RP® FINANCIAL, LC. Serving the Financial Services Industry Since 1988
Exhibit
99.1
| RP® FINANCIAL, LC. | |
|
Serving
the Financial Services Industry Since 1988
|
January
22, 2010
Xx.
Xxxxxx X. Xxxxxxx
President
and Chief Executive Officer
Colonial
Bankshares, Inc.
0000
Xxxxx Xxxxxx Xxxxx
Vineland,
New Jersey 08360
Dear Xx.
Xxxxxxx:
This
letter sets forth the agreement between Colonial Bank, FSB, the wholly-owned
subsidiary of Colonial Bankshares, Inc. (the “Company”), which in turn is the
majority-owned subsidiary of Colonial Bankshares, MHC, Vineland, New Jersey (the
“MHC”), and RP®
Financial, LC. (“RP Financial”) whereby RP Financial will provide the
independent conversion appraisal services in conjunction with the second step
conversion transaction by the Company. The scope, timing and fee
structure for these appraisal services are described below.
These
appraisal services will be directed by Xxxxxxx X. Xxxxxxxxxxx, Managing
Director, with the assistance of a team of senior members of RP
Financial.
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.
| Washington Headquarters | |
| Three Ballston
Plaza 0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000 Xxxxxxxxx, XX 00000 E-Mail: xxxxxxxxxxxx@xxxxxxxxxxx.xxx |
Direct: (000)
000-0000
Telephone: (000) 000-0000 Fax No.: (000) 000-0000 Toll-Free
No.: (000)
000-0000
|
Xx.
Xxxxxx X. Xxxxxxx
January
22, 2010
Page
2
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:
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$5,000
upon execution of this letter of agreement engaging RP Financial’s
appraisal services;
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$35,000
upon delivery of the completed original appraisal report;
and
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$5,000
upon delivery of each subsequent appraisal update report required in
conjunction with the regulatory application and stock
offering. It is anticipated that there will be at least one
appraisal update report, specifically the update to be prepared in
conjunction with the completion of the stock
offering.
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The
Company will reimburse RP Financial for reasonable out-of-pocket expenses
incurred in preparation of the original appraisal and subsequent updates. 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, without the Company’s authorization to
exceed this level.
In the
event the Company shall, for any reason, discontinue the proposed transaction
prior to delivery of the completed original appraisal report or subsequent
updates and payment of the corresponding 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.
Xxxxxx X. Xxxxxxx
January
22, 2010
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.
Xxxxxx X. Xxxxxxx
January
22, 2010
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, non-appealable 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.
Xx.
Xxxxxx X. Xxxxxxx
January
22, 2010
Page
5
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.
* * * * * * * * * * *
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/ Xxxxxxx X. Xxxxxxxxxxx | ||
|
Xxxxxxx X. Xxxxxxxxxxx
Chief Executive Officer and
|
||
| Managing Director | ||
| /s/ Xxxxxx X. Xxxxxxx | |||
| Agreed To and Accepted By: | Xx. Xxxxxx X. Xxxxxxx | ||
| President and Chief Executive Officer | |||
|
Upon
Authorization by the Board of Directors
For:
|
Colonial
Bank, FSB, subsidiary of Colonial
Bankshares, Inc.
|
|
Vineland,
New Jersey
|
| Date Executed: | 1/25/2010 | |
