Exhibit 99.3
Appraisal Agreement between Rainier Pacific Savings Bank and RP Financial, LC.
[LETTERHEAD OF RP FINANCIAL LC.]
April 1, 2003
Xx. Xxxx X. Xxxx
President
Rainier Pacific Bank
0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxxxxxx 00000
Dear Xx. Xxxx:
This letter sets forth the agreement between Rainier Pacific Bank, Fife,
Washington ("Rainier Pacific" or the "Bank"), and RP Financial, LC. ("RP
Financial") for independent conversion appraisal services pertaining to the
Bank's simultaneous holding company formation and mutual-to-stock conversion.
The specific appraisal services to be rendered by RP Financial are described
below. These services will be conducted by our senior consulting staff and will
be directed by the undersigned.
Description of Appraisal Services
Prior to preparing the conversion appraisal report, RP Financial will
conduct a financial due diligence, including on-site interviews of senior
management and reviews of financial and other documents and records, to gain
insight into the Bank's operations, financial condition, profitability, market
area, risks and various internal and external factors which impact the pro forma
market value of the Bank.
RP Financial will prepare a detailed written valuation report of the Bank
which will be fully consistent with applicable federal regulatory guidelines and
standard pro forma valuation practices. The appraisal report will include an
analysis of the Bank's financial condition and operating results, as well as an
assessment of the Bank's interest rate risk, credit risk and liquidity risk. The
appraisal report will describe the Bank's business strategies, market area,
prospects for the future and the intended use of proceeds. A peer group analysis
relative to comparable publicly-traded savings institutions will be conducted
for the purpose of determining appropriate valuation adjustments for the Bank
relative to the peer group.
We will review pertinent sections of the Bank's prospectus and hold
discussions with the Bank to obtain necessary data and information for the
appraisal report, including the impact of key deal elements on the pro forma
market value, such as dividend policy, use of proceeds and reinvestment rate,
tax rate, conversion expenses and characteristics of stock plans.
Xx. Xxxx X. Xxxx
April 1, 2003
Page 2
The appraisal report will establish a midpoint pro forma market value. The
appraisal report may be periodically updated throughout the conversion process
as appropriate. The conversion appraisal guidelines require at least one updated
valuation just prior to the time of the closing of the stock offering.
RP Financial agrees to deliver the appraisal report and subsequent
updates, in writing, to the Bank at the above address in conjunction with the
filing of the regulatory application. Subsequent updates will be filed promptly
as certain events occur which would warrant the preparation and filing of such
valuation updates. Further, RP Financial agrees to perform such other services
as are necessary or required in connection with the regulatory review of the
appraisal and respond to the regulatory comments, if any, regarding the
valuation appraisal and subsequent updates. RP Financial expects to formally
present the appraisal report, including the appraisal methodology, peer group
selection and assumptions, to the Board of Directors for review and acceptance.
Fee Structure
The Bank agrees to pay RP Financial a fixed fee of $50,000 for preparation
and delivery of the original appraisal report and required appraisal updates,
plus reimbursable expenses. Payment of these fees shall be made according to the
following schedule:
o $5,000 upon execution of the letter of agreement engaging RP
Financial's appraisal services;
o $35,000 upon delivery of the completed original appraisal report;
and
o $10,000 upon completion of the conversion for the preparation of the
required valuation updates.
The Bank will reimburse RP Financial for out-of-pocket expenses incurred
in preparation of the valuation reports. Such out-of-pocket expenses will likely
include travel, printing, telephone, facsimile, shipping, computer and data
services. RP Financial will agree to limit reimbursable expenses in conjunction
with the business planning engagement, subject to written authorization from the
Bank to exceed such level.
In the event the Bank shall, for any reason, discontinue the proposed
conversion prior to delivery of the completed documents set forth above and
payment of the respective progress payment fees, the Bank agrees to compensate
RP Financial according to RP Financial's standard billing rates for consulting
services based on accumulated and verifiable time expenses, not to exceed the
respective fee caps noted above, after giving full credit to the initial
retainer fee. RP Financial's standard billing rates range from $75 per hour for
research associates to $275 per hour for managing directors.
If during the course of the proposed transaction, unforeseen events occur
so as to materially change the nature or the work content of the services
described in this contract, the terms of said contract shall be subject to
renegotiation by the Bank and RP Financial. Such unforeseen events shall
include, but not be limited to, major changes in the conversion regulations,
appraisal
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April 1, 2003
Page 3
guidelines or processing procedures as they relate to conversion appraisals,
major changes in management or procedures, operating policies or philosophies,
and excessive delays or suspension of processing of conversion applications by
the regulators such that completion of the conversion transaction requires the
preparation by RP Financial of a new appraisal.
Representations and Warranties
The Bank and RP Financial agree to the following:
1. The Bank agrees to make available or to supply to RP Financial such
information with respect to its business and financial condition as RP Financial
may reasonably request in order to provide the aforesaid valuation. Such
information heretofore or hereafter supplied or made available to RP Financial
shall include: annual financial statements, periodic regulatory filings and
material agreements, debt instruments, off balance sheet assets or liabilities,
commitments and contingencies, unrealized gains or losses and corporate books
and records. All information provided by the Bank to RP Financial shall remain
strictly confidential (unless such information is otherwise made available to
the public), and if the conversion is not consummated or the services of RP
Financial are terminated hereunder, RP Financial shall upon request promptly
return to the Bank the original and any copies of such information.
2. The Bank hereby represents and warrants to RP Financial that any
information provided to RP Financial does not and will not, to the best of the
Bank's knowledge, at the times it is provided to RP Financial, 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 in light of the
circumstances under which they were made.
3. (a) The Bank agrees that it will indemnify and hold harmless RP
Financial, any affiliates of RP Financial, the respective directors, officers,
agents and employees of RP Financial or their successors and assigns who act for
or on behalf of RP Financial in connection with the services called for under
this agreement (hereinafter referred to as "RP Financial"), 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) attributable to (i) any untrue statement or alleged untrue statement of a
material fact contained in the financial statements or other information
furnished or otherwise provided by the Bank to RP Financial, either orally or in
writing; (ii) the omission or alleged omission of a material fact from the
financial statements or other information furnished or otherwise made available
by the Bank to RP Financial; or (iii) any action or omission to act by the Bank,
or the Bank's respective officers, directors, employees or agents which action
or omission is willful or negligent. The Bank will be under no obligation to
indemnify RP Financial hereunder if a court determines that RP Financial was
negligent or acted in bad faith with respect to any actions or omissions of RP
Financial related to a matter for which indemnification is sought hereunder. Any
time devoted by employees of RP Financial to situations for which
indemnification is provided hereunder, shall be an indemnifiable cost payable by
the Bank at the normal hourly professional rate chargeable by such employee.
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April 1, 2003
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(b) RP Financial shall give written notice to the Bank of such claim
or facts within thirty days of the assertion of any claim or discovery of
material facts upon which the RP Financial intends to base a claim for
indemnification hereunder. In the event the Bank elects, within seven days of
the receipt of the original notice thereof, to contest such claim by written
notice to RP Financial, RP Financial will be entitled to be paid any amounts
payable by the Bank hereunder, together with interest on such costs from the
date incurred at the annual rate of prime plus two percent within five days
after the final determination of such contest either by written acknowledgement
of the Bank or a final judgment of a court of competent jurisdiction. If the
Bank does not so elect, RP Financial shall be paid promptly and in any event
within thirty days after receipt by the Bank of the notice of the claim.
(c) The Bank shall pay for or reimburse the reasonable expenses,
including attorneys' fees, incurred by RP Financial in advance of the final
disposition of any proceeding within thirty days of the receipt of such request
if RP Financial furnishes the Bank: (1) a written statement of RP Financial's
good faith belief that it is entitled to indemnification hereunder; and (2) a
written undertaking to repay the advance if it ultimately is determined in a
final adjudication of such proceeding that it or he is not entitled to such
indemnification.
(d) In the event the Bank does not pay any indemnified loss or make
advance reimbursements of expenses in accordance with the terms of this
agreement, RP Financial shall have all remedies available at law or in equity to
enforce such obligation.
It is understood that, in connection with RP Financial's above-mentioned
engagement, RP Financial may also be engaged to act for the Bank in one or more
additional capacities, and that the terms of the original engagement may be
embodied in one or more separate agreements. The provisions of Paragraph 3
herein shall apply to the original engagement, any such additional engagement,
any modification of the original engagement or such additional engagement and
shall remain in full force and effect following the completion or termination of
RP Financial's engagement(s). This agreement constitutes the entire
understanding of the Bank and RP Financial concerning the subject matter
addressed herein, and such contract shall be governed and construed in
accordance with the laws of the Commonwealth of Virginia. This agreement may not
be modified, supplemented or amended except by written agreement executed by
both parties.
Rainier Pacific and RP Financial are not affiliated, and neither Rainier
Pacific nor RP Financial 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.
* * * * * * * * * * *
Xx. Xxxx X. Xxxx
April 1, 2003
Page 5
Please acknowledge your agreement to the foregoing by signing as indicated
below and returning to RP Financial a signed copy of this letter, together with
the initial retainer fee of $5,000.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
President and Managing Director
Agreed To and Accepted By: Xxxx X. Xxxx /s/ Xxxx X. Xxxx
President ----------------------------------------
Upon Authorization by the Board of Directors For: Rainier Pacific Bank
Fife, Washington
Date Executed: 4-7-03
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