[Sandler ONeill & Partners, L.P. Letterhead]
Exhibit 1.1
[Sandler ONeill & Partners, L.P. Letterhead]
January 21, 2005
Board of Directors
Newport Federal Savings Bank
100 Bellevue Avenue
Newport, Rhode Island 02840
Attention: | Mr. Kevin M. McCarthy |
President and Chief Executive Officer |
Ladies and Gentlemen:
Sandler ONeill & Partners, L.P. (Sandler ONeill) is pleased to act as an independent financial advisor to Newport Federal Savings Bank (the Bank) in connection with the Banks proposed conversion from mutual to stock form (the Conversion), including the offer and sale of certain shares of the common stock of the proposed new holding company for the Bank (the Holding Company) to the Banks eligible account holders in a Subscription Offering, to members of the Banks community in a Direct Community Offering and, under certain circumstances, to the general public in a Syndicated Community Offering (collectively, the Offerings). For purposes of this letter, the term Actual Purchase Price shall mean the price at which the shares of the Holding Companys common stock are sold in the Conversion. This letter is to confirm the terms and conditions of our engagement.
ADVISORY SERVICES
Sandler ONeill will act as a consultant and advisor to the Bank and the Holding Company and will work with the Banks management, counsel, accountants and other advisors in connection with the Conversion and the Offerings. We anticipate that our services will include the following, each as may be necessary and as the Bank may reasonably request:
1. | Consulting as to the securities marketing implications of any aspect of the Plan of Conversion or related corporate documents; |
2. | Reviewing with the Board of Directors the financial impact of the Offerings on the Bank, based upon the independent appraisers appraisal of the common stock; |
3. | Reviewing all offering documents, including the Prospectus, stock order forms and |
Board of Directors
Newport Federal Savings Bank
January 21, 2005
Page 2
related offering materials (it being understood that preparation and filing of such documents will be the responsibility of the Bank and the Holding Company and their counsel); |
4. | Assisting in the design and implementation of a marketing strategy for the Offerings; |
5. | As necessary, assisting Bank management in scheduling and preparing for meetings with potential investors and broker-dealers in connection with the Offerings; and |
6. | Providing such other general advice and assistance as may be requested to promote the successful completion of the Conversion. |
It is understood that in no event shall Sandler ONeill be obligated to take or purchase any shares of the common stock in the Offerings.
SUBSCRIPTION AND COMMUNITY OFFERING FEES
If the Conversion is consummated, the Bank agrees to pay Sandler ONeill for its services a fee of one percent (1.0%) of the aggregate Actual Purchase Price of the shares of common stock sold in the Subscription Offering and in the Direct Community Offering, excluding in each case shares purchased (i) by any employee benefit plan of the Holding Company or the Bank established for the benefit of their respective directors, officers and employees, (ii) by, or on behalf of, a charitable foundation, and (iii) by any director, officer or employee of the Holding Company or the Bank or members of their immediate families.
If (a) Sandler ONeills engagement hereunder is terminated for any of the reasons provided for under the second paragraph of the section of this letter captioned Definitive Agreement, or (b) the Conversion is terminated by the Bank, no fees shall be payable by the Bank to Sandler ONeill hereunder; however, the Bank shall reimburse Sandler ONeill for its reasonable out-of-pocket expenses (including legal fees) incurred in connection with its engagement hereunder and for any fees and expenses incurred by Sandler ONeill on behalf of the Bank pursuant to the second paragraph under the section captioned Costs and Expenses below.
All fees payable to Sandler ONeill hereunder shall be payable in cash at the time of the closing of the Conversion. In recognition of the long lead times involved in the conversion process, the Bank agrees to make an advance payment to Sandler ONeill in the amount of $50,000, which shall be payable upon execution of this letter and which shall be credited against any fees or reimbursement of expenses payable hereunder. In the event that the advance payment exceeds the amount due in payment of fees and reimbursement of expenses hereunder, the excess shall be refunded to the Bank.
Board of Directors
Newport Federal Savings Bank
January 21, 2005
Page 3
COSTS AND EXPENSES
In addition to any fees that may be payable to Sandler ONeill hereunder and the expenses to be borne by the Bank pursuant to the following paragraph, the Bank agrees to reimburse Sandler ONeill, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder, regardless of whether the Conversion is consummated, including, without limitation, legal fees, advertising, promotional, syndication, and travel expenses, up to a maximum of $50,000; provided, however, that Sandler ONeill shall document such expenses to the reasonable satisfaction of the Bank. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this letter.
As is customary, the Bank will bear all other expenses incurred in connection with the Conversion and the Offerings, including, without limitation, (i) the cost of obtaining all securities and bank regulatory approvals, including any required NASD filing fees; (ii) the cost of printing and distributing the offering materials; (iii) the costs of blue sky qualification (including fees and expenses of blue sky counsel) of the shares in the various states; (iv) listing fees; and (v) all fees and disbursements of the Banks and the Holding Companys counsel, accountants, conversion agent and other advisors. In the event Sandler ONeill incurs any such fees and expenses on behalf of the Bank or the Holding Company, the Bank will reimburse Sandler ONeill for such fees and expenses whether or not the Conversion is consummated; provided, however, that Sandler ONeill shall not incur any substantial expenses on behalf of the Bank or the Holding Company pursuant to this paragraph without the prior approval of the Bank.
SYNDICATED COMMUNITY OFFERING
If any shares of the Holding Companys common stock remain available after the expiration of the Subscription Offering and the Direct Community Offering, at the request of the Bank and subject to the continued satisfaction of the conditions set forth in the second paragraph under the caption Definitive Agreement below, Sandler ONeill will seek to form a syndicate of registered dealers to assist in the sale of such common stock in a Syndicated Community Offering on a best efforts basis, subject to the terms and conditions to be set forth in a selected dealers agreement. With respect to any shares of the common stock sold by Sandler ONeill or any other NASD member firm under any selected dealers agreements in a Syndicated Community Offering, the Bank agrees to pay: (a) the sales commission payable to the selected dealer under such agreement and (b) a management fee to Sandler ONeill of one percent (1.0%) of the aggregate Actual Purchase Price of the shares of common stock sold in the Syndicated Community Offering. Sandler ONeill will endeavor to limit the aggregate fees to be paid by the Bank under any such selected dealers agreements to an amount competitive with gross underwriting discounts charged at such time for underwritings of comparable amounts of stock sold at a comparable price per share in a similar market environment, which shall not exceed 6.5% of the aggregate Actual Purchase Price of the shares sold under such agreements.
Board of Directors
Newport Federal Savings Bank
January 21, 2005
Page 4
Sandler ONeill will endeavor to distribute the common stock among dealers in a fashion that best meets the distribution objectives of the Bank and the requirements of the Plan of Conversion, which may result in limiting the allocation of stock to certain selected dealers.
DUE DILIGENCE REVIEW
Sandler ONeills obligation to perform the services contemplated by this letter shall be subject to the satisfactory completion of such investigation and inquiries relating to the Bank and the Holding Company, and their respective directors, officers, agents and employees, as Sandler ONeill and its counsel in their sole discretion may deem appropriate under the circumstances. In this regard, the Bank agrees that, at its expense, it will make available to Sandler ONeill all information that Sandler ONeill requests, and will allow Sandler ONeill the opportunity to discuss with the Banks and the Holding Companys management the financial condition, business and operations of the Bank and the Holding Company. The Bank and the Holding Company acknowledge that Sandler ONeill will rely upon the accuracy and completeness of all information received from the Bank and the Holding Company and their directors, trustees, officers, employees, agents, independent accountants and counsel.
BLUE SKY MATTERS
The Bank agrees that if Sandler ONeills counsel does not serve as counsel with respect to blue sky matters in connection with the Offerings, the Bank will cause the counsel performing such services to prepare a Blue Sky Memorandum related to the Offerings including Sandler ONeills participation therein and shall furnish Sandler ONeill a copy thereof addressed to Sandler ONeill or upon which such counsel shall state Sandler ONeill may rely.
CONFIDENTIALITY
Other than disclosure to other firms made part of any syndicate of selected dealers or as required by law, regulation or legal process, Sandler ONeill agrees that it will treat as confidential all material, non-public information relating to the Bank obtained in connection with its engagement hereunder (the Confidential Information), whether or not the Conversion is consummated. As used in this paragraph, the term Confidential Information shall not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by Sandler ONeill, (ii) was available to Sandler ONeill on a non-confidential basis prior to its disclosure to Sandler ONeill by the Bank, or (iii) becomes available to Sandler ONeill on a non-confidential basis from a person other than the Bank who is not otherwise known to Sandler ONeill to be bound not to disclose such information pursuant to a contractual, legal or fiduciary obligation.
Board of Directors
Newport Federal Savings Bank
January 21, 2005
Page 5
INDEMNIFICATION
Since Sandler ONeill will be acting on behalf of the Bank and the Holding Company in connection with the Conversion and the Offerings, the Holding Company and the Bank agree to indemnify and hold Sandler ONeill and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934 (Sandler ONeill and each such person being an Indemnified Party) harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, related to or arising out of the Conversion or the Offerings or the engagement of Sandler ONeill pursuant to, or the performance by Sandler ONeill of the services contemplated by, this letter, and will reimburse any Indemnified Party for all expenses (including reasonable legal fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party; provided, however, that the Bank and the Holding Company will not be liable in any such case to the extent that any such loss, claim, damage, liability or expense (i) arises out of or is based upon any untrue statement of a material fact or the omission of a material fact required to be stated therein or necessary to make not misleading any statements contained in any final prospectus, or any amendment or supplement thereto, made in reliance on and in conformity with written information furnished to the Bank by Sandler ONeill expressly for use therein, or (ii) is primarily attributable to the gross negligence, willful misconduct or bad faith of Sandler ONeill. If the foregoing indemnification is unavailable for any reason, the Bank and the Holding Company agree to contribute to such losses, claims, damages, liabilities and expenses in the proportion that its financial interest in the Conversion and the Offerings bears to that of Sandler ONeill.
DEFINITIVE AGREEMENT
Sandler ONeill and the Bank agree that (a) except as set forth in clause (b), the foregoing represents the general intention of the Bank and Sandler ONeill with respect to the services to be provided by Sandler ONeill in connection with the Offerings, which will serve as a basis for Sandler ONeill commencing activities, and (b) the only legal and binding obligations of the Bank, the Holding Company and Sandler ONeill with respect to the subject matter hereof shall be (1) the Banks obligation to reimburse costs and expenses pursuant to the section captioned Costs and Expenses, (2) those set forth under the captions Confidentiality and Indemnification, and (3) as set forth in a duly negotiated and executed definitive Agency Agreement to be entered into prior to the commencement of the Subscription Offering relating to the services of Sandler ONeill in connection with the Offerings. Such Agency Agreement shall be in form and content satisfactory to Sandler ONeill, the Bank and the Holding Company and their respective counsel and shall contain standard indemnification provisions consistent herewith.
Board of Directors
Newport Federal Savings Bank
January 21, 2005
Page 6
Sandler ONeills execution of such Agency Agreement shall also be subject to (i) Sandler ONeills satisfaction with its investigation of the Banks business, financial condition and results of operations, (ii) preparation of offering materials that are satisfactory to Sandler ONeill and its counsel, (iii) compliance with all relevant legal and regulatory requirements to the reasonable satisfaction of Sandler ONeills counsel, (iv) agreement that the price established by the independent appraiser is reasonable, and (v) market conditions at the time of the proposed offering. Sandler ONeill may terminate this agreement if such Agency Agreement is not entered into prior to March 31, 2006.
Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Sandler ONeill the duplicate copy of this letter enclosed herewith.
Very truly yours, | ||
Sandler ONeill & Partners, L.P. | ||
By: | Sandler ONeill & Partners Corp., the sole general partner |
By: | /s/ James J. OMeara | |
James J. OMeara | ||
Authorized Signatory |
Accepted and agreed to as of the date first above written:
Newport Federal Savings Bank | ||
By: | /s/ Kevin M. McCarthy | |
Kevin M. McCarthy | ||
President and Chief Executive Officer |
[Sandler ONeill & Partners, L.P. Letterhead]
January 21, 2005
Mr. Kevin M. McCarthy
President and Chief Executive Officer
Newport Federal Savings Bank
100 Bellevue Avenue
Newport, Rhode Island 02840
Dear Mr. McCarthy:
Sandler ONeill & Partners, L.P. (Sandler ONeill) is pleased to act as conversion agent to Newport Federal Savings Bank (the Bank) in connection with the Banks proposed conversion from mutual to stock form (the Conversion), including the offer and sale of certain shares of the common stock of the proposed new holding company for the Bank (the Holding Company) to the Banks eligible account holders in a Subscription Offering and, if necessary, to members of the Banks community in a Direct Community Offering (collectively, the Offerings). This letter is to confirm the terms and conditions of our engagement.
SERVICES AND FEES
In our role as Conversion Agent, we anticipate that our services will include the services outlined below, each as may be necessary and as the Bank may reasonably request:
I. | Consolidation of Accounts and Vote Calculation |
II. | Design and Stenciling of Proxy, Order and/or Request Forms |
III. | Organization and Supervision of the Conversion Center |
IV. | Proxy Solicitation and Special Meeting Services |
V. | Subscription Services |
Each of these services is further described in Appendix A to this agreement.
For its services hereunder, the Bank agrees to pay Sandler ONeill a fee of $10,000. The fee set forth above is based upon the requirements of current regulations governing the conversion
Mr. Kevin M. McCarthy
January 21, 2005
Page 2
process and the Plan of Conversion as currently contemplated and an uncontested solicitation of proxies. Any unusual or additional items or duplication of service required as a result of a material change in the regulations or the Plan of Conversion, any opposition to the proxy solicitation by a third party or a material delay or other similar events may result in extra charges which will be covered in a separate agreement if and when they occur.
All fees under this agreement shall be payable in cash, as follows: (a) $5,000, payable upon execution of this agreement by the Bank, which shall be non-refundable; and (b) the balance upon the completion of the Conversion.
COSTS AND EXPENSES
In addition to any fees that may be payable to Sandler ONeill hereunder, the Bank agrees to reimburse Sandler ONeill, upon request made from time to time, for its reasonable out-of-pocket expenses incurred in connection with its engagement hereunder regardless of whether the Conversion is consummated, including, without limitation, travel, lodging, food, telephone, postage, listings, forms and other similar expenses; provided, however, that Sandler ONeill shall document such expenses to the reasonable satisfaction of the Bank. The provisions of this paragraph are not intended to apply to or in any way impair the indemnification provisions of this agreement. It is understood that all expenses associated with the operation of the Conversion Center will be borne by the Bank.
RELIANCE ON INFORMATION PROVIDED
The Bank will provide Sandler ONeill with such information as Sandler ONeill may reasonably require to carry out its duties. The Bank recognizes and confirms that Sandler ONeill (a) will use and rely on such information in performing the services contemplated by this agreement without having independently verified the same, and (b) does not assume responsibility for the accuracy or completeness of the information. The Bank will also inform Sandler ONeill within a reasonable period of time of any changes in the Plan of Conversion that require changes in Sandler ONeills services. If a substantial expense results from any such change, the parties shall negotiate an equitable adjustment in the fee.
LIMITATIONS
Sandler ONeill, as Conversion Agent hereunder, (a) shall have no duties or obligations other than those specifically set forth herein; (b) will be regarded as making no representations and having no responsibilities as to the validity, sufficiency, value or genuineness of any order form or any stock certificates or the shares represented thereby, and will not be required to and will make no representations as to the validity, value or genuineness of the offer; (c) shall not be liable to any
Mr. Kevin M. McCarthy
January 21, 2005
Page 3
person, firm or corporation including the Bank by reason of any error of judgment or for any act done by it in good faith, or for any mistake of law or fact in connection with this agreement and the performance hereof unless caused by or arising out of its own willful misconduct, bad faith or gross negligence; (d) will not be obliged to take any legal action hereunder which might in its judgment involve any expense or liability, unless it shall have been furnished with reasonable indemnity satisfactory to it; and (e) may rely on and shall be protected in acting in reliance upon any certificate, instrument, opinion, notice, letter, telex, telegram, or other document or security delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties.
Anything in this agreement to the contrary notwithstanding, in no event shall Sandler ONeill be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if Sandler ONeill has been advised of the likelihood of such loss or damage and regardless of form of action.
INDEMNIFICATION
The Bank agrees to indemnify and hold Sandler ONeill and its affiliates and their respective partners, directors, officers, employees, agents and controlling persons (Sandler ONeill and each such person being an Indemnified Party) harmless from and against any and all losses, claims, damages and liabilities, joint or several, to which such Indemnified Party may become subject under applicable federal or state law, or otherwise, related to or arising out of the engagement of Sandler ONeill pursuant to, and the performance by Sandler ONeill of the services contemplated by this letter, and will reimburse any Indemnified Party for all expenses (including reasonable counsel fees and expenses) as they are incurred, including expenses incurred in connection with the investigation of, preparation for or defense of any pending or threatened claim or any action or proceeding arising therefrom, whether or not such Indemnified Party is a party. The Bank will not be liable under the foregoing indemnification provision to the extent that any loss, claim, damage, liability or expense is found in a final judgment by a court of competent jurisdiction to have resulted primarily from Sandler ONeills willful misconduct, bad faith or gross negligence.
MISCELLANEOUS
This agreement may be terminated by either party in the event that the agreement entered into between the Bank and Sandler ONeill for financial advisory services in connection with the Conversion is terminated.
The following addresses shall be sufficient for written notices to each other:
If to you: Newport Federal Savings Bank
Mr. Kevin M. McCarthy
January 21, 2005
Page 4
100 Bellevue Avenue
Newport, Rhode Island 02840
Attention: Mr. Kevin M. McCarthy, President and CEO
If to us: Sandler ONeill & Partners, L.P.
919 Third Avenue, 6th Floor
New York, New York 10022
Attention: Michael Lacovara, Esq., General Counsel
The Agreement and appendix hereto constitute the entire Agreement between the parties with respect to the subject matter hereof and can be altered only by written consent signed by the parties. This Agreement is governed by the laws of the State of New York.
Please confirm that the foregoing correctly sets forth our agreement by signing and returning to Sandler ONeill the duplicate copy of this letter enclosed herewith.
Very truly yours, | ||
Sandler ONeill & Partners, L.P. | ||
By: | Sandler ONeill & Partners Corp., | |
the sole general partner |
By: | /s/ James J. OMeara | |
JamesJ. OMeara | ||
AuthorizedSignatory |
Accepted and agreed to as of
the date first above written:
Newport Federal Savings Bank | ||
By: | /s/ Kevin M. McCarthy | |
Kevin M. McCarthy | ||
President and Chief Executive Officer |
APPENDIX A
OUTLINE OF CONVERSION AGENT SERVICES
I. | Consolidation of Accounts/Vote Calculation |
1. | Consolidate files in accordance with regulatory guidelines and create central file. |
2. | Our EDP format will be provided to your data processing people. |
3. | Vote calculation. |
II. | Design and Stenciling of Proxy/Order Form/Request Cards |
1. | Assist in designing any combination of proxies, request cards and stock order forms for voting and ordering stock. |
2. | Stencil proxies, request cards and order forms with account holder data. |
3. | Target group identification for proxy solicitation. |
III. | Organization and Supervision of Conversion Center |
1. | Advising on the physical organization of the Conversion Center, including materials requirements. |
2. | Assist in the training of all Bank personnel who will be staffing the conversion center. |
3. | Establish reporting procedures. |
4. | On-site supervision of the Conversion Center during the solicitation/offering period. |
IV. | Proxy Solicitation and Special Meeting Services |
1. | Direct proxy solicitation. |
2. | Proxy and ballot tabulation. |
3. | Act as or support inspector of election, it being understood that Sandler ONeill will not act as inspector of election in the case of a contested election. |
4. | Delete voting record date accounts closed prior to special meeting. |
5. | Produce final report of vote. |
V. | Subscription Services |
1. | Produce list of depositors by state (Blue Sky report). |
2. | Production of subscription rights and research books. |
3. | Stock order form processing. |
4. | Acknowledgment letter to confirm receipt of stock order. |
5. | Daily reports and analysis. |
6. | Proration calculation and share allocation in the event of an oversubscription. |
7. | Produce charter shareholder list. |
8. | Interface with Transfer Agent for Stock Certificate issuance. |
9. | Refund and interest calculations. |
10. | Confirmation letter to confirm purchase of stock. |
11. | Notification of full/partial rejection of orders. |
12. | Production of 1099/Debit tape. |
A - 1