EXHIBIT 10.1
[LETTERHEAD OF XXXXXXXX & COMPANY]
AUGUST 31, 1998
BOARD OF DIRECTORS
COMMUNITY SAVINGS BANK, SSB
000 X. XXXXXX XXXXXX
XXXXXXXXXX, XX 00000
DEAR DIRECTORS:
This letter sets forth the agreement between Community Savings Bank, SSB
("Community" or "Bank"), Burlington, North Carolina, and Xxxxxxxx & Company
("F&C"), Hurst, Texas, under the terms of which Community 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
Community or its holding company; and (2) assist Community 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 Community
at the above address on or before a mutually agreed upon date and to consult
with the Board of Directors of Community with regard to both the written
valuation and the business plan. 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 Community 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
final appraisal update shall be $25,000 plus $3,500 for each appraisal update in
addition to the original appraisal and final appraisal update. In addition,
Community shall reimburse F&C for all out-of-pocket expenses. Payment under this
agreement shall be made as follows:
1. Upon execution of this engagement letter--$7,500;
2. Upon issuance of the business plan--$7,500;
3. Upon issuance of the appraisal--$10,000;
4. Upon issuance of each additional intermediate appraisal update, if
any--$3,500; and
5. Out-of-pocket expenses are to be paid monthly.
If, during the course of Community'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 Community'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 completion of
Community's conversion requires the preparation by F&C of a new appraisal report
or business plan.
BOARD OF DIRECTORS
AUGUST 31, 1998
PAGE 2
To induce F&C to provide the services described above, Community hereby
agrees as follows:
1. Community shall supply 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. Community 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. Community 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
Community 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.
4. F&C shall not be entitled to indemnification pursuant to Paragraph 3
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
Community 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.
5. F&C additionally shall not be entitled to indemnification pursuant to
Paragraph 3 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.
Community and F&C are not affiliated, and neither Community 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.
BOARD OF DIRECTORS
AUGUST 31, 1998
PAGE 3
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 Xxxxxxxx & Company in
the amount of $7,500. The extra copy is for your conversion counsel.
Yours very truly,
/s/Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxx
Principal
Agreed to ($7,500 check enclosed):
Community Savings Bank, SSB
Burlington, North Carolina
By: /s/ X. X. Xxxxxxx
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