EXHIBIT 99.5
Exhibit 99.5
RP FINANCIAL, LC.
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Financial Services Industry Consultants
May 22, 2002
Xx. Xxx Xxxxxx Xxxxx
President and Chief Executive Officer
Citizens South Banking Corporation
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Dear Mr. Price:
This letter sets forth the agreement between Citizens South Banking
Corporation ("Citizens South" or the "Company"), subsidiary of Citizens South
Holdings, MHC, Gastonia, North Carolina (the "MHC"), and RP Financial, LC. ("RP
Financial"), whereby the Company has engaged RP Financial to prepare the written
document and financial projections reflecting the pro forma impact of the mutual
to stock conversion of the MHC and the post-conversion activities of the
Company. These services are described in greater detail below.
Description of Proposed Services
RP Financial's business planning services will include the following areas:
(1) determining the Company's current financial and operating condition,
business strategies and anticipated future strategies, both currently and on a
pro forma basis; (2) quantifying the impact of business strategies,
incorporating the use of offering proceeds; (3) preparing detailed financial
projections on a quarterly basis for a period of at least three fiscal years to
reflect the impact of selected business strategies and the use of offering
proceeds; (4) preparing the written business plan document which conforms with
applicable regulatory guidelines, including a description of the use of offering
proceeds and how the convenience and needs of the community will be addressed;
and (5) preparing the detailed schedules of the capitalization and inter-company
cash flows.
Contents of the business plan will include: Philosophy/Goals; Economic
Environment and Background; Lending, Leasing and Investment Activities; Deposit,
Savings and Borrowing Activity; Asset and Liability Management; Operations;
Records, Systems and Controls; Growth, Profitability and Capital; Responsibility
for Monitoring this Plan.
RP Financial agrees to prepare the business plan and accompanying financial
projections in writing such that the business plan conforming to regulatory
guidelines can be filed with the appropriate federal and state regulatory
agencies in conjunction with the filing of the stock offering application.
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Washington Headquarters
Rosslyn Center Telephone: (000) 000-0000
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Xxx No.: (000) 000-0000
Arlington, VA 22209 Toll-Free No.: (000) 000-0000
xxx.xxxxxxxxxxx.xxx E-Mail: xxxxxxxxxxxx@xxxxxxxxxxx.xxx
Xx. Xxx Xxxxxx Xxxxx
May 22, 2002
Page 2
Fee Structure and Payment Schedule
The Company agrees to compensate RP Financial for preparation of the
business plan on a fixed fee basis of $10,000. Payment of the professional fees
shall be made upon delivery of the completed business plan. The Company also
agrees to reimburse RP Financial for those direct reasonable out-of-pocket
expenses necessary and incidental to providing the business planning services.
Reimbursable expenses will likely include shipping, telephone/facsimile
printing, computer and data services, and shall be paid to RP Financial as
incurred and billed. RP Financial will agree to limit reimbursable expenses in
conjunction with the business planning and appraisal engagements to $7,500,
subject to written authorization from the Company to exceed such level.
In the event the Company shall, for any reason, discontinue this planning
engagement prior to delivery of the completed business plan and payment of the
progress payment fee, the Company 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 fixed fee described
above, plus reimbursable expenses incurred.
If during the course of the planning engagement, unforeseen events occur so
as to materially change the nature or the work content of the business planning
services described in this contract, the terms of said contract shall be subject
to renegotiation by the Company and RP Financial. Such unforeseen events may
include changes in regulatory requirements as it specifically relates to the
Company.
Indemnifications
The provisions of paragraph 3 in that certain letter agreement dated May
22, 2002 between the Company and RP Financial are incorporated herein by
reference.
Please acknowledge your agreement to the foregoing by signing as indicated
below and returning to RP Financial a signed copy of this letter.
Sincerely,
/s/ Xxxxxxx X. Xxxxxxxxxxx
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Xxxxxxx X. Xxxxxxxxxxx
Chief Executive Officer and
Managing Director
Agreed To and Accepted By: /s/ Xxx X. Xxxxx
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Xxx Xxxxxx Xxxxx
President and Chief Executive Officer
Upon Authorization by the Board of Directors For: Citizens South Banking
Corporation
Subsidiary of Citizens South
Holdings, MHC
Gastonia, North Carolina
Date Executed: 5-30-02
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