EXHIBIT 99.3
Agreement with RP Financial, LC.
RP Financial, LC.
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Financial Services Industry Consultants
January 6, 1997
Xx. Xxxxx X. Xxxxxxx
President and Chief Executive Officer
First Federal Savings & Loan Association of Spartanburg
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Dear Xx. Xxxxxxx:
This letter sets forth the agreement between First Federal Savings
and Loan Association of Spartanburg, South Carolina ("First Federal"
or the "Association"), and RP Financial, LC. ("RP Financial") for certain
conversion appraisal services pertaining to the Association's mutual-to-stock
conversion and simultaneous holding company formation. The specific appraisal
services to be rendered by RP Financial are described below. These appraisal
services will be rendered by a team of one to two 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 Association's operations, financial condition, profitability,
market area, risks and various internal and external factors which impact the
pro forma value of the Association. RP Financial will prepare a written
detailed valuation report of First Federal 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
Association's financial condition and operating results, as well as an
assessment of the Association's interest rate risk, credit risk and liquidity
risk. The appraisal report will describe the Association'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 prospectus 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 establish a midpoint
pro forma value as well as the range of value. 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.
RP Financial agrees to deliver the valuation appraisal and subsequent
updates, in writing, to First Federal 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.
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Washington Headquarters
Rosslyn Center
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Telephone: (000) 000-0000
Arlington, VA 22209 Fax No.: (000) 000-0000
RP Financial, LC.
Xx. Xxxxx X. Xxxxxxx
January 6, 1997
Page 2
Fee Structure and Payment Schedule
First Federal agrees to pay RP Financial a fixed fee of $35,000
for these services, 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 $25,000 upon delivery of the completed original appraisal report;
and
o $5,000 upon completion of the conversion to cover all subsequent
valuation updates that may be required.
The Association 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 to a
reasonable cap, subject to written authorization from the Association to exceed
such level.
In the event First Federal shall, for any reason, discontinue the
proposed conversion prior to delivery of the completed documents set forth
above and payment of the respective progress payment fees, First Federal
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 First Federal 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
conversion 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
conversion transaction requires the preparation by RP Financial of a new
appraisal or financial projections.
Representations and Warranties
First Federal and RP Financial agree to the following:
1. The Association 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 Association to RP
Financial shall remain strictly confidential (unless such information is
otherwise made available to the public), and if conversion is not consummated or
the services of RP Financial are terminated hereunder, RP Financial shall upon
request promptly return to the Association the original and any copies of such
information.
2. The Association hereby represents and warrants to RP Financial that
any information provided to RP Financial does not and will not, to the best of
the Association's knowledge, at the times it is provided to RP
RP Financial, LC.
Xx. Xxxxx X. Xxxxxxx
January 6, 1997
Page 3
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 Association 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 Association 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 Association to RP Financial; or (iii) any action or
omission to act by the Association, or the Association's respective officers,
directors, employees or agents which action or omission is willful or negligent.
The Association 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 Association at the normal hourly
professional rate chargeable by such employee.
(b) RP Financial shall give written notice to the Association of
such claim or facts within thirty days of the assertion of any claim or
discovery of material facts upon which the RP Financial intends to base a claim
for indemnification hereunder. In the event the Association elects, within seven
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 Association hereunder, together with interest on such
costs from the date incurred at the annual rate of prime plus two percent within
five days after the final determination of such contest either by written
acknowledgement of the Association or a final judgment of a court of competent
jurisdiction. If the Association does not so elect, RP Financial shall be paid
promptly and in any event within thirty days after receipt by the Association of
the notice of the claim.
(c) The Association 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 Association: (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.
(d) In the event the Association 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
Association in one or more additional capacities, and that the terms of the
original engagement may be embodied 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 Association 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.
RP Financial, LC.
Xx. Xxxxx X. Xxxxxxx
January 6, 1997
Page 4
First Federal and RP Financial are not affiliated, and neither First
Federal 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/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President and Managing Director
Agreed To and Accepted By: Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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President and Chief Executive Officer
Upon Authorization by the Board of Directors For: First Federal Savings and
Loan Association of
Spartanburg
Spartanburg, South Carolina
Date Executed: 2/4/97
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RP Financial, LC.
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Financial Services Industry Consultants
January 6, 1997
Xx. Xxxxx X. Xxxxxxx
President and Chief Executive Officer
First Federal Savings & Loan Association of Spartanburg
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Dear Xx. Xxxxxxx:
This letter sets forth the agreement between First Federal Savings
and Loan Association of Spartanburg, South Carolina ("First Federal"
or the "Association"), and RP Financial, LC. ("RP Financial"), whereby the
Association has engaged RP Financial to prepare the regulatory business plan
and financial projections to be adopted by the Association's Board of Directors
in conjunction with the concurrent formation of a holding company and the
Association's mutual-to-stock conversion. These services are described in
greater detail below.
Description of Proposed Services
RP Financial's business planning services will include the
following areas: (1) evaluating First Federal's current financial and
operating condition, business strategies and anticipated strategies in the
future; (2) analyzing and quantifying the impact of business strategies,
incorporating the use of net conversion proceeds both in the short and long
term; (3) preparing detailed financial projections on a quarterly basis for a
period of at least three fiscal years to reflect the impact of Board
approved business strategies and use of proceeds; (4) preparing the written
business plan document which conforms with applicable regulatory guidelines
including a description of the use of proceeds and how the convenience and needs
of the community will be addressed; and (5) preparing the detailed schedules of
the capitalization of the holding company and the cash flows between the holding
company and the Association.
Contents of the business plan will include: Philosophy/Goals;
Economic Environment and Background; Lending, Leasing and Investment
Activities; Deposit, Savings and Borrowing Activity; Asset and Liability
Management; Operations; Records, Systems and Controls; Growth,
Profitability and Capital; Responsibility for Monitoring this Plan.
RP Financial agrees to prepare the business plan and accompanying
financial projections in writing such that the business plan can be filed with
the appropriate regulatory agencies prior to filing the conversion application.
Fee Structure and Payment Schedule
The Association agrees to compensate RP Financial for preparation of
the business plan on a fixed fee basis of $7,500. Payment of the professional
fees shall be made upon delivery of the completed business plan.
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Washington Headquarters
Rosslyn Center
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Telephone: (000) 000-0000
Arlington, VA 22209 Fax No.: (000) 000-0000
RP Financial, LC.
Xx. Xxxxx X. Xxxxxxx
January 6, 1997
Page 2
The Association also agrees to reimburse RP Financial for
those direct out-of-pocket expenses necessary and incidental to providing the
business planning services. Reimbursable expenses will likely include shipping,
telephone/facsimile printing, computer and data services, and shall be paid to
RP Financial as incurred and billed. RP Financial will agree to limit
reimbursable expenses to a reasonable cap, subject to written authorization from
the Association to exceed such level.
In the event the Association shall, for any reason, discontinue this
planning engagement prior to delivery of the completed business plan and payment
of the progress payment fee, the Association 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 fixed fee
described above, plus reimbursable expenses incurred.
If during the course of the planning engagement, unforeseen events
occur so as to materially change the nature or the work content of the business
planning services described in this contract, the terms of said contract shall
be subject to renegotiation by the Association and RP Financial. Such
unforeseen events may include changes in regulatory requirements as it
specifically relates to First Federal or potential transactions which
will dramatically impact the Association such as a pending acquisition or
branch transaction.
* * * * * * * * * * *
Please acknowledge your agreement to the foregoing by signing as
indicated below and returning to RP Financial a signed copy of this letter.
Sincerely,
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
President and Managing Director
Agreed To and Accepted By: Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
--------------------
President and Chief Executive Officer
Upon Authorization by the Board of Directors For: First Federal Savings and
Loan Association of
Spartanburg
Spartanburg, South Carolina
Date Executed: 2/4/97
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RP FINANCIAL, LC.
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Financial Services Industry Consultants
January 6, 1997
* VIA FEDEX*
Xx. Xxxxx X. Xxxxxxx
President and Chief Executive Officer
First Federal Savings & Loan Association of Spartanburg
000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Dear Xx. Xxxxxxx:
Pursuant to my conversation with Xxxx Xxxxxxx of Breyer & Aguggia, we are
pleased to submit RP Financial's proposals for appraisal and planning services.
RP Financial is the leading firm in the nation with respect to preparation
of conversion appraisals and related business planning. In this regard, over the
last five years, RP Financial provided appraisals for more than 160 conversion
transactions with gross proceeds approximating nearly $6 billion. This includes
appraisal services for the majority of the offerings over $50 million in
proceeds. In addition, we have performed conversion appraisal services for a
number of recent southeast conversions, including the following offerings over
$50 million: Home Federal in North Carolina, Home Savings in Florida, Great
Financial in Kentucky, First Federal in Virginia and Iberia Savings in
Louisiana. In addition, we have performed appraisal and planning services for
several South Carolina institutions, most recently Perpetual Savings in
Anderson.
We will be able to conform with the proposed conversion timetable,
culminating in filing the application, appraisal and business plan in early
1997. With our automated in-house data bases of publicly-traded institutions,
all insured financial institutions, economic/demographic and competitive data
bases coupled with the proposed staffing of the project, we can accommodate the
schedule. Our strong working relationships with Xxxxxx & Aguggia and Trident
Securities should be extremely beneficial in facilitating a smooth conversion
process. We will ensure the appraisal and business plan documents are prepared
in a form consistent with the appropriate federal regulations.
Should RP Financial be engaged for the appraisal and planning services, we
will coordinate our initial data and information needs with materials you have
already provided to Breyer & Aguggia--we will then request any additional
information directly from First Federal.
I look forward to speaking with you further about RP Financial's appraisal
and planning services.
Sincerely,
(Signature of Xxxxxx X. Xxxxxxx)
Xxxxxx X. Xxxxxxx
President and Managing Director
Enclosures
cc: Xxxx X. Xxxxxxx, Esq.
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Washington Headquarters
Rosslyn Center
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000 Telephone: (000) 000-0000
Arlington, VA 22209 Fax No.: (000) 000-0000
