EXHIBIT 99.5
JULY 17, 1996
BOARD OF DIRECTORS
HOME SAVINGS BANK, SSB
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
DEAR DIRECTORS:
This letter sets forth the agreement between Home Savings Bank, SSB ("Home
Savings"), Washington, North Carolina, and ▇▇▇▇▇▇▇▇ & Co., LLP ("F&C"), Irving,
Texas, under the terms of which Home Savings has engaged F&C, in connection with
its conversion from mutual to stock form, to (1) determine the pro forma market
value of the shares of common stock to be issued and sold by Home Savings or its
holding company; and (2) assist Home Savings in preparing a business plan to be
filed with the application for approval to convert to stock.
F&C agrees to deliver the written valuation and business plan to Home
Savings at the above address on or before a mutually agreed upon date and to
meet and consult with the Board of Directors of Home Savings with regard to both
the written valuation and the business plan. Further, F&C agrees to perform such
other services as are necessary or required in connection with comments from the
applicable regulatory authorities relating to the business plan and appraisal
and the preparation of appraisal updates as requested by Home Savings or its
counsel. It is understood that the services of F&C under this agreement shall
be limited as herein described.
F&C's fee for the business plan and initial appraisal valuation report and
any required updates shall be $35,000. In addition, Home Savings shall
reimburse F&C for all out-of-pocket expenses. Payment under this agreement
shall be made as follows:
1. Execution of this engagement letter--$7,500
2. Delivery of the business plan--$10,000
3. Delivery of the appraisal report--$12,500
4. Approval of the appraisal--$2,500
5. Approval of the final value--$2,500
6. Out-of-pocket expenses are to be paid monthly
BOARD OF DIRECTORS
JULY 17, 1996
PAGE 2
If, during the course of Home Savings' conversion, unforeseen events occur
so as to change materially the nature or the work content of the services
described in this contract, the terms of the contract shall be subject to
renegotiation. Such unforeseen events shall include, but not be limited to,
major changes in the conversion regulations, appraisal guidelines or processing
procedures as they relate to conversion appraisals, major changes in Home
Savings' management or operating policies, execution of a merger agreement with
another institution prior to completion of conversion, and excessive delays or
suspension of processing of conversions by the regulatory authorities such that
completion of Home Savings' conversion requires the preparation by F&C of a new
appraisal report or business plan, excluding appraisal updates during the course
of the engagement.
To induce F&C to provide the services described above, Home Savings hereby
agrees as follows:
1. Home Savings shall supply to F&C such information with respect to its
business and financial condition as F&C reasonably may request in
order to make the aforesaid valuation. Such information made available
to F&C shall include, but not be limited to, annual financial
statements, periodic regulatory filings, material agreements, debt
instruments and corporate books and records.
2. Home Savings hereby represents and warrants, to the best of its
knowledge, that any information provided to F&C does not and will not,
at any time relevant hereto, contain any misstatement or untrue
statement of a material fact or omit any and all material facts
required to be stated therein or necessary to make the statements
therein not false or misleading in light of the circumstances under
which they were made.
3. Home Savings shall indemnify and hold harmless F&C and any employees
of F&C who act for or on behalf of F&C in connection with the services
called for under this agreement, from and against any and all loss,
cost, damage, claim, liability or expense of any kind, including
reasonable attorneys fees and other expenses incurred in
investigating, preparing to defend and defending any claim or claims
(specifically including, but not limited to, claims under federal and
state securities laws) arising out of any misstatement or untrue
statement of a material fact contained in the information supplied by
Home Savings to F&C or by an omission to state a material fact in the
information so provided which is required to be stated therein in
order to make the statement therein not false or misleading.
4. F&C shall not be entitled to indemnification pursuant to Paragraph 3
above with regard to any claim arising where, with regard to the basis
for such claim, F&C had knowledge that a statement of a fact material
to the evaluation and contained in the information supplied by Home
Savings was untrue or had knowledge that a material fact was omitted
from the information so provided and that such material fact was
necessary in order to make the statement made to F&C not false or
misleading.
BOARD OF DIRECTORS
JULY 17, 1996
PAGE 3
5 F&C additionally shall not be entitled to indemnification pursuant to
Paragraph 3 above notwithstanding its lack of actual knowledge of an
intentional misstatement or omission of a material fact in the
information provided if F&C is determined to have been negligent or to
have failed to exercise due diligence in the preparation of its
valuation.
Home Savings and F&C are not affiliated, and neither Home Savings nor F&C
has an economic interest in, or held in common with, the other and has not
derived a significant portion of its gross revenue, receipts or net income for
any period from transactions with the other.
To bind this proposal, please acknowledge your consent by executing the
enclosed copies of this letter and returning one copy to us, together with a
check payable to ▇▇▇▇▇▇▇▇ & Co. in the amount of $7,500. The extra copy is for
your conversion counsel
Yours very truly,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Principal
Agreed to ($7,500 check enclosed):
Home Savings Bank
Washington, North Carolina
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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