Exhibit 99.1
[RP Financial, LC. Letterhead]
March 23, 2004
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman
PSB Holdings, Inc.
Putnam Savings Bank
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇▇▇:
This letter sets forth the agreement between PSB Holdings, Inc.,
Putnam, Connecticut (the "Company"), Putnam Savings Bank, Putnam, Connecticut
(the "Bank", the Bank and the Company are referred to collectively as "Putnam"),
and RP(R) Financial, LC. ("RP Financial") for independent appraisal services for
the Company's minority stock offering (the "Stock Offering"). The specific
appraisal services to be rendered by RP Financial are described below. These
appraisal services will be rendered by a team of consultants on staff and will
be directed by the undersigned.
DESCRIPTION OF CONVERSION APPRAISAL SERVICES
Prior to preparing the valuation 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
▇▇▇▇▇▇'▇ operations, financial condition, profitability, market area, risks and
various internal and external factors which impact the pro forma value of
Putnam. RP Financial will prepare a written detailed valuation report of Putnam
that will be fully consistent with applicable regulatory guidelines and standard
pro forma valuation practices. The appraisal report will include an in-depth
analysis of ▇▇▇▇▇▇'▇ financial condition and operating results, as well as an
assessment of ▇▇▇▇▇▇'▇ interest rate risk, credit risk and liquidity risk. The
appraisal report will describe ▇▇▇▇▇▇'▇ business strategies, market area,
prospects for the future and the intended use of proceeds both in the short term
and over the longer term. A peer group analysis relative to publicly-traded
savings institutions will be conducted for the purpose of determining
appropriate valuation adjustments relative to the group. We will review
pertinent sections of the applications and offering documents to obtain
necessary data and information for the appraisal, including the impact of key
deal elements on the appraised value, such as dividend policy, use of proceeds
and reinvestment rate, tax rate, conversion expenses and characteristics of
stock plans. The appraisal report will conclude with a pro forma value to
establish the range of value, and reflect the Stock Offering size determined by
the Company's Board of Directors. The appraisal report may be periodically
updated throughout the conversion process and there will be at least one updated
valuation prepared at the time of the closing of the Stock Offering.
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WASHINGTON HEADQUARTERS
Rosslyn Center Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Arlington, VA 22209 Toll-Free No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ E-Mail: ▇▇▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
MARCH 23, 2004
PAGE 2
RP Financial agrees to deliver the valuation appraisal and subsequent
updates, in writing, to the Company 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.
FEE STRUCTURE AND PAYMENT SCHEDULE
The Company agrees to pay RP Financial fees for preparation and
delivery of the original appraisal report and subsequent appraisal updates as
shown in the detail below, 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 $15,000 upon delivery of the completed original appraisal report;
and
o $3,500 upon delivery of each subsequent appraisal update report.
There will be at least one appraisal update report, to be filed
upon completion of the Stock Offering.
The Company will reimburse RP Financial for out-of-pocket expenses
incurred in preparation of the valuation. 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
connection with this engagement and in connection with the preparation of a
regulatory business plan as described in the accompanying letter to $6,000
subject to written authorization from the Company to exceed such level.
In the event the Company shall, for any reason, discontinue the
proposed Stock Offering prior to delivery of the completed documents set forth
above and payment of the respective progress payment fees, 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 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 Company and RP Financial. 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 appraisals,
major changes in management or procedures, operating policies or philosophies,
and excessive delays or suspension
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MARCH 23, 2004
PAGE 3
of processing of conversion applications by the regulators such that completion
of the transaction requires the preparation by RP Financial of a new appraisal
or financial projections.
REPRESENTATIONS AND WARRANTIES
Putnam and RP Financial agree to the following:
1. Putnam 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 Putnam to RP Financial
shall remain strictly confidential (unless such information is otherwise made
available to the public), and if the Stock Offering is not consummated or the
services of RP Financial are terminated hereunder, RP Financial shall upon
request promptly return to Putnam the original and any copies of such
information.
2. Putnam hereby represents and warrants to RP Financial that any
information provided to RP Financial does not and will not, to the best of
▇▇▇▇▇▇'▇ 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) ▇▇▇▇▇▇ 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) brought by third parties and 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 Putnam 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 Putnam to RP Financial; or (iii) any action or
omission to act by Putnam, or ▇▇▇▇▇▇'▇ respective officers, Directors, employees
or agents which action or omission is willful or negligent. Putnam 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 Putnam at the normal hourly professional rate chargeable by such
employee.
(b) RP Financial shall give written notice to Putnam of such
claim or facts within thirty days of the assertion of any claim or discovery of
material facts upon which RP Financial intends to base a claim for
indemnification hereunder. In the event Putnam elects,
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MARCH 23, 2004
PAGE 4
within ten business 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 Putnam hereunder within five days
after the final determination of such contest either by written acknowledgement
of Putnam or a final judgment (including all appeals therefrom) of a court of
competent jurisdiction. If ▇▇▇▇▇▇ does not so elect, RP Financial shall be paid
promptly and in any event within thirty days after receipt by Putnam of the
notice of the claim.
(c) ▇▇▇▇▇▇ 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 Putnam: (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; provided, however, that Putnam shall not be required to make
any such advance payment if ▇▇▇▇▇▇ furnishes to RP Financial a written statement
of ▇▇▇▇▇▇'▇ reasonable good faith belief that RP Financial is not entitled to
indemnification hereunder. Putnam may assume the defense of any claim (as to
which notice is given in accordance with 3(b)) with counsel reasonably
satisfactory to RP Financial, and after notice from Putnam to RP Financial of
its election to assume the defense thereof, Putnam will not be liable to RP
Financial for any legal or other expenses subsequently incurred by RP Financial
(other than reasonable costs of investigation and assistance in discovery and
document production matters). Notwithstanding the foregoing, RP Financial shall
have the right to employ its own counsel in any action or proceeding if RP
Financial shall have concluded that a conflict of interest exists between Putnam
and RP Financial which would materially impact the effective representation of
RP Financial. In the event that RP Financial concludes that a conflict of
interest exists, RP Financial shall have the right to select counsel reasonably
satisfactory to Putnam which will represent RP Financial in any such action or
proceeding and Putnam shall reimburse RP Financial for the reasonable legal fees
and expenses of such counsel and other expenses reasonably incurred by RP
Financial. In no event shall Putnam be liable for the fees and expenses of more
than one counsel, separate from its own counsel, for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same allegations or circumstances. Putnam
will not be liable under the foregoing indemnification provision in respect of
any compromise or settlement of any action or proceeding made without its
consent, which consent shall not be unreasonably withheld.
(d) In the event Putnam 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 Putnam
in one or more additional capacities, and that the terms of the original
engagement may be incorporated by reference 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 Putnam and RP Financial concerning the
subject matter addressed herein, and such contract shall be governed
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MARCH 23, 2004
PAGE 5
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.
Putnam and RP Financial are not affiliated, and neither Putnam 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.
* * * * * * * * * * *
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.
Very truly yours,
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Chief Executive Officer and
Managing Director
Agreed To and Accepted By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chairman, PSB Holdings, Inc.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Chairman, Putnam Savings Bank
Date Executed: 3/30/2004
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