EXHIBIT 1.2
July 5, 2005
Mr. Stephen M. Oksas
Chairman of the Board, President and Chief Executive Officer
Mutual Federal Bancorp, MHC
Mutual Federal Savings and Loan Association of Chicago
2212 West Cermak Road
Chicago, Illinois 60608
Dear Mr. Oksas:
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") is pleased to act
as records management agent for Mutual Federal Bancorp, MHC (the "MHC") and
Mutual Federal Savings and Loan Association of Chicago (the "Bank") in
connection with the offer and sale of certain shares of the common stock of a
newly-formed, mid-tier holding company (the "Holding Company") to the Bank's
eligible account holders in a Subscription Offering and to members of the Bank's
community in a Direct Community Offering (collectively, the "Offerings")
pursuant to the terms of a Plan of Stock Issuance to be adopted by the Boards of
Directors of the MHC, the Holding Company and the Bank (the "Plan"). This letter
is to confirm the terms and conditions of our engagement.
SERVICES AND FEES
- -----------------
In our role as Records Management Agent, we anticipate that our
services will include the services outlined below, each as may be necessary and
as the MHC, Holding Company and Bank may reasonably request:
I. Consolidation of Accounts and Development of a Central File
II. Preparation of Order Forms
III. Organization and Supervision of the Stock Offering Center
IV. Subscription Services
Each of these services is further described in Appendix A to this agreement.
Mr. Stephen M. Oksas
July 5, 2005
Page 2
For its services hereunder, the Bank agrees to pay Sandler O'Neill a
fee of $10,000. The fee set forth above is based upon the requirements of
current regulations and the Plan as currently contemplated. Any unusual or
additional items or duplication of service required as a result of a material
change in the regulations or the Plan 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, which shall be non-refundable;
and (b) the balance upon the completion of the Offerings.
COSTS AND EXPENSES
- ------------------
In addition to any fees that may be payable to Sandler O'Neill
hereunder, the MHC, the Holding Company and the Bank agree to reimburse Sandler
O'Neill, 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 Offerings are consummated, including, without limitation, travel,
lodging, food, telephone, postage, listings, forms and other similar expenses;
provided, however, that Sandler O'Neill shall document such expenses to the
reasonable satisfaction of the MHC, the Holding Company and the Bank. It is
understood that all expenses associated with the operation of the Stock Offering
Center will be borne by the MHC, the Holding Company and the Bank.
RELIANCE ON INFORMATION PROVIDED
- --------------------------------
The MHC, the Holding Company and the Bank will provide Sandler O'Neill
with such information as Sandler O'Neill may reasonably require to carry out its
duties. The MHC, the Holding Company and the Bank recognize and confirm that
Sandler O'Neill (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 MHC, the Holding Company and the Bank will
also inform Sandler O'Neill within a reasonable period of time of any changes in
the Plan which require changes in Sandler O'Neill's services. If a substantial
expense results from any such change, the parties shall negotiate an equitable
adjustment in the fee.
LIMITATIONS
- -----------
Sandler O'Neill, as Records Management 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
Mr. Stephen M. Oksas
July 5, 2005
Page 3
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 person or
entity, including the MHC, the Holding Company and 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 O'Neill be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if Sandler O'Neill has been advised of the likelihood of such loss or damage and
regardless of the form of action.
INDEMNIFICATION
- ---------------
The MHC, the Holding Company and the Bank agree to indemnify and hold
Sandler O'Neill and its affiliates and their respective partners, directors,
officers, employees, agents and controlling persons (Sandler O'Neill 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 O'Neill
pursuant to, and the performance by Sandler O'Neill 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 MHC, the
Holding Company and 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 O'Neill's willful misconduct, bad faith or
gross negligence.
MISCELLANEOUS
- -------------
The following addresses shall be sufficient for written notices to each
other:
Mr. Stephen M. Oksas
July 5, 2005
Page 4
If to you: Mutual Federal Savings and Loan Association of Chicago
2212 West Cermak Road
Chicago, Illinois 60608
Attention: Mr. Stephen M. Oksas
If to us: Sandler O'Neill & Partners, L.P.
919 Third Avenue
New York, New York 10022
Attention: Ms. Catherine A. Lawton
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 O'Neill the duplicate copy of this letter
enclosed herewith.
Very truly yours,
Sandler O'Neill & Partners, L.P.
By: Sandler O'Neill & Partners Corp.,
the sole general partner
By: /s/ Robert A. Kotecki
----------------------------------
Robert A. Kotecki
Authorized Signatory
Accepted and agreed to as of
the date first above written:
Mutual Federal Bancorp MHC
Mutual Federal Savings and Loan Association of Chicago
By: /s/ Stephen M. Oksas
-------------------------------------------
Stephen M. Oksas
President and Chief Executive Officer
APPENDIX A
----------
OUTLINE OF RECORDS MANAGEMENT AGENT SERVICES
--------------------------------------------
I. Consolidation of Accounts
1. Consolidate files in accordance with regulatory guidelines and
create central file.
2. Our EDP format will be provided to your data processing
people.
II. Order Form Preparation
1. Assist in designing stock order forms for ordering stock.
2. Stencil order forms with account holder data.
3. Target group identification for subscription offering.
III. Organization and Supervision of Stock Offering Center
1. Advising on the physical organization of the Stock Offering
Center, including materials requirements.
2. Assist in the training of all Bank personnel who will be
staffing the Stock Offering Center.
3. Establish reporting procedures.
4. On-site supervision of the Stock Offering Center during the
offering period.
IV. 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