Exhibit 1.1 Engagement Letter between State Capital Bancorp and
Xxxxxxx Xxxx & Company, A Division of Xxxxx, Xxxxxxxx &
Xxxxx, Inc.
EXHIBIT 1.1
[Xxxxxxx Xxxx & Company Letterhead]
October 21, 1996
Xx. Xxxx X. Xxxxxxxx, Xx.
0000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxxx:
This is in connection with the your proposal to form a de novo Maryland
chartered trust company (the "Bank") to be capitalized through a public offering
of stock (the "Organization"). In order to effect the Organization, it is
contemplated that all of the Bank's common stock to be outstanding pursuant to
the Organization 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 to the public.
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 the offering of stock in connection with the
Organization. This letter sets forth selected terms and conditions of our
engagement.
1. Advisory/Organization 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 from a Stock Sales Center to be managed 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.
Xx. Xxxx X. Xxxxxxxx, Xx.
October 21, 1996
Page 2 of 6
Additionally, post Organization 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-Organization reference manual
which will include specifics relative to these items. (The nature of the
services to be provided by Xxxx as the Bank's and the Company's financial
advisor and marketing agent are further described in Exhibit A attached hereto.)
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 and Organization. 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 is 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 specified 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,
Xx. Xxxx X. Xxxxxxxx, Xx.
October 21, 1996
Page 3 of 6
the NASD 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 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 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).
(b) 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(b), such fees shall be in lieu of, and not in addition to, payment
pursuant to subparagraph 7(b).
(c) 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 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%
Xx. Xxxx X. Xxxxxxxx, Xx.
October 21, 1996
Page 4 of 6
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(c), such fees
shall be in lieu of, and not in addition to, payment pursuant to
subparagraph 7(a) and 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
Organization; the fees set forth in Section 7; and fees for "Blue Sky" legal
work.
In addition, the bank shall reimburse Xxxx for its reasonable out-of-pocket
expenses, including expenses of its counsel, not to exceed $25,000.00.
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.
11. Definitive Agreement. This letter reflects Xxxx'x present intention of
proceeding to work with the Bank on its proposed Organization. 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
Xx. Xxxx X. Xxxxxxxx, Xx.
October 21, 1996
Page 5 of 6
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 the Bank and/or Company shall ratify
the pre-organization actions of you and the Board, including the execution of
this agreement, and that the Bank and/or Company shall assume any and all
pre-organization fees, expenses and liabilities incurred by you and the Board,
including those fees, expenses and liabilities contemplated by this agreement.
You further 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 Organization. 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.
Xx. Xxxx X. Xxxxxxxx, Xx.
October 21, 1996
Page 6 of 6
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
By: /s/ XXXX XXXXX
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Xxxx Xxxxx
Senior Vice President
State Capital Bancorp, Inc.
By: /s/ XXXX X. XXXXXXXX, XX. Nov. 18, 1976
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Xxxx X. Xxxxxxxx, Xx., Date
President & Chief Executive Officer
