EXHIBIT 1.1
[Keefe, Bruyette & Woods Letterhead]
September 30, 2004
Mr. Robert W. Hughes
President and Chief Executive Officer
Ohio Central Savings
6033 Perimeter Drive
Dublin, OH 43017
Dear Mr. Hughes:
This proposal is in connection with the intention of Ohio Central Savings (the
"Client" or "Bank") 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 Bank's common stock to be outstanding pursuant to
the Conversion will be issued to a holding company (the "Company") to be formed
by the Bank, and that the Company will offer and sell shares of its common stock
first to eligible persons (pursuant to the Bank's Plan of Conversion) in a
Subscription and Community Offering as defined in the Bank's Plan of Conversion.
Keefe, Bruyette and Woods ("KBW") will act as the Bank's and the Company's
exclusive financial advisor and marketing agent in connection with the
Conversion and stock issuance. This letter sets forth selected terms and
conditions of our engagement.
1. ADVISORY/CONVERSION SERVICES. As the Bank's and Company's financial
advisor and marketing agent, KBW will provide the Bank and 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 the Bank and the Company concerning the Conversion and
related issues. KBW will assist in providing Conversion 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 Bank which are typical in
connection with an equity offering and include, but are not limited to,
financial analysis of the Client with a focus on identifying factors which
impact the valuation of the common stock and provide the appropriate
recommendations for the betterment of the equity valuation.
Additionally, post Conversion financial advisory services will include advice on
shareholder relations, NASDAQ or OTC-BB listing, after-market trading, dividend
policy (for both regular and special dividends), stock repurchase strategy and
communication with market makers. Prior to the closing of the Conversion, KBW
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
KBW as
Mr. Robert W. Hughes
September 30, 2004
Page 2 of 5
the Bank's and the Company's financial advisor and marketing agent is further
described in Exhibit A attached hereto.)
2. PREPARATION OF OFFERING DOCUMENTS. The Bank, 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. KBW
will attend meetings to review these documents and 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 AND CONFIDENTIALITY. Prior to filing the
Registration Statement, Application for Conversion or any offering or other
documents naming KBW as the Bank's and the Company's financial advisor and
marketing agent, KBW and its representatives will undertake substantial
investigations to learn about the Bank'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 Bank agrees
that it 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. The Bank
acknowledges that KBW will rely upon the accuracy and completeness of all
information received from the Bank, its officers, directors, employees, agents
and representatives, accountants and counsel including this letter to serve as
the Bank's and the Company's financial advisor and marketing agent.
In connection with the engagement of KBW, it is contemplated that KBW will
receive from the Client certain information the Client considers confidential.
KBW agrees that it will keep confidential such information provided by and
relating to the Client. KBW shall use this confidential information solely for
the purpose of rendering services to the Client pursuant to this letter and
shall not disclose any of such confidential information to any party (other than
certain officers and employees of KBW providing services pursuant to this
engagement letter) except with the prior written consent of the Client;
provided, however, that the foregoing restriction shall not apply to any
information that is publicly available when provided or thereafter becomes
publicly available other than through disclosure by KBW or that is required to
be disclosed by KBW by judicial or administrative process in connection with any
action, suit, proceeding or investigation. Information shall be deemed "publicly
available" if it becomes a matter of public knowledge or is contained in
materials available to the public or is obtained by KBW from any source other
than the Client or its representatives, provided that such source was not to the
actual knowledge of KBW subject to a confidentiality agreement with the Client.
4. REGULATORY FILINGS. The Bank and/or the Company will cause appropriate
Conversion and 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 banking and securities commissioners as may be
determined by the Bank.
Mr. Robert W. Hughes
September 30, 2004
Page 3 of 5
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
provide for the final agreed upon representations, warranties and covenants by
the Bank and KBW, and for the Company to indemnify KBW and its controlling
persons (and, if applicable, the member of the selling group and their
controlling persons), and for KBW to 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 Bank or the Company, or the Bank
and the Company together, shall pay the following fees to KBW at closing unless
stated otherwise:
(a) MANAGEMENT FEE. A Management Fee of $25,000 payable in five
consecutive monthly installments of $5,000 commencing with the adoption of the
Plan of Conversion. 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 KBW, KBW shall have earned and be entitled to be paid fees
accruing through the stage at which point the termination occurred. The
Management Fee will be credited against the Success Fee in (b).
(b) SUCCESS FEE: A Success Fee of 1.50% shall be charged based on
the aggregate purchase price of common stock sold in the Subscription Offering
and Community Offering excluding shares purchased by the Bank's officers,
directors, or employees (or members of their immediate family) plus any ESOP,
charitable foundations, tax-qualified or stock based compensation plans (except
IRA's) or similar plan created by the Bank for some or all of its directors or
employees. The minimum amount of the success fee will be $75,000.
(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 Bank, 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 Bank and the Plan of
Conversion. 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
Mr. Robert W. Hughes
September 30, 2004
Page 4 of 5
similar market environment. Fees with respect to purchases affected 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 BANK 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 Conversion, 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 (e.g., evaluation of business strategies regarding the use of
net proceeds), without the payment by the Company and the Bank of any fees in
addition to those set forth in Section 7 hereof. Nothing in this Agreement shall
require the Company and the Bank to obtain such services from KBW. Following
this initial one year term, if the Bank, Company and KBW wish to continue the
relationship, a fee will be negotiated and an agreement entered into at that
time.
9. EXPENSES. The Bank 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
Bank'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.
KBW shall not charge for any out-of-pocket expenses. The selection of KBW's
counsel will be done by KBW, with the approval of the Bank. The Bank will
reimburse KBW for the fees 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.
Mr. Robert W. Hughes
September 30, 2004
Page 5 of 5
13. DEFINITIVE AGREEMENT. This letter reflects KBW's present intention of
proceeding to work with the Bank on its proposed Conversion. 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
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 letter 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 by the Bank and the Company 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.
KBW acknowledges that in offering the Company's common 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.
Sincerely,
KEEFE, BRUYETTE & WOODS
By: /s/ Douglas L. Reidel
-------------------------------
Douglas L. Reidel
Managing Director
OHIO CENTRAL SAVINGS
By: /s/ Robert W. Hughes Date: 10/13/04
------------------------------- ----------------------
Robert W. Hughes
President and CEO
EXHIBIT A
---------
CONVERSION SERVICES PROPOSAL
TO OHIO CENTRAL SAVINGS
KBW provides thrift institutions converting from the mutual to stock form of
ownership 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 Bank.
GENERAL SERVICES
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 in drafting and distribution of press releases as required or
appropriate.
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.
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 a trading commitment from at least
three NASD firms, one of which will be Keefe, Bruyette & Woods, Inc.