Engagement Letter for Investment Banking Services between Friedman, Billings, Ramsey & Co., Inc. and Oswego County Bancorp, Inc.

Summary

Friedman, Billings, Ramsey & Co., Inc. (FBR) is engaged by Oswego County Bancorp, Inc., Oswego County Savings Bank, and Oswego County MHC to provide investment banking and marketing services for the Bank’s reorganization and stock offering. FBR will advise on the conversion plan, create marketing materials, train staff, and assist with the stock listing. FBR will receive a management and marketing fee, plus reimbursement for expenses. The agreement includes indemnification for FBR and is governed by Virginia law. Only certain compensation and indemnity terms are binding until a definitive agreement is signed.

EX-1.1 3 dex11.txt EXHIBIT 1_1 Exhibit 1.1 [FRIEDMAN BILLINGS RAMSEY LETTERHEAD] June 6, 2002 Board of Directors Attn: Gregory J. Kreis President & Chief Executive Officer Oswego County Bancorp, Inc. 44 East Bridge Street Oswego, NY 13126 Re: Reorganization and Plan of Conversion Marketing Services Gentlemen: This letter sets forth the terms of the proposed engagement between Friedman, Billings, Ramsey and Co., Inc. ("FBR") and Oswego County Bank (the "Bank"), concerning our Investment Banking Services in connection with the Plan of Conversion and Plan of Reorganization (the "Plan") in connection with the reorganization of the Bank, Oswego County Bancorp, Inc. (the "Company"), and Oswego County MHC (the "Mutual Holding Company") from the mutual holding company structure into the stock holding company structure. All references in this document to the Company or the Bank include activities of Oswego County Bank, Oswego County MHC and Oswego County Savings Bancorp, Inc. FBR is prepared to assist the Bank in connection with the offering of its shares of common stock during the Subscription Offering and Community Offering as such terms are determined in the Plan. The specific terms of the services contemplated hereunder shall be set forth in a definitive sales agency agreement (the "Agreement") between FBR and the Bank to be executed prior to mailing of the Offering material. The price of the shares during the Subscription Offering and Community Offering will be the price established by the Bank's Board of Directors, based upon an independent appraisal as approved by the appropriate regulatory authorities, provided such price is mutually acceptable to FBR and the Bank. In connection with the Subscription Offering and Community Offering FBR will render the following services: .. Act as the Financial Advisor to the Bank .. Create marketing materials and formulate a marketing Plan .. Conduct training for all Directors and Employees concerning the reorganization and stock offering .. Manage Stock Center and staff with FBR personnel .. Assist the Bank and Attorneys with listing on Nasdaq At the appropriate time, FBR, in conjunction with its counsel, will conduct an examination of the relevant documents and records of the Bank as FBR deems necessary and appropriate. The Bank will make all documents, records and other information deemed necessary by FBR or its counsel available to them upon request. For its services hereunder, FBR will receive the following compensation and reimbursement from the Bank: Oswego County Bancorp, Inc. June 6, 2002 Page 2 of 5 1. A management fee of $25,000 payable as follows, $12,500 upon the signing of this letter and $12,500 upon receiving regulatory approval of the Plan application. Should the Plan be terminated for any reason not attributable to the action or inaction of FBR, FBR shall have earned and be entitled to be paid fees accruing through the stage at which point the termination occurred. 2. A marketing fee of $175,000 regardless of the amount of Common Stock sold in the Subscription Offering and Community Offering. The management fee of $25,000 will be subtracted from the marketing fee. 3. The foregoing fees are to be payable to FBR at closing as defined in the Agreement to be entered into between FBR and the Bank. 4. FBR shall be reimbursed for allocable expenses incurred by them, including legal fees, whether or not the Agreement is consummated. It is further understood that the Bank will pay all other expenses of the Plan including but not limited to its attorneys' fees, NASD filing fees, filing and registration fees and fees of either FBR's attorneys or the attorneys relating to any required state securities law filings, telephone charges, air freight, supplies, conversion agent charges, transfer agent charges, fees relating to auditing and accounting and costs of printing all documents necessary in connection with the foregoing. For purpose of FBR's obligation to file certain documents and to make certain representations to the NASD in connection with the Plan, The Bank warrants that: (a) The Bank has not privately placed any securities within the last 18 months (b) there have been no material dealings within the last 12 months between the Bank and any NASD member or any person related to or associated with any such member; (c) none of the officers or directors of the Bank has any affiliation with the NASD; (d) except as contemplated by this engagement letter with FBR, the Bank has no financial or management consulting contracts outstanding with any other person; (e) the Bank has not granted FBR a right of first refusal with respect to the underwriting of any future offering of the Bank's common stock; and (f) there has been no intermediary between FBR and the Bank in connection with the public offering of the Bank shares, and no person is being compensated in any manner far providing such service. The Bank agrees to indemnify FBR and its controlling persons, representatives and agents in accordance with the indemnification provisions (the "Indemnification Provisions") set forth in Appendix A, and agrees to the other provisions of Appendix A, which is incorporated herein by this reference, regardless of whether the proposed offering is consummated. This letter is merely a statement of intent and is not a binding legal agreement except as to the compensation and reimbursement paragraphs numbered l-4 above and the indemnity described in Appendix A. While FBR and the Bank agree in principle to the contents hereof and the purpose to proceed promptly, and in good faith, to work out the arrangements with respect to the proposed Offering, any legal obligations between FBR and the Bank shall be only as set forth in a duly executed Agreement. The indemnification provision described in Appendix A will be superseded by the indemnification provisions of the Agreement entered into by the Bank and FBR. Such Agreement shall be in the form and content satisfactory to, among other things, there being in FBR's opinion no material adverse change in the condition or operations of the Bank or no market conditions which might render the sale of the shares by the Bank hereby contemplated inadvisable. The validity and interpretation of this agreement shall be governed by, and construed and enforced in accordance with, the laws of the Commonwealth of Virginia (excluding the conflicts of laws rules). Oswego County Bancorp, Inc. June 6, 2002 Page 3 of 5 Please acknowledge your agreement to the foregoing by signing below and retaining to FBR one copy of this letter along with a payment of $12,500. This proposal is open for your acceptance for a period of thirty (30) days from the date hereof. Very truly yours, /s/ James C. Neuhauser - ------------------------------------------------ By: James C. Neuhauser Title: Managing Director Date: /s/ David H. Neiswander - ------------------------------------------------ By: David H. Neiswander Title: Vice President Date: 6/6/2002 Agreed and Accepted to this 1/st/ day of July, 2002. Oswego County Savings Bank, Oswego County Bancorp, Inc., Oswego County MHC By: /s/ Gregory J. Kreis --------------------------------------- Title: President and Chief Executive Officer --------------------------------------- Oswego County Bancorp, Inc. June 6, 2002 Page 4 of 5 APPENDIX A The Bank agrees to indemnify and hold harmless FBR and its affiliates (as defined in Rule 405 under the Securities Act of 1933, as amended) and their respective directors, officers, employees, agents and controlling persons (FBR and each person being an "Indemnified Party") from and against all losses, claims, damages and liabilities (or actions, including shareholder actions, in respect thereof), joint or several, to which such Indemnified Party may become subject under any applicable federal or state law, or otherwise, which are related to or result from the performance by FBR of the services contemplated by or the engagement of FBR pursuant to, this letter agreement and will promptly reimburse any Indemnified Party for all reasonable expenses (including reasonable counsel fees and expenses) as they are incurred in connection with the investigation or, preparation for or defense arising from any threatened or pending claim, whether or not such Indemnified Party is a party and whether or not such claim, action or proceeding is initiated or brought by the Bank. The Bank will not be liable to any Indemnified Party under the foregoing indemnification and reimbursement provisions, (i) for any settlement by an Indemnified Party effected without its prior written consent (not to be unreasonably withheld); or (ii) to the extent that any loss, claim, damage or liability is found in a final non-appealable judgment by a court of competent jurisdiction to have resulted primarily from FBR's willful misconduct or gross negligence. The Bank also agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to the Bank or its security holders or creditors related to or arising out of the engagement of FBR pursuant to, or the performance by FBR of the services contemplated by, this letter agreement except to the extent that any loss, claim, damage or liability is found in a judgment by an appellate court (or trial court if FBR fails to file a timely appeal) of competent jurisdiction to have resulted primarily from FBR's willful misconduct or gross negligence. Promptly after receipt by an Indemnified Party of notice of any intention or threat to commence an action, suit or proceeding or notice of the commencement of any action, suit or proceeding, such Indemnified Party will, if a claim in respect thereof is to be made against the Bank pursuant hereto, promptly notify the Bank in writing of the same. In case any such action is brought against any Indemnified Party and such Indemnified Party notifies the Bank of the commencement thereof, the Bank may elect to assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party, and an Indemnified Party may retain counsel to participate in the defense of any such action; provided, however, that in no event shall the Bank be required to pay fees and expenses for more than one firm of attorneys representing Indemnified Parties unless the defense of one Indemnified Party is unique or separate from that of another Indemnified Party subject to the same claim or condition. Any failure or delay by an Indemnified Party to give the notice referred to in this paragraph shall not affect such Indemnified Party's right to be indemnified hereunder, except to the extent that such failure or delay causes actual harm to the Bank, or prejudices its ability to defend such action, suit or proceeding on behalf of such Indemnified Party. If the indemnification provided for its this letter agreement is for any reason held unenforceable by an Indemnified Party (other than as a result of a judicial determination as to FBR's willful misconduct or gross negligence, the Bank agrees to contribute to the losses, claims, damages and liabilities for which such indemnification is held unenforceable (i) in such proportion as is appropriate to reflect the relative benefits to the Bank, on the one hand, and FBR on the other hand, of the Offering as contemplated (whether or not the Offering is consummated) or, (ii) if (but only if) the allocation provided for in clause (i) is for any reason unenforceable, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Bank, on the one hand and FBR, on the other hand, as well as any other relevant equitable considerations. The Bank agrees that for the purposes of this paragraph the relative benefits to the Bank and FBR of the Transactions as contemplated shall be deemed to be in the same proportion that the total value received or contemplated to be received by the Oswego County Bancorp, Inc. June 6, 2002 Page 5 of 5 Bank or its shareholders, as the case may be, as a result of or in connection with the Transactions bear to the fees paid or to be paid to FBR under this letter agreement. Notwithstanding the foregoing, the Bank expressly agrees that FBR shall not be required to contribute any amount in excess of the amount by which fees owed FBR hereunder (excluding reimbursable expenses), exceeds the amount of any damages which FBR has otherwise been required to pay. The Bank agrees that without FBR's prior written consent, which shall not be unreasonably withheld, it will not settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which this indemnification could be sought under the indemnification provisions of this letter agreement (in which FBR or any other Indemnified Party is an actual or potential party to such claim, action or proceeding), unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action or proceeding. In the event that an Indemnified Party is requested or required to appear as a witness to any action brought by or on behalf of or against the Bank in which such Indemnified Party is not named as a defendant the Bank agrees, to promptly reimburse FBR on a monthly basis for all expenses incurred by it in connection with such Indemnified Party's appearing and preparing to appear as such a witness, including, without limitation, the reasonable fees and disbursements of its legal counsel. In addition to any reimbursed fees, expenses or costs outlined hereunder, FBR shall also receive from the Bank cash compensation of $1,000.00 per person, per day, plus reasonable out-of-pocket expenses and costs should FBR be required to provide testimony in any formal or informal proceeding regarding the Offering. If multiple claims are brought with respect to at least one of which indemnification is permitted under applicable law and provided for under this agreement, we agree that any judgment or arbitrated award shall be conclusively deemed to be based on claims as to which indemnification is permitted and provided for, except to the extent the judgment or arbitrated award expressly states that the award, or any portion thereof, is based solely on a claim as to which indemnification is not available. In the event that the Bank does not promptly assume the defense of a claim or action, the Indemnified Party shall have the right to employ counsel reasonable satisfactory to the Bank, at the Bank's expense, to defend such pending or threatened action or claim. Agreed and Accepted to this 1/st/ day of July, 2002. Oswego County Savings Bank, Oswego County Bancorp, Inc., Oswego County MHC By: /s/ Gregory J. Kreis --------------------------------------- Title: President and Chief Executive Officer ---------------------------------------