[LETTERHEAD OF CAPITAL RESOURCES GROUP, INC.]
August 4, 1998
Xx. Xxxxxx Xxxxxx
President and Chief Executive Officer
First Federal Savings Bank
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxx:
This letter sets forth the agreement between First Federal Savings Bank
(the "Bank") and Capital Resources Group, Inc. ("CRG"), whereby First Federal
has engaged CRG to determine the estimated pro forma market value of the shares
of common stock that are to be issued and sold by the Bank in conjunction with
its conversion into a stock savings institution (the "Conversion") and to
prepare the regulatory business plan for the formation of the new holding
company.
XXX agrees to deliver the valuation, in writing, to the Bank at the above
address on or before a mutually-agreed upon date. Further, we agree to discuss
with the board of directors the valuation, the methodology employed and other
relevant factors of the appraisal. In addition, CRG agrees to undertake all the
necessary filing requirements with respect to the valuation appraisal report
with the Office of Thrift Supervision ("OTS") and Securities and Exchange
Commission ("SEC"). It is understood that the services of CRG under this
agreement shall be limited as described above. CRG is an affiliate of Capital
Resources, Inc. which is offering marketing agent services separately.
First Federal agrees to pay CRG for its services to prepare the appraisal
and the regulatory business plan and to reimburse CRG for certain expenses
necessary and incident to the completion of the appraisal. Professional fees
for our services are $20,000 for the appraisal and $15,000 for the regulatory
holding company business plan. Payment of the appraisal and business plan fees
shall be made according to the following schedule:
o $10,000 upon execution of this letter of agreement;
o $10,000 upon delivery of the completed appraisal report; and
o $15,000 upon delivery of the completed regulatory business plan.
Any updated appraisal reports necessary in the conversion process will be
produced for a fixed fee of $5,000. Typically, no updates are required for the
business plan.
CAPITAL RESOURCES GROUP, INC.
Xx. Xxxxxx Xxxxxx
August 4, 1998
Page 2
Reimbursement of expenses for travel, communications, reproduction, data
and computer time shall be paid to CRG as incurred and billed. CRG will make
every attempt to hold these costs to a minimum, but in no event will they exceed
$5,000 without the prior approval of the Bank.
In the event the Bank shall, for any reason, discontinue its conversion to
a stock savings institution prior to the filing of the original appraisal and
business plan with the OTS, the Bank agrees to compensate CRG according to CRG's
standard billing rates for consulting services based on accumulated and
verifiable time expenses, not to exceed $35,000 plus reimbursable expenses.
If, during the course of the Bank's Conversion, unforeseen events occur so
as to materially change the nature of the work content of the appraisal services
described in this contract, the terms of said contract shall be subject to
renegotiation by the Bank and CRG. Such unforeseen events shall include, but
not be limited to, major changes in OTS' procedures as they relate to conversion
regulations, appraisal guidelines or processing procedures as they relate to
conversions, major changes in management, operating policies or financial
condition, and excessive delays in completing the transaction and/or suspension
of processing of conversions such that completion of the proposed Conversion
requires the preparation by CRG of a new appraisal report which differs
substantially from the appraisal report prepared by CRG.
The Bank and CRG hereby agree to the following:
1. The Bank agrees to supply to CRG such information with respect to its
business and financial condition as CRG may reasonably request in order to
provide the aforesaid valuation. Such information heretofore or hereafter
supplied or made available to CRG shall include without limitation: annual
financial statements, periodic regulatory filings and material agreements, debt
instruments, commitments and contingencies, potential gains/losses and corporate
books and records.
2. The Bank hereby represents and warrants to CRG that any information
provided to CRG does not and will not, to the best of the Bank's knowledge, at
all relevant times, contain any untrue statement of a material fact or fail to
state a material fact necessary to make the statements therein not false or
misleading.
3. (a) The Bank agrees that it will indemnify and hold harmless CRG and
any affiliates of CRG who act for or on behalf of CRG in connection with the
services called for under this agreement, from and against any and all losses,
claims, damages and liabilities (including, but not limited to, all losses and
expenses in connection with claims under the federal securities laws) caused by
or arising out of any untrue statement of a material fact contained in the
information supplied by the Bank to CRG or by an omission to state a material
fact in the information so provided that is required to be stated therein or
necessary to make the statements not misleading.
CAPITAL RESOURCES GROUP, INC.
Xx. Xxxxxx Xxxxxx
August 4, 1998
Page 3
(b) The Bank will not be responsible for any such losses, claims,
damages and liabilities if CRG is determined to be negligent or otherwise at
fault.
(c) CRG will not be responsible for any such losses, claims, damages
and liabilities to the extent that it reasonably relied upon information
furnished by the Bank whether or not the Bank is determined to be negligent or
otherwise at fault.
(d) Should CRG incur legal expenses in defending any legal action
challenging the valuation where CRG is not negligent or otherwise at fault or is
found by a court of law to be not negligent or otherwise at fault, the Bank will
indemnify CRG for all such expenses.
The Bank and CRG are not affiliated, and neither the Bank nor CRG has an
economic interest in, or is held in common with, the other and has not derived a
significant portion of its gross revenues, receipts or net income for any period
from transactions with the other.
Please acknowledge your agreement to the foregoing by signing as indicated
below and returning to CRG a signed copy of this letter.
Sincerely,
CAPITAL RESOURCES GROUP, INC.
/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
Chairman and Chief
Executive Officer
Agreed To and Accepted By:
FIRST FEDERAL SAVINGS BANK
/s/ Xxxxxx Xxxxxx 8/28/98
----------------------------------------------------
signed date
Xxxxxx Xxxxxx, President and Chief Executive Officer
