EXHIBIT 1.1
[TRIDENT SECURITIES LETTERHEAD]
April 23, 1998
Board of Directors
Summit Bank
00 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-1867
RE: Mutual Holding Company Marketing Services
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Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and Summit Bank (the "Bank") concerning Trident's
investment banking services in connection with a minority stock offering (the
"Offering") by a to-be-formed mid-tier stock holding company subsidiary (the
"Stock Holding Company") of Service Bancorp, MHC, the Bank's existing mutual
holding company (the "MHC").
Trident is prepared to assist the Bank in connection with the Offering of shares
of common stock pursuant to the Bank's Stock Issuance Plan (the "Plan"). It is
expected that Trident will assist the Bank in the Offering as follows: (1) as
financial advisor to Management, (2) targeting sales efforts in the Bank's local
communities, (3) conducting information meetings for prospective investors (as
desired), (4) training and educating the Bank's management and employees
regarding the mechanics and regulatory requirements of the process, (5)
providing support for the administration and processing of orders and
establishing a Stock Information Center on site in Medway, and (6) listing stock
of the Bank on the NASDAQ System and acting as a market maker for the shares.
The specific terms of the services contemplated hereunder shall be set forth in
a definitive Sales Agency Agreement (the "Agreement") between Trident and the
Bank/Stock Holding Company to be executed on the date the Prospectus is declared
effective by the appropriate regulatory authorities. The price of the shares
during the Offering will be the price established by the Bank's and the Stock
Holding Company's Board of Directors, based upon an independent appraisal as
approved by the appropriate regulatory authorities, provided such price is
mutually acceptable to Trident and the Bank/Stock Holding Company.
At the appropriate time, Trident, in conjunction with its counsel will conduct
an examination of the relevant documents and records of the Bank as Trident and
its counsel deem necessary and appropriate. The Bank will make all documents,
records and other information deemed necessary by Trident or its counsel
available to them upon request.
For its services, Trident will receive the following compensation and
reimbursement from the Bank:
Board of Directors
April 23, 1998
Page 2
1. A commission equal to two percent (2.0%) of the aggregate dollar
amount of capital stock sold in the subscription and community
offerings up to a maximum of $150,000, excluding any shares of stock
sold to the Bank's directors, officers, employees and the employee
benefit plans. Additionally, commissions will be excluded on those
shares sold to "Associates" of the Bank's directors and executive
officers. The term "Associates" as used herein shall have the same
meaning as that found in the Bank's Plan.
2. For stock sold by other NASD member firms under selected dealer's
agreements, the commission shall not exceed a fee to be agreed upon
jointly by Trident and the Bank to reflect market requirements at the
time of the stock allocation in a Syndicated Community Offering.
3. The foregoing fees and commissions are to be payable to Trident at
closing as defined in the Agreement to be entered into between the
Bank and Trident.
4. Trident shall be reimbursed for out-of-pocket expenses incurred by
them and their counsel, whether or not the Agreement is consummated.
Trident's out-of-pocket expenses will not exceed $10,000 and its legal
fees will not exceed $27,500. The Bank will forward to Trident a check
in the amount of $10,000 as an advance payment to defray the expenses
of Trident.
It further is understood that the Bank will pay all other expenses of the
offering including but not limited to its attorneys' fees, National Association
of Securities Dealers ("NASD") filing fees, and fees of either Trident's
attorneys or other attorneys relating to any required state securities laws
filings, transfer agent charges, 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 Paragraph (4) above.
For purposes of Trident's obligation to file certain documents and to make
certain representations to the NASD in connection with the reorganization, the
Bank warrants that: (a) the Bank has not privately placed any securities within
the last 18 months; (b) 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 or directors of the
Bank has any affiliation with the NASD; (d) except as contemplated by this
engagement letter with 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 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 and the
Bank in connection with the public offering of 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 Trident and each person, if any,
who controls the firm 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 reorganization or the engagement
hereunder of Trident except to the extent such losses are the result of the
negligence or willful misconduct of Trident. If the foregoing indemnification is
unavailable for any reason, the Bank agrees to contribute to such Losses in the
proportion that its financial interest in the reorganization bears to that of
the indemnified parties. If the agreement is entered into with respect the
common stock to be issued in
Board of Directors
April 23, 1998
Page 3
the reorganization, the Agreement will provide for indemnification, which will
be in addition to any rights that 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 Agreement entered
into by the Bank and Trident.
This letter is merely a statement of intent and is not a binding legal agreement
except as to paragraph (4) above with regard to the obligation to reimburse
Trident for allocable expenses to be incurred prior to the execution of the
Agreement and the indemnity described in the preceding paragraph. While Trident
and the Bank 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
proposed offering, any legal obligations between Trident and the Bank shall be
only as set forth in the duly executed Agreement. Such Agreement shall be in
form and content satisfactory to Trident and among other things, there being in
Trident's opinion no material adverse change in the condition or obligations of
the Bank or no market conditions which might render the sale of the shares by
the Bank hereby contemplated inadvisable.
Please acknowledge your agreement to the foregoing by signing below and
returning to Trident one copy of this letter along with the advance payment of
$10,000. This proposal is open for your acceptance for a period of thirty (30)
days from the date hereof.
Yours very truly,
TRIDENT SECURITIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
Managing Director
TEL:cs
Agreed and accepted this
____ day of _________, 1998
SUMMIT BANK
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx
President and CEO
