Exhibit 1.1
[letterhead of Keefe, Bruyette
& Woods]
April 27, 2009
Harvard Savings, MHC
Harvard Illinois Financial Corp.
Harvard Savings Bank
58 N Ayer Street
Harvard, Illinois 60033
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Attention:
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Duffield J
Seyller III
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Ladies and Gentlemen:
This letter confirms the engagement
of Keefe, Bruyette & Woods, Inc. (“KBW”) to
act as the exclusive financial advisor to Harvard Savings, MHC (the
“MHC”), Harvard Illinois Financial Corp.(the
“Mid-Tier”) and Harvard Savings Bank (the
“Bank”) in connection with the MHC’s proposed
conversion from a mutual holding company to full stock form
pursuant to a Plan of Conversion and Reorganization (the
“Conversion”), including the offer and sale of certain
shares of the common stock (the “Common Stock”) of a
new stock holding company to be formed in connection with the
Conversion and Reorganization (the “Holding Company”)
to eligible persons in a Subscription Offering, with any remaining
shares offered to the general public in a Community Offering and,
under certain circumstances, to the general public in a Syndicated
Community Offering (the Subscription Offering the Community
Offering and any Syndicated Community Offering are collectively
referred to herein as the “Offerings”). In addition,
KBW will act as Records Agent in connection with the Offerings
pursuant to the terms of a separate agreement among the MHC,
Mid-Tier, Bank and KBW. The MHC, Mid-Tier, the Bank and the Holding
Company are sometimes collectively referred to herein as the
“Company” This letter sets forth the terms and
conditions of our engagement.
KBW will provide financial and
logistical advice to the Company and will assist the
Company’s management, legal counsel, accountants and other
advisors in connection with the Offerings and related issues. We
anticipate our services will include the following, each as may be
necessary and as the Company may reasonably request:
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1.
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Provide advice
on the financial and securities market implications of the Plan of
Conversion and any related corporate documents, including the
Company’s Business Plan;
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2.
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Assist in
structuring the Offerings, including developing and assisting in
implementing a marketing strategy for the Offerings;
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3.
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Reviewing all
offering documents, including the Prospectus, stock order forms,
letters, brochures and other related offering materials (it being
understood that preparation and filing of such documents will be
the responsibility of the Company and its counsel);
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Harvard Savings, MHC
Harvard Illinois Financial Corp.
Harvard Savings Bank
April 27, 2009
Page 2 of 7
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4.
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Assisting the
Company in preparing for and scheduling meetings with potential
investors and broker-dealers, as necessary;
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5.
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Assist the
Company in analyzing proposals from outside vendors retained in
connection with the Offerings, including printers, transfer agents
and appraisal firms;
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6.
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Assist the
Company in the drafting and distribution of press releases as
required or appropriate in connection with the Offerings (it being
understood that preparation and filing of such documents will be
the responsibility of the Company and its counsel);
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7.
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Meet with the
Board of Directors and/or management of the Company to discuss any
of the above services; and
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8.
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such other
financial advisory and investment banking services in connection
with the Offerings as may be agreed upon by KBW and the
Company.
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The Company acknowledges and agrees
that KBW’s obligation to perform the services contemplated by
this agreement shall be subject to the satisfactory completion of
such investigations and inquiries relating to the Company, and its
directors, officers, agents and employees, as KBW and their counsel
in their sole discretion my deem appropriate under the
circumstances. The Company agrees it will make available to KBW all
relevant information, whether or not publicly available, which KBW
reasonably requests, and will permit KBW to discuss with the board
of directors and management the operations and prospects of the
Company. KBW will treat all material non-public information as
confidential. The Company recognizes and confirms that KBW
(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
or to conduct any independent verification or any appraisal or
physical inspection of properties or assets. KBW will assume that
all financial forecasts have been reasonably prepared and reflect
the best then currently available estimates and judgments of the
Company’s management as to the expected future financial
performance of the Company.
The Company will cause appropriate
Offering documents to be filed with all regulatory agencies
including the Securities and Exchange Commission
(“SEC”), the Financial Industry Regulatory Authority
(“FINRA”), the appropriate federal and/or state bank
regulatory agencies. In addition, the Company and KBW agree that
the Company’s counsel shall serve as counsel with respect to
blue sky matters in connection with the Offerings, and that the
Company shall cause such counsel to prepare a Blue Sky Memorandum
related to the Offerings including KBW’s participation
therein and shall furnish KBW a copy thereof addressed to KBW or
upon which counsel shall state KBW may rely.
Harvard Savings, MHC
Harvard Illinois Financial Corp.
Harvard Savings Bank
April 27, 2009
Page 3 of 7
For the services hereunder, the
Company shall pay the following fees to KBW at closing unless
otherwise stated herein:
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(a)
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Management
Fee : A Management Fee of
$30,000 payable in five consecutive monthly installments of $6,000
commencing on the first day of the first month following the
execution of this engagement letter. Such fees shall be deemed to
have been earned when due. Should the Offering be terminated for
any reason not attributable to the action or inaction of KBW, KBW
shall have earned and be entitled to be paid fees accruing through
the stage at which point the termination occurred.
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(b)
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Success
Fee : A Success Fee of
$140,000 for shares of Common Stock sold in the Subscription
Offering. In addition, a Success Fee of 2.5% shall be paid on the
aggregate Purchase Price of Common Stock sold in the Direct
Community Offering. The Management Fee described in 4(a) will be
credited against the first Success Fee paid pursuant to this
paragraph. The total of the Success Fees for the sale of shares of
Common Stock in the Subscription and Direct Community Offerings
shall not exceed $180,000.
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(c)
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Syndicated
Community Offering : If
any shares of the Company’s stock remain available after the
Subscription Offering and Direct Community Offering, at the request
of the Company, KBW will seek to form a syndicate of registered
broker-dealers to assist in the sale of such common stock on a best
efforts basis, subject to the terms and conditions set forth in a
selected dealers agreement to be entered into between the Company
and KBW. KBW will endeavor to distribute the common stock among
dealers in a fashion which best meets the distribution objectives
of the Company and the Plan. KBW will be paid a fee not to exceed
7.0% of the aggregate Purchase Price of the shares of common stock
sold in the Syndicated Community Offering. From this fee, KBW will
pass onto selected broker-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 a
broker/dealer other than KBW shall be transmitted by KBW to such
broker/dealer. The decision to utilize selected broker-dealers will
be made by KBW upon consultation with the Company.
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The Company will bear those expenses
of the proposed Offering customarily borne by issuers, including,
without limitation, regulatory filing fees, SEC, “Blue
Sky,” and FINRA filing and registration fees; the fees of the
Company’s accountants, attorneys, appraiser, transfer agent
and registrar, printing, mailing and marketing and syndicate
expenses associated with the Offering; the fees set forth in
Section 4; and fees for “Blue Sky” legal work. If
KBW incurs expenses on behalf of Company, the Company will
reimburse KBW for such expenses.
Harvard Savings, MHC
Harvard Illinois Financial Corp.
Harvard Savings Bank
April 27, 2009
Page 4 of 7
KBW shall be reimbursed for its
out-of-pocket expenses related to the Offering, including costs of
travel, meals and lodging, photocopying, telephone, facsimile, and
couriers not to exceed $7,500 without the approval of the Company.
In addition, KBW will be reimbursed for fees and expenses of its
counsel not to exceed $37,500. These expenses assume no unusual
circumstances or delays, or a re-solicitation in connection with
the Offerings. KBW and the Company acknowledge that such expense
cap may be increased by mutual consent, including in the event of a
material delay in the Offering which would require an update of the
financial information in tabular form to reflect a period later
than that set forth in the original filing of the offering
document. The provisions of this paragraph are not intended to
apply to or in any way impair or limit the indemnification
provisions contained herein.
The Company acknowledges that all
opinions and advice (written or oral) given by KBW to the Company
in connection with KBW’s engagement are intended solely for
the benefit and use of the senior management and directors of the
Company for the purposes of their evaluation of the proposed
Offerings. Unless otherwise expressly stated in an opinion letter
issued by KBW or otherwise expressly agreed, no one other than such
persons is authorized to rely upon this engagement of KBW or any
statements or conduct by KBW. The Company agrees that no such
opinion or advice shall be used, reproduced, disseminated, quoted
or referred to at any time, in any manner, or for any purpose, nor
shall any public references to KBW be made by the Company or any of
its representatives without the prior written consent of
KBW.
The Company acknowledges and agrees
that KBW has been retained to act solely as financial advisor to
the Company and not as an advisor to or agent of any other person,
and the Company’s engagement of KBW is not intended to confer
rights upon any person not a party to this Agreement (in
