Exhibit 1.1
January 9, 1998
Board of Trustees
Cortland Savings Bank
0 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
RE: Investment Banking Services
Gentlemen:
This letter sets forth the terms of the proposed engagement ("Engagement
Agreement") between CIBC Oppenheimer Corp. ("Oppenheimer") and Trident
Securities, Inc. ("Trident") and Cortland Savings Bank (the "Bank") concerning
our joint investment banking services in connection with the conversion
("Conversion") of the Bank from the mutual to the stock form of ownership and
the issuance of shares of a stock holding company (the "Holding Company") to be
formed as part of the transaction in a subscription and, under certain
circumstances, a community offering and/or to the general public in a syndicated
community offering (the "Syndicated Community Offering" and, together with the
subscription and community offering, the "Offerings"). In the event that the
Holding Company is not formed, the terms of this Engagement Agreement shall also
apply to investment banking services in connection with the reorganization of
the Bank into the mutual holding company form and the issuance of shares of
common stock of the Bank in the Offerings, with such modifications to this
Engagement Agreement as are necessary to reflect the changed structure of the
transaction. Oppenheimer and Trident are sometimes referred to jointly herein as
the "Financial Advisor."
Oppenheimer and Trident are prepared to assist the Bank in connection with the
offering of shares of common stock of the Holding Company during the Offerings,
as such term is defined in the Bank's Plan of Conversion (the "Plan"). It is
expected that Oppenheimer and Trident will assist the Bank in the Offerings as
set forth in Annex A attached hereto (which is incorporated by reference as if
fully set forth herein), which assistance shall include, but is not limited to,
the following: (1) acting as financial advisor to the Bank; (2) reviewing the
appraisal with the Bank's Board of Trustees; (3) reviewing the registration
statement, prospectus and other offering documents; (4) using best efforts to
target sales efforts in the Bank's local communities; (5) conducting information
meetings for prospective investors (as desired); (6) assisting in the
solicitation of proxies by voting depositors; (7) training and educating the
Bank's management and employees regarding the mechanics and regulatory
requirements of the process; (8) providing support for the administration and
processing of orders and establishing a Conversion Center on site at the Bank;
and (9) assisting the Bank in its efforts to obtain approval for quotation on
the Nasdaq National Market System and acting as a market maker for the shares.
The Bank acknowledges that the Conversion Center activities portion of this
assignment, as further described in Annex A, may be performed by either
Oppenheimer or Trident, or in some combination of their services. The specific
terms of the services contemplated hereunder shall be set forth in a definitive
sales agency agreement (the "Agency Agreement") among Oppenheimer, Trident, the
Holding Company and the Bank to be executed on the date the registration
statement is declared effective by the Securities and Exchange Commission
("SEC"). The price of the shares during the Offerings will be the price
established by the Board of Directors of the Holding Company and by the Bank's
Board of Trustees, based upon an independent appraisal as approved by the
appropriate regulatory authorities, provided such price is mutually acceptable
to Oppenheimer, Trident, the Holding Company and the Bank. The Bank agrees it
will not negotiate with any other underwriter or advisor relating to a possible
Conversion of the Bank, unless either party informs the other in writing that it
will not proceed to the execution of the Agency Agreement for the reasons set
forth in the last sentence of the ninth paragraph of this Engagement Agreement.
The Bank recognizes and confirms that in performing its duties pursuant to this
Engagement Agreement, Oppenheimer and Trident will be using and relying on data,
material, and other information (the "Information") furnished by the Bank, the
Holding Company, or their respective employees and representatives. In
connection with Xxxxxxxxxxx'x and Trident's activities on the Bank's and the
Holding Company's behalf, the Bank and the Holding Company will cooperate with
Oppenheimer and Trident and will furnish Oppenheimer and Trident with all
Information concerning the Bank and the Holding Company which Oppenheimer and
Trident deem appropriate, and will provide Oppenheimer and Trident with access
to the Bank's and the Holding Company's respective officers, directors,
trustees, employees, independent accountants and legal counsel for the purpose
of performing Xxxxxxxxxxx'x and Xxxxxxx's obligations pursuant to this
Engagement Agreement. The Bank hereby agrees and represents that all Information
(a) furnished to Oppenheimer and Trident pursuant to this Engagement Agreement,
and (b) contained in any filing by the Bank or the Holding Company with any
court or governmental or regulatory agency, commission or instrumentality (each,
an "Agency") shall, at all times during the period of the
Cortland Savings Bank
January 9, 1998
Page 3
engagement of Oppenheimer and Trident hereunder, be accurate and complete in all
material respects at the time provided, and that, if the Information provided by
the Bank becomes materially inaccurate, incomplete or misleading during the term
of Xxxxxxxxxxx'x and Xxxxxxx's engagement hereunder, the Bank shall so advise
Oppenheimer and Trident in writing. Accordingly, Oppenheimer and Trident assume
no responsibility for the accuracy and completeness of the Information. In
rendering their services hereunder, Oppenheimer and Trident will be using and
relying upon the Information without independent verification thereof or
independent evaluation of any of the assets or liabilities of the Bank. All
Information that is not publicly available will be treated in strict confidence,
and will not be revealed, or used (except in the performance of Xxxxxxxxxxx'x
and Trident's duties under this Engagement Agreement) by Oppenheimer and Xxxxxxx
unless legally compelled as determined in good faith by counsel to Oppenheimer
or Trident.
The Bank acknowledges that all advice (written or oral) given by Oppenheimer and
Trident to the Bank is intended solely for the benefit and use of the Bank and
the Holding Company (including without limitation their respective management,
trustees, directors, attorneys, accountants and transfer agent). Other than (a)
to the extent reflected in the minutes of meetings of the Board of Trustees of
the Bank and committees thereof, (b) for disclosure to the Federal Deposit
Insurance Corporation ("FDIC"), the Board of Governors of the Federal Reserve
System ("FRB"), the Office of Thrift Supervision ("OTS"), the New York State
Banking Department, the SEC or any other regulatory authority having
jurisdiction, the Bank's accountants, the Bank's attorneys, and the transfer
agent, and (c) pursuant to a subpoena or order issued by a court of competent
jurisdiction or by a judicial or administrative or legislative body or committee
or as otherwise required by law or regulation (based on the advice of counsel to
the Bank), no opinion or advice (written or oral) of Oppenheimer and Trident
shall be used, reproduced, disseminated, quoted or referred to at any time, in
any manner, or for any purpose, nor shall any public reference regarding
Xxxxxxxxxxx'x or Trident's services or advice hereunder be made by the Bank, the
Holding Company or their respective directors, trustees, officers, employees and
representatives without the prior written consent of Oppenheimer and Trident,
which consent shall not be unreasonably withheld. Oppenheimer and Trident
acknowledge and agree that all information provided to them by the Bank
regarding the Bank's financial condition or business affairs, whether now
existing or projected, shall be deemed confidential, except for such information
that has been disclosed publicly by the
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January 9, 1998
Page 4
Bank. Anything herein to the contrary notwithstanding, confidential information
shall not include: (a) any information which Oppenheimer or Trident or their
respective legal counsel or other representatives ("Representatives") possessed
prior to any disclosure by the Bank; (b) any information which was not received
from the Bank or the Holding Company, or their respective officers, trustees,
directors, agents and employees, regarding the Conversion; (c) any information
which is in the public domain; or (d) anything which becomes a matter in the
public domain or becomes known or available to Oppenheimer or Trident or any of
their respective Representatives on a nonconfidential basis from any source,
provided such source is not known to Xxxxxxxxxxx'x or Trident's actual knowledge
to be bound by a confidentiality agreement with the Bank. The obligations of the
parties under this paragraph shall survive termination of this Engagement
Agreement and the consummation of the Conversion.
For their services Oppenheimer and Trident will receive the following
compensation and reimbursement from the Bank:
1. A commission equal to one hundred and fifteen basis points (1.15%)
of the aggregate dollar amount of stock sold in the subscription
and direct community offerings excluding any shares of stock sold
to (i) the Bank's or Holding Company's directors, trustees,
officers and their immediate families and any Individual Retirement
Account or employee benefit plans for the benefit of any such
directors, trustees, officers and their immediate families and (ii)
any employee benefit plans of the Bank or the Holding Company and
excluding any shares sold or issued to or exchanged with the
shareholders of another holding company or financial institution in
a contemporaneous or subsequent merger, consolidation or other
business combination of the Holding Company or the Bank with such
other holding company or other financial institution; provided,
however, that in no event shall the commission payable pursuant to
this paragraph 1 be less than $750,000.
2. For stock sold by Oppenheimer and Trident or other National
Association of Securities Dealers ("NASD") member firms in the
Syndicated Community Offering, the commission shall not exceed
four and one-half percent (4.5%).
3. The foregoing fees and commissions are to be payable to
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January 9, 1998
Page 5
Oppenheimer and Trident at closing as defined in the Agency
Agreement.
4. Oppenheimer and Trident shall be reimbursed for out-of-pocket
expenses incurred by them, whether or not the Agency Agreement is
consummated, and Oppenheimer and Trident shall document such
expenses to the reasonable satisfaction of the Bank. Such
out-of-pocket expenses will not exceed $25,000, excluding the
expenses described in the succeeding paragraph and agreed upon
disbursements. The Bank agrees to pay directly the expenses for
Xxxxxxxxxxx'x and Trident's legal fees not to exceed $75,000,
exclusive of out-of-pocket expenses and disbursements for such
legal counsel, which shall also be the Bank's responsibility. The
Bank will forward to each of Oppenheimer and Trident a check in the
amount of $10,000 as an advance payment to defray the expenses of
Oppenheimer and Trident; provided, however, that if the Financial
Advisor terminates the engagement hereunder without cause, the
Financial Advisor shall only be entitled to reimbursement of its
out-of-pocket expenses through the date of such termination.
It further is understood that the Bank will pay all other expenses of the
Offerings, including, but not limited to, its attorneys' fees, the fees of the
independent appraiser, the fees of the account consolidation agent, the fees of
the independent vote tabulator, NASD filing fees, the fees of attorneys relating
to any required state securities laws filings, transfer agent charges, roadshow
related expenses, telephone charges, air freight, rental equipment, supplies,
fees relating to auditing and accounting and costs of printing all documents
necessary in connection with the foregoing. These expenses are to be in addition
to those enumerated in item "4" of the preceding paragraph of this Engagement
Agreement.
For purposes of Xxxxxxxxxxx'x and Trident's obligation to file certain documents
and to make certain representations to the NASD in connection with the
Conversion and stock sale, and except as otherwise disclosed to Oppenheimer and
Trident in writing on the date hereof, the Bank warrants that: (a) the Bank has
not privately placed any securities within the last 18 months; (b) except for
Northeast Capital & Advisory, Inc, there have been no material dealings within
the last 12 months between the Bank and any NASD member or any person related to
or associated with any such member; (c) none of the officers, trustees or
directors of the Bank or the
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January 9, 1998
Page 6
Holding Company has any affiliation with the NASD; (d) except with respect to
Northeast Capital & Advisory, Inc. and as contemplated by this Engagement
Agreement with Oppenheimer and Trident, the Bank has no financial or management
consulting contracts outstanding with any NASD member or any person related to
or associated with any such member; (e) the Bank has not granted Oppenheimer or
Trident a right of first refusal with respect to the underwriting of any future
offering of the Bank's stock; and (f) there has been no intermediary between
Trident, Oppenheimer and the Bank in connection with the public offering of the
Holding Company's or the Bank's shares, and no NASD member or any person related
to or associated with any such member is being compensated in any manner for
providing such service.
The Bank agrees to indemnify and hold harmless Oppenheimer and Trident and each
person, if any, who controls either of such firms against all losses, claims,
damages or liabilities, joint or several, and all legal or other expenses
reasonably incurred by them in connection with the investigation or defense
thereof (collectively, "losses"), to which they may become subject under
securities laws or under the common law, that arise out of or are based upon the
Conversion or the engagement hereunder of Oppenheimer and Trident as set forth
in Annex B attached hereto, which is incorporated by reference as if fully set
forth herein. If the Agency Agreement is entered into with respect to the common
stock to be issued in the Conversion, the Agency Agreement will provide for
indemnification, which will be in addition to any rights that Oppenheimer and
Trident or any other indemnified party may have at common law or otherwise. The
indemnification provision of this paragraph will be superseded by the
indemnification provisions of the Agency Agreement entered into by the Bank, the
Holding Company, Oppenheimer and Trident.
This letter is merely a statement of intent and is not a binding legal agreement
except as to (i) the fifth paragraph of this Engagement Agreement above with
regard to the obligation to reimburse Oppenheimer and Trident for out-of-pocket
expenses and disbursements to be incurred prior to the execution of the Agency
Agreement, (ii) the indemnity described in the preceding paragraph (iii) the
last sentence of the second paragraph of this Engagement Agreement and (iv) the
confidentiality provisions of the fourth paragraph of this Engagement Agreement.
While the Bank, Oppenheimer and Xxxxxxx agree in principle to the contents
hereof and propose to proceed promptly, and in good faith, to work out the
arrangements with respect to the Offerings, any legal obligations between the
Bank, Oppenheimer and Trident shall be only as set
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January 9, 1998
Page 7
forth in the duly executed Agency Agreement. Such Agency Agreement shall be in
form and content satisfactory to Oppenheimer, Trident and the Bank, and shall be
subject to, among other things, there being in Xxxxxxxxxxx'x and Trident's
opinion, no material adverse change in the condition or operations of the Bank
or no market conditions which might render the sale of the shares by the Bank
hereby contemplated inadvisable, and, there being in the Bank's opinion, no
material change in the financial condition, operations or regulatory status of
either Oppenheimer or Trident.
In addition, the obligations of Oppenheimer and Trident to enter into the Agency
Agreement will be subject to the approval of Xxxxxxxxxxx'x and Trident's Due
Diligence and Commitment Committees, the satisfactory completion of
Xxxxxxxxxxx'x and Trident's due diligence investigation, market conditions and
the good faith negotiation of customary and mutually agreeable terms and
conditions.
Oppenheimer and Trident shall be permitted to advertise, in such newspapers and
periodicals as they may choose, the services they provided to the Bank in
connection with a Conversion subsequent to the consummation of a Conversion.
This Engagement Agreement shall be governed by, construed and interpreted in
accordance with the laws of the State of New York without regard to the conflict
of laws provisions thereof and may not be amended or modified except in a
writing signed by both parties.
Any action, suit or proceeding arising out of, based on, or in connection with
this Engagement Agreement or the transaction contemplated hereby may be brought
only in a court located in White Plains, New York, and each party covenants and
agrees not to assert, by way of motion, as a defense, or otherwise, in any such
action, suit or proceeding, any claim that it is not subject personally to the
jurisdiction of such court that the action, suit or proceeding is brought in an
inconvenient forum, that the venue of the action, suit or proceeding is improper
or that this Engagement Agreement or the subject matter hereof may not be
enforced in or by such court.
If any provision of this Engagement Agreement shall be held or made invalid by a
statute, rule, regulation, decision of a tribunal or otherwise, the remainder of
this Engagement Agreement shall not be affected thereby and, to this extent, the
provisions of this
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January 9, 1998
Page 8
Engagement Agreement shall be deemed to be severable.
The Bank, Oppenheimer and Trident represent and warrant that each has all
requisite power and authority, and all necessary authorizations, to enter into
and carry out the terms and provisions of this Engagement Agreement.
No waiver, amendment or other modification of this Engagement Agreement shall be
effective unless in writing and signed by all the parties to be bound thereby.
This Engagement Agreement and all rights, liabilities and obligations hereunder
shall be binding upon and inure to the benefit of each party's successors but
may not be assigned without the prior written approval of the other parties.
The Bank represents and warrants to Oppenheimer and Trident, and Oppenheimer and
Trident represent to the Bank to the best of their knowledge, that there are no
brokers, representatives or
other persons which have an interest in compensation due to Oppenheimer and
Trident from any transaction contemplated herein.
Please acknowledge your agreement to the foregoing by signing below and
returning to each of Oppenheimer and Trident an executed copy of this letter
along with the advance payment of $10,000.
Yours very truly,
CIBC XXXXXXXXXXX CORP. TRIDENT SECURITIES, INC.
By: By:
--------------------------------- ---------------------
Xxxx Xxxx Xxxxxxxx Xxxxxxx X. Xxxxxxx
Executive Director Managing Director
Xxxxxx and accepted this
Day of January, 1998
CORTLAND SAVINGS BANK
By:
---------------------------------
Xxxxxx X. Xxxxxxx
Cortland Savings Bank
January 9, 1998
Page 9
President and Chief Executive Officer
ANNEX A
Conversion Center Activities As further described in the attached engagement
letter, Oppenheimer and/or Trident will supervise and administer the Conversion
Center. Designated representatives of either (or both) of such firms will train
Conversion Center staff to help record stock orders, answer customer inquiries
and handle special situations as they arise. Conversion Center activities
include the following:
- Provide experienced on-site registered representatives to manage the
Conversion Center;
- Identify and organize space for the on-site Conversion Center, the focal
point of conversion activity;
- Administer the Conversion Center;
- Prepare procedures for processing proxies, stock orders and cash, and for
handling requests for information;
- Provide training and guidance for the telephone team in soliciting proxies;
- Train branch managers and customer-contact employees on the proper response
to stock purchase inquiries;
- Train and supervise Conversion Center staff assisting with proxy and order
processing;
- Prepare daily sales reports for management;
- Coordinate functions with the conversion agent, printer, transfer agent,
stock certificate printer and other professionals;
- Organize and implement a proxy solicitation campaign;
- Design and implement procedures for handling IRA and Xxxxx orders;
- Provide post-offering subscriber assistance; and
- Assist in the allocation of shares in the event of an oversubscription.
Securities Marketing Activities:
- Assign licensed registered representatives from our staff to work at the
Conversion Center to solicit orders on behalf of the Bank from prospective
investors who have been targeted as likely and desirable stockholders;
- Assist management in developing a list of potential investors who are
viewed as priority prospects;
- Respond to inquiries concerning the conversion and investment opportunity;
- Organize, coordinate and participate in community informational meetings.
These meetings are intended to both relieve customer anxiety and attract
potential investors. The meetings generate widespread publicity for the
conversion while providing local exposure of the Bank and promoting
favorable stockholder relations;
- Supervise and conduct a telemarketing campaign to identify prospects from
among the Bank's customer base (if requested);
- Continually advise management on market conditions and the community's
responsiveness to the offering;
- Educate the Bank's trustees, officers and employees about the conversion,
their roles and relevant securities laws; and
- If appropriate, assemble a selling group of selected local broker-dealers
to assist in selling stock during the offering. In so doing, prepare broker
"fact sheets" and arrange "roadshows" (at the Bank's expense) for the
purpose of stimulating local interest in the stock and informing the
brokerage community of the particulars of the offering.
ANNEX B
The Holding Company and the Bank as defined in the attached Engagement Agreement
(collectively, the "Company") hereby agree to indemnify Xxxxxxxxxxx and Trident,
their respective employees, directors, officers, agents, affiliates and each
person, if any, who controls either of such firms within the meaning of either
Section 20 of the Securities Exchange Act of 1934 or Section 15 of the
Securities Act of 1933 (each such person, including Xxxxxxxxxxx and Trident, is
referred to as "Indemnified Party") from and against any losses, claims, damages
and liabilities, joint or several (including all legal or other expenses
reasonably incurred by any Indemnified Party in connection with the preparation
for or defense of any threatened or pending claim, action or proceeding, whether
or not resulting in any liability) ("Damages"), to which such Indemnified Party,
in connection with its services or arising out of its engagement hereunder, may
become subject under any applicable Federal or state law or otherwise, including
but not limited to liability (i) caused by or arising out of an untrue statement
or an alleged untrue statement of a material fact or the omission or the alleged
omission to state a material fact necessary in order to make a statement not
misleading in light of the circumstances under which it was made, (ii) caused by
or arising out of any act or failure to act or (iii) arising out of
Xxxxxxxxxxx'x and Trident's engagement or the rendering by any Indemnified Party
of its services under the Engagement Agreement; provided, however, that the
Company will not be liable to the Indemnified Party hereunder to the extent that
any Damages are found in a final non-appealable judgment by a court of competent
jurisdiction (x) to have resulted from the gross negligence, bad faith or
willful misconduct of the Indemnified Party seeking indemnification hereunder or
(y) to have arisen out of or be based upon any untrue statement of a material
fact required to be stated therein or necessary to make not misleading any
statements contained in any final proxy statement, registration 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 regarding (a) Xxxxxxxxxxx and Trident or (b)
the possible use of a syndicated community offering which written information is
furnished to the Bank or the Holding Company by Xxxxxxxxxxx and Trident
expressly for use therein.
These indemnification provisions shall be in addition to any liability which the
Company may otherwise have to any Indemnified Party.
If for any reason, other than a final non-appealable judgment finding an
Indemnified Party liable for Damages for its gross negligence, bad faith or
willful misconduct, the foregoing indemnity is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless, then the Company
shall contribute to the amount paid or payable by an Indemnified Party as a
result of such Damages in such proportion as is appropriate to reflect not only
the relative benefits received by the Company and its shareholders on the one
hand and Xxxxxxxxxxx and Trident on the other, but also the relative fault of
the Company and the Indemnified Party as well as any relevant equitable
considerations, subject to the limitation that in no event shall the total
contribution
of all Indemnified Parties to all such Damages exceed the total amount of fees
actually received and retained by Xxxxxxxxxxx and Trident hereunder.
Promptly after receipt by the Indemnified Party of notice of any claim or of the
commencement of any action in respect of which indemnity may be sought, the
Indemnified Party will notify the Company in writing of the receipt or
commencement thereof and the Company shall have the right to assume the defense
of such claim or action (including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of fees and expenses of
such counsel), provided that the Indemnified Party shall have the right to
control its defense if, in the opinion of its counsel, the Indemnified Party's
defense is unique or separate to it as the case may be, as opposed to a defense
pertaining to the Company. In any event, the Indemnified Party shall have the
right to retain counsel reasonably satisfactory to the Company, at the Company's
expense, to represent the Indemnified Party in any claim or action in respect of
which indemnity may be sought and agrees to cooperate with the Company and the
Company's counsel in the defense of such claim or action, it being understood,
however, that the Company shall not, in connection with any one such claim or
action or separate but substantially similar or related claims or action in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys for all the Indemnified Parties unless the defense of one Indemnified
Party is unique or separate from that of another Indemnified Party subject to
the same claim or action. In the event that the Company does not promptly assume
the defense of a claim or action, the Indemnified Party shall have the right to
employ counsel reasonably satisfactory to the Company, at the Company's expense,
to defend such claim or action. The omission by an Indemnified Party to promptly
notify the Company of the receipt or commencement of any claim or action in
respect of which indemnity may be sought will relieve the Company from any
liability the Company may have to such Indemnified Party only to the extent that
such a delay in notification materially prejudices the Company's defense of such
claim or action. The Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld or delayed. Any obligation pursuant to this Annex B shall
survive the termination or expiration of the Engagement Agreement.
