EXHIBIT 99.1
July 3, 1997
Board of Directors
First Federal Savings and Loan Association
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
Dear Directors:
This letter sets forth the agreement between First Federal Savings and
Loan Association ("First Federal"), Cheraw, South Carolina, and Xxxxxxxx &
Company ("F&C"), Irving, Texas, under the terms of which First Federal 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 First Federal or its holding company; and (2) assist First Federal
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 First
Federal at the above address on or before a mutually agreed upon date. 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 First Federal 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 $25,000. In addition, First Federal shall
reimburse F&C for all out-of-pocket expenses (which we estimate to be
approximately $5,000). Payment under this agreement shall be made as follows:
1. Upon execution of this engagement letter--$7,500.
2. Upon delivery of the business plan--$7,500.
3. Upon delivery of the completed appraisal report--$10,000.
4. Out-of-pocket expenses are to be paid monthly.
If, during the course of First Federal's 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 First
Federal's 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 First Federal's conversion requires the preparation by F&C of a
new appraisal report or business plan, excluding appraisal updates during the
course of the engagement.
Board of Directors
July 3, 1997
Page 2
To induce F&C to provide the services described above, First Federal
hereby agrees as follows:
1. First Federal 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. First Federal 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. First Federal 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 First
Federal 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 First Federal 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.
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.
First Federal and F&C are not affiliated, and neither First Federal 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.
Board of Directors
July 3, 1997
Page 3
In order for F&C to consider this proposal binding, please acknowledge
your consent to the foregoing by executing the enclosed copies of this letter
and returning one copy to us, together with a check payable to Xxxxxxxx &
Company in the amount of $7,500. There are three copies for the conversion
committee and the extra copy of this letter is for your conversion counsel.
Yours very truly,
Xxxxx X. Xxxxxxx
Principal
Agreed to ($7,500 check enclosed):
First Federal Savings and Loan Association
Cheraw, South Carolina
By:
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Date:
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