May 6, 2010
Exhibit 99.1
May 6, 2010
Xx. Xxxxxx X. Xxxxxxx, Xx.
President and Chief Executive Officer
Atlantic Coast Federal Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
President and Chief Executive Officer
Atlantic Coast Federal Corporation
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Dear Xx. Xxxxxxx:
This letter sets forth the agreement between Atlantic Coast Federal Corporation (the
“Company”), the majority owned subsidiary of Atlantic Coast Federal MHC, Waycross, Georgia, and
RP® Financial, LC. (“RP Financial”), whereby RP Financial will provide the independent
conversion appraisal services in conjunction with the second step. Atlantic Coast Bank (the
“Bank”) is wholly-owned by the Company. The specific appraisal services to be rendered by RP
Financial are described below.
Description of Appraisal Services
In conjunction with the appraisal services, RP Financial will conduct a financial due
diligence, including on-site interviews of senior management and reviews of historical and pro
forma financial information and other documents and records, to gain insight into the operations,
financial condition, profitability, market area, risks and various internal and external factors of
the Company, all of which will be considered in estimating the pro forma market value of the
Company in accordance with the applicable regulatory appraisal guidelines. RP Financial will
prepare a detailed written valuation report of the Company that will be fully consistent with
applicable regulatory appraisal guidelines and standard pro forma valuation practices. The
appraisal report will include an analysis of the Company’s financial condition and operating
results, as well as an assessment of the Company’s interest rate risk, credit risk and liquidity
risk. The appraisal report will incorporate an evaluation of the Company’s business strategies,
market area, prospects for the future and the intended use of proceeds. A peer group analysis
relative to certain relatively comparable publicly-traded banking companies will be conducted for
the purpose of determining appropriate valuation adjustments for the Company relative to the peer
group.
We will review pertinent sections of the Company’s prospectus and conduct discussions
with representatives of the Company to obtain necessary data and information for the appraisal
report, including key deal elements such as dividend policy, use of proceeds, reinvestment rate,
tax rate, offering expenses, and characteristics of stock plans.
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The original appraisal report will establish a midpoint pro forma market value in accordance
with the applicable regulatory requirements. The appraisal report may be periodically updated
throughout the conversion process, and there will be at least one updated appraisal that would be
prepared at the time of the closing of the stock offering to determine the number of shares to be
issued in accordance with the conversion regulations.
RP Financial agrees to deliver the original appraisal report and subsequent updates, in
writing, to the Company at the above address in conjunction with the filing of the regulatory
conversion applications and amendments thereto. Subsequent updates will be filed promptly as
certain events occur which would warrant the preparation and filing of such appraisal updates
pursuant to regulatory guidelines.
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 original appraisal and subsequent updates.
RP Financial expects to formally present the appraisal report, including the appraisal
methodology, peer group selection and assumptions, to the Board of Directors for review and
consideration. If appropriate, RP Financial will present subsequent updates to the Board.
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:
| • | $5,000 upon execution of the letter of agreement engaging RP Financial’s appraisal services; | ||
| • | $45,000 upon delivery of the completed original appraisal report; and | ||
| • | $5,000 upon delivery of each subsequent appraisal update report. There will be at least one appraisal update report, to be filed upon completion of the offering. |
The Company will reimburse RP Financial for reasonable out-of-pocket expenses incurred in
preparation of the valuation within 30 days after receipt of a detailed billing statement or
invoice therefore. Such out-of-pocket expenses will likely include travel, printing, telephone,
facsimile, shipping, reasonable counsel fees, computer and data services, and will not exceed
$7,500 in the aggregate unless otherwise mutually agreed upon.
In the event the Company shall, for any reason, discontinue the proposed transaction prior to
delivery of the completed original appraisal report set forth above and payment of the
corresponding 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 applying
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full credit to the initial retainer fee towards such payment, together with reasonable out of
pocket expenses subject to the cap on such expenses as set forth above. RP Financial’s standard
billing rates range from $75 per hour for research associates to $400 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, material changes in the conversion regulations, appraisal
guidelines or processing procedures as they relate to conversion appraisals, material 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 conversion
transaction requires the preparation by RP Financial of a new appraisal.
Covenants, Representations and Warranties
The Company and RP Financial agree to the following:
1. The Company 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 of the MHC, the Company
and the Bank. All information provided by the Company to RP Financial shall remain strictly
confidential (unless such information is otherwise made available to the public), and if the
conversion is not consummated or the services of RP Financial are terminated hereunder, RP
Financial shall promptly return to the Company the original and any copies of such information.
2. The Company represents and warrants to RP Financial that any information provided to RP
Financial does not and will not, to the best of the Company’s knowledge, at the times it is
provided to RP Financial, contain any untrue statement of a material fact or in response to
informational requests by RP Financial 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) The Company agrees that it will indemnify and hold harmless RP Financial, any
affiliates of RP Financial, the respective members, 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,
reasonable attorneys fees, and all losses and expenses in connection with claims under the federal
securities laws) 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
the Company 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
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otherwise made available by the Company to RP Financial; or (iii) any action or omission to act by
the Company, or the Company’s respective officers, directors, employees or agents, which action or
omission is undertaken in bad faith or is negligent. The Company 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. Reasonable time devoted by RP Financial to situations for
which RP Financial is deemed entitled to indemnification hereunder, shall be an indemnifiable cost
payable by the Company at the normal hourly professional rate chargeable by such employee.
(b) RP Financial shall give written notice to the Company 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. With respect to the legal counsel retained by RP
Financial in such indemnified matters, RP Financial and the Company agree that the legal counsel
retained will be mutually agreeable to both RP Financial and the Company. In the event the Company
elects, within seven days of the receipt of the original notice thereof, to contest such claim by
written notice to RP Financial, the Company shall not be obligated to make payments under Section
3(c), but RP Financial will be entitled to be paid any amounts payable by the Company hereunder
within five days after the final non-appealable determination of such contest either by written
acknowledgement of the Company or a decision of a court of competent jurisdiction or alternative
adjudication forum, unless it is determined in accordance with Section 3(c) hereof that RP
Financial is not entitled to indemnity hereunder. If the Company does not so elect to contest
a claim for indemnification by RP Financial
hereunder, RP Financial shall (subject to the Company’s receipt of the written statement and
undertaking under Section 3(c) hereof) be paid promptly and in any event within thirty days after
receipt by the Company of detailed billing statements or invoices for which RP Financial is
entitled to reimbursement under Section 3(c) hereof.
(c) Subject to the Company’s right to contest under Section 3(b) hereof, the Company shall pay
for or reimburse the reasonable expenses, including reasonable 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 the Company: (1) a written statement of RP Financial’s
good faith belief that it is entitled to indemnification hereunder; (2) a written undertaking to
repay the advance if it ultimately is determined in a final, nonappealable adjudication of such
proceeding that it or he is not entitled to such indemnification; and (3) a detailed invoice of the
expenses for which reimbursement is sought.
(d) In the event the Company 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.
This agreement constitutes the entire understanding of the Company and RP Financial concerning
the subject matter addressed herein. This agreement may not be modified, supplemented or amended
except by written agreement executed by both parties.
The Company and RP Financial are not affiliated, and neither the Company 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 RP Financial represents and warrants that it is not aware of any fact or
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circumstance that would cause it not to be “independent” within the meaning of the conversion
regulations or the applicable regulatory valuation guidelines or otherwise prohibit or restrict in
anyway RP Financial from serving in the role of independent appraiser for the Company.
* * * * * * * * * * *
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.
| Sincerely, |
||||
| /s/ Xxxxx X. Xxxxxxxxx | ||||
| Xxxxx X. Xxxxxxxxx | ||||
| Senior Vice President | ||||
| Agreed To and Accepted By: | Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx President and Chief Executive Officer |
| Upon Authorization by the Board of Directors For: | Atlantic Coast Federal Corporation., subsidiary of Atlantic Coast Federal, MHC Waycross, Georgia |
| Date Executed: | May 7, 2010 |
