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Exhibit 1.1
March 4, 2004
Mr. Thomas A. Borner, Chairman
PSB Holdings, Inc.
c/o Borner, Scola, Hill, Baruti & Smith
155 Providence Street
Putnam, CT 06260
Dear Mr. Borner:
This proposal is being submitted in connection with the proposed minority stock
(the "Offering") by PSB Holdings, Inc. (the "Company"), the mid-tier stock
holding company of Putnam Savings Bank (the "Bank"). The Company and the Bank
are referred to collectively as the "Company". The Offering will be made
pursuant to the Company's Stock Issuance Plan (the "Plan") to eligible
depositors and others in a Subscription Offering, with any remaining shares
offered to the general public in a Community Offering.
Keefe, Bruyette and Woods, Inc. ("KBW") will act as the Company's exclusive
financial advisor and marketing agent in connection with the Offering. This
letter sets forth selected terms and conditions of our engagement.
1. ADVISORY/OFFERING SERVICES. As the Company's financial advisor and
marketing agent, KBW will provide the Company with a comprehensive program of
services designed to promote an orderly, efficient, cost-effective and long-term
stock distribution. KBW will provide financial and logistical advice to Company
concerning the Conversion and related issues. KBW will provide Offering
enhancement services intended to maximize stock sales in the Subscription
Offering and to residents of the Bank's market area, if necessary, in the
Community Offering.
KBW shall provide financial advisory services to the Company which are typical
in connection with an equity offering and include, but are not limited to,
overall financial analysis of the Company with a focus on identifying factors
which impact the valuation of the common stock.
Additionally, post Offering financial advisory services will include advice on
shareholder relations, after-market trading, dividend policy (for both regular
and special dividends), stock repurchase strategies and communication with
market makers. Prior to the closing of the Offering, KBW shall furnish to client
a Post-Offering reference manual, which will include specifics relative to these
items. (The nature of the services to be provided by KBW as the Company's
financial advisor and marketing agent is further described in Exhibit A attached
hereto.)
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Mr. Thomas A. Borner
March 4, 2004
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2. PREPARATION OF OFFERING DOCUMENTS. The Company and its counsel will draft
the registration statement, Ooffering application, prospectus and other
documents to be used in connection with the Offering. KBW will attend meetings
to review these documents and will advise you on their form and content. KBW and
its counsel will draft an 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, Offering
application or any offering or other documents naming KBW as the Company's
financial advisor and marketing agent, KBW and its representatives will
undertake substantial investigations to learn about the Bank's and Company's
business and operations ("due diligence review") in order to confirm information
provided to us and to evaluate information to be contained in the Company's
offering documents. The Company and the Bank agree that they 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 Company acknowledges that KBW will rely upon
the accuracy and completeness of all information received from the Company, its
officers, directors, employees, agents and representatives, accountants and
counsel including this letter to serve as 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"), the Office of Thrift Supervision ("OTS"), and such
state securities commissioners as may be determined by the Company.
5. AGENCY AGREEMENT. The specific terms of KBW's services, including stock
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
include representations, warranties and covenants mutually agreeable to the
Company and KBW, and will provide that the Company will indemnify KBW and
its controlling persons (and, if applicable, the members of the selling
group and their controlling persons), and that KBW will 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 Company shall pay the following fees
to KBW at
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Mr. Thomas A. Borner
March 4, 2004
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closing unless stated otherwise:
(a) MANAGEMENT FEE. A Management Fee of $40,000 payable in four
consecutive monthly installments of $10,000 commencing with the
adoption of the Plan. Such fees shall be deemed to have been earned
when due. Should the Offering 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.
(b) SUCCESS FEE: A Success Fee of 1.00% shall be charged based on the
aggregate Purchase Price of Common Stock sold in the Offering
excluding shares purchased by the Bank's officers, directors, or
employees (or members of their immediate family) plus any ESOP,
tax-qualified or stock based compensation plans (except IRA's) or
similar plan created by the Bank or the Company for some or all of
their directors or employees. The Management Fee described in 7(a)
will be applied against the Success Fee.
(c) BROKER-DEALER PASS-THROUGH. If any shares of the Company's stock
remain available after the Subscription Offering and Community
Offering, at the request of the Company, 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 Company and the
Plan. 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 effected 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 COMPANY upon consultation with KBW. In the event, with
respect to any stock 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(b).
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 OFFERING, 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 OR THE
BANK OF ANY FEES IN ADDITION TO THOSE SET FORTH IN SECTION 7 HEREOF. Nothing
in this
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Mr. Thomas A. Borner
March 4, 2004
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Agreement shall require the Company or 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 Company 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
Company's accountants, attorneys, appraiser, transfer agent and registrar,
printing, mailing and marketing and syndicate expenses associated with the
Offering; the fees set forth in Section 7; and fees for "Blue Sky" legal work.
If KBW incurs expenses on behalf of Company, the Company will reimburse KBW for
such expenses.
KBW shall be reimbursed for reasonable out-of-pocket expenses, including costs
of travel, meals and lodging, photocopying, telephone, facsimile and couriers,
provided such expenses do not to exceed $15,000. The selection of KBW's counsel
will be done by KBW, with the approval of the Company. The Company will
reimburse KBW for the 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.
11. 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.
12. DEFINITIVE AGREEMENT. This letter reflects KBW's present intention of
proceeding to work with the Company on its proposed Offering and minority stock
issuance. 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 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 KBW pursuant to this engagement is rendered for use solely
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Mr. Thomas A. Borner
March 4, 2004
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by the Company and its agents in connection with the Offering. 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 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.
Very truly yours,
KEEFE, BRUYETTE & WOODS, INC.
By: /s/ Patricia A. McJoynt
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Patricia A. McJoynt
Managing Director
PSB HOLDINGS, INC.
By: /s/ Thomas A. Borner Date: /s/ 3/24/04
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Thomas A. Borner
Chairman
PUTNAM SAVINGS BANK
By: /s/ Thomas A. Borner Date: /s/ 3/24/04
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Thomas A. Borner
Chairman
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EXHIBIT A
STOCK OFFERING SERVICES PROPOSAL
TO PUTNAM SAVINGS BANK
KBW provides thrift institutions converting from the mutual to stock form of
ownership or conducting mutual holding company minority stock offerings with a
comprehensive program of stock issuance services designed to promote an orderly,
efficient, cost-effective and long-term stock distribution. The following list
is representative of the stock issuance services, if appropriate, we propose to
perform on behalf of the Company.
GENERAL SERVICES
Assist management and legal counsel in structuring the transaction.
Review and comment on the Stock Issuance Plan.
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.
Review and comment on the prospectus and any business plan prepared in
connection with the Offering.
STOCK OFFERING ENHANCEMENT SERVICES
Establish and manage Stock Information Center at the Bank. Stock Information
Center personnel will track prospective investors; record stock orders; 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 (if
applicable), 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.
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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STOCK 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.
AFTER-MARKET SUPPORT SERVICES.
KBW will use their best efforts to secure trading and on-going research
commitment from at least two NASD firms, one of which will be Keefe, Bruyette &
Woods, Inc.