EXHIBIT 1.1
[LETTERHEAD OF XXXX, XXXX & CO.]
CONFIDENTIAL
------------
Financial Advisory Agreement
August 9, 1999
Mr. Xxxxxxx Xxxxxxx
President & Chief Executive Officer
Xxxxxx Financial, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Dear Xx. Xxxxxxx:
This agreement supplements our Strategic Advisory Services agreement dated April
1, 1998, as amended on May 17, 1999 (the "STARS Agreement"). As contemplated
under Section 3 of the STARS Agreement, this Financial Advisory Agreement (the
"Engagement Agreement") sets forth the terms and conditions under which Xxxxxx
Financial Inc. ("Xxxxxx" or the "Company") has engaged the services of Xxxx,
Xxxx & Co., Inc. ("Xxxx, Xxxx") to act as its financial advisor in connection
with the potential acquisition of the institution identified in the Schedule
attached hereto (the "Target").
1. SERVICES
X. Xxxx, Xxxx will provide the following merger and acquisition related
services to the Company:
(i) Xxxx, Xxxx will review and analyze, using several computer models,
such financial, market and other data, as necessary, to express an
opinion on the value of Target;
(ii) Xxxx, Xxxx will formulate and recommend an exchange ratio(s) or (if
other than a stock-for-stock exchange) alternative transaction
structures to accomplish the proposed acquisition of Target. Any
definitive acquisition agreement entered into by the company
involving the sale, merger or other business combination involving
at least 80% of the Target's stock or assets shall be a
"Transaction".
Mr. Xxxxxxx Xxxxxxx
August 9, 1999
Page 2
(iii) Xxxx, Xxxx will recommend the form and structure of the proposed
acquisition with specific reference to the accounting and tax
consequences to each party from a corporate point of view;
(iv) The conclusions, opinions and recommendations resulting from the
above will be presented to the management and Board of the Company;
(v) Xxxx, Xxxx will be available for discussion of results and the
recommended structure and acquisition price as requested and will
negotiate with Target's representatives toward reaching an
agreement for a possible acquisition;
(vi) Xxxx, Xxxx will conduct a due diligence investigation of Target.
Xxxx, Xxxx understands that the Company intends to conduct
comprehensive due diligence.
(vii) Xxxx, Xxxx will, if requested by the Company, issue a separate
written opinion as to the fairness from a financial point of view,
to the shareholders of the Company, depending upon the transaction
structure, of either the Exchange Ratio or the consideration
("Consideration") to be paid by the Company ("Opinion"). The
Company may reproduce the Opinion in full in any disclosure
document or proxy statement relating to such Transaction (the
"Statement") that the Company files under the Securities Exchange
Act of 1934 or any other federal or state law and distributes to
its shareholders; in such event, the Company may also include
references to the Opinion and to Xxxx, Xxxx and its relationship
with the Company in the Statement. Any references to Xxxx, Xxxx in
the Statement shall be approved by Xxxx, Xxxx.
(viii) Xxxx, Xxxx will review all agreements, regulatory applications,
filings and shareholders communications in connection with the
proposed acquisition and provide comments where needed. Xxxx, Xxxx
will also be available to meet with the various regulatory
authorities to review the details of the Transaction.
B) Term of Engagement
Xxxx, Xxxx'x services may be terminated by the Company or Xxxx, Xxxx at any time
with or without cause effective upon receipt of written notice to that effect;
provided, however, that Xxxx, Xxxx will be entitled to the applicable advisory
and other fees set forth in Section 1(C) in the event that at any time prior to
the expiration of twelve months after such termination an agreement is entered
into with the Target.
Mr. Xxxxxxx Xxxxxxx
August 9, 1999
Page 3
C) Advisory and Other Fees
For all the services rendered hereunder, (including without limitation rendering
the fairness opinion) Xxxx, Xxxx shall be entitled to a financial advisory fee
(the "Contingent Advisory Fee") as established on the attached Schedule.
Twenty-five percent of the amount of the Contingent Advisory Fee shall be due
and payable upon execution of a definitive acquisition agreement with respect to
the Transaction and the remainder shall be due and payable upon closing of the
Transaction. Pursuant to the STARS Agreement, any hourly charges for work
leading to such Transaction will be credited against the final installment of
the Contingent Advisory Fee.
2. OTHER ADVISORY SERVICES AND OFFERINGS
The Company also appoints Xxxx, Xxxx to act in the following capacity in any of
the following transactions entered into or contemplated by the Company (each, an
"Other Transaction"):
(i) Capital Raising: Lead manager, underwriter or placement agent and
----------------
financial advisor in connection with any offering of equity or other
capital markets financings.
Xxxx, Xxxx'x appointment with respect to Other Transactions shall be for the
term of this Engagement Letter plus one year. Xxxx, Xxxx'x compensation in
connection with any Other Transaction shall be determined by agreement between
the Company and Xxxx, Xxxx on the basis of compensation customarily paid to
financial advisors, underwriters or placement agents in similar transactions.
3. INDEMNIFICATION AND CONTRIBUTION
The Company agrees to indemnify Xxxx, Xxxx in accordance with the
indemnification provisions attached hereto as Annex A (the "Indemnification
Provisions"), which provisions are incorporated by reference herein and made a
part hereof and which shall survive the termination or expiration of the
Engagement Agreement.
4. CONFIDENTIALITY
The Company agrees that all information and Opinions it receives from Xxxx, Xxxx
are confidential and shall, except to the extent otherwise provided herein, be
disseminated only to the officers, directors and advisors of the Company. All
other information received from Xxxx, Xxxx may not be distributed to other than
officers, directors and advisors of the Company without the prior consent of
Xxxx, Xxxx. The Company shall provide, and will use its best efforts to cause
Target to provide, to Xxxx, Xxxx on a confidential basis any and all information
which Xxxx, Xxxx may reasonably require or request that would be pertinent to
the services performed hereunder. Xxxx,
Mr. Xxxxxxx Xxxxxxx
August 9, 1999
Page 4
Xxxx agrees to keep confidential all information it receives except information
which (a) is or becomes generally available to the public other than as a result
of a disclosure by Ryan, Beck , (b) was available to Xxxx, Xxxx on a non-
confidential basis prior to its disclosure by Xxxx, Xxxx or (c) becomes
available to Xxxx, Xxxx on a non-confidential basis from a person who is not
otherwise bound by a confidentiality agreement with respect to the information,
or is not otherwise prohibited from transmitting the information to Xxxx, Xxxx.
It is understood that Xxxx, Xxxx will rely upon all information supplied without
any attempt or obligation on the part of Xxxx, Xxxx to verify the accuracy or
completeness of such information. The advice or recommendations which Xxxx,
Xxxx gives may, in many cases, have legal, regulatory, tax or accounting
consequences. While Xxxx, Xxxx will not knowingly advise any action or make any
recommendation which is contrary to law, regulation or accounting standards, it
does not by this Engagement Agreement take any responsibility for the legal,
regulatory, tax or accounting treatment of the advice which it gives or the
recommendations which it makes. Additionally, the Company agrees that it will
review with and rely on the opinions of its legal counsel and accountants as to
the legal, regulatory, tax or accounting implications of the recommendations
made by Xxxx, Xxxx. Xxxx, Xxxx agrees that: (i) all information it receives
from the Company in connection with this Engagement Agreement is confidential;
and (ii) such information shall be disseminated only to such officers and
employees of Xxxx, Xxxx who are involved with this engagement. All persons to
whom said information and opinions are disclosed shall be advised of the terms
and confidentiality contained herein. The limitation upon dissemination of
information and opinions may be waived only by agreement by both parties hereto.
5. ARBITRATION
Any claims, controversies, demands, disputes or differences between or among the
parties hereto or any persons bound hereby arising out of, or by virtue of, or
in connection with, or otherwise relating to this Agreement shall be submitted
to and settled by arbitration conducted in Morristown, New Jersey, before one or
three arbitrators, each of whom shall be knowledgeable in the field of
securities law and investment banking. Such arbitration shall otherwise be
conducted in accordance with the rules then on of the American Arbitration
Association. The parties hereto agree to share equally the responsibility for
all fees of the arbitrators, abide by any decision rendered as final and
binding, and waive the right to appeal the decision or otherwise submit the
dispute to a court of law for a jury or non-jury trial. The parties hereto
specifically agree that neither party may appeal or subject the award or
decision of any such arbitrator to appeal or review in any court of law or in
equity or by any other tribunal, arbitration system or otherwise. Judgment upon
any award granted by such an arbitrator may be enforced in any court having
jurisdiction thereof.
Mr. Xxxxxxx Xxxxxxx
August 9, 1999
Page 5
6. MISCELLANEOUS
The Company has been informed and acknowledges that Xxxx, Xxxx has and will have
engagement agreements with, and renders and will render services to other
financial institutions now and in the future, which now or in the future will or
may be competitors of the Company. The Company does not object to Xxxx, Xxxx
having these engagements and relationship with other institutions and agrees
that it will not raise objections in the future to such engagements and
relationships. In the event that Xxxx, Xxxx encounters a conflict of interest
in any Transaction, Xxxx, Xxxx will advise the Company of such conflict as soon
as it is apparent. Xxxx, Xxxx will also, to the extent practicable and
consistent with confidentiality restrictions, respond promptly to the Company's
inquiries with respect to conflicts of interest which may involve other
financial institutions. In those situations where a request for opinions or
recommendations by the Company places Xxxx, Xxxx in a "conflict of interest,"
Xxxx, Xxxx will so advise the Company. It is understood that Xxxx, Xxxx will
honor requests in such circumstances on a first request basis.
This Engagement Agreement shall be governed by the laws of the New Jersey and
shall be binding on the Company and Ryan, Beck, their successors and assigns.
This Engagement Agreement embodies the entire understanding between the parties
and may not be modified, altered, amended or supplemented, except by a written
agreement executed by both parties hereto. If any provision of this Engagement
Agreement is found to be invalid, it shall be considered deleted and shall not
invalidate the remaining provisions.
Mr. Xxxxxxx Xxxxxxx
August 9, 1999
Page 6
If the foregoing correctly sets forth the engagement of Xxxx, Xxxx as the
financial advisor to the Company, please indicate so by signing both copies and
returning one copy of this Engagement Agreement.
XXXX, XXXX & CO., INC.
By: Xxx X. Xxxxxxx
----------------------------------------------------
Xxx X. Xxxxxxx, President & Chief Executive Officer
Agreed to this 17 day of August, 1999
XXXXXX FINANCIAL, INC.
By: Xxxxxxx Xxxxxxx
----------------------------------------------------
Xxxxxxx Xxxxxxx, President & Chief Executive Officer
SCHEDULE
--------
Revised Effective December 30, 1999
The following companies are defined as "Targets" pursuant to this Engagement
Agreement:
1) Company Name: York Financial Corp.; Advisory Fee: $975,000
------------
ANNEX A
This Annex A is attached to and incorporated by reference into the engagement
letter, dated August 9, 1999 ("Engagement Letter"), between Xxxx, Xxxx & Co.
("Xxxx, Xxxx") and Xxxxxx Financial, Inc. (the "Company").
In the event that Xxxx, Xxxx becomes involved in any capacity in any action,
proceeding or investigation brought by or against any person (including an
action or proceeding brought by a shareholder of the Company), in connection
with or as a result of either our engagement or any matter referred to in our
Engagement Letter, the Company periodically on demand will reimburse Xxxx, Xxxx
for its legal and other expenses (including the cost to Xxxx, Xxxx of any
investigation and preparation and including the appropriate hourly charges of
Xxxx, Xxxx'x officers and employees) incurred in connection therewith; provided,
however, that if in any such action, proceeding or investigation it is found by
a court in a final judgment that any loss, claim, damage or liability of Xxxx,
Xxxx has resulted from the gross negligence or willful misconduct of Xxxx, Xxxx
in performing the services which were the subject of the Engagement Letter,
Xxxx, Xxxx shall repay such portion of the reimbursed amounts that is
attributable to expenses incurred in relation to the act or omission of Xxxx,
Xxxx which is the subject of such finding. The Company also will indemnify and
hold Xxxx, Xxxx harmless against any and all losses, claims, damages or
liabilities to any such person in connection with or as a result of either Xxxx,
Xxxx'x engagement by the Company or any matter referred to in the Engagement
Letter, except to the extent that in any such action, proceeding or
investigation it is found by a court in a final judgment that any such loss,
claim, damage or liability has resulted from the gross negligence or willful
misconduct of Xxxx, Xxxx in performing the services which were the subject of
the Engagement Letter. If for any reason the foregoing indemnification is
unavailable to Xxxx, Xxxx or insufficient to hold it harmless, then the Company
shall contribute to the amount paid or payable by Xxxx, Xxxx as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
the relative benefits received by the Company and its shareholders on the one
hand and Xxxx, Xxxx on the other hand in the matters contemplated by the
Engagement Letter as well as the relative fault of the Company and Xxxx, Xxxx
with respect to such loss, claim, damage or liability and other relevant
equitable considerations; provided however, that Xxxx, Xxxx shall not be
----------------
obligated to contribute any amount hereunder that exceeds the amount of the
compensation paid to Xxxx, Xxxx hereunder. The reimbursement, indemnity and
contribution obligations of the Company under this paragraph shall be in
addition to any liability which the Company may otherwise have, shall extend
upon the same terms and conditions to any affiliate of Xxxx, Xxxx and the
directors, officers, employees, agents and controlling persons (if any) of Xxxx,
Xxxx and similarly to the directors, officers, employees, agents and controlling
persons (if any) of any such affiliate, and shall be binding upon and inure to
the benefit of any successors, assigns, heirs and personal representatives of
the Company, Ryan, Beck, any such affiliate and any such person. The Company
also agrees that neither Xxxx, Xxxx nor any of such affiliates, directors,
officers, employees, agents or controlling persons shall have any liability to
the Company or any person asserting claims on behalf of or in right of the
Company in connection with or as a result of either our engagement or any matter
referred to in this letter except to the extent that any losses, claims,
damages, liabilities or expenses incurred by the Company are found by a court in
a final judgment to have resulted from the gross negligence or willful
misconduct of Xxxx, Xxxx in performing the services that are the subject of this
letter. The provisions of this paragraph shall survive any termination or
completion of the engagement provided by the Engagement Letter.
