Exhibit 1.1
[LETTERHEAD OF KEEFE, BRUYETTE & WOODS, INC.]
June 29, 2000
Mr. Jack L. Blair
President and Chief Executive Officer
Lawrence Federal Savings Bank
311 S. Fifth Street.
Ironton, OH 45638
Dear Mr. Blair:
This proposal is in connection with Lawrence Federal Savings Bank's (the
"Client" or "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.
Keefe, Bruyette and Woods, 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, KBW 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. KBW will provide
financial and logistical advice to the Bank and the Company concerning the
offering and related issues. KBW 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, and if necessary, in the Community
Offering.
KBW 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.
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. KBW will
attend meetings to review these documents
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Mr. Jack L. Blair
June 29, 2000
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and advise you on their form and content. KBW 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 KBW as the Bank's and
the Company's financial advisor and marketing agent, KBW 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 KBW all relevant information, whether or not publicly
available, which KBW reasonably requests, and will permit KBW to discuss with
management the operations and prospects of the Bank. KBW will treat all material
non-public information as confidential. The Bank acknowledges that KBW 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"), Office of Thrift Supervision ("OTS") 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 a mutually agreed upon Agency Agreement between KBW
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 OTS 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 to be agreed upon representations, warranties and covenants by the Bank and
KBW, and for the Company to indemnify KBW and their controlling persons (and, if
applicable, the members of the selling group and their controlling persons), and
for KBW 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 KBW 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
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Mr. Jack L. Blair
June 29, 2000
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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 KBW, KBW shall have earned and be entitled to be paid
fees accruing through the stage at which point the termination
occurred. The Management Fee shall be applied against the Success Fee
as described in 7(b)
(b) A Success Fee of $125,000 will be charged. The Management Fee as
described in 7(a) will be credited against the Success Fee.
(c) Broker-Dealer Pass-Through. If any shares of the Company's stock
remain available after the subscription offering, at the request of
the Bank, 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 the
selected dealers agreement. KBW 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. KBW will be paid a
fee not to exceed 5.5% of the aggregate Purchase Price of the shares
of common stock sold by them. 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 the Bank upon consultation
with KBW. The fee paid pursuant to Section 7(b) shall be reduced
pro-rata to the extent the Company pays any fee in connection with the
sale of stock pursuant to Section 7(c).
8. Additional Services. KBW 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 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 KBW.
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
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Mr. Jack L. Blair
June 29, 2000
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Conversion; the fees set forth in Section 7; and fees for "Blue Sky" legal work.
If KBW incurs expenses on behalf of Client pursuant to this Section 9, Client
will reimburse KBW for such expenses.
KBW shall not request reimbursement for out-of-pocket expenses, including costs
of travel, meals and lodging, photocopying, telephone, facsimile and couriers.
The selection of KBW's counsel will be done by KBW, with the approval of the
Bank. The Bank will reimburse KBW for fees and expenses of its counsel, which
will not exceed $30,000.
10. Conditions. KBW's willingness and obligation to proceed hereunder shall be
subject to, among other things, satisfaction of the following conditions in
KBW's opinion, which opinion shall have been formed in good faith by KBW 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 KBW, 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 KBW's 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 KBW.
13. Definitive Agreement. This letter reflects KBW's 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 KBW 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
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 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 KBW 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.
KBW 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, KBW agrees that in connection with the offering it
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Mr. Jack L. Blair
June 29, 2000
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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.
Sincerely,
KEEFE, BRUYETTE & WOODS, INC.
By: /s/ Harold T. Hanley III
-------------------------------------
Harold T. Hanley III
Managing Director
LAWRENCE FEDERAL SAVIGS BANK
By: /s/ Jack L. Blair Date: 7/5/00
------------------------------------- -----------
Jack L. Blair
President and Chief Executive Officer
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EXHIBIT A
CONVERSION SERVICES PROPOSAL
TO LAWRENCE FEDERAL SAVINGS BANK
KBW 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 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; review
stock orders for compliance with conversion guidelines and procedures; mail
order confirmations; provide the Bank's senior management with daily reports;
answer customer inquiries; and handle special situations as they arise.
Assign KBW's 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/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.
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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.
KBW 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 Keefe, Bruyette &
Woods, Inc.
