November 23, 2009
Exhibit
99.1
| RP® FINANCIAL, LC. |
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| Serving the Financial Services Industry Since 1988 | |
November
23, 2009
Xx.
Xxxxxxx X. Xxxx
President
and Chief Executive Officer
Jacksonville
Savings Bank, subsidiary of
Jacksonville
Bancorp, MHC
0000 Xxxx
Xxxxxx Xxxxxx
Jacksonville,
Illinois 62650
Dear Xx.
Xxxx:
This
letter sets forth the agreement between Jacksonville Savings Bank (the
“Company”), subsidiary of Jacksonville Bancorp, MHC, Jacksonville, Illinois (the
“MHC”), and RP®
Financial, LC. (“RP Financial”) for independent conversion appraisal services
pertaining to the mutual-to-stock conversion of the MHC. The specific
appraisal services to be rendered by RP Financial are described
below. These appraisal services will be rendered by a team of senior
members of our firm and will be directed by the undersigned.
Description of Appraisal
Services
In
conjunction with preparing the appraisal report, 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 federal
guidelines. RP Financial will prepare a detailed written valuation
report of the Company that will be fully consistent with applicable federal
regulatory 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
describe the Company’s business strategies, market area, prospects for the
future and the intended use of proceeds. A peer group analysis
relative to certain publicly-traded savings and banking institutions 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 hold discussions with
representatives of the Company and MHC to obtain necessary data and information
for the appraisal report, including the impact of key deal elements on the pro
forma market value, such as dividend policy, use of proceeds and reinvestment
rate, tax rate, offering expenses, characteristics of stock plans, and the
structure of any contribution to a charitable foundation immediately following
the offering if applicable.
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Washington
Headquarters
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Rosslyn
Center
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Direct:
(000) 000-0000
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0000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
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Telephone:
(000) 000-0000
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Arlington,
VA 22209
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Fax
No.: (000) 000-0000
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E-Mail:
xxxxxxxxxxxx@xxxxxxxxxxx.xxx
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Toll-Free
No.: (000) 000-0000
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Xx.
Xxxxxxx X. Xxxx
November
23, 2009
Page
2
The
appraisal report will establish a midpoint pro forma market value in accordance
with the applicable federal regulatory requirements. The appraisal
report may be periodically updated throughout the conversion process as
appropriate. There will be at least one updated valuation that would
be prepared at the time of the closing of the stock offering. 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. Subsequent updates
will be filed promptly as certain events occur which would warrant the
preparation and filing of such valuation updates pursuant to federal
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 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.
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:
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$5,000
upon execution of the letter of agreement engaging RP Financial’s
appraisal services;
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$20,000
upon delivery of the completed original appraisal report;
and
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●
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$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 reorganization and stock
offering.
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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 $10,000 in the
aggregate.
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 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.
Xx.
Xxxxxxx X. Xxxx
November
23, 2009
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
the Company and RP Financial. Such unforeseen events shall include,
but not be limited to, material changes to the structure of the transaction such
as inclusion of a simultaneous business combination transaction, 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. 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 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.
Xx.
Xxxxxxx X. Xxxx
November
23, 2009
Page
4
(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,
including the name of counsel that RP Financial intends to engage in connection
with any indemnification related matter. 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, and such contract shall be
governed and construed in accordance with the Commonwealth of
Virginia. 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 circumstance that
would cause it not to be “independent” within the meaning of the conversion
regulations of the Office of Thrift Supervision or otherwise prohibit or
restrict in anyway RP Financial from serving in the role of independent
appraiser for the Company.
Xx.
Xxxxxxx X. Xxxx
November
23, 2009
Page
5
* * * * * * * * * * *
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, | ||||
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/s/
Xxxxxxx
X. Xxxxxxxxxxx
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Xxxxxxx
X. Xxxxxxxxxxx
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Chief
Executive Officer and
Managing Director
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Agreed To
and Accepted By: Xx. Xxxxxxx X. Xxxx /s/ Xxxxxxx X.
Xxxx
President
and Chief Executive Officer
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Upon
Authorization by the Board of Directors For:
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Jacksonville
Savings Bank, subsidiary of
Jacksonville Bancorp, MHC Jacksonville,
Illinois
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Date
Executed: 12-10-09
