Exhibit 1.1
[LETTERHEAD OF TRIDENT SECURITIES, INC.]
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September 22, 1998
Board of Directors
Community Savings Bank, SSB
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, 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 Community Savings Bank, SSB, Burlington, North
Carolina (the "Bank") concerning our investment banking services in connection
with the conversion of the Bank from a mutual to a capital stock form of
organization.
Trident is prepared to assist the Bank 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 Bank's Plan of Conversion. 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 to be executed
on the date the offering circular/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 Bank'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.
In connection with the subscription offering and community offering, Trident
will act as financial advisor and exercise its best efforts to assist the Bank
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
Bank will determine the selected dealers to assist the Bank 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 Bank as
Trident deems 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 hereunder, Trident will receive the following compensation and
reimbursement from the Bank:
Board of Directors
September 22, 1998
Page 2
1. A commission equal to one and seventy-five one hundredths (1.75%) of
the aggregate dollar amount of capital stock sold in the subscription
and community offerings, excluding any shares of conversion stock sold
to the Bank's directors, executive officers and the employee stock
ownership plan. 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 of Conversion .
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 allocable expenses incurred by them,
including legal fees, whether or not the Agreement is consummated.
Trident's legal fees and expenses will not exceed $27,500 and its
other reimbursable expenses will not exceed $7,500.
It further is understood that the Bank will pay all other expenses of the
conversion including but not limited to its attorneys' fees, 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.
Trident understands that the Bank's board of directors has not adopted a plan of
conversion as of the date hereof. Accordingly, the board of directors has not
decided at this point whether a conversion will occur and information about the
possibility of a conversion is strictly confidential. The Bank may terminate
this engagement at any time upon written notice to Trident. In such event,
Trident shall be entitled to receive the reasonable value of its services
rendered to the date of such termination.
For purposes of Trident's obligation to file certain documents and to make
certain representations to the NASD in connection with the conversion, 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
Board of Directors
September 22, 1998
Page 3
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 other person; (e) the Bank has not granted Trident a right
of first refusal with respect to the underwriting of any future offering of the
Bank 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 person 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 the securities laws or under the common
law, that arise out of or are based upon the conversion or the engagement
hereunder of Trident unless it is determined by final judgment of a court having
jurisdiction over the matter that such Losses are primarily a result of
Trident's gross negligence. 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 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 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 in
good faith to work out the arrangements with respect to the proposed future
offering, any legal obligations between Trident and the Bank shall be only as
set forth in a duly executed Agreement. Such Agreement shall be in form and
content satisfactory to Trident and the Bank, 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 Bank or no market conditions which might render the sale of
the shares by the Bank hereby contemplated inadvisable.
Board of Directors
September 22, 1998
Page 4
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
$2,500. 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: /s/ X. Xxx Xxxxxxx, Xx.
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X. Xxx Xxxxxxx, Xx.
Managing Director
Xxxxxx and accepted to this 23rd day
of September, 1998
COMMUNITY SAVINGS BANK, SSB
By:/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
President
