[LETTERHEAD OF XXXXXXX FINANCIAL ADVISORS, INC. APPEARS HERE]
Exhibit 17.1
July 30, 1997
Board of Directors
Xxxxxx Federal Savings and Loan Association
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Gentlemen:
This letter sets forth the agreement between Xxxxxx Federal Savings and Loan
Association (the "Association") and Xxxxxxx Financial Advisors, Inc. ("FFA"),
whereby the Association has engaged FFA to provide an independent appraisal of
the estimated aggregate pro forma market value (the "Valuation") of the shares
of common stock that are to be outstanding upon completion of the reorganization
of the Association from a federally chartered savings and loan association into
the mutual holding company structure and the contemporaneous issuance of a
minority ownership interest in the resulting stock savings and loan association
subsidiary (the "Reorganization").
FFA agrees to deliver the Valuation, in writing, to the Association at the
address above on or before a mutually agreed upon date. Further, FFA agrees to
perform such other services as are necessary or required of the independent
appraiser in connection with comments from the Association's regulatory
authorities and updates of the Valuation as from time to time may be necessary,
both after initial approval by the Association's regulatory authorities and
prior to the time the Reorganization is completed. FFA also agrees to assist the
Association in the preparation of its regulatory business plan in connection
with the Reorganization application to be filed with the Office of Thrift
Supervision ("OTS") and to accompany the Association at all meetings with the
OTS to review the business plan. FFA will also assist the Association in
responding to all OTS inquiries regarding the business plan.
The Association agrees to pay FFA a consulting fee of $22,500: $17,500 for
FFA's appraisal services and $5,000 for services in conjunction with the
preparation of the Association's regulatory business plan. The Association also
agrees to reimburse FFA for certain out-of-pocket expenses necessary and
incident to the completion of the services described above. These expenses
shall not exceed $2,500 without the prior consent of the Association.
Reimbursable expenses for courier delivery, copying, travel, data materials and
report reproduction shall be paid to FFA as incurred and billed. Payment of the
consulting fee shall be made according to the following schedule:
. $ 3,000 upon execution of this Agreement;
. $ 5,000 upon completion of the Association's regulatory business
plan;
. $ 12,000 upon delivery of the completed appraisal report to the
Association; and,
. $ 2,500 upon completion of the Reorganization.
Xxxxxxx Financial Advisors, Inc.
Board of Directors
Xxxxxx Federal Savings and Loan Association
July 30, 1997
Page 2
If, during the course of the Association's Reorganization, unforeseen events
occur so as to materially change the nature of the work content of the appraisal
services described above such that FFA must supply services beyond that
contemplated at the time this contract was executed, the terms of this agreement
shall be subject to renegotiation by the Association and FFA. Such unforeseen
events shall include, but not be limited to, major changes in the stock
conversion and mutual holding company regulations, appraisal guidelines or
processing procedures as they relate to conversion appraisals, major changes in
the Association's management or operating policies, and excessive delays or
suspension of processing of the Reorganization.
In the event the Association shall for any reason discontinue the Reorganization
prior to delivery of the completed appraisal and payment of the progress payment
fee amounting to $12,000, the Association agrees to compensate FFA according to
FFA's standard billing rates for consulting appraisal services based on
accumulated and verifiable time expended, provided that the total of such
charges shall not exceed $15,000 plus reimbursable expenses.
In order to induce FFA to render the aforesaid services, the Association agrees
to the following:
1. The Association agrees to supply FFA such information with respect to
the Association's business and financial condition as FFA may reasonably
request in order for FFA to perform the aforesaid services. Such
information shall include, without limitation: annual financial
statements, periodic regulatory filings and material agreements,
corporate books and records, and such other documents as are material
for the performance by FFA of the aforesaid services.
2. The Association hereby represents and warrants to FFA (i) that to its
best knowledge any information provided to FFA by or on behalf of the
Association, will not, at any relevant time, contain any untrue
statement of a material fact or fail to state a material fact necessary
to make the information or statements therein not false or misleading,
(ii) that the Association will not use the product of FFA services in
any manner, including in a proxy or offering circular, in connection
with any untrue statement of a material fact or in connection with the
failure to state a material fact necessary to make other statements not
false or misleading, and (iii) that all documents incorporating or
relying upon FFA services or the product of FFA services will otherwise
comply with all applicable federal and state laws and regulations. Any
valuations or opinions issued by FFA may be included in its entirety in
any communication by the Association in any application, proxy statement
or prospectus; however, such valuations or opinions may not be excerpted
or otherwise publicly referred to without FFA's prior written consent
nor shall FFA be publicly referred to without FFA's prior written
consent; however, such consent shall not be unreasonably withheld.
Xxxxxxx Financial Advisors, Inc.
Board of Directors
Xxxxxx Federal Savings and Loan Association
July 30, 1997
Page 3
3. FFA's Valuation will be based upon the Association's representation that
the information contained in the Reorganization application and
additional information furnished to us by the Association and its
independent auditors is truthful, accurate, and complete in all material
respects. FFA will not independently verify the financial statements
and other information provided by the Association and its independent
auditors, nor will FFA independently value the assets or liabilities of
the Association. The Valuation will consider the Association only as a
going concern and will not be considered as an indication of the
liquidation value of the Association.
4. FFA's Valuation is not intended, and must not be represented to be, a
recommendation of any kind as to the advisability of purchasing shares
of common stock in the Reorganization. Moreover, because the Valuation
is necessarily based upon estimates and projections of a number of
matters, all of which are subject to change from time to time, FFA will
give no assurance that persons who purchase shares of common stock in
the Reorganization will thereafter be able to sell such shares at prices
related to FFA's Valuation.
5. The Association agrees that it will indemnify and hold harmless FFA and
its officers and employees (collectively, "FFA indemnified persons")
from and against any and all liabilities arising from or based upon this
agreement or the services provided by FFA hereunder, except to the
extent that such liabilities are adjudicated by a final judgment (after
all appeals or the expiration of time to appeal) to result from the
negligence or willful misconduct of a FFA indemnified person. The
Association agrees that it will promptly reimburse, as incurred, all
reasonable legal fees and expenses, and other reasonable out-of-pocket
disbursements, paid by any FFA indemnified person in connection with any
claim subject to indemnification hereunder in advance of the final
determination of any proceeding if the FFA indemnified person furnishes
the Association: (i) a written statement that it is FFA's good faith
belief that the FFA indemnified person is entitled to indemnification
hereunder; (ii) a written undertaking by such indemnified person to
repay the advance if a final judgment (after all appeals or the
expiration of time to appeal) is entered against such person based upon
such person's negligence or willful misconduct; and (iii) an
acknowledgment that the FFA indemnified person shall not be entitled to
indemnification hereunder and shall promptly reimburse any advancement
of fees and expenses if the FFA indemnified person enters into any
settlement of a claim subject to indemnification hereunder without the
prior written consent of the Association. Each FFA indemnified person
shall give prompt written notice to the Association of the commencement
of any action or proceeding and the Association shall have the right to
participate, at its expense, in contesting, defending or litigating the
Xxxxxxx Financial Advisors, Inc.
Board of Directors
Xxxxxx Federal Savings and Loan Association
July 30, 1997
Page 4
same. A FFA indemnified person shall have the right to employ its own
counsel in connection with all matters referred to in this Paragraph,
and such counsel shall have the right to take charge of such matter for
such person; provided, however, that the Association shall not be liable
under this Paragraph for the fees and expenses of more than one counsel
for all FFA indemnified persons.
6. The Association and FFA are not affiliated, and neither the Association
nor FFA 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.
It is understood that FFA is not a seller of securities within the scope
of any federal or state securities law and any report prepared by FFA
shall not be used as an offer or solicitation with respect to the
purchase or sale of any security, it being understood that the foregoing
shall not be construed to prohibit the filing of any such report as part
of the Reorganization application or SEC and blue sky filings or
customary references thereto in applications, filings, proxy statements
and prospectuses.
* * * *
Please acknowledge your agreement to the foregoing by signing as indicated below
and returning to FFA a signed copy of this letter.
Yours very truly,
XXXXXXX FINANCIAL ADVISORS, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
President
AGREED AND ACCEPTED:
XXXXXX FEDERAL SAVINGS AND LOAN ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: President and CEO
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Date: 08-01-97
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