Exhibit 1.1 Engagement Letter between Annapolis National Bancorp, Inc. and
Xxxxxxx Xxxx & Company, A Division of Xxxxx, Xxxxxxxx & Xxxxx,
Inc.
[KBW LOGO] Xxxxxxx Xxxx & Company [LOGO]
A Division of
XXXXX, XXXXXXXX & XXXXX, INC.
May 2, 1997
Xx. Xxxx X. Xxxxxxxx, Xx.
President and Chief Executive Officer
Annapolis National Bank
000 Xxxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxxx:
This is in connection with the your proposal to recapitalize Annapolis National
Bank, (the "Bank") through a public offering of stock (the "Offering") of the
Bank's holding company, Maryland Publick Banks (the "Company"). Xxxxxxx Xxxx
& Company, a Division of Xxxxx Xxxxxxxx & Xxxxx, Inc. ("Xxxx" and "KBW") will
act as the Bank's and the Company's exclusive financial advisor and marketing
agent/managing dealer in connection with the Offering. This letter sets forth
selected terms and conditions of our engagement.
1. Advisory/Offering Services. As the Bank's and Company's financial advisor and
marketing agent, Xxxx 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. Xxxx will provide financial and logistical
advice to the Bank and the Company concerning the offering and related issues,
including methods to best accomplish the goal of a broad local distribution of
the stock. Xxxx will provide services intended to maximize stock sales to
residents of the Bank's market area. This will be accomplished through direct
solicitation of orders by Xxxx and through selected local brokers. If necessary,
Xxxx will assist in placing any remaining shares through a syndicate to be
managed by Xxxx. KBW may participate in such syndicated offering.
Xxxx shall provide financial advisory services to the Bank which are typical in
connection with an equity offering and include, but are not limited to, overall
financial analysis of the client with a focus on identifying factors which
impact the valuation of an equity security and provide the appropriate
recommendations for the betterment of the equity valuation. Xxxx will use its
best efforts to price the sale of the stock in the offering at a price of $5.50
to $6.00 per share. The final price will depend upon, among other things, the
financial condition, operations and
------------------Investment Bankers and Financial Advisors---------------------
211 Bradenton o Dublin, Ohio 43017-3541 o 000-000-0000 o Fax: 000-000-0000
Xx. Xxxx X. Xxxxxxxx, Xx.
May 2, 1997
Page 2 of 6
prospects of the Company as well as economic, financial and market conditions
affecting the market for financial institutions' stock and the economy in
general.
Additionally, post Offering financial advisory services will include advice on
shareholder relations, NASDAQ listing, dividend policy, capital management
strategy and communication with market makers. Prior to the closing of the
offering, Xxxx shall furnish to client a Post-Offering reference manual which
will include specifics relative to these items.
2. Preparation of Offering Documents. The Bank, the Company and their counsel
will draft the Registration Statement, Prospectus and other documents to be used
in connection with the offering. Xxxx will attend meetings to review these
documents and advise you on their form and content. Xxxx and their counsel will
draft 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 or any
offering or other documents naming Xxxx as the Bank's and the Company's
financial advisor and marketing agent, Xxxx and their representatives will
undertake necessary investigations to learn about the Bank's proposed business
and operations ("due diligence review") in order to confirm information provided
to us and to evaluate information to be contained in the Bank's and/or the
Company's offering documents. The Bank agrees that it will make available to
Xxxx all relevant information, whether or not publicly available, which Xxxx
shall reasonably request, and will permit Xxxx to discuss personnel and the
operations and prospects of the Bank with management. Xxxx will treat all
material non-public information as confidential. The Bank acknowledges that Xxxx
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 of intent to serve as the Bank's
and 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"), and such state securities commissioners as may be
determined by the Bank.
5. Agency Agreement. The specific terms of Xxxx'x services, including offering
enhancement and syndicated offering services contemplated in this letter, shall
be set forth in an Agency Agreement between Xxxx 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 and such state
securities commissioners and other regulatory agencies as required by applicable
law.
Xx. Xxxx X. Xxxxxxxx, Xx.
May 2, 1997
Page 3 of 6
6. Representations, Warranties and Covenants. The Agency Agreement will provide
for customary representations, warranties and covenants by the Bank and Xxxx,
and for the Company to indemnify Xxxx and their controlling persons (and, if
applicable, the members of the selling group and their controlling persons), and
for Xxxx 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 and/or Company shall pay the
following fees to Xxxx at closing unless stated otherwise:
(a) A Management Fee of $25,000 payable in four consecutive monthly
installments of $6,250 commencing with the signing of this letter. 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 Xxxx, Xxxx shall
have earned and be entitled to be paid fees accruing through the stage at which
point the termination occurred.
(b) A Success Fee of 5.0% of 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 families).
(c) During the initial offering period, stock may be offered through local
brokers/dealers selected and agreed upon by the Bank and Xxxx. The Bank, in
consultation with Xxxx, shall determine the number of shares which any such
broker/dealer shall be allotted. Xxxx will be paid a fee not to exceed 5.0% of
the aggregate Purchase Price of the shares of common stock sold by local
broker/dealers. Xxxx will pass onto such selected local broker-dealers 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 affected with the assistance
of a selected local broker/dealers other than Xxxx shall be transmitted by Xxxx
to such broker/dealer. The decision to utilize selected broker-dealers will be
made by the Bank upon consultation with Xxxx. 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).
(d) If any shares of the Company's stock remain available, Xxxx, at the
request of the Bank, 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
Xx. Xxxx X. Xxxxxxxx, Xx.
May 2, 1997
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conditions set forth in the selected dealers agreement. Xxxx will endeavor to
distribute the common stock among dealers in a fashion which best meets the
distribution objectives of the Bank. Xxxx will be paid a fee not to exceed 5.0%
of the aggregate Purchase Price of the shares of common stock sold by them. Xxxx
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 affected with the assistance
of a broker/dealer other than Xxxx shall be transmitted by Xxxx to such
broker/dealer. The decision to utilize selected broker-dealers will be made by
the Bank upon consultation with Xxxx. In the event, with respect to any stock
purchases, fees are paid pursuant to this subparagraph 7(d), such fees shall be
in lieu of, and not in addition to, payment pursuant to subparagraph 7(b).
8. 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
Offering; the fees set forth in Section 7; and fees for "Blue Sky" legal work.
The Bank shall reimburse Xxxx for its reasonable out-of-pocket expenses,
including meals, travel, lodging, and communication, in an amount not to exceed
$10,000. In addition, the Bank shall reimburse Xxxx for the fees and expenses of
its counsel in an amount to be agreed upon by Xxxx and the Bank.
9. Conditions. Xxxx'x willingness and obligation to proceed hereunder shall be
subject to, among other things, satisfaction of the following conditions in
Xxxx'x opinion, which opinion shall have been formed in good faith by Xxxx 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 Xxxx, 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 proposed condition or
operations of the Bank subsequent to the execution of the agreement; and (c) no
market conditions at the time of offering which in Xxxx'x opinion make the sale
of the shares by the Company inadvisable.
10. Benefit. This Agreement shall inure to the benefit of the parties hereto and
their respective successors and to the parties indemnified hereunder 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 Xxxx.
Xx. Xxxx X. Xxxxxxxx, Xx.
May 2, 1997
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11. Definitive Agreement. This letter reflects Xxxx'x present intention of
proceeding to work with the Company on its proposed Offering. It does not create
a binding obligation on the part of the Bank, the Company or Xxxx except as set
forth below and 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 8, 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 acknowledge that any report or analysis rendered by
Xxxx pursuant to this engagement is rendered for use solely by the management of
the Bank 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.
Xxxx 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, Xxxx 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,
XXXXXXX XXXX & COMPANY,
A DIVISION OF XXXXX, XXXXXXXX & XXXXX, INC.
By: /s/ Xxxx Xxxxx
--------------------------------
Xxxx Xxxxx
Senior Vice President
Agreed to: MARYLAND PUBLICK BANKS
By: /s/ Xxxx X. Xxxxxxxx, Xx. 5/8/97
-------------------------------- ---------------
Xxxx X. Xxxxxxxx, Xx. Date
Vice President & Chief Executive Officer
