Exhibit 1.1
[LETTERHEAD OF TRIDENT SECURITIES, INC. APPEARS HERE]
July 1, 1997
Board of Directors
Xxxxxx Federal Savings and Loan Association
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
RE: Mutual Holding Company Marketing Services
-----------------------------------------
Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and Xxxxxx Federal Savings and Loan Association
(the "Association") concerning Trident's investment banking services in
connection with the reorganization ("Reorganization") of the Association into a
mutual holding company ("MHC") and the issuance of shares of the stock savings
bank subsidiary of the MHC in a community offering (the "Offering").
Trident is prepared to assist the Association in connection with the offering of
shares of common stock of the MHC's stock savings bank subsidiary during the
Offering as such term is defined in the Association's Plan of Mutual Holding
Company Reorganization and Stock Issuance Plan (the "Plan"). It is expected that
Trident will assist the Association in the Offering as follows: (1) as financial
advisor to Management, (2) targeting sales efforts in the Association's local
communities, (3) conducting information meetings for prospective investors (as
desired), (4) training and educating the Association'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 Gastonia, and (6) listing
stock of the Association 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 Association to be executed on the date the Offering Circular is
declared effective by the appropriate regulatory authorities. The price of the
shares during the 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.
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 and its counsel deem 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.
For its services, Trident will receive the following compensation and
reimbursement from the Association:
TRIDENT SECURITIES, INC.
Board of Directors
July 1, 1997
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, excluding any shares of stock sold to the
Association's directors, officers, employees and the employee
benefit plans. Additionally, commissions will be excluded on
those shares sold to "Associates" of the Association's
directors and executive officers. The term "Associates" as used
herein shall have the same meaning as that found in the
Association's Plan of Reorganization.
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 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 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
$7,500 and its legal fees will not exceed $27,500. The
Association will forward to Trident a check in the amount of
$7,500 as an advance payment to defray the expenses of Trident.
It further is understood that the Association 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
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 by this engagement letter with Trident, the Association 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 Association
has not granted Trident a right of first refusal with respect to the
underwriting of any future offering of the Association's 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 NASD member or any
person related to or associated with any such member is being compensated if 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
TRIDENT SECURITIES, INC.
Board of Directors
July 1, 1997
Page 3
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 reorganization or the engagement hereunder 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 reorganization bears to that of the indemnified parties. If the agreement is
entered into with respect the common stock to be issued in 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 Association
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 Association 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
Association 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 Association or no market conditions which might
render the sale of the shares by the Association 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
$7,500. 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: --------------------------
X. Xxx Xxxxxxx, Xx.
Managing Director
RLB:cs
Agreed and accepted this
_____ day of ___________, 1997
XXXXXX FEDERAL SAVINGS AND LOAN ASSOCIATION
By: -------------------------
Xxxxx X. Xxxxx
Director
