Exhibit 1.1
[LETTERHEAD OF FRIEDMAN, BILLINGS, RAMSEY & CO. INC.]
October 15, 1997
Board of Directors
Attn: Wendell T. Breithaupt
President & Chief Executive Officer
Trenton Savings Bank, FSB
134 Franklin Corner Road
Lawrenceville, New Jersey 08648
Re: Reorganization and Plan of Conversion Marketing Services
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Gentlemen:
This letter sets forth the terms of the proposed engagement between Friedman,
Billings, Ramsey and Co., Inc. ("FBR") and Trenton Savings Bank, FSB ("Trenton
Savings"), concerning our Investment Banking Services in connection with the
Plan of Conversion and Plan of Reorganization (the "Plan") in connection with
the reorganization of Trenton Savings Bank, FSB and Peoples Bancorp, Inc. from
the mutual holding company format into the stock holding company structure.
FBR is prepared to assist Trenton Savings 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 Plan. The specific terms of the services
contemplated hereunder shall be set forth in a definitive sales agency agreement
(the "Agreement") between FBR and Trenton Savings to be executed prior to
mailing of the Offering material as referred to in the third to last paragraph
of this letter. The price of the shares during the Subscription Offering and
Community Offering will be the price established by Trenton Savings Board of
Directors, based upon an independent appraisal as approved by the appropriate
regulatory authorities, provided such price is mutually acceptable to FBR and
Trenton Savings.
In connection with the Subscription Offering and Community Offering, FBR will
render the following services:
1. Act as the Financial Advisor to Trenton Savings
2. Create marketing materials and formulate a marketing plan
3. Conduct training for all Directors and Employees concerning the
reorganization and stock offering
4. Manage Stock Center and staff with FBR personnel
5. Assist Trenton Savings and Attorneys with listing on Nasdaq
After the Offering, FBR intends to become a Market Maker and continue converage
of Trenton Savings through after market support and research.
Mr. Breithaupt
October 15, 1997
Page 2
At the appropriate time, FBR, in conjunction with its counsel, will conduct an
examination of the relevant documents and records of Trenton Savings as FBR
deems necessary and appropriate. Trenton Savings will make all documents,
records and other information deemed necessary by FBR or its counsel available
to them upon request.
For its services hereunder, FBR will receive the following compensation and
reimbursement from Trenton Savings:
1. A management fee of $50,000 payable as follows, $25,000 upon the
signing of this letter and $25,000 upon receiving OTS approval of the
Plan Application. Should the Plan be terminated for any reason not
attributable to the action or inaction of FBR, FBR shall have earned
and be entitled to be paid fees accruing through the stage at which
point the termination occurred.
2. A marketing fee of 0.75% of the aggregate Purchase Price of Common
Stock sold in the Subscription Offering and Community Offering,
excluding those shares purchased by Trenton Savings officers,
directors, or employees (or member of their immediate families) or by
an ESOP, tax-qualified or stock compensation plans (except IRA's) or
similar plan created by Trenton Savings for some or all of its
directors or employees. The management fee of $50,000 will be
subtracted from the marketing fee.
3. With respect to paragraphs 1 and 2 above, the total
marketing/management fee will not exceed $1,000,000.
4. The foregoing commissions are to be payable to FBR at closing as
defined in the agreement to be entered into between FBR and Trenton
Savings.
5. FBR shall be reimbursed for allocable expenses incurred by them,
including legal fees, whether or not the Agreement is consummated.
These expenses shall not exceed $70,000.
It is further understood that Trenton Savings will pay all other expenses of the
Plan including but not limited to its attorneys' fees, NASD filing fees, filing
and registration fees and fees of either FBR's attorneys or your attorneys
relating to any required state securities law filings, telephone charges, air
freight, supplies, conversion agent charges, transfer agent charges, fees
relating to auditing and accounting and costs of printing all documents
necessary in connection with the foregoing.
For purpose of FBR's obligation to file certain documents and to make certain
representations to the NASD in connection with the Plan, Trenton Savings
warrants that: (a) Trenton Savings has not privately placed any securities
within the last 18 months; (b) other than in connection with the Bank's
acquisitions of Burlington County Bank and Manchester Trust, there have been no
material dealings within the last 12 months between Trenton Savings and any NASD
member or any person related to or associated with any such member; (c) none of
the officers or directors of Trenton Savings has any affiliation with any NASD
member; (d) Trenton Savings has not granted FBR a right of first refusal with
respect to the underwriting of any future offering of Trenton Savings stock; and
(e) there has been no intermediary between FBR and Trenton Savings in connection
with the public offering of Trenton Savings shares, and no person is being
compensated in any manner for providing such service.
Mr. Breithaupt
October 15, 1997
Page 3
Trenton Savings agrees to indemnify and hold harmless FBR and its affiliates (as
defined in Rule 405 under the Securities Act of 1933, as amended) and their
respective directors, officers, employees, agents and controlling persons (FBR
and each such person being an "Indemnified Party") from and against any and all
losses, claims, damages and liabilities (or actions, including shareholder
actions, in respect thereof), joint or several, to which such Indemnified Party
may become subject under any applicable federal or state law, or otherwise,
which are related to or result from the performance by FBR of the services
contemplated by, or the engagement of FBR pursuant to, this letter agreement and
will promptly reimburse any Indemnified Party for all reasonable expenses
(including reasonable counsel fees and expenses) as they are incurred in
connection with the investigation of, preparation for or defense arising
therefrom, whether or not such Indemnified Party is a party and whether or not
such claim, action or proceeding is initiated or brought by Trenton Savings.
Trenton Savings will not be liable to any Indemnified Party under the foregoing
indemnification and reimbursement provisions, (i) for any settlement by an
Indemnified Party effected without its prior written consent; or (ii) to the
extent that any loss, claim, damage or liability is found in a final judgment by
a court to have resulted primarily from FBR's gross negligence or willful
misconduct. FBR shall repay to Trenton Savings any amounts paid by Trenton
Savings for reimbursement of FBR's and any Indemnified Party's expenses in the
event that such expenses were incurred in relation to an act or omission with
respect to which it is finally determined that FBR has acted in gross negligence
or with willful misconduct. Trenton Savings also agrees that no Indemnified
Party shall have any liability (whether direct or indirect, in contract or tort
or otherwise) to Trenton Savings or its security holders or creditors related to
or arising out of the engagement of FBR pursuant to, or the performance by FBR
of the services contemplated by, this letter agreement except to the extent that
any loss, claim, damage or liability is found in a final judgment by a count to
have resulted primarily from FBR's gross negligence or willful misconduct.
Promptly after receipt by an Indemnified Party of notice of any intention or
threat to commence an action, suit or proceeding or notice of the commencement
of any action, suit or proceeding, such Indemnified Party will, if a claim in
respect thereof is to be made against Trenton Savings pursuant hereto, promptly
notify Trenton Savings in writing of the same. In case any such action is
brought against any Indemnified Party and such Indemnified Party notifies
Trenton Savings of the commencement thereof, Trenton Savings may elect to assume
the defense thereof, with counsel reasonably satisfactory to such Indemnified
Party, and an Indemnified Party may retain counsel to participate in the defense
of any such action; provided, however, that in no event shall Trenton Savings be
required to pay fees and expenses for more than one firm of attorneys
representing Indemnified Parties.
If the indemnification provided for in this letter agreement is for any reason
held unenforceable by an Indemnified Party, Trenton Savings agrees to contribute
to the losses, claims, damages and liabilities for which such indemnification is
held unenforceable (i) in such proportion as is appropriate to reflect the
relative benefits to Trenton Savings, on the one hand, and FBR on the other
hand, of the Transaction as completed (whether or not the Transaction is
consummated) or, (ii) if (but only if) the allocation provided for in clause (i)
is for any reason unenforceable, in such proportion as in appropriate to reflect
not only the relative benefits referred to in clause (i) but also the relative
fault of Trenton Savings, on the one hand, and FBR, on the other hand, as well
as any other relevant equitable considerations. Each of the parties hereto (on
its own behalf and, to the extent permitted by applicable law, on behalf of its
stockholders) waives all right to trial by jury in any action, proceeding or
Mr. Breithaupt
October 15, 1997
Page 4
counteraction (whether based upon contract, or otherwise) related to or arising
out of our engagement pursuant to, or the performance by us of the services
contemplated by, this Letter Agreement.
This letter is merely a statement of intent and is not a binding legal agreement
except as to the compensation and reimbursement paragraphs number 1-5 above and
the indemnity described above. While FBR and Trenton Savings agree in principle
to the contents hereof and the purpose to proceed promptly, and in good faith,
to work out the arrangements with respect to the proposed offering, any legal
obligations between FBR and Trenton Savings shall be only as set forth in a duly
executed Agreement, which Agreement shall include customary representations and
warranties, covenants and indemnification provisions (which indemnification
provisions shall supersede, in part, the indemnity described above). Such
Agreement shall be in the form and content satisfactory to, among other things,
there being in FBR's opinion no material adverse change in the condition or
obligations of Trenton Savings or no market conditions which might render the
sale of the shares by Trenton Savings hereby contemplated inadvisable.
The validity and interpretation of this Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the Commonwealth of
Virginia (excluding the conflicts of laws rules).
Please acknowledge your agreement to the foreging by signing below and returning
to FBR one copy of this letter along with a payment of $25,000. This proposal is
open for your acceptance for a period of thirty (30) days from the date hereof.
Very truly yours,
By: /s/ J. Rock Tonkel /s/ Richard A. Buckner
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J. Rock Tonkel Richard A. Buckner
Title: Managing Director Senior Vice President
Date: October 15, 1997
Agreed and Accepted to this 15th day of November, 1997.
Trenton Savings Bank, FSB
By: /s/Wendell T. Breithaupt
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Title: President/CEO