Exhibit 1.1
[SANDLER O'NEILL LETTERHEAD]
April 9, 2002
Mr. Barry M. Donohue
President and Chief Executive Officer
Atlantic Liberty Savings
186 Montague Street
Brooklyn, New York 11201-3601
Dear Mr. Donohue:
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") is pleased to act
as conversion agent to Atlantic Liberty Savings (the "Bank") in connection with
the Bank's proposed conversion from mutual to stock form (the "Conversion").
This letter is to confirm the terms and conditions of our engagement.
SERVICES AND FEES
In our role as Conversion Agent, we anticipate that our services will
include the services outlined below, each as may be necessary and as the Bank
may reasonably request:
I. Consolidation of Accounts and Development of a Central File
II. Preparation of Proxy, Order and/or Request Forms
III. Organization and Supervision of the Conversion Center
IV. Proxy Solicitation and Special Meeting Services
V. Subscription Services
Each of these services is further described in Appendix A to this agreement.
For its services hereunder, the Bank agrees to pay Sandler O'Neill a
fee of $10,000. This fee is based upon the requirements of current regulations
and the Plan of Conversion as currently contemplated and an uncontested
solicitation of proxies. Any unusual or additional items or duplication of
service required as a result of a material change in the regulations or the Plan
of
Mr. Barry M. Donohue
April 9, 2002
Page 2
Conversion, any opposition to the proxy solicitation by a third party 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 by the Bank, which shall be
non-refundable; and (b) the balance upon the completion of the Conversion.
COSTS AND EXPENSES
In addition to any fees that may be payable to Sandler O'Neill
hereunder, the Bank agrees 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 Conversion is
consummated, including, without limitation, travel, lodging, food, telephone,
postage, listings, forms and other similar expenses, up to a maximum of $5,000;
provided, however, that Sandler O'Neill shall document such expenses to the
reasonable satisfaction of the Bank. The provisions of this paragraph are not
intended to apply to or in any way impair the indemnification provisions of this
agreement. It is understood that all expenses associated with the operation of
the Conversion Center will be borne by the Bank.
RELIANCE ON INFORMATION PROVIDED
The Bank will provide Sandler O'Neill with such information as Sandler
O'Neill may reasonably require to carry out its duties. The Bank recognizes and
confirms 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 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 Conversion 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 any order form or any stock
certificates or the shares represented thereby, and will not be required to and
will make no
Mr. Barry M. Donohue
April 9, 2002
Page 3
representations as to the validity, value or genuineness of the offer; (c) shall
not be liable to any person, firm or corporation including 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 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 form of action.
INDEMNIFICATION
The Bank agrees 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 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 bad faith or
gross negligence.
MISCELLANEOUS
The following addresses shall be sufficient for written notices to each
other:
If to you: Atlantic Liberty Savings
186 Montague Street
Brooklyn, NY 11201-3601
Attention: Mr. Barry M. Donohue
Mr. Barry M. Donohue
April 9, 2002
Page 4
If to us: Sandler O'Neill & Partners, L.P.
919 Third Avenue, 6th Floor
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/Catherine A. Lawton
----------------------------
Catherine A. Lawton
Vice President
Accepted and agreed to as of the date first above written:
Atlantic Liberty Savings
By: /s/Barry M. Donohue Pres. & CEO
------------------------------------
Barry M. Donohue
President and Chief Executive Officer
APPENDIX A
OUTLINE OF CONVERSION AGENT SERVICES
I. Consolidation of Accounts
1. Consolidate files in accordance with regulatory guidelines.
2. Accounts from various files are all linked together. The resulting
central file can then be maintained on a regular basis.
3. Our EDP format will be provided to your data processing people.
II. Proxy/Order Form/Request Card Preparation
1. Vote calculation.
2. Any combination of proxies, request cards and stock order forms for
voting and ordering stock.
3. Target group identification for subscription offering.
III. Organization and Supervision of Conversion Center
1. Advising on and supervising the physical organization of the
Conversion Center, including materials requirements.
2. Assist in the training of all Bank personnel who will be staffing the
conversion center.
3. Establish reporting procedures.
4. On-site supervision of the Conversion Center during the solicitation/
offering period.
IV. Special Meeting Services *
1. Direct proxy solicitation.
2. Proxy and ballot tabulation.
3. Act as or support inspector of election, it being understood that
Sandler O'Neill will not act as inspector of election in the case of
a contested election.
4. Delete voting record date accounts closed prior to special meeting.
5. Produce final report of vote.
* To the extent independent third parties are required by any regulatory
agency to perform such services, it is understood and agreed that Sandler
O'Neill will subcontract for such services and that the Bank will
reimburse Sandler O'Neill for such reasonable fees and expenses incurred
as a result of such regulatory requirement.
A - 1
V. 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 - 2
[SANDLER O'NEILL LETTERHEAD]
April 9, 2002
Board of Directors
Atlantic Liberty Savings
186 Montague Street
Brooklyn, New York 11201-3601
Attention: Mr. Barry M. Donohue
President and Chief Executive Officer
Ladies and Gentlemen:
Sandler O'Neill & Partners, L.P. ("Sandler O'Neill") is pleased to act
as an independent financial advisor to Atlantic Liberty Savings F.A. (the
"Bank") in connection with the Bank's proposed conversion from mutual to stock
form (the "Conversion"), including the offer and sale of certain shares of the
common stock of the proposed new holding company for the Bank (the "Holding
Company") to the Bank's eligible account holders in a Subscription Offering, to
members of the Bank's community in a Direct Community Offering and, under
certain circumstances, to the general public in a Syndicated Community Offering
(collectively, the "Offerings"). For purposes of this letter, the term "Actual
Purchase Price" shall mean the price at which the shares of the Common Stock are
sold in the Offerings. This letter is to confirm the terms and conditions of our
engagement.
ADVISORY SERVICES
Sandler O'Neill will act as a consultant and advisor to the Bank and
the Holding Company and will work with the Bank's management, counsel,
accountants and other advisors in connection with the Conversion and the
Offerings. We anticipate that our services will include the following, each as
may be necessary and as the Bank may reasonably request:
1. Consulting as to the securities marketing implications of any
aspect of the Plan of Conversion or related corporate documents;
2. Reviewing with the Board of Directors the independent appraiser's
appraisal of the Common Stock;
3. Reviewing all offering documents, including the Prospectus, stock
order forms and related offering materials (it being understood
that preparation and filing of such
Board of Directors
Atlantic Liberty Savings
April 9, 2002
Page 2
documents will be the responsibility of the Bank and the Holding
Company and their counsel);
4. Assisting in the design and implementation of a marketing
strategy for the Offerings;
5. Assisting in obtaining all requisite regulatory approvals;
6. Assisting Bank management in scheduling and preparing for
meetings with potential investors and broker-dealers; and
7. Providing such other general advice and assistance as may be
requested to promote the successful completion of the Conversion.
FEES
If the Conversion and the Offerings are consummated, the Bank agrees to
pay Sandler O'Neill for its services hereunder a fee of $200,000.
If (i) Sandler O'Neill's engagement hereunder is terminated for any of
the reasons provided for under the second paragraph of the section of this
letter captioned "Definitive Agreement," or (ii) the Conversion is terminated by
the Bank, no fees shall be payable by the Bank to Sandler O'Neill hereunder;
however, the Bank shall reimburse Sandler O'Neill for its reasonable
out-of-pocket expenses (including legal fees and expenses) incurred in
connection with its engagement hereunder up to a maximum of $55,000.
All fees payable to Sandler O'Neill hereunder shall be payable in cash
at the time of the closing of the Conversion. In recognition of the long lead
times involved in the conversion process, the Bank agrees to make an advance
payment to Sandler O'Neill in the amount of $25,000, which shall be payable upon
execution of this letter and which shall be credited against any fees or
reimbursement of expenses payable hereunder.
COSTS AND EXPENSES
In addition to any fees that may be payable to Sandler O'Neill
hereunder and the expenses to be borne by the Bank pursuant to the following
paragraph, the Bank agrees 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 Conversion is
consummated,
Board of Directors
Atlantic Liberty Savings
April 9, 2002
Page 3
including, without limitation, legal fees and expenses, promotional,
syndication, and travel expenses, up to an aggregate maximum of $55,000;
provided, however, that Sandler O'Neill shall document such expenses to the
reasonable satisfaction of the Bank. The provisions of this paragraph are not
intended to apply to or in any way impair the indemnification provisions of this
letter.
As is customary, the Bank will bear all other expenses incurred in
connection with the Conversion and the Offerings, including, without limitation,
(i) the cost of obtaining all securities and bank regulatory approvals,
including any required NASD filing fees; (ii) the cost of printing and
distributing the offering materials; (iii) the costs of blue sky qualification
(including fees and expenses of blue sky counsel) of the shares in the various
states; (iv) listing fees; and (v) all fees and disbursements of the Bank's and
the Holding Company's counsel, accountants, conversion agent and other advisors.
In the event Sandler O'Neill incurs any such fees and expenses on behalf of the
Bank or the Holding Company, the Bank will reimburse Sandler O'Neill for such
fees and expenses whether or not the Conversion is consummated; provided,
however, that Sandler O'Neill shall not incur any expenses in excess of $2,500
on behalf of the Bank or the Holding Company pursuant to this paragraph without
the prior approval of the Bank.
DUE DILIGENCE REVIEW
Sandler O'Neill's obligation to perform the services contemplated by
this letter shall be subject to the satisfactory completion of such
investigation and inquiries relating to the Bank and the Holding Company, and
their respective directors, officers, agents and employees, as Sandler O'Neill
and its counsel in their sole discretion may deem appropriate under the
circumstances. In this regard, the Bank agrees that, at its expense, it will
make available to Sandler O'Neill all information which Sandler O'Neill
requests, and will allow Sandler O'Neill the opportunity to discuss with the
Bank's management the financial condition, business and operations of the Bank
and the Holding Company. The Bank and the Holding Company acknowledges that
Sandler O'Neill will rely upon the accuracy and completeness of all information
received from the Bank and the Holding Company and their directors, trustees,
officers, employees, agents, independent accountants and counsel.
BLUE SKY MATTERS
Sandler O'Neill and the Bank agree that the Bank's counsel shall serve
as counsel with respect to blue sky matters in connection with the Offerings,
and that the Bank will cause such counsel to prepare a Blue Sky Memorandum
related to the Offerings including Sandler O'Neill's participation therein and
shall furnish Sandler O'Neill a copy thereof addressed to Sandler O'Neill or
upon which such counsel shall state Sandler O'Neill may rely.
Board of Directors
Atlantic Liberty Savings
April 9, 2002
Page 4
CONFIDENTIALITY
Other than as required by law or regulation or legal process, Sandler
O'Neill agrees that it will treat as confidential all material, non-public
information relating to the Bank and the Holding Company obtained in connection
with its engagement hereunder (the "Confidential Information"), whether or not
the Conversion is consummated. As used in this paragraph, the term "Confidential
Information" shall not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure by Sandler
O'Neill, (ii) was available to Sandler O'Neill on a non-confidential basis prior
to its disclosure to Sandler O'Neill by the Bank or the Holding Company, or
(iii) becomes available to Sandler O'Neill on a non-confidential basis from a
person other than the Bank or the Holding Company who is not otherwise known to
Sandler O'Neill to be bound not to disclose such information pursuant to a
contractual, legal or fiduciary obligation.
INDEMNIFICATION
Since Sandler O'Neill will be acting on behalf of the Bank and the
Holding Company in connection with the Conversion and the Offerings, 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 within the meaning of Section 15 of the Securities Act
of 1933 or Section 20 of the Securities Exchange Act of 1934 (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 Conversion or the Offerings or the
engagement of Sandler O'Neill pursuant to, or the performance by Sandler O'Neill
of the services contemplated by, this letter, and will reimburse any Indemnified
Party for all expenses (including reasonable legal 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; provided, however, that the Bank and the Holding Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense (i) arises out of or is based upon any untrue statement of
a material fact or the omission of a material fact required to be stated therein
or necessary to make not misleading any statements contained in any final proxy
statement or prospectus, or any amendment or supplement thereto, or any of the
applications, notices, filings or documents related thereto made in reliance on
and in conformity with written information furnished to the Bank by Sandler
O'Neill expressly for use therein, or (ii) is primarily attributable to the
gross negligence, willful misconduct or bad faith of Sandler O'Neill. If the
foregoing indemnification is unavailable for any reason, the Bank and the
Holding Company agree to contribute to such losses, claims, damages, liabilities
and expenses in the proportion that its financial interest in the Conversion and
the Offerings bears to that of Sandler O'Neill. The definitive Agency Agreement
discussed under "Definitive Agreement" below will provide for indemnification of
the type usually found in underwriting agreements as to certain liabilities,
including liabilities under the Securities Act of 1933.
Board of Directors
Atlantic Liberty Savings
April 9, 2002
Page 5
If indemnification is to be sought hereunder by an Indemnified Party,
then such Indemnified Party shall promptly notify the Bank of the commencement
of any action or proceeding or investigation in respect thereof but failure to
so notify the Bank shall not relieve the Bank from any liability which it may
have otherwise than on account of this agreement. The Bank shall be entitled to
assume the defense of any action for which indemnification is sought hereunder
with counsel of its choice at its expense (in which case it shall not thereafter
be responsible for the fees and expenses of any separate counsel retained by
Sandler O'Neill or any other Indemnified Party except as set forth below);
provided, however, that such counsel shall be satisfactory to Sandler O'Neill in
the exercise of its reasonable judgment. Notwithstanding the Bank's election to
assume the defense of such action, Sandler O'Neill or any other Indemnified
Party shall have the right to employ separate counsel and to participate in the
defense of such action and the Bank shall bear the reasonable fees, costs and
expenses of such separate counsel if (i) the use of such counsel chosen by the
Bank to represent Sandler O'Neill or any other Indemnified Party would present
such counsel with a conflict of interest (in which case the Bank shall not have
the right to assume the defense of such action on Sandler O'Neill's or the
Indemnified Party's behalf); (ii) the actual or potential defendants in, or
targets of, any such action include both the Bank and Sandler O'Neill, and
Sandler O'Neill shall have reasonably concluded that there may be legal defenses
available to Sandler O'Neill or the Indemnified Party which are different from
or additional to those available to the Bank (in which case the Bank shall not
have the right to assume the defense of such action on Sandler O'Neill's or the
Indemnified Party's behalf); (iii) the Bank shall not have employed counsel
satisfactory to Sandler O'Neill to represent Sandler O'Neill or the Indemnified
Party within a reasonable time after notice of the institution of such action;
or (iv) the Bank shall authorize Sandler O'Neill or any other Indemnified Party
to employ separate counsel at the Bank's expense. It is expressly understood
that the Bank shall only be obligated to pay for one separate counsel (in
addition to any required local counsel) in any one action or proceeding or group
of related actions or proceedings for all Indemnified parties collectively. The
Bank will not be liable under this letter agreement for any amount paid by
Sandler O'Neill or any other Indemnified Party to settle any claims or actions
if the settlement is entered into without the Bank's consent, which shall not be
unreasonably withheld.
DEFINITIVE AGREEMENT
Sandler O'Neill and the Bank agree that (a) except as set forth in
clause (b), the foregoing represents the general intention of the Bank and
Sandler O'Neill with respect to the services to be provided by Sandler O'Neill
in connection with the Offerings, which will serve as a basis for Sandler
O'Neill commencing activities, and (b) the only legal and binding obligations of
the Bank, the Holding Company and Sandler O'Neill with respect to the subject
matter hereof shall be (1) the Bank's obligation to reimburse costs and expenses
pursuant to the section captioned "Costs and Expenses," (2) those set forth
under the captions "Confidentiality" and "Indemnification," and (3) as set forth
in a duly negotiated and executed definitive Agency Agreement to be entered into
prior to the commencement of the Subscription Offering relating to the services
of Sandler O'Neill in connection with the Offerings. Such Agency Agreement shall
be in form and content satisfactory to Sandler O'Neill, the Bank and the Holding
Company and their respective counsel and shall contain standard indemnification
provisions consistent herewith.
Sandler O'Neill's execution of such Agency Agreement shall also be
subject to (i) Sandler O'Neill's satisfaction with its investigation of the
Bank's business, financial condition and results of operations, (ii) preparation
of offering materials that are satisfactory to Sandler O'Neill and its counsel,
(iii) compliance with all relevant legal and regulatory requirements to the
reasonable satisfaction of Sandler O'Neill's counsel, (iv) agreement that the
price established by the independent appraiser is reasonable and (v) market
conditions at the time of the proposed Offerings. Sandler O'Neill may terminate
this agreement if such Agency Agreement is not entered into prior to March 31,
2003.
Board of Directors
Atlantic Liberty Savings
April 9, 2002
Page 6
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/Catherine A. Lawton
--------------------------------
Catherine A. Lawton
Vice President
Accepted and agreed to as of the date first above written:
Atlantic Liberty Savings
By: /s/Barry M. Donohue Pres. & CEO
-------------------------------------
Barry M. Donohue
President and Chief Executive Officer