EXHIBIT 99.1
RP FINANCIAL, LC.
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Financial Services Industry Consultants
January 27, 2004
Xx. Xxxxxxx X. Xxxxxx, Xx.
President and Chief Executive Officer
Monadnock Community Bank
0 Xxxxxxx Xxxx
Xxxxxxxxxxxx, Xxx Xxxxxxxxx 00000
Dear Xx. Xxxxxx:
This letter sets forth the agreement between Monadnock Community Bank,
Peterborough, New Hampshire ("Monadnock"), and RP Financial, LC. ("RP
Financial") for the independent appraisal services pertaining to Monadnock's
reorganization into a "two-tier" mutual holding company (the "Reorganization"),
including the formation of a mid-tier stock holding company and minority stock
offering by the mid-tier stock holding company (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
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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
Monadnock's operations, financial condition, profitability, market area, risks
and various internal and external factors which impact the pro forma value of
Monadnock. RP Financial will prepare a written detailed valuation report of
Monadnock 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 Monadnock's financial condition and operating results, as
well as an assessment of Monadnock's interest rate risk, credit risk and
liquidity risk. The appraisal report will describe Monadnock's 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
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WASHINGTON HEADQUARTERS
Rosslyn Center Telephone: (000) 000-0000
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Fax No.: (000) 000-0000
Arlington, VA 22209 Toll-Free No.: (000) 000-0000
XX. XXXXXXX X. XXXXXX, XX.
JANUARY 27, 2004
PAGE 2
value to establish the range of value, and reflect the Stock Offering size
determined by Xxxxxxxxx'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.
RP Financial agrees to deliver the valuation appraisal and subsequent
updates, in writing, to Monadnock 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
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Xxxxxxxxx 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 $2,500 upon execution of the letter of agreement engaging RP
Financial's appraisal services;
o $17,500 upon delivery of the completed original appraisal
report; and
o $2,500 upon delivery of each subsequent appraisal update report.
There will be at least one appraisal update report, to be filed
upon completion of the Reorganization and Stock Offering.
Monadnock 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, subject to
written authorization from Monadnock to exceed such level.
In the event Monadnock shall, for any reason, discontinue the proposed
Reorganization and Stock Offering prior to delivery of the completed documents
set forth above and payment of the respective progress payment fees, Xxxxxxxxx
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.
XX. XXXXXXX X. XXXXXX, XX.
JANUARY 27, 2004
PAGE 3
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 Monadnock 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 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
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Monadnock and RP Financial agree to the following:
1. Monadnock 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 Monadnock to RP
Financial shall remain strictly confidential (unless such information is
otherwise made available to the public), and if the Reorganization and Stock
Offering are not consummated or the services of RP Financial are terminated
hereunder, RP Financial shall upon request promptly return to Monadnock the
original and any copies of such information.
2. Monadnock hereby represents and warrants to RP Financial that
any information provided to RP Financial does not and will not, to the best of
Monadnock'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) Xxxxxxxxx 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
Monadnock 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 Monadnock to RP Financial;
or (iii) any action or omission to act by Monadnock, or Monadnock's respective
officers, Directors, employees or agents which action or omission is willful or
negligent. Monadnock will be under no obligation to indemnify RP Financial
hereunder if a court
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JANUARY 27, 2004
PAGE 4
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 Monadnock at the normal hourly professional
rate chargeable by such employee.
(b) RP Financial shall give written notice to Monadnock 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 Monadnock elects, 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 Monadnock hereunder within five days after the final
determination of such contest either by written acknowledgement of Monadnock or
a final judgment (including all appeals therefrom) of a court of competent
jurisdiction. If Monadnock does not so elect, RP Financial shall be paid
promptly and in any event within thirty days after receipt by Monadnock of the
notice of the claim.
(c) Monadnock 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 Monadnock: (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 Monadnock shall not be
required to make any such advance payment if Monadnock furnishes to RP Financial
a written statement of Xxxxxxxxx's reasonable good faith belief that RP
Financial is not entitled to indemnification hereunder. Monadnock 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 Monadnock
to RP Financial of its election to assume the defense thereof, Monadnock 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 their own counsel in any
action or proceeding if RP Financial shall have concluded that a conflict of
interest exists between Monadnock 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 Monadnock which will represent RP
Financial in any such action or proceeding and Monadnock 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 Monadnock 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. Monadnock 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.
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JANUARY 27, 2004
PAGE 5
(d) In the event Monadnock 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 Monadnock 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 Monadnock 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.
Monadnock and RP Financial are not affiliated, and neither Monadnock 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 $2,500.
Very truly yours,
/s/ Xxxxx X. Xxxx
Xxxxx X. Xxxx
Senior Vice President
Agreed To and Accepted By: Xxxxxxx X. Xxxxxx, Xx. /s/ Xxxxxxx X. Xxxxxx, Xx.
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President and Chief Executive Officer
Upon Authorization by the Board of Directors For: Monadnock Community Bank
Peterborough, New Hampshire
Date Executed: January 19, 2004
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