EXHIBIT 1.1
[Letterhead of Ryan, Beck & Co., Inc.]
CONFIDENTIAL
October 13, 2004
Mr. Thomas R. Venables
President & Chief Executive Officer
Benjamin Franklin Bancorp, MHC
Benjamin Franklin Savings Bank
58 Main Street
Franklin, MA 02038
Re: Mutual to Stock Conversion - Subscription Enhancement &
Administrative Services
Dear Mr. Venables:
Ryan Beck & Co., Inc. ("RBCO") is pleased to submit this engagement letter
setting forth the terms of the proposed engagement between RBCO and Benjamin
Franklin Bancorp, MHC, (the "Company"), and Benjamin Franklin Savings Bank (the
"Bank") in connection with the proposed conversion of the Company to stock form
and concurrent sale of common stock.
1. BACKGROUND ON RYAN BECK
Ryan Beck & Co., Inc. was organized in 1946 and is one of the nation's leading
investment bankers for financial institutions. The firm is a registered
broker-dealer with the Securities and Exchange Commission, a member of the
National Association of Securities Dealers, Inc., Securities Industry
Association and a member of the Securities Investor Protection Corporation.
RBCO's Financial Institutions Group represents one of the largest such groups
devoted solely to financial institution matters in the country.
2. MUTUAL TO STOCK CONVERSION AND STOCK OFFERING
It is our understanding that the Company has signed a definitive agreement to
acquire Chart Bank, A Cooperative Bank ("Chart") (the "Merger") contingent upon
the Company's proposed conversion (the "Conversion") to a fully converted public
company. (The Company in its pre-Conversion mutual form and post-Conversion
stock form is referred to herein as the "Company"). In connection therewith, the
Company's common stock (the "Common Stock") would be offered in a subscription
offering with any remaining shares sold in a direct community offering and, if
necessary, a syndicated community offering (collectively the "Offering"). If
there are unsubscribed for shares after the depositor offering and the direct
community offering, the Company may, in its discretion, determine to apply
unsubscribed shares toward the stock portion of the merger consideration to be
paid to Chart Bank's stockholders ("Adjusted Minimum Feature"). In connection
with the Conversion and Offering, the Company's Board of Trustees would adopt a
Plan of Conversion from Mutual to Stock
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 2
Form (the "Plan") whereby shares of Common Stock would be offered for sale in
the Offering. In connection with the Offering, RBCO would propose to act as
financial advisor to the Company with respect to the Plan and selling
agent/manager with respect to the Offering of the shares of Common Stock in the
Offering. Specific terms of services shall be set forth in a definitive agency
agreement (the "Definitive Agreement") between RBCO and the Company to be
executed on the date the offering document is declared effective by the
appropriate regulatory authorities.
As previously disclosed to the Company, Ryan Beck is engaged to represent Chart
as its financial advisor in the Merger. Under certain circumstances, pursuant to
section 7.9 of the Agreement and Plan of Merger dated September 1, 2004 by and
between the Company and Chart, Chart may be required to address any unsolicited
bona fide written acquisition proposal(s) from a party(s) other than the
Company. In such circumstances, Ryan Beck agrees not to counsel Chart or opine
on the financial merits of any such competing offer. Chart would seek
professional financial advice from a second independent financial advisor.
3. SERVICES TO BE PROVIDED BY RYAN BECK
a. Advisory Services - Thorough planning is essential to a successful
offering. RBCO serves as lead coordinator of the financial advisory,
marketing and logistic efforts necessary to prepare for an offering.
Our actions are intended to clearly define responsibilities and
timetables, while avoiding costly surprises. We assume responsibility
for the initial preparation of marketing materials--saving you time and
legal expense. Moreover, as your investment banker, RBCO, will evaluate
the financial, marketing and regulatory issues involved in the
Offering. Our specific responsibilities include:
- Advise with respect to business planning issues in preparation for
a public offering;
- Advise with respect to the choice of charter and form of
organization;
- Review and advise with respect to the Plan;
- Review and provide input with respect to the Business Plan to be
prepared in connection with the Offering;
- Participate in drafting the Prospectus and assist in obtaining all
requisite regulatory approvals;
- Review and provide comments to the Board of Trustees on the
adequacy of the appraisal process;
- Develop a marketing plan for the Offering including direct mail,
advertising, community meetings and telephone solicitation;
- Provide specifications and assistance in selecting data processing
assistance, printer and other professionals;
- Develop an operating plan for the Stock Sale Center (the
"Center");
- Provide a list of equipment and supplies needed for the Center;
- Draft marketing materials including letters, brochures, slide show
script and advertisements; and
- Assist in arranging market-makers for post-reorganization trading.
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 3
b. Administrative Services and Stock Sale Center Management - RBCO will
manage all aspects of the Offering. A successful Offering requires an
enormous amount of attention to detail. Working knowledge and familiarity
with the law and "lore" of bank regulators, Securities and Exchange
Commission and NASD is essential. RBCO's experience in managing many
thrift reorganizations and mutual holding company conversion offerings
will minimize the burden on your management and disruption to normal
banking business. At the same time, our legal, accounting and regulatory
background ensures that details are attended to in a professional fashion.
An Offering requires accurate and timely record keeping and reporting.
Furthermore, customer inquiries must be handled professionally and
accurately. The Stock Sale Center centralizes all data and work effort
relating to the Offering.
RBCO will supervise and administer the Center. We will train Center staff to
help record stock orders, answer customer inquiries and handle special
situations as they arise. Center activities include the following:
- Provide experienced on-site registered representatives to minimize
disruption of day-to-day business;
- Identify and organize space for the Center, the focal point of
sales activity;
- Administer the Center. All substantive stock related matters will
be handled by employees of RBCO;
- Prepare procedures for processing stock orders and cash, and for
handling requests for information;
- RBCO will outsource all Offering agent/data processing/transfer
agent functions. The cost of such services will be borne by the
Company and are subject to separate agreement. RBCO will provide
the Company with the proposed agreements for such services prior
to the execution of such agreements by RBCO or the Companies;
- Provide scripts, training and guidance for the telephone team in
the stock sales telemarketing effort;
- Educate the Company's directors, officers and employees about the
Conversion and Offering, their roles and relevant securities laws;
- Train branch managers and customer-contact employees on the proper
response to stock purchase inquiries;
- Train and supervise Center staff assisting with order processing;
- Prepare daily sales reports for management and ensure funds
received balance to such reports;
- Coordinate functions with the data processing agent, printer,
transfer agent, stock certificate printer and other professionals;
- Design and implement procedures for handling IRA and Keogh orders;
and
- Provide post-offering subscriber assistance and management of the
pro-ration process.
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 4
c. Securities Marketing Services - RBCO uses various sales techniques
including direct mail, advertising, community investor meetings,
telephone solicitation, and if necessary, selling group formation. The
sales approach is tailored to fit your specific situation. Our
techniques are designed to attract a stockholder base comprised largely
of community oriented individuals loyal to the Company.
Our specific actions include:
- Assign licensed registered representatives from our staff to
work at the Center to solicit orders on behalf of the Company
from eligible prospects who have been targeted as likely and
desirable stockholders;
- Assist management in developing a list of potential investors
who are viewed as priority prospects;
- Respond to inquiries concerning the Offering and investment
opportunities;
- Organize, coordinate and participate in community
informational meetings. These meetings are intended to both
relieve customer anxiety and attract potential investors. The
meetings generate widespread publicity for the Offering while
providing local exposure of the Company and promoting
favorable stockholder relations;
- Supervise and conduct a telemarketing campaign to identify
prospects from among the Company's customer base;
- Continually advise management on market conditions and the
community's responsiveness to the Offering; and
- If appropriate assemble a selling group of selected local
broker-dealers to assist in selling stock during the offering.
In so doing, prepare broker "fact sheets" and arrange "road
shows" for the purpose of stimulating local interest in the
stock and informing the brokerage community of the particulars
of the Offering.
4. COMPENSATION
a. A fee of one percent (1.00%) of the dollar amount of the Common Stock sold
in the Offering. No fee shall be payable pursuant to this subsection in
connection with the sale of stock to (i) officers, Directors, employees or
immediate family of such persons ("Insiders"); (ii) a charitable
foundation associated with the Company; or (iii) qualified and
non-qualified employee benefit plans of the Company or the Insiders. Also,
no fee shall be payable on shares issued in connection with the
acquisition of Chart, including shares issued as Adjusted Minimum shares.
b. For stock sold by a group of NASD member firms (which will include RBCO)
pursuant to a syndicated community offering solely managed by RBCO (the
"Selling Group"), a fee equal to one percent (1.00%), which fee along with
the fee payable directly by the Company to selected dealers shall not
exceed six percent (6.00%) in the aggregate. In consultation with RBCO,
the Company shall be authorized to determine which NASD member firms
participate in the syndicated
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 5
community offering and the extent of their participation. RBCO will not
commence sales of the stock through members of the Selling Group without
the specific prior approval of the Company.
Unless otherwise stated all fees described in subparagraphs a and b above
are to be paid to RBCO at the closing of the Conversion. If, pursuant to a
resolicitation undertaken by the Company, RBCO is required to provide
significant additional services, the parties shall mutually agree to the
dollar amount of the additional compensation due (if any).
c. The term of this engagement shall be for a period of one year, unless
RBCO's services are terminated earlier by the Company or RBCO at any time
with or without cause effective upon receipt of written notice to that
effect.
d. If, after adoption of the Plan, (i) the Plan is abandoned or terminated by
the Company; (ii) the Offering is not consummated by September 30, 2005;
(iii) RBCO terminates this relationship because there has been a material
adverse change in the financial condition or operations of the Company
since June 30, 2004; or (iv) immediately prior to commencement of the
Offering, RBCO terminates this relationship because in its opinion, which
shall have been formed in good faith after reasonable determination and
consideration of all relevant factors, there has been a failure to
satisfactorily disclose all relevant information in the disclosure
documents or the existence of market conditions which might render the
sale of the shares by the Company hereby contemplated inadvisable; RBCO
shall not be entitled to the fees set forth above under subparagraphs a
and b, but shall be entitled to receive the reimbursement of its
reasonable out-of-pocket expenses as set forth in paragraph 7 below.
5. MARKET MAKING
RBCO agrees to use its best efforts to maintain a market and to solicit other
broker-dealers to make a market in the Common Stock after the Offering so that
there are at least three market makers for the Common Stock after the Offering.
6. DOCUMENTS
The Company and its counsel will complete, file with the appropriate regulatory
authorities and, as appropriate, amend from time to time, the information to be
contained in the Company's applications to banking and securities regulators and
any related exhibits thereto. In this regard, the Company and its counsel will
prepare a prospectus and any other necessary disclosure documents relating to
the offering of the Common Stock in conformance with applicable rules and
regulations. As the Company's financial advisor, RBCO will in conjunction with
counsel, conduct an examination of the relevant documents and records of the
Company and the Bank and will make such other reasonable investigation as deemed
necessary and appropriate under the circumstances. The Company and the Bank
agree to make all such documents, records and other information deemed necessary
by RBCO, or its counsel, available to them upon reasonable request. RBCO's
counsel will prepare, subject to the approval of the Company's counsel, the
Definitive Agreement. RBCO's counsel shall be selected by RBCO, subject to the
approval of the Company.
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 6
7. EXPENSES AND REIMBURSEMENT
The Company and the Bank will bear all of its expenses in connection with the
Conversion and the Offering of the Common Stock including, but not limited to,
the Company's attorney fees, NASD filing fees, "blue sky" legal fees, expenses
for appraisal, auditing and accounting services, advertising expenses, printing
expenses, "road show" expenses, syndicate related expenses, temporary personnel
expenses and the preparation of stock certificates. In the event RBCO incurs
such expenses on behalf of the Company or the Bank, the Company shall pay or
reimburse RBCO for such reasonable fees and expenses regardless of whether the
Conversion is successfully completed. RBCO will not incur any single expense of
more than $2,000, pursuant to this paragraph without the prior approval of the
Company.
The Company also agrees to reimburse RBCO for reasonable out-of-pocket expenses,
including legal fees and expenses, incurred by RBCO in connection with the
services contemplated hereunder. RBCO will not incur legal fees (excluding the
out-of-pocket expenses of counsel) in excess of $75,000 without the approval of
the Company. RBCO will not incur reimbursable direct out of pocket expenses in
excess of $25,000 without the consent of the Company. The parties acknowledge,
however, that such cap may be increased by the mutual consent of the Company and
RBCO in the event of any material delay in the Offering which would require an
update of the financial information in tabular form contained in the prospectus
for a period later than that set forth in the original Prospectus filing. Not
later than three days before closing, we will provide you with a detailed
accounting of all reimbursable expenses to be paid at closing.
8. BLUE SKY
To the extent required by applicable state law, RBCO and the Company will need
to obtain or confirm exemptions, qualifications or registration of the Common
Stock under applicable state securities laws and NASD policies. The cost of such
legal work and related filing fees will be paid by the Company to the law firm
furnishing such legal work. The Company will cause the counsel performing such
services to prepare a Blue Sky memorandum related to the Offering including
RBCO's participation therein and shall furnish RBCO a copy thereof addressed to
RBCO or upon which such counsel shall state RBCO may rely.
9. AVAILABILITY OF "STARS" PROGRAM
As an additional service to the Company, RBCO will make available for a period
of 1 year following the completion of the Offering, advisory services through
the RBCO Strategic Advisory Services ("STARS") program. Fred Schluter will serve
as the senior relationship manager for this program. If the Company elects to
avail itself of the STARS program, RBCO will meet with the Company at its
request. RBCO also will provide opinions and recommendations, upon request, for
the areas covered below:
Valuation Analysis
Merger and Acquisition Planning and Analysis
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 7
Merger and Acquisition Trends
Planning, Forecasting & Competitive Strategy
Capital, Asset & Liability Structure & Management
Stock Repurchase Programs
Dividend Policy
Dividend Reinvestment Programs
Market Development and Sponsorship of Bank Securities
Financial Disclosure
Financial Relations
Financial Reports
Branch Sales and Purchases
Stock Benefit Plan Analysis and Advisory
Stockholder & Investor Relations Presentations & Programs
Fairness Opinions
Scanning of Potential Acquisition Candidates
Based on Published Statement Information
(This screening does not extend to any in-depth merger and
acquisition analyses or studies which are available under
RBCO's normal fee schedule, and does not include retention of
RBCO by the Company for any specific merger/acquisition
situation.)
If the Company elects to utilize the STARS program RBCO will waive the regular
retainer fee and hourly charges for this program for the first year. The Company
also will reimburse RBCO's reasonable out-of-pocket expenses incurred in
conjunction with the performance of these services. Such out-of-pocket expenses
shall include travel, legal and other miscellaneous expenses. RBCO will not
incur any single expense in excess of $2,000 pursuant to this paragraph without
the prior approval of the Company.
10. INDEMNIFICATION
The Definitive Agreement will provide for indemnification of the type usually
found in underwriting agreements as to certain liabilities, including
liabilities under the Securities Act of 1933. The Company and the Bank also
agree to defend, indemnify and hold harmless RBCO and its officers, directors,
employees and agents against all claims, losses, actions, judgments, damages or
expenses, including but not limited to reasonable attorneys' fees, arising
solely out of the engagement described herein, except that such indemnification
shall not apply to RBCO's own bad faith, willful misconduct or gross negligence.
11. CONFIDENTIALITY
To the extent consistent with legal requirements and except as otherwise set
forth in the Prospectus, all information given to RBCO by the Company or the
Bank or Chart Bank, unless publicly available or otherwise available to RBCO
without restriction to breach of any confidentiality agreement ("Confidential
Information"), will be held by RBCO in confidence and will not be disclosed to
anyone other than RBCO's agents without the Company's or Chart Bank's, as
applicable, prior approval or
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 8
used for any purpose other than those referred to in this engagement letter.
Upon any termination of its engagement, RBCO shall promptly deliver to the
Company or Chart Bank, as applicable, all materials specifically produced for it
and will return to the Company and Chart Bank, as applicable, all Confidential
Information provided to RBCO during the course of its engagement hereunder.
12. NASD MATTERS
RBCO has an obligation to file certain documents and to make certain
representations to the National Association of Security Dealers ("NASD") in
connection with the Offering. The Company and the Bank agree to cooperate with
RBCO and provide such information as may be necessary for RBCO to comply with
all NASD requirements applicable to it in connection with its participation as
contemplated herein in the Offering. RBCO is and will remain through completion
of the Offering a member in a good standing of the NASD and will comply with all
applicable NASD requirements.
13. OBLIGATIONS
(a) Except as set forth below, this engagement letter is merely a statement of
intent. While RBCO, the Company and the Bank agree in principle to the
contents hereof and propose to proceed promptly and in good faith to work
out the arrangements with respect to the Offering, any legal obligations
between RBCO, the Company and the Bank shall be only: (i) those set forth
herein in paragraphs 2, 3 and 4 regarding services and payments; (ii)
those set forth in paragraph 7 regarding reimbursement for certain
expenses; (iii) those set forth in paragraph 10 regarding indemnification;
(iv) those set forth in paragraph 11 regarding confidentiality; and (v) as
set forth in a duly negotiated and executed Definitive Agreement.
(b) The obligation of RBCO to enter into the Definitive Agreement shall be
subject to there being, in RBCO's opinion, which shall have been formed in
good faith after reasonable determination and consideration of all
relevant factors: (i) no material adverse change in the condition or
operation of the Company or the Bank; (ii) satisfactory disclosure of all
relevant information in the disclosure documents and a determination that
the sale of stock is reasonable given such disclosures; (iii) no market
conditions which might render the sale of the shares by the Company hereby
contemplated inadvisable; and (iv) agreement that the price established by
the independent appraiser is reasonable in the then prevailing market
conditions.
14. INDEPENDENT CONTRACTOR; NO FIDUCIARY DUTY
The Company and the Bank acknowledge and agree that they are a sophisticated
business enterprises and that RBCO has been retained pursuant to this Agreement
to act as financial advisor to the Company and the Bank solely with respect to
the matters set forth herein. In such capacity, RBCO shall act as an independent
contractor, and any duties of RBCO arising out of this engagement pursuant to
this Agreement shall be contractual in nature and shall be owed solely to the
Company and the Bank. Each party disclaims any intention to impose any fiduciary
duty on the other.
Mr. Thomas R. Venables
Benjamin Franklin Bancorp, MHC
Page 9
15. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts applicable to contracts executed and to be
wholly performed therein without giving effects to its conflicts of laws
principles or rules. Any dispute here under shall be brought in a court in the
Commonwealth of Massachusetts.
16. WAIVER OF TRAIL BY JURY
EACH OF RBCO AND THE COMPANY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
RELATED TO OR ARISING OUT OF THIS AGREEMENT.
RYAN BECK & CO., INC.
BY: __________________________________
Robin P. Suskind
Managing Director
Accepted and Agreed to This _____ Day of October, 2004
BENJAMIN FRANKLIN BANCORP, MHC
BY: _________________________________
Thomas R. Venables
President & Chief Executive Officer
BENJAMIN FRANKLIN SAVINGS BANK
BY: ________________________________
Thomas R. Venables
President & Chief Executive Officer