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February 18, 1997
Mr. Jon W Letzkus
President and Chief Executive Officer
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912
Dear Mr. Letzkus:
This proposal is in connection with Bridgeport Savings and Loan Association's
(the "Association") 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 Association's common stock to be outstanding
pursuant to the Conversion will be issued to a holding company (the "Company")
to be formed by the Association, and that the Company will offer and sell shares
of its common stock first to eligible persons (pursuant to the Association's
Plan of Conversion) in a Subscription Offering and then in a Community Offering.
Charles Webb & Company, a Division of Keefe Bruyette & Woods ("Webb") will act
as the Association'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 Association's and Company's financial
advisor and marketing agent, Webb will provide the Association and the Company
with a comprehensive program of conversion services designed to promote an
orderly, efficient, cost-effective and long-term stock distribution. Webb will
provide financial and logistical advice to the Association and the Company
concerning the offering and related issues. Webb will assist in providing of
conversion enhancement services intended to maximize stock sales in the
Subscription Offering and to residents of the Association's market area, if
necessary, in the Community Offering.
Webb shall provide financial advisory services to the Association 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 an equity security and provide the appropriate
recommendations for the betterment of the equity valuation.
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Mr. Jon W. Letzkus
February 18, 1997
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Additionally, post conversion financial advisory services will include advice on
shareholder relations, NASDAQ listing, dividend policy, stock repurchase
strategy and communication with market makers. Prior to the closing of the
offering, Webb 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 Webb as the Association's and the Company's financial advisor and
marketing agent are further described in Exhibit A attached hereto.)
2. PREPARATION OF OFFERING DOCUMENTS. The Association, 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.
Webb will attend meetings to review these documents and advise you on their form
and content. Webb 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 Webb as the
Association's and the Company's financial advisor and marketing agent, Webb and
its representatives will undertake substantial investigations to learn about the
Association's business and operations ("due diligence review") in order to
confirm information provided to us and to evaluate information to be contained
in the Association's and/or the Company's offering documents. The Association
agrees that it will make available to Webb all relevant information, whether or
not publicly available, which Webb reasonably request, and will permit Webb to
discuss personnel and the operations and prospects of the Association with
management. Webb will treat all material non-public information as confidential.
The Association acknowledges that Webb will rely upon the accuracy and
completeness of all information received from the Association, its officers,
directors, employees-agents and representatives, accountants and counsel
including this letter of intent to serve as the Association's and the Company's
financial advisor and marketing agent.
4. REGULATORY FILINGS. The Association 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") and such state securities commissioners as may be
determined by the Association.
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 Webb and the
Association 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 and such state securities commissioners and other regulatory
agencies as required by applicable law.
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Mr. Jon W. Letzkus
February 18, 1997
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6. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Agency Agreement will provide
for customary representations warranties and covenants by the Association and
Webb, and for the Company to indemnify Webb and their controlling persons (and,
if applicable, the members of tile selling group and their controlling persons),
and for Webb to indemnify the Association and the Company against certain
liabilities, including, without limitation, liabilities under the Securities Act
of 1933.
7. FEES. For the services hereunder, the Association and/or Company shall pay
the following fees to Webb at closing unless stated otherwise:
(a) 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 Webb, Webb shall have earned and be entitled to be paid
fees accruing through the stage at which point the termination
occurred.
(b) A Success Fee of 1.50% of the aggregate Purchase Price of Common Stock
sold in the Subscription Offering and Community Offering excluding
shares purchased by the Association's officers, directors, or employees
(or members of their immediate families) plus any ESOP, tax-qualified
or stock based compensation plans (except IRA's) or similar plan
created by the Association for some or all of its directors or
employees.
(c) If any shares of the Company's stock remain available after the
subscription offering, at the request of the Association, Webb 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. Webb will
endeavor to distribute the common stock among dealers in a fashion
which best meets the distribution objectives of the Association and the
Plan of Conversion. Webb will be paid a fee not to exceed 5.5% of the
aggregate Purchase Price of the shares of common stock sold by them.
Webb 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 Webb shall be transmitted by Webb to such broker/dealer. The
decision to utilize selected broker-dealers will be made by the
Association upon consultation with Webb. In the event, with respect to
any stock
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Mr. Jon W. Letzkus
February 18, 1997
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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. EXPENSES. The Association 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
Association'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.
Webb shall be reimbursed for the reasonable fees and expenses of its Counsel.
The selection of such counsel will be done by Webb, with the approval of the
Association. Such fees and legal expenses shall be agreed upon by both Webb and
Client.
Because of the proximity of Webb to the Association, Webb will not be reimbursed
for its reasonable out of pocket expenses, including communication, lodging and
travel expenses.
CONDITIONS. Webb's willingness and obligation to proceed hereunder shall be
subject to, among other things, satisfaction of the following conditions in
Webb's opinion, which opinion shall have been formed in good faith by Webb 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 Webb, 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 Association subsequent to the execution of the agreement; and (c) no
market conditions at the time of offering which in Webb's opinion make the sale
of the shares by the Company inadvisable.
10. BENEFIT. This Agreement shall inure to the benefit of the parties hereto and
their respective successors and to the parties indemnified hereunder 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 Webb.
11. DEFINITIVE AGREEMENT. This letter reflects Webb's present intention of
proceeding to work with the Association on its proposed conversion. It does not
create a binding obligation on the part of the Association, the Company or Webb
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 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 Webb
pursuant to this engagement is rendered for use solely by the
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Mr. Jon W. Letzkus
February 18, 1997
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management of the Association 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.
Webb 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, Webb 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.
Sincerely,
CHARLES WEBB & COMPANY,
A DIVISION OF KEEFE BRUYETTE & WOODS
By: /s/ John Bruno
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John Bruno
Senior Vice President
BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
By: /s/ Jon W. Letzkus MARCH 1, 1997
----------------------------------------- ----------------------
Jon W. Letzkus Date
President and
Chief Executive Officer
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EXHIBIT A
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CONVERSION SERVICES PROPOSAL
TO BRIDGEPORT SAVINGS AND LOAN ASSOCIATION
Charles Webb & 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 Association.
General Services
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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
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Establish and manage Conversion Center at the Association. Conversion Center
personnel will track prospective investors; record stock orders; mail order
confirmations; provide the Association's senior management with daily reports;
answer customer inquiries; and handle special situations as they arise.
Assign Webb's personnel to be at the Association through completion of the
Subscription and Community Offerings to manage the Conversion Center, meet with
prospective shareholders at individual and community information meetings,
solicit local investor interest through a telemarketing 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 Webb.
Create target investor list based upon review of the Association'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 Association's common stock.
Aftermarket Support Services
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Keefe, Bruyette & Woods will make a market and provide on-going research to the
Company. In addition, Webb will use its best efforts to secure another market
maker.