EXHIBIT 99.1
RP(R) FINANCIAL, LC.
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Financial Services Industry Consultants
September 22, 2004
Xx. Xxxxxx X. Xxxxxx
President and Chief Executive Officer
Ohio Central Savings
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Dear Xx. Xxxxxx:
This letter sets forth the agreement between Ohio Central Savings,
Dublin, Ohio (the "Bank"), and RP(R) Financial, LC. ("RP Financial") for the
independent appraisal services in connection with the Bank's simultaneous
divestiture as a wholly-owned subsidiary of Third Federal Savings and Loan
Association, MHC, to an independent mutual savings association, holding company
formation and mutual-to-stock conversion. The specific appraisal services to be
rendered by RP Financial are described below.
DESCRIPTION OF CONVERSION APPRAISAL SERVICES
Prior to preparing the valuation report, RP Financial will conduct a
financial due diligence, including on-site interviews of senior management and
reviews of financial and other documents and records, to gain insight into the
Bank's operations, financial condition, profitability, market area, risks and
various internal and external factors which impact the pro forma value of the
Bank. All such evaluations and analyses will be conducted with a view towards
developing an assessment of the Bank as an independent operating entity and will
take into account any dividends paid to Third Federal Savings and Loan
Association, MHC, prior to the time of divestiture.
RP Financial will prepare a written detailed valuation report of the
Bank that will be fully consistent with applicable regulatory guidelines and
standard pro forma valuation practices. In this regard, the applicable
regulatory guidelines are those set forth in the Office of Thrift Supervision's
("OTS") October 21, 1994 "Guidelines for Appraisal Reports for the Valuation of
Savings and Loan Associations Converting from Mutual to Stock Form of
Organization," which have been endorsed by the Federal Deposit Insurance
Corporation ("FDIC") and various state banking agencies.
The appraisal report will include an in-depth analysis of the Bank's
financial condition and operating results, as well as an assessment of the
Bank's interest rate risk, credit risk and liquidity risk. The appraisal report
will describe the Bank's business strategies, market area, prospects for the
future and the intended use of proceeds both in the short term and over the
longer term. A peer
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WASHINGTON HEADQUARTERS
Rosslyn Center Telephone: (000) 000-0000
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Fax No.: (000) 000-0000
Arlington, VA 22209 Toll Free No.: (000) 000-0000
xxx.xxxxxxxxxxx.xxx E-Mail: xxxx@xxxxxxxxxxx.xxx
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SEPTEMBER 22, 2004
PAGE 2
group analysis relative to publicly-traded savings institutions will be
conducted for the purpose of determining appropriate valuation adjustments
relative to the group.
We will review pertinent sections of the applications and offering
documents to obtain necessary data and information for the appraisal, including
the impact of key deal elements on the appraised value, such as dividend policy,
use of proceeds and reinvestment rate, tax rate, conversion expenses, and
characteristics of stock plans. The appraisal report will conclude with a
midpoint pro forma market value that will establish the range of value, and
reflect the offering price per share determined by the Bank's Board of
Directors. The appraisal report may be periodically updated throughout the
conversion process as appropriate. The conversion appraisal guidelines require
at least one updated valuation just prior to the time of the closing of the
stock offering.
RP Financial agrees to deliver the valuation appraisal and subsequent
updates, in writing, to the Bank at the above address in conjunction with the
filing of the regulatory application. Subsequent updates will be filed promptly
as certain events occur which would warrant the preparation and filing of such
valuation updates. 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.
FEE STRUCTURE AND PAYMENT SCHEDULE
The Bank agrees to pay RP Financial a fixed fee of $25,000 for
preparation and delivery of the original appraisal report, plus reimbursable
expenses, and $2,500 for preparation and delivery of each required updated
appraisal report, plus reimbursable expenses. Payment of these fees shall be
made according to the following schedule:
o $5,000 upon execution of the letter of agreement engaging RP
Financial's appraisal services;
o $20,000 upon delivery of the completed original appraisal
report; and
o $2,500 upon completion of each valuation update that may be
required.
The Bank will reimburse RP Financial for out-of-pocket expenses incurred
in preparation of the valuation. Such out-of-pocket expenses will likely include
travel, printing, telephone, facsimile, shipping, computer and data services. RP
Financial will agree to limit reimbursable expenses in connection with this
appraisal engagement, subject to written authorization from the Bank to exceed
such level.
In the event the Bank shall, for any reason, discontinue the proposed
reorganization and conversion offering prior to delivery of the completed
documents set forth above and payment of the respective progress payment fees,
the Bank agrees to compensate RP Financial according to
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SEPTEMBER 22, 2004
PAGE 3
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 giving full credit to the initial retainer fee. RP
Financial's standard billing rates range from $75 per hour for research
associates to $300 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 Bank and RP Financial. 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 appraisals,
major 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 transaction requires the preparation
by RP Financial of a new appraisal or financial projections.
REPRESENTATIONS AND WARRANTIES
The Bank and RP Financial agree to the following:
1. The Bank 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 Bank to RP
Financial shall remain strictly confidential (unless such information is
otherwise made available to the public), and if the reorganization and
conversion are not consummated or the services of RP Financial are terminated
hereunder, RP Financial shall upon request promptly return to the Bank the
original and any copies of such information.
2. The Bank hereby represents and warrants to RP Financial that any
information provided to RP Financial does not and will not, to the best of the
Bank's knowledge, at the times it is provided to RP Financial, contain any
untrue statement of a material fact or 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 Bank agrees that it will indemnify and hold harmless
RP Financial, any affiliates of RP Financial, the respective directors,
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, 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 Bank to RP Financial, either
orally or in writing; (ii) the omission or alleged omission of a material fact
from the
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SEPTEMBER 22, 2004
PAGE 4
financial statements or other information furnished or otherwise made available
by the Bank to RP Financial; or (iii) any action or omission to act by the Bank,
or the Bank's respective officers, Directors, employees or agents which action
or omission is willful or negligent. The Bank 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. Any
time devoted by employees of RP Financial to situations for which
indemnification is provided hereunder, shall be an indemnifiable cost payable by
the Bank at the normal hourly professional rate chargeable by such employee.
(b) RP Financial shall give written notice to the Bank 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. In the event the Bank elects, within ten business
days of the receipt of the original notice thereof, to contest such claim by
written notice to RP Financial, RP Financial will be entitled to be paid any
amounts payable by the Bank hereunder within five days after the final
determination of such contest either by written acknowledgement of the Bank or a
final judgment (including all appeals therefrom) of a court of competent
jurisdiction. If the Bank does not so elect, RP Financial shall be paid promptly
and in any event within thirty days after receipt by the Bank of the notice of
the claim.
(c) The Bank shall pay for or reimburse the reasonable
expenses, including 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 Bank: (1) a written statement of RP
Financial's good faith belief that it is entitled to indemnification hereunder;
and (2) a written undertaking to repay the advance if it ultimately is
determined in a final adjudication of such proceeding that it or he is not
entitled to such indemnification. The Bank may assume the defense of any claim
(as to which notice is given in accordance with 3(b)) with counsel reasonably
satisfactory to RP Financial, and after notice from the Bank to RP Financial of
its election to assume the defense thereof, the Bank will not be liable to RP
Financial for any legal or other expenses subsequently incurred by RP Financial
(other than reasonable costs of investigation and assistance in discovery and
document production matters). Notwithstanding the foregoing, RP Financial shall
have the right to employ their own counsel in any action or proceeding if RP
Financial shall have concluded that a conflict of interest exists between the
Bank and RP Financial which would materially impact the effective representation
of RP Financial. In the event that RP Financial concludes that a conflict of
interest exists, RP Financial shall have the right to select counsel reasonably
satisfactory to the Bank which will represent RP Financial in any such action or
proceeding and the Bank shall reimburse RP Financial for the reasonable legal
fees and expenses of such counsel and other expenses reasonably incurred by RP
Financial. In no event shall the Bank be liable for the fees and expenses of
more than one counsel, separate from its own counsel, for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same allegations or
circumstances. The Bank will not be liable under the foregoing indemnification
provision in respect of any compromise or settlement of any action or proceeding
made without its consent, which consent shall not be unreasonably withheld.
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SEPTEMBER 22, 2004
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(d) In the event the Bank 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.
It is understood that, in connection with RP Financial's above-mentioned
engagement, RP Financial may also be engaged to act for the Bank in one or more
additional capacities, and that the terms of the original engagement may be
incorporated by reference in one or more separate agreements. The provisions of
Paragraph 3 herein shall apply to the original engagement, any such additional
engagement, any modification of the original engagement or such additional
engagement and shall remain in full force and effect following the completion or
termination of RP Financial's engagement(s). This agreement constitutes the
entire understanding of the Bank and RP Financial concerning the subject matter
addressed herein, and such contract shall be governed and construed in
accordance with the laws of the Commonwealth of Virginia. This agreement may not
be modified, supplemented or amended except by written agreement executed by
both parties.
The Bank and RP Financial are not affiliated, and neither the Bank 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.
* * * * * * * * * * *
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
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Xxxxx X. Xxxxxxxxx
Senior Vice President
Agreed To and Accepted By: Xxxxxx X. Xxxxxx
______________________________________
President and Chief Executive Officer
Upon Authorization by the Board of Directors For: Ohio Central Savings
Dublin, Ohio
Date Executed: 10/13/04
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