of a national emergency or war; or (iv) a material decline
in the price of equity or debt securities if the effect of such a
declaration or decline, in the Agent's reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the
delivery of the Shares on the terms and in the manner contemplated
in the Registration Statement and the Prospectus.
(l) At or prior to the Closing Date, counsel to the Agent shall have
been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
sale of the Shares as herein contemplated and related proceedings or
in order to evidence the occurrence or completeness of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the
Company, the MHC, the Mid-Tier Holding Company or the Bank in
connection with the Conversion and the sale of the Shares as herein
contemplated shall be satisfactory in form and substance to KBW and
its counsel.
SECTION 8. INDEMNIFICATION.
(a) The Company, the MHC, the Mid-Tier Holding Company and the Bank
jointly and severally agree to indemnify and hold harmless the
Agent, its officers and directors, employees and agents, and each
person, if any, who controls the Agent within the meaning of Section
15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever (including,
but not limited to, settlement expenses), joint or several, that the
Agent or any of them may suffer or to which the Agent and any such
persons may become subject under all applicable federal or state
laws or otherwise, and to promptly reimburse the Agent and any such
persons upon written demand for any expenses (including reasonable
fees and disbursements of counsel) incurred by the Agent or any of
them in connection with investigating, preparing to defend or
defending any actions, proceedings or claims (whether commenced or
threatened)
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to the extent such losses, claims, damages, liabilities or actions:
(i) arise out of or are related to the Conversion or any action
taken by the Agent where acting as agent of the Company, the MHC,
the Mid-Tier Holding Company and the Bank; (ii) arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus
(or any amendment or supplement thereto), the Conversion Application
(or any amendment or supplement thereto), the Holding Company
Application or any instrument or document executed by the Company,
the MHC, the Mid-Tier Holding Company or the Bank or based upon
written information supplied by the Company, the MHC, the Mid-Tier
Holding Company or the Bank filed in any state or jurisdiction to
register or qualify any or all of the Shares or to claim an
exemption therefrom or provided to any state or jurisdiction to
exempt the Company as a broker-dealer or its officers, directors and
employees as broker-dealers or agent, under the securities laws
thereof (collectively, the "Blue Sky Application"), or any document,
advertisement, oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Company, the MHC,
the Mid-Tier Holding Company or the Bank with their consent or based
upon written or oral information furnished by or on behalf of the
Company, the MHC, the Mid-Tier Holding Company or the Bank, whether
or not filed in any jurisdiction, in order to qualify or register
the Shares or to claim an exemption therefrom under the securities
laws thereof; (iii) arise out of or are based upon the omission or
alleged omission to state in any of the foregoing documents or
information a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iv)
arise from any theory of liability whatsoever relating to or arising
from or based upon the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any
amendment or supplement thereto), the Conversion Application,
including the Members' Proxy Statement and the Stockholders' Proxy
Statement, (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information or other documentation distributed
in connection with the Conversion; provided, however, that no
indemnification is required under this paragraph (a) to the extent
such losses, claims, damages, liabilities or actions arise out of or
are based upon any untrue material statement or alleged untrue
material statement in, or material omission or alleged material
omission from, the Registration Statement (or any amendment or
supplement thereto), preliminary or final Prospectus (or any
amendment or supplement thereto), the Conversion Application, any
Blue Sky Application or Sales Information made in reliance upon and
in conformity with information furnished in writing to the Company,
the MHC, the Mid-Tier Holding Company or the Bank by the Agent or
its counsel regarding the Agent, provided, that it is agreed and
understood that the only information furnished in writing to the
Company, the MHC, the Mid-Tier Holding Company or the Bank by the
Agent regarding the Agent is set forth in the Prospectus under the
caption "The Conversion - Plan of Distribution; Selling Agent
Compensation;" and,
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PROVIDED FURTHER, that the Company, the MHC, the Mid-Tier Holding
Company and the Bank shall not be liable under clause (i) of the
foregoing indemnification provision to the extent that any loss,
claim, damage, liability or action is found in a final judgment by a
court of competent jurisdiction to have resulted from the Agent's
bad faith or gross negligence. Notwithstanding anything to the
contrary in this Agreement, the Company, the MHC, the Mid-Tier
Holding Company and/or the Bank shall not provide any
indemnification under this Agreement to the extent prohibited by
applicable law, rule, order or directive by the OTS or the SEC.
(b) The Agent agrees to indemnify and hold harmless, the Company, the
Mid-Tier Holding Company, the MHC and the Bank, their directors and
officers and each person, if any, who controls the Company or the
Bank within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act against any and all loss, liability, claim,
damage or expense whatsoever (including but not limited to
settlement expenses), joint or several, which they, or any of them,
may suffer or to which they, or any of them may become subject under
all applicable federal and state laws or otherwise, and to promptly
reimburse the Company, the Mid-Tier Holding Company, the MHC, the
Bank, and any such persons upon written demand for any expenses
(including reasonable fees and disbursements of counsel) incurred by
them, or any of them, in connection with investigating, preparing to
defend or defending any actions, proceedings or claims (whether
commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or any amendment or
supplement thereto), the Conversion Application (or any amendment or
supplement thereto), the preliminary or final Prospectus (or any
amendment or supplement thereto), any Blue Sky Application or Sales
Information, (ii) are based upon the omission or alleged omission to
state in any of the foregoing documents a material fact required to
be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or (iii) arise from any theory of liability whatsoever
relating to or arising from or based upon the Registration Statement
(or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), or any Blue
Sky Application or Sales Information or other documentation
distributed in connection with the Conversion; provided, however,
that the Agent's obligations under this Section 8(b) shall exist
only if and only to the extent that such untrue statement or alleged
untrue statement was made in, or such material fact or alleged
material fact was omitted from, the Registration Statement (or any
amendment or supplement thereto), the preliminary or final
Prospectus (or any amendment or supplement thereto), the Conversion
Application (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information in reliance upon and in conformity
with information furnished in writing to the Company, the MHC, the
Mid-Tier Holding Company or the Bank by the Agent or its counsel
regarding the Agent,
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provided, that it is agreed and understood that the only information
furnished in writing to the Company, the MHC, the Mid-Tier Holding
Company or the Bank by the Agent regarding the Agent is set forth in
the Prospectus under the caption "The Conversion - Plan of
Distribution; Selling Agent Compensation."
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether
commenced or threatened), or suit instituted against it in respect
of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve it from any liability which
it may have on account of this Section 8 or otherwise. An
indemnifying party may participate at its own expense in the defense
of such action. In addition, if it so elects within a reasonable
time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may
assume defense of such action with counsel chosen by it and approved
by the indemnified parties that are defendants in such action,
unless such indemnified parties reasonably object to such assumption
on the ground that there may be legal defenses available to them
that are different from or in addition to those available to such
indemnifying party. If an indemnifying party assumes the defense of
such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action, proceeding or claim,
other than reasonable costs of investigation. In no event shall the
indemnifying parties be liable for the fees and expenses of more
than one separate firm of attorneys (and any special counsel that
said firm may retain) for each indemnified party in connection with
any one action, proceeding or claim or separate but similar or
related actions, proceedings or claims in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) The agreements contained in this Section 8 and in Section 9 hereof
and the representations and warranties of the Company, the MHC, the
Mid-Tier Holding Company and the Bank set forth in this Agreement
shall remain operative and in full force and effect regardless of:
(i) any investigation made by or on behalf of the Agent or its
officers, directors or controlling persons, agent or employees or by
or on behalf of the Company, the MHC, the Mid-Tier Holding Company
or the Bank or any officers, directors, trustees or controlling
persons, agent or employees of the Company, the MHC, the Mid-Tier
Holding Company or the Bank; (ii) delivery of and payment hereunder
for the Shares; or (iii) any termination of this Agreement.
SECTION 9. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the MHC, the Mid-Tier Holding Company,
the Bank or the Agent, the Company, the MHC, the Mid-Tier Holding Company, the
Bank and the Agent shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
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connection with, and any amount paid in settlement of, any action, suit or
proceeding, but after deducting any contribution received by the Company, the
MHC, the Mid-Tier Holding Company, the Bank or the Agent from persons other than
the other parties thereto, who may also be liable for contribution) in such
proportion so that the Agent is responsible for that portion represented by the
percentage that the fees paid to the Agent pursuant to Section 2 of this
Agreement (not including expenses) bears to the gross proceeds received by the
Company from the sale of the Shares in the Offering, and the Company, the MHC,
the Mid-Tier Holding Company and the Bank shall be responsible for the balance.
If, however, the allocation provided above is not permitted by applicable law,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative fault of the Company, the MHC, the Mid-Tier Holding Company and
the Bank on the one hand and the Agent on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions, proceedings or claims in respect thereto), but also the
relative benefits received by the Company, the MHC, the Mid-Tier Holding Company
and the Bank on the one hand and the Agent on the other from the Offering
(before deducting expenses). The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the MHC, the Mid-Tier Holding
Company and/or the Bank on the one hand or the Agent on the other and the
parties' relative intent, good faith, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
MHC, the Mid-Tier Holding Company, the Bank and the Agent agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro-rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this Section 9. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions, proceedings or claims
in respect thereof) referred to above in this Section 9 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. It is expressly agreed that the Agent shall not be liable for any
loss, liability, claim, damage or expense or be required to contribute any
amount pursuant to Section 8(b) or this Section 9 which in the aggregate exceeds
the amount paid (excluding reimbursable expenses) to the Agent under this
Agreement. It is understood that the above stated limitation on the Agent's
liability is essential to the Agent and that the Agent would not have entered
into this Agreement if such limitation had not been agreed to by the parties to
this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Company, the MHC, the Mid-Tier Holding
Company, the Bank and the Agent under this Section 9 and under Section 8 shall
be in addition to any liability which the Company, the MHC, the Mid-Tier Holding
Company, the Bank and the Agent may otherwise have. For purposes of this Section
9, each of the Agent's, the Company's, the MHC's, the Mid-Tier Holding Company's
or the Bank's officers and directors and each person, if any, who controls the
Agent or the Company, the MHC, the Mid-Tier Holding Company or the Bank within
the meaning of the 1933 Act and the 1934 Act shall have the same rights to
contribution as the Agent, the Company, the MHC, the Mid-Tier Holding Company or
the Bank. Any party entitled to contribution, promptly after receipt of
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notice of commencement of any action, suit, claim or proceeding against such
party in respect of which a claim for contribution may be made against another
party under this Section 9, will notify such party from whom contribution may be
sought, but the omission to so notify such party shall not relieve the party
from whom contribution may be sought from any other obligation it may have
hereunder or otherwise than under this Section 9. Notwithstanding anything to
the contrary in this Agreement, the Company, the MHC, the Mid-Tier Holding
Company and/or the Bank shall not provide any contribution under this Agreement
to the extent prohibited by applicable law, rule, order or directive by the OTS
or the SEC.
SECTION 10. SURVIVAL OF AGREEMENTS, REPRESENTATIONS AND INDEMNITIES. The
respective indemnities of the Company, the MHC, the Mid-Tier Holding Company,
the Bank and the Agent and the representations and warranties and other
statements of the Company, the MHC, the Mid-Tier Holding Company, the Bank and
the Agent set forth in or made pursuant to this Agreement shall remain in full
force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of the Agent, the Company,
the MHC, the Mid-Tier Holding Company, the Bank or any controlling person
referred to in Section 8 hereof, and shall survive the issuance of the Shares,
and any successor or assign of the Agent, the Company, the MHC, the Mid-Tier
Holding Company, the Bank, and any such controlling person shall be entitled to
the benefit of the respective agreements, indemnities, warranties and
representations.
SECTION 11. TERMINATION. The Agent may terminate this Agreement by giving
the notice indicated below in this Section 11 at any time after this Agreement
becomes effective as follows:
(a) In the event the Company fails to sell the required minimum number
of the Shares by ___________, 2003, and in accordance with the
provisions of the Plan or as required by the Conversion Regulations,
and applicable law, this Agreement shall terminate upon refund by
the Company to each person who has subscribed for or ordered any of
the Shares the full amount which it may have received from such
person, together with interest as provided in the Prospectus, and no
party to this Agreement shall have any obligation to the other
hereunder, except as set forth in Sections 2(a), 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7 shall not have been
fulfilled when and as required by this Agreement, unless waived in
writing, or by the Closing Date, this Agreement and all of the
Agent's obligations hereunder may be canceled by the Agent by
notifying the Company, the MHC, the Mid-Tier Holding Company and the
Bank of such cancellation in writing or by telegram at any time at
or prior to the Closing Date, and any such cancellation shall be
without liability of any party to any other party except as
otherwise provided in Sections 2(a), 6, 8 and 9 hereof.
(c) In the event one of the Company, the MHC, the Mid-Tier Holding
Company or the Bank is in material breach of the representations and
warranties or covenants contained in Sections 4 and 5 and such
breach has not been cured after the Agent
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has provided the Company, the MHC, the Mid-Tier Holding Company and
the Bank with notice of such breach.
If the Agent elects to terminate this Agreement as provided in this
Section, the Company, the MHC and the Mid-Tier Holding Company and the Bank
shall be notified promptly by telephone or telegram, confirmed by letter.
The Company, the MHC, the Mid-Tier Holding Company and the Bank may
terminate this Agreement in the event the Agent is in material breach of the
representations and warranties or covenants contained in Section 5 and such
breach has not been cured after the Company, the MHC, the Mid-Tier Holding
Company and the Bank have provided the Agent with notice of such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
SECTION 12. NOTICES. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Keefe, Bruyette
& Woods, Inc., 211 Bradenton Drive, Dublin, Ohio 43017-5034, Attention: Ms.
Patricia A. McJoynt (with a copy to Thacher Proffitt & Wood, Attention: Richard
A. Schaberg, Esq.), and, if sent to the Company, the MHC, the Mid-Tier Holding
Company and the Bank, shall be mailed, delivered or telegraphed and confirmed to
the Company, the MHC, the Mid-Tier Holding Company and the Bank at Sound Federal
Bancorp, 300 Mamaroneck Avenue, Mamaroneck, New York 10543, Attention: Richard
P. McStravick President and CEO (with a copy to Luse Gorman Pomerenk & Schick,
P.C., Attention: Alan Schick, Esq.).
SECTION 13. PARTIES. The Company, the MHC, the Mid-Tier Holding Company
and the Bank shall be entitled to act and rely on any request, notice, consent,
waiver or agreement purportedly given on behalf of the Agent when the same shall
have been given by the undersigned. The Agent shall be entitled to act and rely
on any request, notice, consent, waiver or agreement purportedly given on behalf
of the Company, the MHC, the Mid-Tier Holding Company or the Bank, when the same
shall have been given by the undersigned or any other officer of the Company,
the MHC, the Mid-Tier Holding Company or the Bank. This Agreement shall inure
solely to the benefit of, and shall be binding upon, the Agent, the Company, the
MHC, the Mid-Tier Holding Company, the Bank, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. It is understood and agreed that
this Agreement is the exclusive agreement among the parties hereto, and
supersedes any prior agreement among the parties (except for specific references
to the letter agreement with the Agent) and may not be varied except in writing
signed by all the parties.
SECTION 14. CLOSING. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by the Agent
and the Company, the MHC, the Mid-Tier Holding Company and the Bank. At the
closing, the Company, the MHC, the Mid-Tier Holding Company and the Bank shall
deliver to the Agent in next day funds the
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commissions, fees and expenses due and owing to the Agent as set forth in
Sections 2 and 6 hereof and the opinions and certificates required hereby and
other documents deemed reasonably necessary by the Agent shall be executed and
delivered to effect the sale of the Shares as contemplated hereby and pursuant
to the terms of the Prospectus.
SECTION 15. PARTIAL INVALIDITY. In the event that any term, provision or
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
SECTION 16. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the State of New York.
SECTION 17. COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
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If the foregoing correctly sets forth the arrangement among the
Company, the MHC, the Mid-Tier Holding Company, the Bank and the Agent, please
indicate acceptance thereof in the space provided below for that purpose,
whereupon this letter and the Agent's acceptance shall constitute a binding
agreement.
Very truly yours,
SOUND FEDERAL, MHC SOUND FEDERAL BANCORP
(a Delaware corporation)
By Its Authorized By Its Authorized
Representative: Representative:
- --------------------------- ---------------------------
Richard P. McStravick Richard P. McStravick
President and Chief Executive Officer President and Chief Executive
Officer
SOUND FEDERAL SAVINGS & LOAN ASSOCIATION SOUND FEDERAL BANCORP
(a federal corporation)
By Its Authorized By Its Authorized
Representative: Representative:
- --------------------------- ---------------------------
Richard P. McStravick Richard P. McStravick
President and Chief Executive Officer President and Chief Executive
Officer
Accepted as of the date first above written
Keefe, Bruyette & Woods, Inc.
By Its Authorized
Representative:
- ---------------------------
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