EXHIBIT 1.2
ENGAGEMENT LETTER BETWEEN FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION
OF SPARTANBURG AND TRIDENT SECURITIES, INC.
TRIDENT SECURITIES, INC.
0000 XXX XXXXX XXXX, XXXXX 000
XXXXXXX, XXXXX XXXXXXXX 00000
TELEPHONE (000) 000-0000
FACSIMILE (000) 000-0000
October 31, 1996
Board of Directors
First Federal Savings and Loan
Association of Spartanburg
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: Conversion Stock Marketing Services
Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and First Federal Savings and Loan Association of
Spartanburg (the "Association") concerning our investment banking services in
connection with the conversion of the Association from a mutual to a capital
stock form of organization.
Trident is prepared to assist the Association in connection with the offering of
its shares of common stock during the subscription offering and community
offering as such terms are defined in the Association's Plan of Conversion (the
"Plan"). The specific terms of the services contemplated hereunder shall be set
forth in a definitive sales agency agreement (the "Agreement") between Trident
and the Association to be executed on the date the prospectus is declared
effective by the appropriate regulatory authorities. The price of the shares
during the subscription offering and community offering will be the price
established by the Association'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 Association.
In connection with the subscription offering and community offering, Trident
will act as financial advisor and exercise its best efforts to assist the
Association in the sale of its common stock during the subscription offering and
community offering. Additionally, Trident may enter into agreements with other
National Association of Securities Dealers, Inc., ("NASD") member firms to act
as selected dealers, assisting in the sale of the common stock. Trident and the
Association will determine the selected dealers to assist the Association during
the community offering. At the appropriate time, Trident in conjunction with its
counsel, will conduct an examination of the relevant documents and records of
the Association as Trident deems necessary and appropriate. The Association will
make all documents, records and other information deemed necessary by Trident or
its counsel available to them upon request.
Board of Directors
October 31, 1996
Page 2
For its services hereunder, Trident will receive the following compensation and
reimbursement from the Association:
1. A commission equal to 1.35% of the aggregate dollar amount of
capital stock sold to investors who reside in the state
of South Carolina and a commission equal to 1.15% on sales to
investors residing outside the State of South Carolina. No
commissions shall be payable on shares purchased by officers,
directors, employees or their associates or employee benefit
plans. Further, all commissions shall be based on the amount
of stock sold; however, fees shall be capped at the midpoint
of the estimated valuation range as set forth on the cover
page of the prospectus first used in connection with the
subscription and community offering. In addition, in the
event that the offering is closed above the midpoint of
the appraised value, the above described fee schedule will
be applied on a pro rata basis as if the offering had
closed at the midpoint.
2. For stock sold by other NASD member firms under selected
dealer's agreements, the commission shall not exceed a fee to
be set by the Association 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 Association and Trident.
4. Trident shall be reimbursed for allocable expenses incurred by
them, including legal fees, 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 $35,000. Trident
will use its best efforts to ensure that the expenses of its
counsel are reasonable. The Association will forward to
Trident a check in the amount of $10,000 as an advance payment
to defray the allocable expenses of Trident.
It further is understood that the Association will pay all other expenses of the
conversion including but not limited to its attorneys' fees (including
out-of-pocket expenses), NASD filing fees, and filing and registration fees and
fees of either Trident's attorneys or the attorneys relating to any required
state securities law filings, telephone charges, air freight, rental equipment,
supplies, transfer agent charges, fees relating to auditing and accounting and
costs of printing all documents necessary in connection with the foregoing.
For purposes of Trident's obligation to file certain documents and to make
certain representations to the NASD in connection with the conversion, the
Association warrants that: (a) the Association 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 Association and any NASD member or any
person related to or associated with any such member; (c) none of the officers
or directors of the Association has any affiliation with the NASD; (d) except as
contemplated
Board of Directors
October 31, 1996
Page 3
by this engagement letter with Trident, the Association has no financial or
management consulting contracts outstanding with any other person; (e) the
Association has not granted Trident a right of first refusal with respect to the
underwriting of any future offering of the Association stock; and (f) there has
been no intermediary between Trident and the Association in connection with the
public offering of the Association's shares, and no person is being compensated
in any manner for providing such service.
The Association 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 the securities
laws or under the common law, that arise out of or are based upon the conversion
or the engagement hereunder of Trident provided, however, that the Association
will not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense (i) arises out of or is based upon any untrue
statement of a material fact or the omission of a material fact required to be
stated therein or necessary to make not misleading any statements contained in
any prospectus, or any amendment or supplement thereto, made in reliance on and
in conformity with information forwarded to the Association by Trident expressly
for use therein, or (ii) is attributable to the gross negligence, willful
misconduct or bad faith of Trident. If the foregoing indemnification is
unavailable for any reason, the Association agrees to contribute to such Losses
in the proportion that its financial interest in the conversion bears to that of
the indemnified parties. If the Agreement is entered into with respect to the
common stock to be issued in the conversion, 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 Association and Trident.
It is understood that if Trident's engagement hereunder is terminated prior to
consummation of the subscription and community offering or the subject
conversion is terminated for any reason, no fees shall be owed to Trident
hereunder. This letter, therefore, 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 Association agree in principle to the contents
hereof and propose to proceed in good faith to work out the arrangements with
respect to the proposed offering, any legal obligations between Trident and the
Association shall be only as set forth in a duly executed Agreement. Such
Agreement shall be in form and content satisfactory to Trident and the
Association, as well as their counsel, and Trident's obligations thereunder
shall be subject to, among other things, there being in Trident's opinion no
material adverse change in the condition or obligations of the Association or no
market conditions which might render the sale of the shares by the Association
hereby contemplated inadvisable.
Board of Directors
October 31, 1996
Page 4
Please acknowledge your agreement to the foregoing by signing below and
returning to Trident one copy of this letter. Trident acknowledges receipt of
the advance payment of $10,000.
Yours very truly,
TRIDENT
SECURITIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxx
Managing Director
RLB/cs
10-1-3
Agreed and accepted to this 31 day of January , 1997
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FIRST FEDERAL SAVINGS AND LOAN ASSOCIATION OF SPARTANBURG
By: /s/ Xxxx X. Xxxxxxx
--------------------
Xxxx X. Xxxxxxx
President
