EXHIBIT 1.1
[TRIDENT SECURITIES, INC. LETTERHEAD APPEARS HERE]
May 13, 1997
Board of Directors
Salida Building and Loan Association
130 West 2nd Street
Salida, Colorado 81201
RE: Conversion Stock Marketing Services
Gentlemen:
This letter sets forth the terms of the proposed engagement between Trident
Securities, Inc. ("Trident") and Salida Building and Loan Association (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.
For its services hereunder, Trident will receive the following compensation and
reimbursement from the Association:
1. A commission equal to 1.70% of the aggregate dollar amount of capital
stock sold in the state of Colorado and 1.20% of the aggregate dollar amount of
capital stock sold outside the state of Colorado in the subscription and
community offerings, excluding any shares of conversion stock sold to the
Association's directors, executive officers, employees and the benefit plans.
Additionally, commissions will be excluded on those shares sold to "associates"
of the Association's directors, employees and executive officers. The term
"associates" as used herein shall have the same meaning as that found in the
Association's Plan of Conversion.
TRIDENT SECURITIES, INC.
Board of Directors
May 13, 1997
Page 2
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 $25,000. 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 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
TRIDENT SECURITIES, INC.
Board of Directors
May 13, 1997
Page 3
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 which
respect to the proposed offering, any legal obligations between Trident and the
Association shall be 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.
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.
Your very truly,
TRIDENT SECURITIES, INC.
By: /s/ Willis Smith, II
--------------------------
Willis Smith, II
Senior Vice President
Agreed and accepted to this 15th day of May, 1997
SALIDA BUILDING AND LOAN ASSOCIATION
By: /s/ Larry D. Smith
------------------------
Larry D. Smith
President