Exhibit 99.01
MEMORANDUM OF UNDERSTANDING
Dated October 29, 1997
XXXXXXXX, XXXXXXXX, XXXXXX GROUP, INC. (together with its subsidiaries
"FBR") and PNC BANK CORP. (together with its subsidiaries, "PNC") hereby set
forth their current intentions to establish an ongoing strategic relationship
in this non-binding Memorandum of Understanding. Substantially simultaneously
with the execution of this Memorandum of Understanding, FBR and PNC are entering
into a binding securities purchase agreement relating to the purchase of shares
of Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"),
of FBR by PNC substantially simultaneously with the closing of the proposed
initial public offering of shares of Class A Common Stock by FBR.
1. The parties hereto intend to establish an ongoing strategic business
relationship with respect to selected capital markets and other activities. The
relationship between the parties shall remain on an arm's-length business basis,
subject to termination at will by either party at any time, and shall in no
manner be construed to constitute a joint venture, partnership or other
fiduciary relationship. Neither party shall exercise a controlling influence
over any aspect of the other party's business or corporate affairs. Each party
shall exercise full independent discretion in the operation of its own business
affairs and shall have full legal responsibility for its own affairs and any
consequences resulting therefrom. Neither party shall have any financial
obligation to the other party pursuant to the terms of this Memorandum of
Understanding, except to the extent such obligations arise pursuant to
independent arm's-length business transactions that the parties may engage in as
contemplated hereunder.
2. FBR and PNC will have a strategic alliance in the interest of helping
PNC to build the equity and high yield capabilities of PNC's section 20
subsidiary, PNC Capital Markets Inc. ("PNC Capital Markets") upon the receipt by
PNC of full tier 2 equity powers. FBR will invite PNC Capital Markets to
participate in selected equity and high yield offerings on which FBR is acting
as lead underwriter or placement agent on a case-by-case basis as FBR deems
appropriate, subject in all instances to the suitability to the issuer's needs
and such issuer's consent.
3. FBR shall be the exclusive independent broker dealer to which PNC and
its affiliates shall refer all underwriting and high yield business that is not
conducted by PNC, PNC Capital Markets, and its affiliates, with an emphasis on
developing a
strong referral business from PNC's middle market and industry specialty
customer base. FBR shall endeavor to the fullest extent compatible with the
needs of such referral clients, and subject to the consent of such clients, to
include PNC Capital Markets as a co-lead underwriter or co-placement agent on
such referred business (with FBR having the left-hand placement and PNC Capital
Markets having the right-hand placement on such offerings).
4. FBR and PNC will explore potential strategic relationships in other
business lines, including, without limitation, mergers and acquisitions advisory
services, merchant banking and venture capital activities, assets management and
real estate advisory services.
5. PNC shall work with FBR to provide enhanced derivatives, asset
securitization, bridge lending and other bank debt financing products to the FBR
client base. PNC shall be the commercial bank to which FBR first refers business
in the areas of derivatives, asset securitization, bridge lending and bank debt
financing. The parties will explore the possibility of forming bridge and/or
equity and venture capital funds to serve the common needs of their respective
client bases.
6. Referral and/or co-underwriter arrangements shall be determined on a
case-by-case basis, and shall in all instances be established on an independent
arm's-length basis.
7. It is the intention of FBR and PNC that the relationship contemplated
by this Memorandum of Understanding be exclusive to PNC in business lines where
PNC's business is national and, for business lines that are not national in
scope, that this relationship be exclusive to PNC in the regions where PNC does
business. Each of FBR and PNC will provide the other with prior notice of any
proposed strategic alliances into which it intends to enter in any of the
business lines discussed herein.
* * *
The aforesaid accurately reflects our understanding. Signed this 29th day of
October, 1997 by:
XXXXXXXX, XXXXXXXX, XXXXXX PNC BANK CORP.
GROUP, INC. (a Virginia corporation)
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxx
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Name: Xxxxxxx Xxxxxxxx Name: Xxxxxx Xxxxx
Title : Chairman and Chief Title: Senior Executive Vice
Executive Officer President and Chief
Financial Officer
