1
Exhibit 99.5
RP FINANCIAL, LC.
- ----------------------------------------------
Financial Services Industry Consultants
February 13, 1997
Mr. Jon W. Letzkus
President and Chief Executive Officer
Bridgeport Savings and Loan Association
435 Main Street
Bridgeport, Ohio 43912-1310
Dear Mr. Letzkus:
This letter sets forth the agreement between Bridgeport Savings and Loan
Association, Bridgeport, Ohio ("Bridgeport Savings" or the "Association"), and
RP Financial, LC. ("RP Financial") for the independent 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 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
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 Bridgeport Savings 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 conclude with a
midpoint pro forma value which will establish 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 Bridgeport Savings 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.
- --------------------------------------------------------------------------------
Washington Headquarters
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
2
RP Financial, LC.
Mr. Jon W. Letzkus
February 13, 1997
Page 2
Fee Structure and Payment Schedule
- ----------------------------------
Bridgeport Savings agrees to pay RP Financial a fixed fee of $12,500 for
these appraisal services, plus reimbursable expenses. Payment of these fees
shall be made according to the following schedule:
- $2,500 upon execution of the letter of agreement engaging RP
Financial's appraisal services;
- $7,500 upon delivery of the completed original appraisal report; and
- $2,500 upon completion of the conversion to cover all subsequent
valuation updates that may be required.
The Association will reimburse RP Financial for all travel expenses
incurred in preparation of the valuation. RP Financial will agree to limit
reimbursable out-of-pocket expenses, including printing, telephone, facsimile
and shipping, to a cap of $1,250 for the appraisal and concurrent planning
engagements, subject to written authorization from the Association to exceed
such level. Computer and data services will be provided at no additional charge.
In the event Bridgeport Savings 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, Bridgeport Savings 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 Bridgeport Savings 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
- ------------------------------
Bridgeport Savings 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.
3
RP Financial, LC.
Mr. Jon W. Letzkus
February 13, 1997
Page 3
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 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 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
4
RP Financial, LC.
Mr. Jon W. Letzkus
February 13, 1997
Page 4
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.
Bridgeport Savings and RP Financial are not affiliated, and neither
Bridgeport Savings 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 $2,500.
Sincerely,
/s/ William E. Pommerening
William E. Pommerening
Chief Executive Officer
and Managing Director
Agreed To and Accepted By: Jon W. Letzkus /s/ Jon W. Letzkus
-------------------------------
President and Chief Executive Office
Upon Authorization by the Board of Directors For:
Bridgeport Savings and Loan Association
Bridgeport, Ohio
Date Executed: 3-1-97
---------------