EXHIBIT 99.3
[LETTERHEAD OF XXXXXXXX & COMPANY APPEARS HERE]
August 7, 1997
Board of Directors
Cavalry Banking
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000
Dear Directors:
This letter sets forth the agreement between Cavalry Banking ("Cavalry" or
"Bank"), Murfreesboro, Tennessee, and Ferguson & Company ("F&C"), Irving, Texas,
under the terms of which Cavalry has engaged F&C, in connection with its
conversion from mutual to stock form, to (1) determine the pro forma market
value of the shares of common stock to be issued and sold by Cavalry's holding
company; and (2) assist Cavalry in preparing a business plan to be filed with
the application for approval to convert to stock.
F&C agrees to deliver the written valuation and business plan to Cavalry at
the above address on or before a mutually agreed upon date. Further, F&C agrees
to perform such other services as are necessary or required in connection with
comments from the applicable regulatory authorities relating to the business
plan and appraisal and the preparation of appraisal updates as requested by
Cavalry or its counsel. It is understood that the services of F&C under this
agreement shall be limited as herein described.
F&C's fee for the business plan and initial appraisal valuation report and
any required updates shall be $25,000. In addition, Cavalry shall reimburse F&C
for all out-of-pocket expenses, which will not exceed $5,000. Payment under this
agreement shall be made as follows:
1. Seven thousand five hundred dollars ($7,500) upon execution of this
engagement letter.
2. Seven thousand five hundred dollars ($7,500) upon delivery of the
business plan.
3. Ten thousand dollars ($10,000) upon delivery of the completed
appraisal report.
4. Out-of-pocket expenses are to be paid monthly.
If, during the course of Cavalry's conversion, unforeseen events occur so
as to change materially the nature or the work content of the services described
in this contract, the terms of the contract shall be subject to renegotiation.
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 conversion appraisals, major changes in Cavalry's management or
operating policies, execution of a merger agreement with another institution
prior to completion of conversion, and excessive delays or suspension of
processing of conversions by the regulatory authorities such that
Board of Directors
August 7, 1997
Page 2
completion of Cavalry's conversion requires the preparation by F&C of a new
appraisal report or business plan, excluding appraisal updates during the course
of the engagement.
To induce F&C to provide the services described above, Cavalry hereby
agrees as follows:
1. Cavalry shall supply in a timely manner to F&C such information with
respect to its business and financial condition as F&C reasonably may
request in order to make the aforesaid valuation. Such information
made available to F&C shall include, but not be limited to, annual
financial statements, periodic regulatory filings, material
agreements, debt instruments and corporate books and records.
2. Cavalry hereby represents and warrants, to the best of its knowledge,
that any information provided to F&C does not and will not, at any
time relevant hereto, contain any misstatement or untrue statement of
a material fact or omit any and all material facts required to be
stated therein or necessary to make the statements therein not false
or misleading in light of the circumstances under which they were
made.
3. (a) Cavalry shall indemnify and hold harmless F&C and any employees of
F&C who act for or on behalf of F&C in connection with the services
called for under this agreement, from and against any and all loss,
cost, damage, claim, liability or expense of any kind, including
reasonable attorneys fees and other expenses incurred in
investigating, preparing to defend and defending any claim or claims
(specifically including, but not limited to, claims under federal and
state securities laws) arising out of any misstatement or untrue
statement of a material fact contained in the information supplied by
Cavalry to F&C or by an omission to state a material fact in the
information so provided which is required to be stated therein in
order to make the statement therein not false or misleading.
(b) F&C shall not be entitled to indemnification pursuant to Paragraph
3(a) above with regard to any claim arising where, with regard to the
basis for such claim, F&C had knowledge that a statement of a fact
material to the evaluation and contained in the information supplied
by Cavalry was untrue or had knowledge that a material fact was
omitted from the information so provided and that such material fact
was necessary in order to make the statement made to F&C not false or
misleading.
(c) F&C additionally shall not be entitled to indemnification pursuant
to Paragraph 3(a) above notwithstanding its lack of actual knowledge
of an intentional misstatement or omission of a material fact in the
information provided if F&C is determined to have been negligent or to
have failed to exercise due diligence in the preparation of its
valuation.
Board of Directors
August 7, 1997
Page 3
Cavalry and F&C are not affiliated, and neither Cavalry nor F&C has an
economic interest in, or held in common with, the other and has not derived a
significant portion of its gross revenue, receipts or net income for any period
from transactions with the other.
In order for F&C to consider this proposal binding, please acknowledge your
consent to the foregoing by executing the enclosed copies of this letter and
returning one copy to us, together with a check payable to Ferguson & Co., LLP
in the amount of $7,500. The extra copy of this letter is for your conversion
counsel.
Yours very truly,
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Principal
Agreed to ($7,500 check enclosed):
Cavalry Banking
Murfreesboro, Tennessee
By: /s/ Ed. X. Xxxxxxx, Xx.
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Xx X. Xxxxxxx, Xx.
