Exhibit 99.3
Appraisal Agreement with RP Financial, LC.
RP FINANCIAL, LC.
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Financial Services Industry Consultants
April 7, 1999
Board of Directors
Everett Mutual Bank
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Dear Members of the Board:
This letter sets forth the agreement between Everett Mutual Bank,
Everett, Washington ("Everett Mutual" or the "Bank"), a wholly-owned subsidiary
of Everett Mutual Bancshares, MHC (the "MHC"), and RP Financial, LC. ("RP
Financial") for the independent appraisal services pertaining to the stock
conversion transaction, whereby the Bank will become a wholly-owned subsidiary
of a stock holding company. 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 Everett
Mutual which will be fully consistent with applicable regulatory guidelines and
standard pro forma valuation practices, and will incorporate the pro forma
impact of assets at the MHC level. 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 conversion 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 conversion size
determined by the Bank's Board of Directors. 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
conversion.
Board of Directors
April 7, 1999
Page 2
RP Financial agrees to deliver the valuation appraisal and subsequent
updates, in writing, to Everett Mutual 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
Everett Mutual agrees to pay RP Financial a fixed fee of $35,000 for
these appraisal 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, provided that the
transaction is not delayed for reasons described below.
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 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 Everett Mutual 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, Everett Mutual 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 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
Board of Directors
April 7, 1999
Page 3
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
Everett Mutual 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 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
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.
Board of Directors
April 7, 1999
Page 4
(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.
(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
Board of Directors
April 7, 1999
Page 5
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.
Everett Mutual and RP Financial are not affiliated, and neither Everett
Mutual 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.
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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President and Managing Director
Agreed To and Accepted By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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President and Chief Executive Officer
Upon Authorization by the Board of Directors For: Everett Mutual Bank
Everett, Washington
Date Executed: April 12, 1999
RP FINANCIAL, LC.
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Financial Services Industry Consultants
April 7, 1999
Board of Directors
Everett Mutual Bank
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Dear Members of the Board:
This letter sets forth the agreement between Everett Mutual Bank,
Everett, Washington ("Everett Mutual" or the "Bank"), a wholly-owned subsidiary
of Everett Mutual Bancshares, MHC (the "MHC"), and RP Financial, LC. ("RP
Financial"), whereby the Bank has engaged RP Financial to prepare the regulatory
business plan and financial projections to be adopted by the Bank's Board of
Directors in conjunction with the stock conversion transaction, whereby the Bank
will become a wholly-owned subsidiary of a stock holding company. 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 Everett Mutual'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
Bank and holding company and related cash flows and the integration of the MHC
assets as a result of the conversation transaction.
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 appropriate
applications.
Board of Directors
April 7, 1999
Page 2
Fee Structure and Payment Schedule
The Bank agrees to compensate RP Financial for preparation of the
business plan on a fixed fee basis of $10,000. Payment of the professional fees
shall be made upon delivery of the completed business plan.
The Bank 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 in conjunction with the appraisal engagement, subject to
written authorization from the Bank to exceed such level.
In the event the Bank shall, for any reason, discontinue this planning
engagement prior to delivery of the completed business plan and payment of the
progress payment fee, the Bank 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 Bank and RP Financial. Such unforeseen events
may include changes in regulatory requirements as it specifically relates to
Everett Mutual or potential transactions which will dramatically impact the Bank
such as a pending acquisition or branch transaction.
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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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Managing Director
Agreed To and Accepted By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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President and Chief Executive Officer
Upon Authorization by the Board of Directors For: Everett Mutual Bank
Everett, Washington
Date Executed: April 12, 1999
