Exhibit 1.1
February 20, 2009
Cullman Savings Bank
316 2 nd Ave SW
Cullman, Alabama 35055
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Attention:
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John A.
Riley
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President
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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 Cullman Savings Bank in
connection with the Bank’s proposed reorganization into
mutual holding company form of ownership (the
“Reorganization”), including the offer and sale of
common stock (the “Common Stock”) of a newly organized
middle-tier stock holding company (the “Holding
Company”) to the Bank’s eligible account holders in a
Subscription Offering with any remaining shares offered to the
general public in a 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 between the
Bank and KBW. The Bank and the Holding Company are collectively
referred to herein as the “Company”. This letter sets
forth the terms and conditions of our engagement.
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1.
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Advisory/Offering Services
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As the Company’s financial
advisor , 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 Reorganization and 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
Reorganization 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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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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Cullman Savings Bank
February 20, 2009
Page 2
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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;
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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”, formerly the NASD), 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.
For the services hereunder, the
Company shall pay the following fees to KBW at closing unless
stated otherwise:
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(a)
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Management
Fee: A Management Fee of
$35,000 payable in five consecutive monthly installments of $7,000
commencing with 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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Cullman Savings Bank
February 20, 2009
Page 3
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(b)
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Success
Fee: A Success Fee of
$145,000 for shares of Common Stock sold in the Subscription
Offering. In addition, a Success Fee shall be paid equal to 3.0% of
the aggregate Purchase Price of Common Stock sold in the Direct
Community Offering. The Management Fee described in 4(a) will be
credited against any Success Fee paid pursuant to this
paragraph.
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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
6.5% 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, 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 Company.
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KBW further agrees to provide
financial advisory assistance to the Company for a period of three
years following completion of the Offering, including general
strategic planning, the creation of a capital management strategy
designed to enhance the value of the Company, including the
formation of a dividend policy and share repurchase program,
assistance with shareholder relations matters, general advice on
mergers and acquisitions, and other related financial matters,
without the payment by the Company of any fees in addition to those
set forth in Section 4 hereof. Nothing in this letter
agreement shall require the Company to obtain such services from
KBW. If KBW acts as a financial advisor to the Company in
connection with any specific transactions, the terms of such
engagement will be set forth in a separate agreement between the
Company and KBW.
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,
Cullman Savings Bank
February 20, 2009
Page 4
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.
KBW shall be reimbursed for its
reasonable out-of-pocket expenses related to the Offering,
including costs of travel, meals and lodging, photocopying,
telephone, facsimile, and couriers not to exceed $20,000 without
the approval of the Company. In addition, KBW will be reimbursed
for fees and expenses of its counsel not to exceed $50,000. 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 caps 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 (including
shareholders, employees or creditors of the Company) as against KBW
or its affiliates, or their respective directors, officers,
employees or agents. In such capacity, KBW shall act as an
independent contractor, and any duties arising out of its
engagement shall be owed solely to the Company. It is understood
that KBW’s responsibility to the Company is solely
contractual in nature and KBW does not owe the Company, or any
other party, any fiduciary duty as a result of this
Agreement.
This letter agreement shall inure to
the benefit of the parties hereto and their respective successors,
and the obligations and liabilities assumed hereunder by the
parties hereto shall be binding upon their respective successors;
provided, however, that this letter agreement shall not be
assignable by KBW.
Cullman Savings Bank
February 20, 2009
Page 5
KBW acknowledges that a portion of
the Information may contain confidential and proprietary business
information concerning the Company. KBW agrees that, Except as
contemplated in connection with the performance of its services
under this agreement, as authorized by the Company or as required
by law, regulation or legal process, KBW agrees that it will treat
as confidential all material, non-public information relating to
the Company obtained in connection with its engagement hereunder
(the “Confidential Information); provided, however, that KBW
may disclose such Confidential Information to its agents and
advisors who are assisting or advising KBW in performing its
services hereunder and who have agreed to be bound by the terms and
conditions of this paragraph. As used in this paragraph, the term
“Confidential Information” shall not include
information which (a) is or becomes generally available to the
public other than as a result of a disclosure by KBW, (b) was
available to KBW on a non-confidential basis prior to its
dis
