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EXHIBIT 10.15
[LETTERHEAD OF RP FINANCIAL, LC.]
February 3, 1999
Board of Managers
Xxxxxx City Savings Bank
W 00 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Dear Members of the Board:
This letter sets forth the agreement between Xxxxxx City Savings Bank,
Paramus, New Jersey ("Xxxxxx City" or the "Bank"), and RP Financial, LC. ("RP
Financial") for the independent appraisal services pertaining to the Bank's
formation of a "two-tier" mutual holding company (the "Reorganization"),
including a mid-tier stock holding company and minority stock offering by the
mid-tier stock holding company (the "Stock Offering"). The specific appraisal
services to be rendered by RP Financial are described below. These appraisal
services will be rendered by a team of two to three senior consultants on staff
and will be directed by the undersigned.
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. RP Financial will prepare a written detailed valuation report of Xxxxxx
City which will be fully consistent with applicable regulatory guidelines and
standard pro forma valuation practices. 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 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 value which will establish the range of value, and reflect
the Stock Offering size determined by the Bank's Board of Managers. The
appraisal report may be periodically updated throughout the conversion process
and there will be at least one updated valuation prepared at the time of the
closing of the Stock Offering.
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February 3, 1999
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RP Financial agrees to deliver the valuation appraisal and subsequent updates,
in writing, to Xxxxxx City 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
Xxxxxx City agrees to pay RP Financial a fixed fee of $125,000 for
preparation and delivery of the original appraisal report and a $10,000 fee for
each subsequent appraisal update, plus reimbursable expenses. Payment of these
fees shall be made according to the following schedule:
- $25,000 upon execution of the letter of agreement engaging RP
Financial's appraisal services;
- $100,000 upon delivery of the completed original appraisal
report; and
- $10,000 upon completion of each subsequent valuation update
that may be required.
The Bank will reimburse RP Financial for reasonable 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 engagement and in connection with the preparation of a
regulatory business plan as described in the accompanying letter, subject to
written authorization from the Bank to exceed such level.
In the event Xxxxxx City shall, for any reason, discontinue the
proposed Reorganization and Stock Offering prior to delivery of the completed
documents set forth above and payment of the respective progress payment fees,
Xxxxxx City 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 giving full credit to the initial retainer fee. RP Financial's standard
billing rates range from $75 per hour for research associates to $250 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 Xxxxxx City and RP Financial. Such unforeseen events shall
include, but not be limited to, major changes in the conversion regulations,
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February 3, 1999
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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
Xxxxxx City 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 Stock
Offering 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. RP Financial hereby represents and warrants to the Bank that it
is familiar with the applicable laws, statutes, rules, regulations, policies,
procedures and practices pertaining to the preparation of appraisals in
connection with mutual holding company reorganizations and agrees to use its
best efforts to comply therewith in preparing the appraisal for the Bank.
4. (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
financial statements or other information furnished or otherwise made available
by the Bank to RP Financial; or (iii) any
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February 3, 1999
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action or omission to act by the Bank, or the Bank's respective officers,
Managers, 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 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 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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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.
Xxxxxx City and RP Financial are not affiliated, and neither Xxxxxx
City 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 $25,000.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President and Managing Director
Agreed To and Accepted By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
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Xxxxxx X. Xxxxxxxx, Xx.
President
Upon Authorization by the Board of Managers For: Xxxxxx City Savings Bank
Paramus, New Jersey
Date Executed: 2/4/99
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