Exhibit 1.2
Engagement Letter between Everett Mutual Bank and ▇▇▇▇▇▇▇ ▇▇▇▇ & Company
[▇▇▇▇▇▇▇ ▇▇▇▇ & Company Letterhead]
April 9, 1999
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
Everett Mutual Bank
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
This proposal is in connection with Everett Mutual Bank (the "Bank") intention
to convert from a mutual to a capital stock form of organization (the
"Conversion"). In order to effect the Conversion, it is contemplated that all of
the Bank's common stock to be outstanding pursuant to the Conversion will be
issued to a holding company (the "Company") to be formed by the Bank, and that
the Company will offer and sell shares of its common stock first to eligible
persons (pursuant to the Bank's Plan of Conversion) in a Subscription and
Community Offering.
▇▇▇▇▇▇▇ ▇▇▇▇ & Company ("▇▇▇▇"), a Division of ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇, Inc.
("KBW"), will act as the Bank's and the Company's exclusive financial advisor
and marketing agent in connection with the Conversion. This letter sets forth
selected terms and conditions of our engagement.
1. Advisory/Conversion Services. As the Bank's and Company's financial advisor
and marketing agent, ▇▇▇▇ will provide the Bank and the Company with a
comprehensive program of conversion services designed to promote an orderly,
efficient, cost-effective and long-term stock distribution. ▇▇▇▇ will provide
financial and logistical advice to the Bank and the Company concerning the
offering and related issues. ▇▇▇▇ will assist in providing conversion
enhancement services intended to maximize stock sales in the Subscription
Offering and to residents of the Bank's market area, if necessary, in the
Community Offering.
▇▇▇▇ shall provide financial advisory services to the Bank which are typical in
connection with an equity offering and include, but are not limited to, overall
financial analysis of the client with a focus on identifying factors which
impact the valuation of the common stock and provide the appropriate
recommendations for the betterment of the equity valuation.
Additionally, post conversion financial advisory services will include advice on
shareholder relations, NASDAQ listing, dividend policy (for both regular and
special dividends), stock
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April 9, 1999
Page 2 of 5
repurchase strategy and communication with market makers. Prior to the closing
of the offering, ▇▇▇▇ shall furnish to client a Post-Conversion reference manual
which will include specifics relative to these items. (The nature of the
services to be provided by ▇▇▇▇ as the Bank's and the Company's financial
advisor and marketing agent are further described in Exhibit A attached hereto.)
2. Preparation of Offering Documents. The Bank, the Company and their counsel
will draft the Registration Statement, Application for Conversion, Prospectus
and other documents to be used in connection with the Conversion. ▇▇▇▇ will
attend meetings to review these documents and advise you on their form and
content. ▇▇▇▇ and its counsel will draft appropriate agency agreement and
related documents as well as marketing materials other than the Prospectus.
3. Due Diligence Review. Prior to filing the Registration Statement, Application
for Conversion or any offering or other documents naming ▇▇▇▇ as the Bank's and
the Company's financial advisor and marketing agent, ▇▇▇▇ and their
representatives will undertake substantial investigations to learn about the
Bank's business and operations ("due diligence review") in order to confirm
information provided to us and to evaluate information to be contained in the
Bank's and/or the Company's offering documents. The Bank agrees that it will
make available to ▇▇▇▇ all relevant information, whether or not publicly
available, which ▇▇▇▇ reasonably requests, and will permit ▇▇▇▇ to discuss with
management the operations and prospects of the Bank. ▇▇▇▇ will treat all
material non-public information as confidential. The Bank acknowledges that ▇▇▇▇
will rely upon the accuracy and completeness of all information received from
the Bank, its officers, directors, employees, agents and representatives,
accountants and counsel including this letter to serve as the Bank's and the
Company's financial advisor and marketing agent.
4. Regulatory Filings. The Bank and/or the Company will cause appropriate
offering documents to be filed with all regulatory agencies including, the
Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers ("NASD"), Federal Deposit Insurance Corp. ("FDIC") Federal
Reserve Bank and such state securities commissioners as may be determined by the
Bank.
5. Agency Agreement. The specific terms of the conversion services, conversion
offering enhancement and syndicated offering services contemplated in this
letter shall be set forth in an Agency Agreement between ▇▇▇▇ and the Bank and
the Company to be executed prior to commencement of the offering, and dated the
date that the Company's Prospectus is declared effective and/or authorized to be
disseminated by the appropriate regulatory agencies, the SEC, the NASD, the FDIC
and such state securities commissioners and other regulatory agencies as
required by applicable law.
6. Representations, Warranties and Covenants. The Agency Agreement will provide
for customary representations, warranties and covenants by the Bank and ▇▇▇▇,
and for the
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April 9, 1999
Page 3 of 5
Company to indemnify ▇▇▇▇ and their controlling persons (and, if applicable, the
members of the selling group and their controlling persons), and for ▇▇▇▇ to
indemnify the Bank and the Company against certain liabilities, including,
without limitation, liabilities under the Securities Act of 1933.
7. Fees. For the services hereunder, the Bank and/or Company shall pay the
following fees to ▇▇▇▇ at closing unless stated otherwise:
(a) Management Fee. A Management Fee of $25,000 payable in four
consecutive monthly installments of $6,250 commencing with the signing of
this letter. 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 ▇▇▇▇, ▇▇▇▇ shall have earned and be entitled to be paid fees
accruing through the stage at which point the termination occurred.
(b) Success Fee. A Success Fee of $715,000.00. The Management Fee
described in 7(a) will be applied against the Success Fee.
(c) Broker-Dealer Pass-Thru. If any shares of the Company's stock
remain available after the subscription offering, at the request of the
Bank, ▇▇▇▇ 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 the selected dealers agreement. ▇▇▇▇
will endeavor to distribute the common stock among dealers in a fashion
which best meets the distribution objectives of the Bank and the Plan of
Conversion. ▇▇▇▇ will be paid a fee not to exceed 5.5% of the aggregate
Purchase Price of the shares of common stock sold by them. ▇▇▇▇ 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 ▇▇▇▇ shall be transmitted by
▇▇▇▇ to such broker/dealer. The decision to utilize selected broker-dealers
will be made by the Bank upon consultation with ▇▇▇▇. In the event, with
respect to any stock purchases, fees are paid pursuant to this subparagraph
7(c), such fees shall be in lieu of, and not in addition to, payment
pursuant to subparagraph 7(a) and 7(b).
8. Additional Services. ▇▇▇▇ further agrees to provide financial advisory
assistance to the Company and the Bank for a period of one year following
completion of the Conversion, including formation of a dividend policy and share
repurchase program, assistance with shareholder reporting and shareholder
relations matters, general advice on mergers and acquisitions and other related
financial matters, without the payment by the Company and the
▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
April 9, 1999
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Bank of any fees in addition to those set forth in Section 7 hereof. Nothing in
this Agreement shall require the Company and the Bank to obtain such services
from ▇▇▇▇. Following this initial one year term, if both parties wish to
continue the relationship, a fee will be negotiated and an agreement entered
into at that time.
9. Expenses. The Bank will bear those expenses of the proposed offering
customarily borne by issuers, including, without limitation, regulatory filing
fees, SEC, "Blue Sky," and NASD filing and registration fees; the fees of the
Bank's accountants, attorneys, appraiser, transfer agent and registrar,
printing, mailing and marketing and syndicate expenses associated with the
Conversion; the fees set forth in Section 7; and fees for "Blue Sky" legal work.
If ▇▇▇▇ incurs expenses on behalf of Client, Client will reimburse ▇▇▇▇ for such
expenses.
▇▇▇▇ shall be reimbursed for reasonable out-of-pocket expenses, including costs
of travel, meals and lodging, photocopying, telephone, facsimile and couriers
and reasonable fees and expenses of their counsel (such fees of counsel will not
be incurred without the prior approval of Client). Such reimbursement of
out-of-pocket expenses will not exceed $35,000. The selection of such counsel
will be done by ▇▇▇▇, with the approval of the Bank. Such reimbursement of legal
fees will not exceed $35,000.
10. Conditions. ▇▇▇▇'▇ willingness and obligation to proceed hereunder shall be
subject to, among other things, satisfaction of the following conditions in
▇▇▇▇'▇ opinion, which opinion shall have been formed in good faith by ▇▇▇▇ after
reasonable determination and consideration of all relevant factors: (a) full and
satisfactory disclosure of all relevant material, financial and other
information in the disclosure documents and a determination by ▇▇▇▇, in its sole
discretion, that the sale of stock on the terms proposed is reasonable given
such disclosures; (b) no material adverse change in the condition or operations
of the Bank subsequent to the execution of the agreement; and (c) no adverse
market conditions at the time of offering which in ▇▇▇▇'▇ opinion make the sale
of the shares by the Company inadvisable.
12. Benefit. This Agreement shall inure to the benefit of the parties hereto and
their respective successors and to the parties indemnified pursuant to the terms
and conditions of the Agency Agreement and their successors, and the obligations
and liabilities assumed hereunder by the parties hereto shall be binding upon
their respective successors provided, however, that this Agreement shall not be
assignable by ▇▇▇▇.
13. Definitive Agreement. This letter reflects ▇▇▇▇'▇ present intention of
proceeding to work with the Bank on its proposed conversion. It does not create
a binding obligation on the part of the Bank, the Company or ▇▇▇▇ except as to
the agreement to maintain the confidentiality of non-public information set
forth in Section 3, the payment of certain fees as set forth in Section 7(a) and
7(b) and the assumption of expenses as set forth in Section 9, all of which
shall constitute the binding obligations of the parties hereto and which shall
survive the
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April 9, 1999
Page 5 of 5
termination of this Agreement or the completion of the services furnished
hereunder and shall remain operative and in full force and effect. You further
acknowledge that any report or analysis rendered by ▇▇▇▇ pursuant to this
engagement is rendered for use solely by the management of the Bank and its
agents in connection with the Conversion. Accordingly, you agree that you will
not provide any such information to any other person without our prior written
consent.
▇▇▇▇ acknowledges that in offering the Company's stock no person will be
authorized to give any information or to make any representation not contained
in the offering prospectus and related offering materials filed as part of a
registration statement to be declared effective in connection with the offering.
Accordingly, ▇▇▇▇ agrees that in connection with the offering it will not give
any unauthorized information or make any unauthorized representation. We will be
pleased to elaborate on any of the matters discussed in this letter at your
convenience.
If the foregoing correctly sets forth our mutual understanding, please so
indicate by signing and returning the original copy of this letter to the
undersigned.
Very truly yours,
▇▇▇▇▇▇▇ ▇▇▇▇ & COMPANY,
A DIVISION OF ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President
EVERETT MUTUAL BANK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Date: 4/12/99
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
EXHIBIT A
CONVERSION SERVICES PROPOSAL
TO EVERETT MUTUAL BANK
▇▇▇▇▇▇▇ ▇▇▇▇ & Company provides thrift institutions converting from mutual to
stock form of ownership with a comprehensive program of conversion services
designed to promote an orderly, efficient, cost-effective and long-term stock
distribution. The following list is representative of the conversion services,
if appropriate, we propose to perform on behalf of the Bank.
General Services
Assist management and legal counsel with the design of the transaction
structure.
Analyze and make recommendations on bids from printing, transfer agent, and
appraisal firms.
Assist officers and directors in obtaining bank loans to purchase stock, if
requested.
Assist in drafting and distribution of press releases as required or
appropriate.
Conversion Offering Enhancement Services
Establish and manage Stock Information Center at the Bank. Stock Information
Center personnel will track prospective investors; record stock orders; mail
order confirmations; provide the Bank's senior management with daily reports;
answer customer inquiries; and handle special situations as they arise.
Assign ▇▇▇▇'▇ personnel to be at the Bank through completion of the Subscription
and Community Offerings to manage the Stock Information Center, meet with
prospective shareholders at individual and community information meetings,
solicit local investor interest through a tele-marketing campaign, answer
inquiries, and otherwise assist in the sale of stock in the Subscription and
Community Offerings.
This effort will be lead by a Principal of ▇▇▇▇/KBW.
Create target investor list based upon review of the Bank's depositor base.
Provide intensive financial and marketing input for drafting of the prospectus.
Conversion Offering Enhancement Services- Continued
Prepare other marketing materials, including prospecting letters and brochures,
and media advertisements.
Arrange logistics of community information meeting(s) as required.
Prepare audio-visual presentation by senior management for community information
meeting(s).
Prepare management for question-and-answer period at community information
meeting(s).
Attend and address community information meeting(s) and be available to answer
questions.
Broker-Assisted Sales Services.
Arrange for broker information meeting(s) as required.
Prepare audio-visual presentation for broker information meeting(s).
Prepare script for presentation by senior management at broker information
meeting(s).
Prepare management for question-and-answer period at broker information
meeting(s).
Attend and address broker information meeting(s) and be available to answer
questions.
Produce confidential broker memorandum to assist participating brokers in
selling the Bank's common stock.
Aftermarket Support Services.
▇▇▇▇ will use their best efforts to secure market making and on-going research
commitment from at least two NASD firms, one of which will be ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, Inc.
