Exhibit 10.14
Agreement and Plan of Reorganization
By and Among
First Federal Bankshares, M.H.C.
First Federal Savings Bank of Siouxland
Mid-Iowa Financial Corp.
and
Mid-Iowa Savings Bank, FSB
Dated: August 17, 1998
TABLE OF CONTENTS
Page No.
ARTICLE I................................................................ 2
THE REORGANIZATION.................................................... 2
1.1. The Reorganization....................................... 2
1.2 Adoption and Execution and Delivery of Documents
providing for the Reorganization......................... 3
1.3. Effective Time and Closing of the Reorganization.......... 3
1.4 Modification of Structure................................. 3
ARTICLE II............................................................... 4
EFFECT OF THE REORGANIZATION; CERTAIN ACTIONS IN
CONNECTION THEREWITH................................................. 4
2.1. Effect of the Reorganization.............................. 4
2.2. Effect on Common Stock of the Company and First Federal... 4
2.3. First Federal to Make Cash Available...................... 5
2.4. Payment of Cash........................................... 5
2.5. Recapitalization or Stock Dividends....................... 6
2.6. Company Stock Options..................................... 6
ARTICLE III.............................................................. 7
REPRESENTATIONS AND WARRANTIES OF MID-IOWA
AND THE COMPANY..................................................... 7
3.1. Corporate Organization.................................... 7
3.2. Capitalization............................................ 8
3.3. Authorization............................................. 9
3.4. No Violation.............................................. 9
3.5. Reports and Consolidated Financial Statements............. 10
3.6. Consents and Approvals.................................... 11
3.7. Absence of Certain Changes................................ 11
3.8. Employee and Employee Benefits Matters.................... 12
3.9. Litigation................................................ 14
3.10. Tax Matters............................................... 14
3.11. Information in the Company Proxy Statement................ 15
3.12. Environmental Matters..................................... 16
3.13. Insurance................................................. 17
3.14. Compliance with Laws and Orders........................... 18
3.15. Governmental Regulation................................... 18
3.16. Contracts and Commitments................................. 18
3.17. Agreements with Directors, Officers and Stockholders...... 19
3.18. Accuracy of Information................................... 19
3.19 Allowances for Losses and Real Estate Owned............... 19
3.20 Title to Assets; Leases................................... 20
3.21. Business of Mid-Iowa...................................... 20
3.22. Tax Matters............................................... 21
Page No.
3.23 Certain Information....................................... 21
ARTICLE IV............................................................... 21
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL....................... 21
4.1. Corporate Organization.................................... 21
4.2. Authorization............................................. 21
4.3. No Violation.............................................. 22
4.4. Consents and Approvals.................................... 22
4.5. Information Supplied for Inclusion in the Company
Proxy Statement........................................... 22
4.6. Accuracy of Information................................... 22
4.7. Regulatory Approvals and No Adverse Change................ 22
ARTICLE V................................................................ 23
COVENANTS OF FIRST FEDERAL............................................ 23
5.1. Affirmative Covenants..................................... 23
5.2. Negative Covenants........................................ 23
5.3. Breaches.................................................. 23
5.4. Filing of Applications.................................... 23
5.5. Supplement to First Federal Disclosure Schedule........... 24
5.6. Expenses.................................................. 24
ARTICLE VI............................................................... 24
COVENANTS OF THE COMPANY AND MID-IOWA................................. 24
6.1. Affirmative Covenants..................................... 24
6.2. Negative Covenants........................................ 25
6.3. Report to First Federal................................... 28
6.4. Breaches.................................................. 28
6.5. Supplement to Disclosure Schedule......................... 28
6.6. Consents and Approvals.................................... 28
6.7. Expenses.................................................. 28
ARTICLE VII.............................................................. 29
ADDITIONAL AGREEMENTS................................................. 29
7.1. Company Shareholders' Meeting............................. 29
7.2. Proxy Statement for Company Shareholders' Meeting......... 29
7.3. Cooperation; Regulatory Approvals......................... 29
7.4. Reports................................................... 30
7.5. Brokers or Finders........................................ 30
7.6. Additional Agreements; Reasonable Efforts................. 30
7.7. Release of Information.................................... 30
7.8. Advisory Directors........................................ 31
7.9. Access to Properties and Records; Confidentiality......... 31
7.10. Certain Policies.......................................... 32
7.11. Employee Benefit Plans; Employment Arrangements. ........ 32
7.12. D&O Indemnification and Insurance......................... 33
Page No.
7.13 Conversion And Offering................................... 34
ARTICLE VIII............................................................. 35
CONDITIONS TO THE OBLIGATIONS OF FIRST FEDERAL........................ 35
8.1. No Material Adverse Change................................ 35
8.2. Representations and Warranties............................ 35
8.3. Performance and Compliance................................ 35
8.4. No Proceeding or Litigation............................... 35
8.5. Consents Under Agreements................................. 36
8.6. No Amendments to Resolutions.............................. 36
8.7. Certificate of Mid-Iowa Officers.......................... 36
8.8. Corporate Proceedings..................................... 36
8.9. Legal Opinion............................................. 36
8.10. Closing Book Value........................................ 36
8.11. Conversion................................................ 36
8.12 Non-Competition Agreements................................ 37
ARTICLE IX............................................................... 37
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND MID-IOWA............. 37
9.1. Representations and Warranties............................ 37
9.2. Performance and Compliance................................ 37
9.3 Corporate Proceedings..................................... 37
9.4. Certificate of First Federal Officers..................... 37
9.5. Legal Opinion............................................. 37
9.6. Opinion of Financial Advisor.............................. 37
ARTICLE X................................................................ 38
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES.......................... 38
10.1. Governmental Approvals.................................... 38
10.2. No Injunctions or Restraints.............................. 38
10.3. Stockholder Approval...................................... 38
10.4 Corporate Proceedings..................................... 38
ARTICLE XI............................................................... 39
TERMINATION........................................................... 39
11.1. Reasons for Termination................................... 39
11.2. Effect of Termination..................................... 41
ARTICLE XII.............................................................. 41
MISCELLANEOUS......................................................... 41
12.1. Nonsurvival of Representations, Warranties
and Agreements........................................... 41
12.2. Expenses and Termination Fee.............................. 41
12.3. Waivers; Amendments....................................... 42
12.4. Assignment; Parties in Interest........................... 42
12.5. Entire Agreement.......................................... 42
Page No.
12.6. Captions and Counterparts................................... 43
12.7. Certain Definitions......................................... 43
12.8. Enforcement of this Agreement............................... 43
12.9. Governing Law............................................... 44
12.10. Notices..................................................... 44
SCHEDULES
Schedule 2.6
Schedule 3.1(a)
Schedule 3.2(c)
Schedule 3.2(d)
Schedule 3.4
Schedule 3.5
Schedule 3.6
Schedule 3.7
Schedule 3.8(a)
Schedule 3.8(b)
Schedule 3.8(c)
Schedule 3.8(e)
Schedule 3.9
Schedule 3.10
Schedule 3.12(f)
Schedule 3.13
Schedule 3.14
Schedule 3.15
Schedule 3.16
Schedule 3.17
Schedule 3.20(b)
Schedule 3.21(b)
Schedule 6.2(b)
Schedule 7.5
Schedule 7.11(c)
Schedule 7.11(f)
Schedule 7.12
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of August 17, 1998 (the
"Agreement"), is entered into by and among First Federal Bankshares, M.H.C.
("Bancorp"), First Federal Savings Bank of Siouxland ("First Federal"), Mid-Iowa
Financial Corp. (the "Company") and Mid-Iowa Savings Bank, FSB ("Mid-Iowa").
R E C I T A L S:
WHEREAS, First Federal is a federally-chartered stock savings bank
headquartered in Sioux City, Iowa, 53.8% of the issued and outstanding capital
stock of which is owned by Bancorp, a federally-chartered mutual holding
company;
WHEREAS, the Company is a company organized under the laws of the State of
Delaware, is registered with the Office of Thrift Supervision as a unitary
savings and loan holding company, and owns 100% of the issued and outstanding
common stock of Mid-Iowa;
WHEREAS, Mid-Iowa is a federally-chartered savings bank headquartered in
Newton, Iowa;
WHEREAS, the parties desire to provide for First Federal's acquisition of
Mid-Iowa pursuant to the transactions set forth in this Agreement on or after
the Effective Time (as defined in Section 1.3 hereof);
WHEREAS, in connection with the Reorganization, as defined herein, the
outstanding capital stock of the Company will be converted into the right to
receive cash;
WHEREAS, it is intended that First Federal and Mid-Iowa will be merged such
that First Federal will be the surviving bank and that the resulting savings
institution will expand its market area and achieve certain economies of scale
and efficiencies as a result of the Reorganization, as defined herein;
WHEREAS, in connection with the Reorganization, it is intended that Bancorp
will convert from a mutual holding company to a stock holding company (the
"Conversion") and conduct an offering of shares of its common stock in a
subscription and community offering, and in an exchange offering to the existing
public shareholders of First Federal (the "Offering").
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
representations, warranties, and agreements herein contained, and in order to
set forth the conditions upon which the foregoing Reorganization, as defined
herein, will be carried out, the parties, intending to be legally bound, hereby
agree as follows:
ARTICLE I.
THE REORGANIZATION
1.1. The Reorganization. Subject to the terms and conditions of this
Agreement, and in accordance with the provisions of Section 18(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)), as amended (the "Bank Merger Act"),
the Home Owners' Loan Act (the "HOLA"), and the rules and regulations
promulgated thereunder including 12 C.F.R. 563.22 and 574.3(a) (the "Thrift
Regulations"), at the Effective Time, the parties hereby agree that the
following corporate transactions (collectively referred to herein as the
"Reorganization") shall occur substantially concurrently in the order set forth
below in accordance with applicable laws and regulations and the provisions of
this Agreement:
(a) Pursuant to the Agreement of Merger, attached hereto as Exhibit A,
among First Federal, the Company, and a to-be-formed Delaware corporation
which is to be wholly owned by First Federal, such to-be-formed corporation
shall be merged with and into the Company (the "Company Merger") and, in
connection therewith, and subject to the rights of dissenting stockholders
which have been asserted and duly perfected in accordance with the
provisions of Section 262 of the Delaware General Corporation Law, each
share of common stock, $.01 par value per share, of the Company ("Company
Common Stock") and each option to purchase such stock granted pursuant to
the Company's stock option plans, as identified herein, outstanding
immediately prior to the effective time of the Company Merger shall be
canceled in exchange for the right to receive the cash payments specified
in such Agreement of Merger, with the result that the Company will become a
wholly owned subsidiary of First Federal.
(b) Pursuant to the Plan of Complete Liquidation and Dissolution (the
"Plan"), attached hereto as Exhibit B, the Company shall be liquidated into
First Federal, immediately following consummation of the transactions
referred to in Section 1.1(a) hereof, with the result that First Federal
will acquire all of the assets and liabilities of the Company and the
Company shall cease to exist.
(c) Pursuant to the Agreement of Merger, attached hereto as Exhibit C,
between Mid-Iowa and First Federal, Mid-Iowa shall merge with and into
First Federal (the "Bank Merger") immediately following consummation of the
transactions referred to in Section 1.1(b) hereof, with the result that
First Federal will acquire all of the assets and liabilities of Mid-Iowa
and Mid-Iowa shall cease to exist.
(d) Upon the consummation of the Reorganization, the separate
existence of the Company and Mid-Iowa shall cease, and First Federal shall
continue as the surviving institution in the Bank Merger.
2
1.2 Adoption and Execution and Delivery of Documents providing for the
Reorganization. Promptly following the formation of the to-be-formed corporation
referred to in Section 1.1(a) hereof, the Company shall execute and deliver the
Agreement of Merger included as Exhibit A hereto and First Federal and such
to-be-formed corporation shall execute and deliver such Agreement of Merger, as
applicable. Promptly upon consummation of the transactions contemplated in
Section 1.1(a) hereof, First Federal shall adopt the Plan included as Exhibit B
hereto in its capacity as sole stockholder of the Company. Promptly upon
consummation of the transactions contemplated by Sections 1.1(a) and (b) hereof,
First Federal and Mid-Iowa shall execute and deliver the Agreement of Merger
included as Exhibit C hereto and First Federal shall adopt such agreement in its
capacity as the sole stockholder of Mid-Iowa.
1.3. Effective Time and Closing of the Reorganization. As soon as
practicable after each of the conditions set forth in Articles VIII, IX and X
hereof have been satisfied or waived, First Federal and Mid-Iowa will file, or
cause to be filed, articles of combination with the Office of Thrift Supervision
(the "OTS"), which articles of combination shall be in the form required by and
executed in accordance with the Thrift Regulations. The Bank Merger shall become
effective at the time the articles of combination for such merger are endorsed
by the OTS pursuant to Section 552.13(k) of the Thrift Regulations (the
"Effective Time"). If (a) this Agreement and the transactions contemplated
hereby have been duly approved as required by the stockholders of the Company,
and (b) all relevant conditions of this Agreement have been satisfied or waived
and all applicable waiting periods have expired, the closing (the "Closing")
shall take place within thirty (30) business days thereafter, on such date as
First Federal and Mid-Iowa shall agree, at the executive offices of First
Federal or at such other time and at such other location mutually acceptable to
First Federal and Mid-Iowa. At the Closing, the parties hereto will exchange
certificates, letters and other documents as required hereby and will cause the
filing described in this Section 1.3 with respect to the Bank Merger to be made.
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
1.4 Modification of Structure. Notwithstanding any provision of this
Agreement to the contrary, First Federal may elect, subject to the filing of all
necessary applications and the receipt of all required regulatory approvals, to
modify the structure of the transactions contemplated hereby so long as (i)
there are no material adverse federal income tax consequences to the
stockholders of the Company as a result of such modification, (ii) the
consideration to be paid to holders of Company Common Stock under this Agreement
is not thereby changed in kind or reduced in amount because of such
modification, and (iii) such modification will not be likely to materially delay
or jeopardize receipt of any required regulatory approvals required hereunder,
or otherwise impede the consummation of the transactions contemplated hereby.
3
ARTICLE II.
EFFECT OF THE REORGANIZATION; CERTAIN ACTIONS IN CONNECTION
THEREWITH
2.1. Effect of the Reorganization.
(a) First Federal, as the surviving institution in the Bank Merger,
shall possess all of the properties and rights and be subject to all of the
liabilities and obligations of Mid-Iowa, all as more fully described in the
Merger Agreement and the Thrift Regulations. The name of First Federal, as the
surviving institution in the Bank Merger, will be "First Federal Savings Bank of
Siouxland" or such other name as determined by the Board of Directors of First
Federal, subject to any required regulatory approval.
(b) At the Effective Time, each share of capital stock of the Company
issued and outstanding immediately prior thereto (except shares as to which the
holders have perfected dissenters' rights in accordance with Section 262 of the
Delaware General Corporation Law) shall, by virtue of the Reorganization, be
canceled. No new shares of the capital stock or other securities or obligations
of First Federal shall be issued or be deemed issued with respect to or in
exchange for such canceled shares, and such canceled shares of capital stock
shall not be converted into any shares or other securities or obligations of
First Federal.
(c) The Charter and Bylaws of First Federal, as in effect immediately
prior to the Effective Time, shall be the Charter and Bylaws of First Federal,
as the surviving institution of the Bank Merger.
(d) Except as otherwise contemplated hereby, the directors and
officers of First Federal immediately prior to the Effective Time shall be the
directors and officers of First Federal, as the surviving institution of the
Bank Merger, and shall continue in office until their successors are duly
elected or otherwise duly selected.
(e) All deposit accounts of Mid-Iowa existing immediately prior to the
Bank Merger shall, upon consummation of the Bank Merger, remain insured by the
Federal Deposit Insurance Corporation ("FDIC") to the fullest extent permitted
by law and regulation.
2.2. Effect on Common Stock of the Company and First Federal.
(a) As of the Effective Time, by virtue of the Reorganization and
without any action except as specified herein on the part of the holders of
shares of common stock, $.01 par value, of the Company, each issued and
outstanding share of Company Common Stock (except with respect to the rights of
dissenting shareholders of the Company) shall be converted into the right to
receive $15.00 in cash (the "Purchase Price"), and all outstanding certificates
representing Company Common Stock shall thereafter represent solely the right to
receive the Purchase Price. Any holders of dissenting shares
4
shall be entitled to payment for such shares only to the extent permitted by and
in accordance with the provisions of Section 262 of the Delaware General
Corporation Law, with funds provided by First Federal. The Company shall give
First Federal prompt notice of any written demand for the payment of the fair
value of any shares of Company Common Stock, withdrawals of such demands, and
any other instruments served pursuant to the Delaware General Corporation Law
and received by the Company. The Company shall give First Federal the
opportunity to participate in all negotiations and proceedings with respect to
such demands, and shall not voluntarily make any payment with respect to any
demands for payment of fair value or settle or offer to settle any such demands.
All shares of Company Common Stock which are held in the treasury of the Company
or Mid-Iowa or by any direct or indirect wholly-owned subsidiary of the Company
and any shares of Company Common Stock owned by First Federal or any direct or
indirect wholly-owned subsidiary or parent of First Federal shall be canceled
and no consideration shall be paid or delivered in exchange therefor. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of Company Common Stock by any holder thereof shall thereafter be made
or recognized.
(b) In the event the Closing has not occurred by April 15, 1999, then
the aggregate Purchase Price payable under Section 2.2(a) shall be increased by
$3,700 per day for each day from April 16, 1999 to the date immediately
preceding the Closing (the "Purchase Price Adjustment"). The per share Purchase
Price shall be increased by an amount equal to the Purchase Price adjustment
divided by the number of shares of Company Common Stock outstanding immediately
prior to the Effective Time, rounded to the nearest $.01.
2.3. First Federal to Make Cash Available. At the Effective Time,
First Federal shall make available to the Exchange Agent (as defined in Section
2.4(a) hereof) hereof, the aggregate amount of cash payable pursuant to Section
2.2 hereof.
2.4. Payment of Cash.
(a) At least twenty (20) days before the Effective Time, First Federal
shall designate an exchange agent (the "Exchange Agent") in connection with the
Reorganization. As soon as practicable after the Effective Time, but in no event
later than ten (10) days thereafter, the Exchange Agent shall send a notice and
form of letter of transmittal to each holder of record of Company Common Stock
at the Effective Time advising such stockholder of the effectiveness of the
Reorganization and the procedures for surrendering to the Exchange Agent
outstanding certificates formerly evidencing shares of Company Common Stock.
Each holder of shares of Company Common Stock who thereafter delivers his or her
certificate or certificates representing such shares to the Exchange Agent shall
be mailed a check for an amount, without interest, equal to the number of shares
represented by the certificate or certificates so surrendered to the Exchange
Agent multiplied by the Purchase Price. Upon surrender, each certificate
evidencing Company Common Stock shall be canceled. Until so surrendered, each
outstanding certificate which prior to the Effective Time evidenced shares of
Company Common Stock will be deemed for all purposes (except as otherwise
provided in Section 2.2 hereof) to evidence the right to receive cash, without
interest, equal to number of shares represented by the certificate or
certificates multiplied by the Purchase Price. After the
5
Effective Time, there shall be no further registration of transfers on the
records of the Company of shares of Company Common Stock and, if a certificate
evidencing such shares is presented for transfer, it shall be canceled in
exchange for a check (except as otherwise provided in Section 2.2 hereof) in the
appropriate amount as calculated above. Notwithstanding any provision of this
Agreement, neither the Exchange Agent nor any person, firm or entity shall be
liable or obligated to any former holder of any share of Company Common Stock
(or to anyone claiming through any such former holder) with respect to amounts
to which any such holder would have been entitled as a consequence of the
Reorganization, if such amounts have been paid, or are payable, to any public
official pursuant to any abandoned property, escheat or similar laws.
(b) If delivery of all or any part of the cash to be paid in
connection with the Reorganization is to be paid to a person other than the
person in whose name the certificate surrendered in exchange therefor is
registered, it shall be a condition to such delivery that the certificate
surrendered in exchange shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such a delivery pay to the Exchange
Agent any transfer or other taxes required by reason of such delivery in any
name other than that of the registered holder of the certificate surrendered or
establish to the satisfaction of the Exchange Agent that such tax has been paid
or is not payable.
(c) In the event any certificate for Company Common Stock shall have
been lost, stolen or destroyed, the Exchange Agent shall deliver (except as
otherwise provided in Section 2.2 hereof) in exchange for such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact by the
holder thereof, the cash to be paid in the Reorganization as provided for
herein; provided, however, that First Federal may, in its sole discretion and as
a condition precedent to the delivery thereof, require the owner of such lost,
stolen or destroyed certificate to deliver a bond in such reasonable sum as
First Federal may direct as indemnity against any claim that may be made against
First Federal, the Company, the Exchange Agent or any other party with respect
to the certificate alleged to have been lost, stolen or destroyed.
2.5. Recapitalization or Stock Dividends. If between the date of this
Agreement and the Effective Time, a share of Company Common Stock shall be
changed into a different number of shares of Company Common Stock or a different
class of shares by reason of reclassification, recapitalization, split-up,
exchange of shares or readjustment, or if a stock dividend shall be declared
with a record date within such period, then the Purchase Price shall be
appropriately and proportionately adjusted.
2.6. Company Stock Options. Effective as of the Effective Time, the
Company shall terminate its 1992 and 1997 Stock Option Plans (the "Company
Option Plans") and each of the 200,296 outstanding options (individually, an
"Option") granted under the Company Option Plan shall be converted to the right
to receive the amount by which the Purchase Price exceeds the exercise price per
share of Company Common Stock under such Option. The amount received by each
option holder will be reduced by any applicable taxes that First Federal is
required to withhold. The Company shall use its best efforts to receive, by no
later than the Effective Time, a cancellation agreement from each holder (the
"Cancellation Agreements") acknowledging such cancellation and termination of
the Option
6
as of the Effective Time. In consideration of the foregoing, First Federal or
the Company shall make such cash payment to the holder of each Option at the
later of: (i) the receipt from such holder of a Cancellation Agreement, or (ii)
the Effective Time. The number of shares of Company Common Stock which are
issuable upon exercise of Options and the holders thereof as of the date hereof
are set forth in Schedule 2.6 of the Company Disclosure Schedules which are
attached hereto and incorporated herein (the "Company Disclosure Schedule"). The
terms of each Option shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction with respect to Company Common
Stock subsequent to the date hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF MID-IOWA AND THE COMPANY
Mid-Iowa and the Company hereby represent and warrant to First Federal
as follows:
3.1. Corporate Organization.
(a) The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware. The Company has the full corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed, qualified
or in good standing would not have a material adverse effect on the operations,
assets, or financial condition of the Company and its subsidiaries taken as a
whole. The Company is duly registered with the OTS under the HOLA as a unitary
savings and loan holding company. Other than as set forth in Company Disclosure
Schedule 3.1(a) and shares of capital stock in Mid-Iowa and its subsidiaries, as
identified below (collectively, the "Company Subsidiaries") the Company does not
own or control or have the right to acquire, directly or indirectly, an equity
interest in any corporation, company, association, partnership, joint venture or
other entity.
(b) Mid-Iowa is a stock savings bank organized, validly existing and in
good standing under the laws of the United States, has the full corporate power
and authority to own or lease all of its properties and assets and to carry on
its business as it is now being conducted, and is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the nature of
the business conducted by it or the character or location of the properties and
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good standing would
not have a material adverse effect on the operations, assets, or financial
condition of the Company and the Company Subsidiaries taken as a whole. All
eligible accounts of depositors in Mid-Iowa are insured by the Savings
Association Insurance Fund ("SAIF") administered by the FDIC
7
to the fullest extent permitted by law. Mid-Iowa is a member of the Federal Home
Loan Bank of Des Moines.
(c) The Company has heretofore delivered to First Federal true and complete
copies of the certificate of incorporation, charter, organization certificate or
other chartering instrument and bylaws of the Company, Mid-Iowa, and each
Company Subsidiary in effect on the date hereof. The minute books of the Company
and each Company Subsidiary contain accurate minutes of all meetings and
accurate consents in lieu of meetings of the board of directors (and any
committee thereof) and of the stockholder(s) of the Company and each Company
Subsidiary recorded therein, and as of the Effective Time such minute books will
contain accurate minutes of all such meetings and such consents in lieu of
meetings respectively held or executed prior thereto. These minute books
accurately reflect all transactions referred to in such minutes and consents in
lieu of meetings and disclose all material corporate actions of the
stockholder(s) and boards of directors of the Company and the Company
Subsidiaries and all committees thereof. Except as reflected in such minute
books, there are no minutes of meetings or consents in lieu of meetings of the
boards of directors (or any committee thereof) or of the stockholder(s) of the
Company or any Company Subsidiary.
3.2. Capitalization.
(a) The authorized capital stock of the Company consists of 2,000,000
shares of Company Common Stock, par value $.01 per share and 500,000 shares of
preferred stock, par value $.01 per share. As of the date of this Agreement,
there were issued and outstanding 1,734,548 shares of Company Common Stock and
no shares of preferred stock. On such date, there were no shares of Company
Common Stock held by the Company as treasury stock. All of such issued and
outstanding shares of Company Common Stock are validly issued, fully paid and
nonassessable and not issued in violation of any preemptive rights. As of the
date hereof, no shares of serial preferred stock were issued and outstanding.
Except pursuant to its stock option plans, the Company does not have any
arrangements or commitments obligating it to issue or sell or otherwise dispose
of, or to purchase or redeem, shares of its capital stock or any securities
convertible into or having the right to purchase shares of its capital stock.
There are no agreements, understandings or commitments relating to the right of
the Company to vote or to dispose of shares of the capital stock or other
ownership interests of any subsidiary of the Company.
(b) All of the outstanding shares of capital stock or other ownership
interests of each Company Subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable and are owned, directly or indirectly,
by the Company or Mid-Iowa, as the case may be, free and clear of any liens,
encumbrances, charges, restrictions or rights of third parties of any kind
whatsoever. Mid-Iowa does not have any arrangements or commitments obligating it
to issue or sell or otherwise dispose of, or to purchase or redeem, shares of
its capital stock or any securities convertible into or having the right to
purchase shares of its capital stock. There are no agreements, understandings or
commitments relating to the right or obligation of Mid-Iowa to issue, to vote or
to dispose of shares of its capital stock or the shares of capital stock of any
Company Subsidiary.
8
(c) Schedule 3.2(c) of the Company Disclosure Schedule sets forth a
complete and accurate list of all options to purchase Company Common Stock that
have been granted and which remain unexercised, including the dates of grant,
exercise prices, dates of vesting, dates of termination and shares subject to
option for each grant.
(d) To the best of the Company's knowledge, no person or group (as
that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934
(the "Exchange Act"), other than as set forth at Schedule 3.2(d) of the Company
Disclosure Schedule, is the beneficial owner of more than 5% of the outstanding
Company Common Stock.
3.3. Authorization.
(a) The Company has full corporate power and authority to execute and
deliver this Agreement and the Agreement of Merger included as Exhibit A hereto
and, subject to the consents and approvals of federal and state regulatory
authorities referred to in Section 3.6 hereof and the approval of the
stockholders of the Company, to consummate the Company Merger and to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement and the Agreement of Merger included as Exhibit A hereto and the
consummation of the Reorganization by the Company have been duly authorized by
the board of directors of the Company and, except for the approval of the
stockholders of the Company, no other corporate proceedings on the part of the
Company are necessary to consummate the transactions so contemplated. This
Agreement has been duly and validly executed and delivered by the Company and
constitutes a valid and legally binding obligation of the Company enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of equitable
remedies (including, without limitation, specific performance) is within the
discretion of the appropriate court.
(b) Promptly following formation of the to-be-formed corporation referred
to in Section 1.1(a) hereof, the Agreement of Merger included as Exhibit A
hereto will be duly and validly executed by the Company and, upon such execution
and delivery and the execution and delivery thereof by the other parties
thereto, will constitute a valid and legally binding obligation of the Company
enforceable in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific performance) is
within the discretion of the appropriate court.
3.4. No Violation. None of the execution and delivery of this
Agreement and the agreements included as Exhibits A and B hereto by the Company
and Mid-Iowa, as applicable, nor the consummation by the Company and Mid-Iowa of
the transactions contemplated hereby and thereby and the Plan in accordance with
their respective terms, as applicable, nor compliance by the Company or Mid-Iowa
with any of their respective terms, as applicable, will (i) violate any
provision of the Company's or Mid-Iowa's certificate of incorporation, charter
or other chartering instrument or bylaws, (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
9
applicable to the Company, Mid-Iowa, or any Company Subsidiary or any of their
properties or assets, or (iii) except as set forth at Schedule 3.4, violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default), under, result in the termination or cancellation of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the respective properties or
assets of the Company, Mid-Iowa, or any Company Subsidiary under the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the
Company, Mid-Iowa, or any Company Subsidiary is a party, or by which they or any
of their respective properties or assets may be bound or affected, except, with
respect to clause (iii) above, such as individually or in the aggregate will not
have a material adverse effect on the operations, assets, or financial condition
of the Company and the Company Subsidiaries taken as a whole and which will not
prevent or delay the consummation of the transactions contemplated by this
Agreement.
3.5. Reports and Consolidated Financial Statements. (a) The Company
and Mid-Iowa have previously furnished First Federal with true and complete
copies of (a) all annual reports, quarterly reports, proxy statements, financial
statements, or any other documents or material provided by the Company to its
stockholders since January 1, 1994, (b) all call reports and other reports filed
by Mid-Iowa with the OTS since January 1, 1994, and (c) the audited financial
statements of the Company for the fiscal years ended September 30, 1995, 1996
and 1997. As of their respective dates, such reports and statements did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements and unaudited interim financial
statements of the Company, including any financial statements included in such
reports or otherwise delivered to First Federal (collectively referred to herein
as the "Company Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of the Company or Mid-Iowa, as the case may be, as of the
dates thereof and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments, any other
adjustments described therein, and the absence of certain footnotes. Except as
set forth in Schedule 3.5 to the Company Disclosure Schedule, since September
30, 1997 neither the Company or Mid-Iowa, or any Company Subsidiary, has
suffered a Material Adverse Effect (as that term is defined in Section 12.7
hereof) and the Company is not aware of any event or circumstance, or series of
events and circumstances, which is reasonably likely to result in a Material
Adverse Effect to the Company or Mid-Iowa. The books and records of the Company
and Mid-Iowa have been, and are being, maintained in accordance with applicable
legal and accounting requirements and reflect only actual transactions. Except
and to the extent reflected, disclosed or provided for in the Company Financial
Statements, neither the Company, nor Mid-Iowa nor any Company Subsidiary had, as
of the date of the Company Financial Statements, any liabilities, whether
absolute, accrued, contingent or otherwise, material to the business,
operations, assets or financial condition of the Company.
10
(b) Mid-Iowa has filed all reports, together with any amendments required
to be made with respect thereto, that were required to be filed since January 1,
1994 to the date of this Agreement with (i) the OTS; (ii) the FDIC; and (iii)
any state banking commission or other banking authority, and has paid all fees
and assessments due and payable in connection therewith.
3.6. Consents and Approvals. Other than as set forth in Schedule 3.6
to the Company Disclosure Schedule and other than the receipt of approvals
required by the HOLA, the Bank Merger Act, the Thrift Regulations, and
applicable federal securities and state laws, and the approval of the holders of
Company Common Stock as described in Section 7.1 hereof, no filing or
registration with, no notice to and no permit, authorization, consent or
approval of any third party or any public or governmental body or authority is
necessary for the consummation by the Company or Mid-Iowa of the transactions
contemplated by this Agreement, except where the failure to make such filing or
obtain such permit, authorization, consent or approval will not in the aggregate
have a Material Adverse Effect. The Company knows of no reason (including those
relating to fair lending laws or other laws relating to discrimination,
including, without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure
Act, and anti-trust or consumer disclosure laws and regulations) why the
regulatory approvals should not be obtained, and is aware of no reason to
believe that such approvals would include any term, condition or requirement
that, individually or in the aggregate, would have a Material Adverse Effect on
the results, business, operations, assets, or financial condition of the
Company.
3.7. Absence of Certain Changes. Since September 30, 1997, and except
as otherwise permitted by this Agreement, neither the Company, Mid-Iowa or any
Company Subsidiary has, except as set forth in Schedule 3.7 to the Company
Disclosure Schedule, (a) issued or sold any corporate debt securities; (b)
granted any option for the purchase of its capital stock; (c) declared or set
aside or paid any dividend or other distribution in respect of its capital
stock; (d) incurred any material obligation or liability (absolute or
contingent), except obligations or liabilities incurred in the ordinary course
of business consistent with past practices; (e) mortgaged, pledged or subjected
to lien or encumbrance (other than statutory liens for taxes not yet delinquent
and landlord liens) any of its material assets or properties except pledges to
secure government or other deposits and in connection with repurchase or reverse
repurchase agreements; (f) discharged or satisfied any material lien or
encumbrance or paid any obligation or liability (absolute or contingent), other
than current liabilities included in the Company's consolidated balance sheet as
of September 30, 1997, and current liabilities incurred since the date thereof
in the ordinary course of business consistent with past practices; (g) sold,
exchanged or otherwise disposed of any of its material capital assets other than
in the ordinary course of business consistent with past practices; (h) made any
wage or salary increase or entered into or modified any employment contract with
any officer or salaried employee or instituted any employee welfare, bonus,
stock option, profit sharing, retirement or similar plan or arrangement, whether
tax-qualified or non tax-qualified (other than salary increases reflected in the
salary schedule set forth at Schedule 3.7); (i) suffered any damage, destruction
or loss, whether or not covered by insurance, materially and adversely affecting
its business, property or assets or waived any rights of value that are material
in the aggregate, considering its business taken as a whole; (j) except in the
ordinary course of business consistent with past practices, entered, or agreed
to enter, into any agreement or
11
arrangement granting any preferential right to purchase any of its assets,
properties or rights or requiring the consent of any party to the transfer or
assignment of any such assets, properties or rights; (k) entered into any
material transaction outside the ordinary course of its business consistent with
past practices, except as expressly contemplated by this Agreement; or (1)
except in the ordinary course of business consistent with past practices or as
reflected in the Company Financial Statements, sold or otherwise disposed of any
of its material investment securities.
3.8. Employee and Employee Benefits Matters. (a) Schedule 3.8(a) to
the Company Disclosure Schedule lists (i) each pension, profit sharing, stock
bonus, thrift, savings, employee stock ownership or other plan, program or
arrangement, which constitutes an "employee pension plan" within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is maintained by the Company, Mid-Iowa or any Company
Subsidiary or to which the Company, Mid-Iowa or any Company Subsidiary
contributes or is maintained for the benefit of any current or former employee,
officer, director, consultant or agent; (ii) each plan, program or arrangement
for the provision of medical, surgical, or hospital care or benefits, benefits
in the event of sickness, accident, disability, death, unemployment, severance,
vacation, apprenticeship, day care, scholarship, prepaid legal services or other
benefits which constitute an "employee welfare benefit plan" within the meaning
of Section 3(1) of ERISA, which is maintained by the Company, Mid-Iowa or any
Company Subsidiary or to which the Company or any Company Subsidiary contributes
for the benefit of any current or former employee, officer, director, consultant
or agent or dependent of any such person; and (iii) every other retirement or
deferred compensation plan, bonus or incentive compensation plan or arrangement,
stock option plan, stock purchase plan, stock bonus plan or stock grant plan,
severance or vacation pay arrangement, or other fringe benefit plan, program or
arrangement through which the Company, Mid-Iowa or any Company Subsidiary
provides benefits for or on behalf of any current or former employee, officer,
director, consultant or agent. The plans, programs or arrangements described in
this Section 3.8 or listed in Schedule 3.8(a) of the Company Disclosure Schedule
are hereinafter referred to as the "Mid-Iowa Benefit Plans." Mid-Iowa has
delivered or made available to First Federal a true and correct copy of (a) each
Mid-Iowa Benefit Plan, including amendments thereto, (b) the most recent annual
report (Form 5500) filed with the Internal Revenue Service ("IRS") with respect
to each Mid-Iowa Benefit Plan, if applicable, (c) each trust agreement and group
annuity contract, if any, relating to such Mid-Iowa Benefit Plan, (d) the most
recent actuarial report or valuation relating to a Mid-Iowa Benefit Plan subject
to Title IV of ERISA and (e) all rulings and determination letters and any open
requests for rulings or letters that pertain to any Mid-Iowa Benefit Plan.
(b) All of the Mid-Iowa Benefit Plans that are subject to ERISA and
the Internal Revenue Code (the "Code") are in compliance with all applicable
requirements of ERISA and the Code and all other applicable federal and state
laws, including, without limitation, the reporting and disclosure requirements
of Part I of Title I of ERISA. Each of the Mid-Iowa Benefit Plans that is
intended to be a pension, profit sharing, stock bonus, thrift, savings or
employee stock ownership plan that is qualified under Section 401(a) of the Code
satisfies the applicable requirements of such provision and there exist no
circumstances that would adversely affect the qualified status of any such plan
under that section, except with respect to any required retroactive amendment
for which the remedial
12
amendment period has not yet expired. Except as set forth in Schedule 3.8(b) to
the Company Disclosure Schedule, there is no pending or, to the best knowledge
of Mid-Iowa, threatened litigation, claim, action, governmental proceeding or
investigation against or relating to any Mid-Iowa Benefit Plan which could give
rise to any material liability, and there is no reasonable basis for any
material litigation, claims, actions or proceedings against any such Mid-Iowa
Benefit Plan, and there are not any facts that could give rise to any material
liability in the event of such litigation, claim, action, investigation, or
proceeding. No Mid-Iowa Benefit Plan (or Mid-Iowa Benefit Plan fiduciary) has
engaged in a non-exempt "Prohibited Transaction" (as defined in Section 406 of
ERISA and Section 4975(c) of the Code) since the date on which said sections
became applicable to such plan. There have been no acts or omissions by the
Company, Mid-Iowa or any Company Subsidiary that have given rise to any fines,
penalties, taxes or related charges under Sections 502(c), 502(i) or 4071 of
ERISA or Chapter 43 of the Code, or that may give rise to any material fines,
penalties, taxes or related damages under such laws for which the Company,
Mid-Iowa or any Company Subsidiary may be liable. No liability under Title IV of
ERISA has been incurred by the Company, Mid-Iowa, any Company Subsidiary, any
former Affiliate (as such term is defined in Section 12.7 hereof) of the
Company, Mid-Iowa or the Mid-Iowa Benefit Plans since the effective date of
ERISA that has not been satisfied in full, and no condition exists that presents
a material risk of incurring a liability under such Title, other than liability
for premiums due the Pension Benefit Guaranty Corporation ("PBGC"), which
payments have been made or will be made when due. With respect to each of the
Mid-Iowa Benefit Plans which is subject to Title IV of ERISA, the present value
of accrued benefits under such plan or plans, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared by such plan's actuary with respect to such plan, did not, as of its
latest valuation date, exceed the then current value of the assets of such plan
allocable to such accrued benefits and Mid-Iowa is not aware of any facts or
circumstances that would materially change the funded status of any such ERISA
plan. None of the Mid-Iowa Benefit Plans is a "multiemployer pension plan" as
such term is defined in section 3(37) of ERISA. None of the Company, Mid-Iowa or
any Company Subsidiary has participated in or agreed to participate in a
multiemployer plan as defined in Section 3(37) of ERISA. Except as listed on
Schedule 3.8(b) to the Company Disclosure Schedule, no employee of the Company,
Mid-Iowa or any Company Subsidiary will be entitled to any additional benefits
or any acceleration of the time of payment or vesting of any benefits under any
Mid-Iowa Benefit Plan as a result of the transactions contemplated by this
Agreement. Other than current or contingent liabilities previously disclosed on
Schedule 3.8(b) to the Company Disclosure Schedule, neither the Company,
Mid-Iowa or any Company Subsidiary or any Mid-Iowa Benefit Plan will have any
material current or contingent liability with respect to any plan. The funding
under each Mid-Iowa Benefit Plan which is an "employee welfare benefit plan" as
defined in Section 3(1) of ERISA does not exceed the limitations under Section
419A(b) or 419A(c) of the Code. All group health plans of the Company, Mid-Iowa
and any Company Subsidiary, including any plans of current and former Affiliates
of the Company, Mid-Iowa or any Company Subsidiary that must be taken into
account under Section 4980B of the Code or Section 601 of ERISA or the
requirements of any similar state law regarding insurance continuation, have
been operated in material compliance with the group health plan continuation
coverage requirements of Section 4980B of the Code and Section 601 of ERISA to
the extent such requirements are applicable. All payments due from any Mid-Iowa
Benefit Plan (or from the Company, Mid-Iowa or any Company Subsidiary with
respect to any Mid-Iowa Benefit Plan) have been made, and all amounts properly
13
accrued to date as liabilities of the Company, Mid-Iowa or any Company
Subsidiary that have not yet been paid have been properly recorded on the books
of the Company, Mid-Iowa or any Company Subsidiary.
(c) Except in all cases as set forth on Schedule 3.8(c), none of
Company, Mid-Iowa or any Company Subsidiary is a party to any employment
contract, management or consulting agreement not terminable at the option of
Company, Mid- Iowa or said Company Subsidiary without liability.
(d) No amounts payable under the Mid-Iowa Benefit Plans, or any
employment, severance or termination agreement between or among the Company,
Mid-Iowa, any Company Subsidiary and any employee, officer or shareholder will
fail to be deductible for federal income tax purposes by virtue of section 280G
of the Code. No compensation payable by the Company, Mid-Iowa or any Company
Subsidiary to any of their employees under any existing contract, plan or other
employment arrangement (including by reason of the transactions contemplated
hereby) will be subject to disallowance under section 162(m) of the Code.
(e) Schedule 3.8(e) identifies each corporate owned life insurance
policy, including any key man insurance policy and policy insuring the life of
any director or employee of the Company, Mid-Iowa, or any Company Subsidiary,
and indicates for each such policy, the face amount of coverage, cash surrender
value, if any, and annual premiums.
3.9. Litigation. Except as set forth in Schedule 3.9 to the Company
Disclosure Schedule, no claims have been asserted and no relief has been sought
against the Company, Mid-Iowa or any Company Subsidiary in any pending
litigation or governmental proceedings or otherwise that would be reasonably
expected to result in damages or other relief which would have a Material
Adverse Effect on the Company and Mid-Iowa, taken as a whole. To the best
knowledge of the Company and Mid-Iowa, there are no circumstances, conditions,
events or arrangements, contractual or otherwise, which may hereafter give rise
to any proceedings, claims, actions or government investigations involving the
Company, Mid-Iowa or any Company Subsidiary that would reasonably be expected to
result in damages or other relief that would have a Material Adverse Effect,
nor, to the knowledge of the Company and Mid-Iowa, are any such proceedings,
claims, actions or government investigations threatened. Except as set forth in
Schedule 3.9 to the Company Disclosure Schedule, neither the Company, Mid-Iowa
or any Company Subsidiary is a party to any order, judgment or decree that would
reasonably be expected to have a Material Adverse Effect on the Company and
Mid-Iowa, taken as a whole, and neither the Company, Mid-Iowa or any Company
Subsidiary (a) is the subject of any cease and desist order, or other formal or
informal enforcement action by any regulatory authority or (b) has made any
commitment to or entered into any agreement with any regulatory authority that
restricts or adversely affects its operations or financial condition.
3.10. Tax Matters. The Company, Mid-Iowa and the Company Subsidiaries
have timely filed (inclusive of applicable extension periods) with the
appropriate governmental agencies all
00
xxxxxxxx xxxxxxx, xxxxx and local income, employment, franchise, excise, sales,
use, real and personal property and other tax returns and reports (including
information returns and reports) that are required to be filed, and neither the
Company, Mid-Iowa or any Company Subsidiary is materially delinquent in the
payment of any taxes shown on such returns or reports or on any assessments for
any such taxes received by the Company, Mid-Iowa or any Company Subsidiary.
There are included in the Company Financial Statements adequate reserves for the
payment of all accrued but unpaid federal, state and local taxes of the Company,
Mid-Iowa and each Company Subsidiary, including interest and penalties, whether
or not disputed for such fiscal years as reflected therein and all fiscal years
prior thereto. Neither the Company, Mid-Iowa or any Company Subsidiary has
executed or filed with the Internal Revenue Service ("IRS") or any state tax
authority any agreement extending the period for assessment and collection of
any federal or state tax, nor is the Company, Mid-Iowa or any Company Subsidiary
a party to any action or proceeding by any governmental authority for assessment
or collection of taxes, except tax liens or levies against customers of any
Company Subsidiary. There is no outstanding material assessment or claim for
collection of taxes against the Company, Mid-Iowa or any Company Subsidiary.
Except as set forth in Schedule 3.10 to the Company Disclosure Schedule, the
federal income tax returns of the Company, Mid-Iowa and each Company Subsidiary
have been examined by the IRS (or are closed to examination due to the
expiration of the applicable statute of limitations) and no deficiencies were
asserted as a result of such examinations that have not been resolved and paid
in full or for which adequate reserves or accruals established in accordance
with generally accepted accounting principles have been taken with respect
thereto.
Neither the Company, Mid-Iowa or any Company Subsidiary has, during
the past five (5) years, except as disclosed in Schedule 3.10 to the Company
Disclosure Schedule, received any notice of deficiency, proposed deficiency or
assessment from the IRS or any other governmental agency, with respect to any
federal, state, county or local taxes. No federal or state tax return of the
Company, Mid-Iowa or any Company Subsidiary is currently the subject of any
audit by the IRS or any other governmental agency. During the past five (5)
years, no material deficiencies have been asserted in connection with the
federal and state income tax returns of each of the Company, Mid-Iowa and the
Company Subsidiaries and the Company has no reason to believe that any material
deficiency would be asserted relating thereto. Except as disclosed in Schedule
3.10 to the Company Disclosure Schedule, neither the Company, Mid-Iowa or any
Company Subsidiary is a party to any agreement providing for allocation or
sharing of taxes. Neither the Company, Mid-Iowa or any Company Subsidiary has
ever been a member of an "affiliated group of corporations" (within the meaning
of Section 1504(a) of the Code) filing consolidated returns, other than the
affiliated group of which the Company is or was the common parent.
3.11. Information in the Company Proxy Statement. The Company
represents and warrants that the Company Proxy Statement (as defined in Section
7.2 hereof) will not, either at the time it is mailed to the stockholders of the
Company in connection with the Company Shareholders' Meeting (as defined in
Section 7.1 hereof) or at the time of the Company Shareholders' Meeting, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading; provided,
however, that none of the representations and warranties in this Section
15
3.11 shall apply to statements in or omissions from the Company Proxy
Statement made in reliance upon and in conformity with information about or
furnished by Bancorp or First Federal for use in the Company Proxy Statement.
3.12. Environmental Matters. For purposes of this Section 3.12, the
following terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization,
approval, consent, order, judgment, decree, injunction or agreement with
any governmental entity relating to (1) the protection, preservation or
restoration of the environment (including, without limitation, air,
water vapor, surface water, groundwater, drinking water supply, surface
soil, subsurface soil, plant and animal life or any other natural
resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production,
release or disposal of Materials of Environmental Concern. The term
Environmental Law includes without limitation (1) the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42
U.S.C. Section 9601, et seq; the Resource Conservation and Recovery Act,
as amended, 42 U.S.C. Section 6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. Section 7401, et seq; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251, et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq; the
Emergency Planning and Community Right to Know Act, 42 U.S.C. Section
11001, et seq; the Safe Drinking Water Act, 42 U.S.C. Section 300f, et
seq; and all comparable state and local laws, and (2) any common law
(including without limitation common law that may impose strict
liability) that may impose liability or obligations for injuries or
damages due to, or threatened as a result of, the presence of or
exposure to any Materials of Environmental Concern.
"Environmental Claim" means any written notice from any governmental
authority or third party alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on, or resulting from
the presence, or release into the environment, of any Materials of
Environmental Concern.
"Materials of Environmental Concern" means pollutants, contaminants,
wastes, toxic substances, petroleum and petroleum products and any other
materials regulated under Environmental Laws.
"Loan Portfolio Properties and Other Properties Owned" means those
properties owned, leased or operated by the Company, Mid-Iowa or any
Company Subsidiary, including those properties serving as collateral for
any loans made and retained by Mid-Iowa or any Company Subsidiary or for
which Mid-Iowa or any Company Subsidiary serves in a trust relationship for
the loans retained in portfolio.
(a) To the knowledge of the Company and Mid-Iowa and each Company
Subsidiary, the Company, Mid-Iowa and each Company Subsidiary is in compliance
with all Environmental Laws, except for any violations of any Environmental Law
which would not, singly or in the aggregate, have a material adverse effect on
the operations, assets, or financial condition of the Company and the
16
Company Subsidiaries taken as a whole. Neither the Company, Mid-Iowa or any
Company Subsidiary has received any communication alleging that the Company,
Mid-Iowa or any Company Subsidiary is not in such compliance and, to the
knowledge of the Company and Mid-Iowa, there are no present circumstances that
would prevent or interfere with the continuation of such compliance.
(b) To the knowledge of the Company and Mid-Iowa and each Company
Subsidiary, neither the Company, Mid-Iowa or any Company Subsidiary has been or
is in violation of or liable under any Environmental Law, except any such
violations or liabilities that would not singly or in the aggregate have a
material adverse effect on the business, operations, assets or financial
condition of the Company and the Company Subsidiaries taken as a whole.
(c) To the knowledge of the Company, Mid-Iowa and each Company
Subsidiary, none of the Loan Portfolio Properties and Other Properties Owned by
them has been or is in violation of or liable under any Environmental Law,
except any such violations or liabilities that singly or in the aggregate would
not have a material adverse effect on the business, operations, assets or
financial condition of the Company and the Company Subsidiaries taken as a
whole.
(d) To the knowledge of the Company, Mid-Iowa and each Company
Subsidiary, there are no actions, suits, demands, notices, claims,
investigations or proceedings pending or threatened relating to the liability of
the Loan Portfolio Properties and Other Properties Owned under any Environmental
Law, including without limitation any notices, demand letters or requests for
information from any federal or state environmental agency relating to any such
liabilities under or violations of Environmental Law, except such which would
not have or result in a material adverse effect on the business, operations,
assets or financial condition of the Company and the Company Subsidiaries taken
as a whole.
(e) To the knowledge of the Company, Mid-Iowa and each Company
Subsidiary, there are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis of any
Environmental Claim or other claim or action or governmental investigation that
could result in the imposition of any liability arising under any Environmental
Law against the Company, Mid-Iowa or any Company Subsidiary or against any
person or entity whose liability for any Environmental Claim the Company,
Mid-Iowa or any Company Subsidiary has or may have retained or assumed either
contractually or by operation of law, except such which would not have a
material adverse effect on the operations, assets, or financial condition of the
Company and the Company Subsidiaries taken as a whole.
(f) The Company has set forth on Schedule 3.12(f) any environmental
studies conducted by it, Mid-Iowa or any Company Subsidiary during the past five
years with respect to any properties owned by it as of the date hereof.
3.13. Insurance. Mid-Iowa or the Company has delivered to First
Federal as part of Schedule 3.13 to the Company Disclosure Schedule true,
accurate and complete copies of all insurance policies and fidelity bonds of the
Company, Mid-Iowa and the Company Subsidiaries. Each such
17
policy is in full force and effect, with all premiums due thereon on or prior to
the Closing Date having been paid as and when due. The Company, Mid-Iowa and the
Company Subsidiaries have not been notified that their fidelity or insurance
coverage will not be renewed by their carrier(s) on substantially the same terms
as their existing coverage. All such policies (i) are sufficient for compliance
by the Company, Mid-Iowa and each Company Subsidiary with all requirements of
law and all agreements to which the Company, Mid-Iowa or any Company Subsidiary
is a party, and (ii) will not, due to action or inaction by the Company or
Mid-Iowa, terminate or lapse prior to the Effective Time without similar
policies being obtained that would continue until the Effective Time.
3.14. Compliance with Laws and Orders. Except as set forth in Schedule
3.14 to the Company Disclosure Schedule, neither the Company, Mid-Iowa or any
Company Subsidiary has received notice of any violation or alleged material
violation of, or, to the knowledge of the Company or Mid-Iowa, is subject to any
liability (whether accrued, absolute, contingent, direct or indirect) for past
or continuing material violations of, any law, statute or regulation. Neither
the Company, Mid-Iowa or any Company Subsidiary is in default under, and no
event has occurred that, with the lapse of time or the giving of notice by a
third party or both, could result in a default under the terms of any judgment,
decree, order, writ, rule or regulation of any governmental authority or court,
whether federal, state or local and whether at law or in equity, where the
failure to be in full compliance would reasonably be expected to result alone or
in the aggregate in damages, which would be reasonably likely to have a Material
Adverse Effect.
3.15. Governmental Regulation. Each of the Company, Mid-Iowa and the
Company Subsidiaries holds all material licenses, certificates, permits,
franchises and rights from all appropriate federal, state and other public
authorities necessary for the conduct of its business; and, between the date
hereof and the Closing Date, the Company and Mid-Iowa will, and the Company will
cause each Company Subsidiary to maintain all such licenses, certificates,
permits, franchises and rights in effect. Except as set forth in Schedule 3.15
to the Company Disclosure Schedule, neither the Company, Mid-Iowa or any Company
Subsidiary is a party or subject to any agreements, directives, orders or
similar arrangements between or involving the Company, Mid-Iowa or any Company
Subsidiary and any federal savings institution regulatory authority.
3.16. Contracts and Commitments. Except as set forth in Schedule 3.16
to the Company Disclosure Schedule, neither the Company, Mid-Iowa or any Company
Subsidiary is a party to or bound by any (a) material lease or license with
respect to any property, real or personal; (b) material contract or commitment
for capital expenditures; (c) material contract or commitment for total expenses
for the purchase of materials, supplies or for the performance of services by
third parties for a period of more than 60 days from the date of this Agreement;
(d) material contract or option for the purchase or sale of any real or personal
property other than in the ordinary course of business; (e) agreement,
arrangement or understanding relating to the employment, election, retention in
office or severance of any present or former director or officer of the Company,
Mid-Iowa or any Company Subsidiary; or (f) interest-rate swaps, caps, floors,
and option agreements, or other similar interest rate risk management
agreements. To their knowledge, the Company, Mid-Iowa and the Company
Subsidiaries have performed in all material respects all obligations required to
be performed by them
18
to date and are not in default under, and no event has occurred which, with the
lapse of time or action by a third party or both, could result in a default
resulting in material damages or other material default under any outstanding
mortgage, lease, contract, commitment or agreement to which the Company,
Mid-Iowa or any Company Subsidiary is a party or by which the Company, Mid-Iowa
or any Company Subsidiary is bound or under any provision of their respective
charters or bylaws. Each such outstanding material mortgage, lease, contract,
commitment or agreement is a valid and legally binding obligation of the
Company, Mid-Iowa or the Company Subsidiary subject to (x) all applicable
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors rights generally or the rights of creditors of savings
institutions the accounts of which are insured by the FDIC, and (y) the
application of equitable principles if equitable remedies are sought.
3.17. Agreements with Directors, Officers and Stockholders. Except as
set forth in Schedule 3.17 to the Company Disclosure Schedule, no director,
executive officer, or beneficial owner of five percent (5.0%) or more of the
outstanding capital stock of the Company or any associate of any such person
(hereinafter sometimes referred to as a "Company Principal") (a) is or has
during the period subsequent to September 30, 1997, been a party (other than as
a depositor) to any transaction with the Company or Mid-Iowa, whether as a
borrower or otherwise, that (i) was made other than in the ordinary course of
business, (ii) was made on other than substantially the same terms, including
interest rate and collateral, as those prevailing at the time for comparable
transactions with other persons, or (iii) involves more than the normal risk of
collectability or presents other unfavorable features; or (b) is a party to any
material loan or loan commitment, whether written or oral. Except as disclosed
in Schedule 3.17 to the Company Disclosure Schedule, no director, executive
officer (or any associate of such person) and, to the knowledge of the Company,
no beneficial owner of five percent (5.0%) or more of the outstanding capital
stock of the Company or any associate of such person holds any position with or
owns more than five percent (5.0%) of the outstanding shares of any class of
voting stock of any depository organization, or holding company therefor, other
than the Company. For the purposes of this Section 3.17, the term "depository
organization" means a commercial bank (including a private bank), a savings
bank, a trust company, a savings and loan association, a homestead association,
a cooperative bank, an industrial bank, a credit union, or a depository holding
company.
3.18. Accuracy of Information. The statements made by the Company and
Mid-Iowa in this Agreement and in any other written documents executed and/or
delivered by or on behalf of the Company or Mid-Iowa pursuant to the terms of
this Agreement are true and correct in all material respects. The statements
contained in such other documents specifically referred to in this Agreement
will be deemed to constitute representations and warranties of the Company and
Mid-Iowa under this Agreement to the same extent as if set forth herein in full.
3.19 Allowances for Losses and Real Estate Owned. Each of the
allowance for loan losses, and the reserve for losses on Real Estate Owned
reflected on the consolidated balance sheets included in the Company's Financial
Statements referred to in Section 3.5 hereof is, or will be in the case of
subsequently delivered Company Financial Statements, as the case may be,
adequate in all material respects as of their respective dates under the
requirements of generally accepted accounting
19
principles to provide for reasonably anticipated losses on outstanding loans net
of recoveries and foreclosed real estate, respectively.
3.20 Title to Assets; Leases
(a) Except for (i) liens and encumbrances specifically disclosed in
any of the Company Financial Statements referred to in Section 3.5 hereof, (ii)
landlords' or statutory liens or other liens incurred in the ordinary course of
business and not securing indebtedness for borrowed money and not yet
delinquent, and (iii) liens and encumbrances which are not material in amount
and do not materially impair the value of any property subject thereto or the
use of such property for the purposes for which it is presently used or intended
to be used, the Company, Mid-Iowa and each Company Subsidiary has good and
marketable title, free and clear of all security interests, encumbrances, trust
agreements, liens or other adverse claims, to all its assets and property, real
and personal, reflected in the Company Financial Statements referred to in
Section 3.5 hereof or acquired thereafter, which includes all property and
assets used by the Company, Mid-Iowa and each Company Subsidiary that are
material to the conduct of their respective businesses, except for assets and
property disposed of in the ordinary course of business after September 30,
1997.
(b) The Company, Mid-Iowa and each Company Subsidiary as lessee has
the right under valid and existing leases to occupy, use, and possess all
property leased by it in all material respects as presently occupied, used, and
possessed by the Company, Mid-Iowa or any Company Subsidiary and such leases
will not terminate or lapse prior to the Effective Time or be affected in any
material respect by consummation of the transactions contemplated hereby.
Schedule 3.20(b) contains an accurate listing of each lease pursuant to which
the Company, Mid-Iowa or any Company Subsidiary acts as lessor or lessee,
including the expiration date and the terms of any renewal options which relate
to the same, as well as a listing of each material real property owned by the
Company, Mid-Iowa or any Company Subsidiary and used in the conduct of its
respective business.
(c) All material real and personal property owned by the Company,
Mid-Iowa or any Company Subsidiary or presently used by any of them are in an
adequate condition (ordinary wear and tear excepted) and are in all material
respects sufficient to carry on the business of the Company, Mid-Iowa and each
Company Subsidiary in the manner conducted currently by them.
3.21. Business of Mid-Iowa. Since September 30, 1997, Mid-Iowa has
conducted its business in the ordinary course. For purposes of the foregoing,
Mid-Iowa has not, since September 30, 1997, controlled expenses through the (i)
elimination of employee benefits; (ii) deferral of routine maintenance of real
property or leased premises; (iii) elimination of reserves where the liability
related to such reserve has remained; (iv) reduction of capital improvements
from previous levels; (v) failure to depreciate capital assets in accordance
with past practice or to eliminate capital assets no longer used in Mid-Iowa's
business; (vi) capitalization of loan production expenses other than in
accordance with SFAS No. 91, or (vii) extraordinary reduction or deferral of
ordinary or necessary expenses.
20
3.22. Tax Matters. Neither the Company or any Company Subsidiary has
taken or agreed to take any action or has any knowledge of any fact or
circumstance that would (i) prevent the transactions contemplated hereby from
qualifying as a reorganization within the meaning of Section 368 of the Code, or
(ii) materially impede or delay receipt of any approval from any regulatory
authority or the consummation of the transactions contemplated by this
Agreement.
3.23 Certain Information. None of the information relating to the
Company, Mid-Iowa or any Company Subsidiary supplied or to be supplied for
inclusion or incorporation by reference in the Prospectus to be prepared by
Bancorp and First Federal as described in Section 7.13 hereof, will, at the time
the Prospectus is mailed to subscribers (and at the time the related
Registration Statement on Form S-1 or, other applicable form, and any amendment
thereto becomes effective under the Securities Act) up to and including the date
of the closing of the offering, contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL
First Federal hereby represents and warrants to the Company and
Mid-Iowa as follows:
4.1. Corporate Organization. First Federal is a stock savings bank
duly organized, validly existing and in good standing under the laws of the
United States. As of the date hereof, Bancorp is a mutual holding company duly
organized, validly existing and in good standing under the laws of the United
States. Upon consummation of the Conversion, Bancorp will become a stock holding
company, duly organized, validly existing and in good standing under the laws of
the state of its incorporation. All eligible accounts issued by First Federal
are insured by the FDIC to the maximum extent permitted under applicable law.
Each of First Federal and Bancorp has all requisite corporate power and
authority to own, operate and lease its properties as presently owned, operated
and leased and to engage in the activities and business now being conducted by
it.
4.2. Authorization. The Board of Directors of First Federal has
approved this Agreement and the transactions contemplated hereby and has
authorized the execution, delivery and performance by First Federal of this
Agreement. No corporate proceeding on the part of First Federal is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby,
and First Federal has full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby subject to the
consents and approvals of federal and state regulatory authorities referred to
in Section 4.4 hereof and the approval of the Conversion by the members of
Bancorp and the stockholders of First Federal. This Agreement has been duly and
validly executed and delivered by First Federal and constitutes the valid and
binding obligation of First Federal, enforceable against it in accordance with
its terms, subject to (a) all applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
(b) the application of equitable principles if equitable remedies are sought.
21
4.3. No Violation. Neither the execution and delivery of this
Agreement or, subject to the receipt of the consents and approvals contemplated
by Section 4.4 hereof and the member and shareholder approvals contemplated
hereby, the consummation of the transactions contemplated herein will, (a)
conflict with, result in the breach of, constitute a violation of, constitute a
default under or accelerate the performance of the terms of any government
regulation, judgment, order or decree of any court or other governmental agency
to which First Federal or Bancorp may be subject, or any contract, agreement or
instrument to which First Federal or Bancorp is a party or by which First
Federal or Bancorp are bound or committed, or the Charter or Bylaws of First
Federal or Bancorp, or any law, or any rule or regulation of any governmental
agency or authority, or (b) constitute an event that with the lapse of time or
action by a third party could result in a default under any of the foregoing, or
(c) result in the creation of any lien, charge or encumbrance upon any of the
assets or properties of First Federal or Bancorp.
4.4. Consents and Approvals. Other than the receipt of approvals
required by the HOLA, the Thrift Regulations, and the Bank Merger Act, in
connection with the Reorganization, and other than the approvals required to
accomplish the Conversion and the Offering from the OTS, the Securities and
Exchange Commission and state securities authorities, no filing or registration
with, no notice to and no permit, authorization, consent or approval of any
public or governmental body or authority is necessary for the consummation by
First Federal of the transactions contemplated by this Agreement. First Federal
knows of no reason (including those relating to fair lending laws or other laws
relating to discrimination, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the
Home Mortgage Disclosure Act, and anti-trust or consumer disclosure laws and
regulations) why the regulatory approvals should not be obtained in a reasonably
timely manner.
4.5. Information Supplied for Inclusion in the Company Proxy
Statement. Any information regarding First Federal, Bancorp or any subsidiary of
First Federal supplied by First Federal or Bancorp to the Company specifically
for inclusion in the Company Proxy Statement (as defined in Section 7.2 hereof)
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
4.6. Accuracy of Information. The statements made by First Federal and
with respect to Bancorp in this Agreement and in any other written documents
executed and/or delivered by or on behalf of Bancorp and First Federal pursuant
to the terms of this Agreement are true and correct in all material respects.
The statements contained in such other documents specifically referred to in
this Agreement will be deemed to constitute representations and warranties of
First Federal under this Agreement to the same extent as if set forth herein in
full.
4.7. Regulatory Approvals and No Adverse Change. First Federal is
aware of no reason that it cannot obtain any of the approvals of regulatory
authorities necessary to consummate the Merger or the Conversion and First
Federal has received no advice or information from any regulatory authority
indicating that such approvals will be denied or are doubtful. There has not
been any adverse
22
change in the business or financial condition, operations, properties or
capitalization of First Federal since the end of its most recently completed
fiscal year that is reasonably likely to have a material adverse effect upon its
ability to consummate the transactions contemplated by this Agreement and as of
the date of this Agreement, no event, occurrence or development of any nature is
existing or, to the knowledge of First Federal, threatened, which would
reasonably be expected to have such an effect on First Federal's ability to
consummate such transactions.
ARTICLE V.
COVENANTS OF FIRST FEDERAL
First Federal hereby agree that from the date of this Agreement until
the Effective Time:
5.1. Affirmative Covenants. As soon as reasonably practicable, First
Federal shall furnish Mid-Iowa with copies of all of First Federal's periodic
reports on Forms 10-K, 10-Q and 8-K, all proxy statements and all call reports
filed with the OTS, or provided to the stockholders of First Federal, subsequent
to the date hereof.
5.2. Negative Covenants. Except as specifically contemplated by this
Agreement, First Federal shall not do, or agree or commit to do, without the
prior written consent of Mid-Iowa any of the following:
(a) take action which would or is reasonably likely to (i) adversely
affect the ability of either First Federal or the Company and Mid-Iowa to
obtain any necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect First Federal's
ability to perform its covenants and agreements under this Agreement; or
(iii) result in any of the conditions to the Reorganization set forth in
Articles IX and X not being satisfied; or
(b) agree in writing or otherwise to do any of the foregoing.
5.3. Breaches. First Federal shall, in the event it becomes aware of
the impending or threatened occurrence of any event or condition which would
cause or constitute a material breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to the Company and use its best efforts to prevent or
promptly remedy the same.
5.4. Filing of Applications. First Federal shall use its best efforts
promptly to and, in any event, no later than December 31, 1998, shall, prepare,
submit, publish and file (a) an application to the OTS pursuant to 12 C.F.R.
Part 574; and (b) any other applications, notices or statements required to be
filed in connection with the transactions contemplated hereby.
23
5.5. Supplement to First Federal Disclosure Schedule. First Federal
will promptly supplement or amend the First Federal Disclosure Schedule with
respect to any matter hereafter arising that, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
the First Federal Disclosure Schedule. No supplement or amendment to the First
Federal Disclosure Schedule will have any effect for the purpose of determining
satisfaction of the condition set forth in Section 9.1 hereof as to the accuracy
of representations made as of the date of this Agreement.
5.6. Expenses. First Federal hereby agrees that if this Agreement or
the transactions contemplated hereby are terminated pursuant to Sections 11.1
(c)(iii) or 11.1 (c)(iv) as a result of a willful breach by First Federal, First
Federal shall promptly (and in any event within ten (10) business days after
such termination) pay all reasonable Expenses of Mid-Iowa in an amount not to
exceed $250,000. For purposes of this Section 5.6, the "Expenses of Mid-Iowa"
shall include all reasonable out-of-pocket expenses of Mid-Iowa (including all
fees and expenses of counsel, accountants, financial advisors, experts and
consultants to Mid-Iowa and its Affiliates) incurred by it or on its behalf in
connection with the consummation of the transactions contemplated by this
Agreement.
ARTICLE VI.
COVENANTS OF THE COMPANY AND MID-IOWA
The Company and Mid-Iowa hereby agree that from the date of this
Agreement until the Effective Time:
6.1. Affirmative Covenants. Unless the prior written consent of First
Federal shall have been obtained (which shall not be unreasonably withheld) and
except as otherwise contemplated herein, the Company and Mid-Iowa will:
(a) operate their business in the ordinary course in accordance with
past business practices;
(b) use their best efforts to (i) preserve intact their business
organization and assets, maintain their rights and franchises, retain the
services of their officers and key employees (except that they shall have
the right to terminate the employment of any officer or key employee in
accordance with established employment procedures) and (ii) maintain their
relationships with customers:
(c) maintain their corporate existence in good standing and file all
required Mid-Iowa Reports (as defined in such Section 12.7(c) hereof);
(d) use their best efforts to maintain and keep their properties in as
good repair and condition as at present, except for ordinary wear and tear;
24
(e) use their best efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that now maintained
by them and, in the event that Mid-Iowa is unable to keep such insurance
and bonds in full force and effect, to provide prompt notice of such
failure to First Federal;
(f) perform all obligations required to be performed by them under all
material contracts, leases, and documents relating to or materially
affecting their assets, properties, and business;
(g) use their best efforts to comply with and perform in all material
respects all obligations and duties imposed upon them by all applicable
laws and regulations; and
(h) as soon as reasonably practicable, furnish First Federal copies of
all of Mid-Iowa's reports and documents provided to Company stockholders or
filed with the OTS subsequent to the date hereof.
6.2. Negative Covenants. Except as specifically contemplated by this
Agreement, from the date hereof until the Effective Time, neither the Company
nor Mid-Iowa shall, or shall any Company Subsidiary be permitted to, without the
prior written consent of First Federal (which shall not be unreasonably
withheld), do any of the following:
(a) incur any material liabilities or material obligations, whether
directly or by way of guaranty, including any obligation for borrowed money
whether or not evidenced by a note, bond, debenture or similar instrument
or enter into or extend any material agreement or lease, except in the
ordinary course of business consistent with past business practices or in
connection with the transactions contemplated and permitted by this
Agreement;
(b) (i) Except as set forth on Schedule 6.2(b) of the Company
Disclosure Schedule, grant any bonus or increase in compensation to its
directors or grant any bonus or any increase in compensation to its
officers and employees, (ii) effect any change in retirement benefits to
any class of employees or officers (unless any such change shall be
required by applicable law) that would increase its retirement benefit
liabilities, (iii) adopt, enter into, amend or modify any Mid-Iowa Benefit
Plan except as required by law, (iv) enter into or amend any employment,
severance or similar agreements or arrangements with any directors or
officers (exclusive of renewals in the ordinary course of business), (v)
make any additional awards under any Mid-Iowa stock bonus plan or Mid-Iowa
stock option plan, or (vi) except as set forth at Schedule 6.2(b) make any
additional contributions to any Mid-Iowa Benefit Plans;
(c) declare or pay any dividend on, or make any other distribution in
respect of, its outstanding shares of capital stock, except for regular,
quarterly cash dividends, paid on normal dividend payment dates, in an
amount no greater than the dividend rate as of the date hereof.
(d) (i) redeem, purchase or otherwise acquire any shares of its
capital stock or any securities or obligations convertible into or
exchangeable for any shares of its capital stock, or any
25
options, warrants, conversion or other rights to acquire any shares of its
capital stock or any such securities or obligations; (ii) merge with or
into any other corporation, savings institution or bank, permit any other
corporation, savings institution or bank to merge into it or consolidate
with any other corporation or bank, or effect any reorganization or
recapitalization; (iii) purchase or otherwise acquire any assets, or shares
of any class of stock, of any corporation, savings institution, bank or
other business; (iv) liquidate, sell, dispose of, or encumber any assets or
acquire any assets, other than in the ordinary course of its business
consistent with past practices; or (v) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for, shares
of its capital stock;
(e) except pursuant to the exercise of outstanding stock options,
issue, deliver, award, grant or sell, or authorize or propose the issuance,
delivery, award, grant or sale of, any shares of its capital stock of any
class (including shares held in treasury), any debt instrument having a
right to vote or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting debt or convertible
securities;
(f) initiate, solicit or encourage, or take any other action to
facilitate, any inquiries or the making of any proposal which constitutes a
Superior Proposal (as defined in Section 7.1 hereof), take any action in
furtherance of such inquiries or to obtain a Superior Proposal, or
negotiate with any person in, or agree to or endorse any Superior Proposal,
or authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, accountant or other representative
retained by it or any Company Subsidiary to take any such action, except
with respect to negotiations regarding, and the endorsement of a Superior
Proposal, as legally required by the fiduciary duties of the Company's
Board of Directors under applicable law and as advised by counsel to the
Company's Board of Directors, and the Company shall promptly notify First
Federal orally and in writing of all of the relevant details relating to
all inquiries and proposals which it may receive relating to any of such
matters;
(g) propose or adopt any amendments to its charter or by-laws, except
such amendments as may be required to consummate the transactions
contemplated by this Agreement;
(h) enter into an agreement in principle with respect to any
acquisition of a material amount of assets or securities or any release or
relinquishment of any material contract rights not in the ordinary course
of business;
(i) except in its fiduciary capacity, purchase any shares of capital
stock of First Federal;
(j) subject to the provisions of Section 7.1 hereof (and provisions of
this Agreement related thereto) regarding a Superior Proposal, willfully
take action which would or is reasonably likely to (i) adversely affect the
ability of either of First Federal, the Company or Mid-Iowa to obtain any
necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect Mid-Iowa's or the
Company's ability to perform its covenants and agreements under
26
this Agreement; or (iii) result in any of the conditions to the
Reorganization set forth in Articles VIII and X not being satisfied;
(k) change in any material respect the lending, investment, deposit,
asset and liability management and other material policies concerning the
business of Mid-Iowa or the Company, unless required by law or regulation
or, with respect to lending or depository activities;
(l) file any applications or make any contract with respect to
branching by Mid-Iowa (whether de novo or by purchase, sale or relocation);
(m) form any new subsidiary or cause or permit a material change in
the activities presently conducted by any Company Subsidiary or make
additional material investments in subsidiaries or enter into or invest in
any partnership, joint venture or other business enterprise;
(n) purchase any derivative securities including CMO or REMIC
products;
(o) purchase any equity securities other than Federal Home Loan Bank
Stock;
(p) discharge or satisfy any lien or encumbrance or pay any material
obligation or liability (absolute or contingent) other than at scheduled
maturity or in the ordinary course of business;
(q) sell or otherwise dispose of any loan, mortgage-backed security or
investment security except in the ordinary course of business consistent
with past practices and policies;
(r) modify or restructure the terms of any loan except in the ordinary
course of business consistent with prudent banking practices and policies;
(s) make any capital expenditures in excess of $25,000 individually or
$50,000 in the aggregate, other than pursuant to binding commitments
existing on the date hereof and other than expenditures necessary to
maintain existing assets in good repair;
(t) change its method of accounting in effect prior to the Effective
Time, except as required by changes in laws or regulations or generally
accepted accounting principles concurred in by its and the Company's
independent certified public accountants, or change any of its methods of
reporting income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax returns for the
Company's last full taxable year, except as required by changes in laws or
regulations;
(u) acquire in any manner whatsoever (other than to realize upon
collateral for a defaulted loan) any business or entity; or
(v) make, renew, increase, extend or purchase any loan secured by
commercial real estate or multifamily real estate, any land acquisition or
development loan, any commercial business
27
loan, or any residential loan in an amount in excess of $300,000, except to
the extent that Mid-Iowa is contractually obligated to do so as of the date
hereof;
(w) fail to keep in full force and effect its insurance and bonds as
now carried;
(x) fail to notify First Federal promptly of its receipt of any
letter, notice or other communication, whether written or oral, from any
regulatory authority advising that it is contemplating issuing, requiring
or requesting any agreement, memoranda, understanding or similar
undertaking, or order, directive, or extraordinary supervisory letter;
(y) agree in writing or otherwise to do any of the foregoing.
6.3. Report to First Federal. The Company and Mid-Iowa will use its
best efforts to keep First Federal fully informed concerning all developments of
which it becomes aware that may have a material effect upon the business, any
properties or condition (either financial or otherwise) of the Company (other
than developments affecting financial institutions generally).
6.4. Breaches. The Company and Mid-Iowa shall, in the event they
become aware of the impending or threatened occurrence of any event or condition
which would cause or constitute a material breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of their representations or agreements contained or referred to
herein, give prompt written notice thereof to First Federal and use their best
efforts to prevent or promptly remedy the same.
6.5. Supplement to Disclosure Schedule. The Company will promptly
supplement or amend the Company Disclosure Schedule with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in the Company Disclosure
Schedule. No supplement or amendment to the Company Disclosure Schedule will
have any effect for the purpose of determining satisfaction of the condition set
forth in Section 8.2 hereof as to the accuracy of representations made as of the
date of this Agreement.
6.6. Consents and Approvals. The Company and Mid-Iowa shall use their
best efforts to assist First Federal in obtaining the consents and approvals
referenced in Section 8.5 hereof.
6.7. Expenses. Mid-Iowa hereby agrees that if this Agreement or the
transactions contemplated hereby are terminated pursuant to Sections 11.1
(b)(iii) or 11.1 (b)(iv) as a result of a willful breach by Mid-Iowa or the
Company, Mid-Iowa shall promptly (and in any event within ten (10) business days
after such termination) pay all reasonable Expenses of First Federal in an
amount not to exceed $250,000. For purposes of this Section 6.7, the "Expenses
of First Federal" shall include all reasonable out-of-pocket expenses of First
Federal (including all fees and expenses of counsel, accountants, financial
advisors, experts and consultants to First Federal and its Affiliates) incurred
by it or on its behalf in connection with the consummation of the transactions
contemplated by this Agreement.
28
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. Company Shareholders' Meeting. The Company shall, as soon as is
reasonably practicable, call and hold a meeting of its stockholders (the
"Company Shareholders' Meeting") to submit for stockholder approval this
Agreement. Subject to receipt of a fairness opinion from Prairie Capital
Services, Inc. updated as of a date within five days of mailing of the Company
Proxy Statement, the Board of Directors of the Company will recommend that
holders of Company Common Stock vote in favor of and approve this Agreement at
the Company Shareholders' Meeting; provided, however, that nothing contained in
this Section 7.1 shall prohibit the Board of Directors of the Company from
failing to recommend approval of the transactions contemplated hereby, if
necessary to comply with its fiduciary duties as determined in consultation with
legal counsel in the context of a Superior Proposal (as hereinafter defined).
For purposes of this Agreement, "Superior Proposal" means a bona fide proposal
to acquire the entire equity interest in the Company or Mid-Iowa or
substantially all of the assets of the Company or Mid-Iowa, which is expressly
conditioned upon the termination of this Agreement and is made by a third party
on terms which a majority of the Board of Directors of the Company determines
pursuant to the exercise of its fiduciary duty after consultation with legal
counsel, to be more favorable (from a financial point of view) to the holders of
Company Common Stock than the Reorganization and for which financing is either
then committed or not a condition precedent to the consummation thereof.
7.2. Proxy Statement for Company Shareholders' Meeting. For the
purposes of holding the Company Shareholders' Meeting, the Company shall prepare
a proxy statement satisfying all requirements under applicable securities laws
(said proxy statement, together with any and all amendments or supplements
thereto, being herein referred to as the "Company Proxy Statement"). First
Federal shall review and comment on the Company Proxy Statement prior to its
distribution to the Company's stockholders.
7.3. Cooperation; Regulatory Approvals. The parties shall cooperate,
and shall cause each of their affiliates and subsidiaries to cooperate, in the
preparation and submission by them, as promptly as reasonably practicable, of
such applications, petitions, and other documents and materials as any of them
may reasonably deem necessary or desirable to the OTS, the FDIC, the Department
of Justice, other regulatory authorities, and any other persons for the purpose
of obtaining any approvals or consents necessary to consummate the transactions
contemplated by this Agreement. Each party will have the right to review and
comment on such applications, petitions and other documents and materials and
shall furnish to the other copies thereof promptly after filing or submission
thereof. At the date hereof, none of the parties is aware of any reason that the
regulatory approvals required to be obtained by it would not be obtained. The
obligation to take action as provided in this Section 7.3 shall not be construed
as including an obligation to accept any terms of or conditions to a consent,
authorization, order or approval of, or any exemption by, any party that are
unduly burdensome as reasonably determined by the Boards of Directors of First
Federal or Mid-Iowa.
29
In the event of a restraining order or injunction which prevents the Closing by
reason of the operation of Section 10.2 hereof, each of the parties hereto shall
use its respective best efforts to cause such order or injunction to be lifted
and the Closing to be consummated as soon as reasonably practicable.
7.4. Reports. Prior to the Effective Time, the Company and Mid-Iowa
shall prepare and file as and when required all Mid-Iowa Reports. Mid-Iowa shall
prepare such Mid-Iowa Reports so that (a) they comply in all material respects
with all of the statutes, rules and regulations enforced or promulgated by the
regulatory authority with which they are filed and do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (b) with
respect to any Mid-Iowa Reports containing Company Financial Statements, the
financial information (i) is prepared in accordance with generally accepted
accounting principles and practices as utilized in the Company Financial
Statements applied on a consistent basis, (ii) presents fairly the consolidated
financial condition of Mid-Iowa at the dates, and the consolidated results of
operations and cash flows for the periods, stated therein and (iii) in the case
of interim fiscal periods, reflects all adjustments, consisting only of normal
recurring items, subject to year-end audit adjustments. All Mid-Iowa Reports
shall be provided to First Federal promptly following the filing of such reports
with the respective regulatory authority.
7.5. Brokers or Finders. Except as set forth on Schedule 7.5, each of
First Federal, the Company and Mid-Iowa represents that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement.
7.6. Additional Agreements; Reasonable Efforts. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of the stockholders of the
Company described in Section 7.1 hereof, including cooperating fully with the
other party. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
First Federal with full title to all properties, assets, rights, approvals,
immunities and franchises of the Company, Mid-Iowa or the Company Subsidiaries,
the proper officers and directors of each party to this Agreement shall take all
such necessary action.
7.7. Release of Information. The Company, Mid-Iowa and First Federal
agree that prior to making any public announcement with respect to the
transactions contemplated by this Agreement, each party will consult with the
other and will use its best efforts either to agree upon the text of the
proposed joint announcement to be made by both parties or to obtain the other's
approval (which approval shall not be unreasonably withheld) of the text of an
announcement to be made solely on behalf of such party. In the event that the
parties do not ultimately agree on the text of any proposed public announcement,
no such disclosure shall be made unless the party seeking to make an
30
announcement is advised by counsel that its failure to do so would be reasonably
likely to constitute a violation of law.
7.8. Advisory Directors. Messrs. Xxxxx X. Xxxxxxx, Xxxx X. Xxxx and
Xxxxxx X. Xxxxxx, each a current director of the Company, shall be entitled to
serve on the Central Iowa Advisory Board to the Board of Directors of First
Federal (the other members of which shall be the current members of the Xxxxxxxx
Advisory Board), for a period of one year following the Effective Time, subject
to reappointment at the sole discretion of First Federal and such Advisory Board
members shall meet monthly during the first year following the Effective Time.
Thereafter, to the extent such Advisory Board is continued, such Advisory Board
members will meet as frequently as requested by the Board of Directors of First
Federal, but no less frequently than quarterly. Such Advisory Board members
shall receive an annual fee of at least $2,000 plus $200 per meeting attended.
7.9. Access to Properties and Records; Confidentiality. (a) Each of
the Company, Mid-Iowa and each Company Subsidiary shall permit First Federal and
its representatives, including financial advisors, reasonable access to its
properties, and shall disclose and make available to them all books, papers and
records relating to the assets, stock ownership, properties, operations,
obligations and liabilities of the Company, Mid-Iowa and each Company
Subsidiary, including, but not limited to, all books of account (including the
general ledger), tax records, minute books of meetings of boards of directors
(and any committees thereof) (except portions thereof relating to this
Agreement, the Reorganization and matters relating thereto, including competing
transactions) and stockholders, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority, accountants'
work papers, litigation files (other than attorney work product or materials
protected by any attorney-client privilege), plans affecting employees, and any
other business activities or prospects in which the Company or Mid-Iowa may have
a reasonable interest. The Company and Mid-Iowa and each Company Subsidiary
shall make their respective officers, employees and agents and authorized
representatives (including counsel and independent public accountants) available
to confer with First Federal and its representatives.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall be treated
as the sole property of the party furnishing the information until consummation
of the transactions contemplated hereby and, if such transactions shall not
occur, the party receiving the information shall, upon request, return to the
party which furnished such information all documents or other materials
containing, reflecting or referring to such information, shall use its best
efforts to keep confidential all such information, and shall not directly or
indirectly use such information for any competitive or other commercial
purposes. The obligation to keep such information confidential shall continue
for one year from the date the proposed transactions are abandoned but shall not
apply to (i) any information which (x) the party receiving the information can
establish by convincing evidence was already in its possession prior to the
disclosure thereof by the party furnishing the information; (y) was then
generally known to the public; or (z) became known to the public through no
fault of the party receiving the information; or (ii) disclosures pursuant to a
legal requirement or in accordance with an order of a court of competent
jurisdiction,
31
provided that the party which is the subject of any such legal requirement or
order shall use its best efforts to give the other party at least ten business
days prior notice thereof.
7.10. Certain Policies. At the request of First Federal, the Company
shall, prior to the Effective Time, (i) establish and take such reserves and
accruals as First Federal shall reasonably request to conform, on a mutually
satisfactory basis, the Company's loan, real estate, accrual and reserve
policies to First Federal's policies and (ii) establish and take such accruals,
reserves and charges in order to implement such policies in respect of severance
costs, write-off or write-down of various assets and other appropriate
accounting adjustments, and to recognize for financial accounting purposes such
expenses incurred in connection with the Reorganization, provided, however, that
Mid-Iowa shall not be obligated to take any such action pursuant to this Section
7.10 unless and until (x) First Federal specifies its request in a writing
delivered to the Company, and acknowledges that all conditions to the
obligations of First Federal to consummate the Reorganization set forth in
Articles VIII and X have been waived (if available) or satisfied and (y) the
Company and Mid-Iowa acknowledge that the conditions to its obligation to
consummate the Reorganization set forth in Articles IX and X have been waived
(if available) or satisfied. The Company and Mid-Iowa shall not be required to
take any such action that is not consistent with generally accepted accounting
principles or any requirement applicable to either of them by any bank
regulatory agency. The representations, warranties and covenants of the Company
and Mid-Iowa contained in this Agreement shall not be deemed to be untrue or
breached in any respect for any purpose as a consequence of any action
undertaken on account of this Section 7.10 and shall not constitute grounds for
termination of this Agreement by First Federal.
7.11. Employee Benefit Plans; Employment Arrangements.
(a) To the extent practicable, First Federal will give consideration
to the retention after the Closing Date of employees of Mid-Iowa in their
current or comparable positions within First Federal as the surviving
institution, subject to the provisions in this Section 7.11 and provided that
this Agreement shall not, except as otherwise provided herein, provide any
contractual right to such employees of such employment. Employees of Mid-Iowa
who continue employment with First Federal on or after the Effective Time (all
such persons are referred to herein as "Continuing Employees") shall be eligible
to participate in such employee benefit plans as may be in effect generally for
employees of First Federal from time to time (the "First Federal Plans"), if
such Continuing Employee shall be eligible or selected for participation
therein. Except as specifically set forth in this Section 7.11 and as otherwise
prohibited by law, Continuing Employees shall be entitled to participate on the
same basis as similarly situated employees of First Federal, except that
Continuing Employees shall be entitled to full credit for each year of prior
service (in which 1,000 hours of service are performed) with Mid-Iowa for
purposes of determining eligibility for participation and vesting, but not for
benefit accruals, in the First Federal Plans, subject to applicable break in
service rules. Notwithstanding the foregoing, First Federal may determine to
continue any of the Mid-Iowa Benefit Plans for Continuing Employees in lieu of
offering participation in one or more First Federal Plans providing similar
benefits (e.g., medical and hospitalization benefits or 401(k) or defined
contribution plan benefits) to terminate any of the Mid-Iowa Benefit Plans or to
merge any such benefit plans with similar First Federal Plans, provided,
however, Mid-Iowa shall have the right on or before the Effective Time (i) to
terminate both its Defined
32
Contribution Plan and Trust and its 401(k) Profit Sharing Plan and Trust
(together, the "Plans and Trusts") as of any date before the Effective Time,
(ii) to apply to the Internal Revenue Service for a determination letter on the
tax-qualified status of the Plans and Trusts on termination and on any
amendments made to them in connection with the termination (provided that any
amendments so made, other than amendments required by law, shall first be
approved by First Federal), and (iii) to distribute the assets of the Plans and
Trusts only after receipt of the aforementioned determination letter.
Notwithstanding anything in this Section 7.11(a) to the contrary, participation
by Continuing Employees in employee benefit plans of First Federal with respect
to which eligibility and participation is at the discretion of the employer,
such as non-qualified deferred compensation plans, stock option plans, stock
bonus plans, restricted stock plans, and other such similar plans, (but not
including employee benefit plans generally available to all full-time employees
of First Federal) shall be discretionary with First Federal. The Company,
Mid-Iowa and any Company Subsidiary agrees to cooperate with First Federal in
implementing any decision made by First Federal with respect to employee benefit
plans and to provide First Federal on or before the Effective Time a schedule of
service credit for prospective Continuing Employees.
(b) With respect to Continuing Employees and dependents covered under
the Iowa Bankers' Group Health Plan maintained by Mid-Iowa, which plan is
concurrently maintained by First Federal, there shall be no waiting period or
preexisting condition exclusions applicable to such persons, amounts previously
paid by such persons towards satisfaction of the required deductible will count
towards satisfaction of the deductible under the plan maintained by First
Federal and the benefits previously received by such persons will count toward
the maximum benefit coverages provided by First Federal.
(c) Following the Effective Time, First Federal shall honor in
accordance with their terms the employment, severance and other compensation
contracts set forth on Schedule 7.11(c) between the Company, any of the Company
Subsidiaries, and any current or former director, officer or employee thereof,
and all provisions for vested benefits or other vested amounts earned or accrued
through the Effective Time under the Company employee benefit plans.
Notwithstanding the foregoing, First Federal or the Company shall be obligated
at the Effective Time to make payments with respect to the separation from
employment in connection with a change of control of the Company under
employment and severance contracts between the Company and its subsidiaries and
Xxxxx Xxxxx and Xxxx Xxxx in the respective amounts of $390,350 and $270,758,
subject to the limitations set forth in Section 3.8(d) hereof.
7.12. D&O Indemnification and Insurance. For a period of four (4)
years following the Effective Time, First Federal shall indemnify the employees,
agents, directors or officers of the Company and Mid-Iowa to the extent they are
indemnified under the Company's Certificate of Incorporation and Bylaws in the
form in effect at the date of this Agreement or arising by operation of law.
First Federal shall use its best efforts to cause the directors and officers
listed in Schedule 7.12 of the Company Disclosure Schedule to be covered under
individual directors' and officers' liability insurance policies, which coverage
is available in the form of tail coverage under the Company's existing
directors' and officers' liability policy for the duration of any applicable
statute of limitations.
33
7.13 Conversion And Offering. Commencing promptly after the date of
this Agreement, Bancorp and First Federal will take all reasonable steps
necessary to effect the Conversion and Offering and Bancorp and First Federal
shall use their best efforts to satisfy the conditions to closing set forth in
Section 8.11. Without limiting the generality of the foregoing, Bancorp shall
cause the following to be done:
(a) Bancorp shall duly call, give notice of, convene and hold a
special meeting of its Board of Directors as soon as practicable for the
purpose of approving the Conversion and Offering.
(b) Bancorp and First Federal will use all reasonable efforts to
prepare and file all required regulatory applications required in
connection with the Conversion and Offering, including, without limitation,
filing applications with the OTS.
(c) Bancorp shall prepare as promptly as practicable, and the Company
shall co-operate in the preparation of, a prospectus (the "Prospectus")
meeting all requirements of applicable federal and state securities and
banking laws and regulations. Bancorp shall incorporate such Prospectus
into a Registration Statement on Form S-1, or other applicable form, ("Form
S-1") satisfying all applicable requirements of the Securities Act of 1933,
and the rules and regulations thereunder. Bancorp shall file the Form S-1
(or other applicable form) with the SEC, and shall use its reasonable best
efforts to have the Form S-1 declared effective under the Securities Act of
1933 as promptly as practicable after such filing.
(d) The Company shall provide Bancorp with any information concerning
it that Bancorp may reasonably request in connection with the Prospectus,
and the Company shall promptly notify Bancorp if at any time it becomes
aware that the Prospectus or the Form S-1 contains any untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading. In such
event, the Company and Bancorp shall cooperate in the preparation of a
supplement or amendment to such Prospectus, which corrects such
misstatement or omission, and shall cause an amended Form S-1 to be filed
with the SEC (if applicable). The Company shall provide to Bancorp a
"comfort" letter from the independent certified public accountants for the
Company, dated as of the date of the Prospectus and updated as of the date
of consummation of the Offering, with respect to certain financial
information regarding the Company, each in form and substance which is
customary in transactions such as the Offering, and shall cause its counsel
to deliver to the placement agent for the Offering such opinions as Bancorp
may reasonably request.
(e) Bancorp shall give the Company and its counsel the opportunity to
review the Prospectus prior to its being filed with the OTS and the SEC,
and shall give the Company and its counsel the opportunity to review all
amendments and supplements to the Prospectus and all responses to requests
for additional information and replies to comments prior to their being
filed with, or sent to, the OTS, and the SEC. Each of Bancorp and the
Company agrees to use all reasonable efforts, after consultation with the
other party hereto, to respond promptly to all such comments of and
requests by the OTS, and the SEC and to cause the Prospectus and all
required amendments and supplements
34
thereto to be mailed to the qualified depositors and other qualified
subsidiaries of First Federal at the earliest practicable time.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF FIRST FEDERAL
The obligations of First Federal under this Agreement to cause the
transactions contemplated herein to be consummated shall be subject to the
satisfaction or written waiver by First Federal of the following conditions:
8.1. No Material Adverse Change. Except as disclosed in Schedule 3.5
to the Company Disclosure Schedule and except for general changes in generally
accepted accounting principles, changes in economic, financial or market
conditions, changes in market interest rates, payments due under any employment
agreements or benefit plans and the transactions contemplated hereby, costs and
expenses relating to this Agreement (including those resulting from actions or
inactions pursuant to the covenants of the Company and Mid-Iowa under this
Agreement) and the transactions contemplated hereby, there shall not have been
any material adverse change in the financial condition, results of operations or
business of the Company, Mid-Iowa, and the Company's Subsidiaries, taken as a
whole, from September 30, 1997 to the Closing Date.
8.2. Representations and Warranties. Each of the representations and
warranties by the Company and Mid-Iowa contained in this Agreement shall be true
and correct in all material respects (or where any statement in a representation
or warranty expressly contains a standard of materiality, such statement shall
be true and correct in all respects taking into consideration the standard of
materiality contained therein) at, or as of, the date of this Agreement and
(except to the extent such representation speaks as of an earlier date) and as
of any date subsequent, until and including the Closing Date (except as
otherwise contemplated or permitted by this Agreement) as though such
representations and warranties were made on and as of said date. Any information
provided by the Company and Mid-Iowa pursuant to Section 6.5 hereof as a
supplement to the Company Disclosure Schedule shall be true and correct in all
material respects as of the date such information is supplied to First Federal.
8.3. Performance and Compliance. The Company and Mid-Iowa shall have
performed or complied in all material respects with all covenants and agreements
required by this Agreement to be performed and satisfied by it on or prior to
the Closing Date.
8.4. No Proceeding or Litigation. On the Closing Date, no suit, action
or proceeding shall be pending or overtly threatened, and no liability or claim
shall have been asserted against the Company, Mid-Iowa or any Company Subsidiary
involving any of the assets, properties, business or operations of the Company,
Mid-Iowa or any Company Subsidiary that would reasonably be expected to have a
Material Adverse Effect.
35
8.5. Consents Under Agreements. First Federal shall have received the
consent or approval of each person or entity whose consent or approval shall be
required in order to permit consummation of the Reorganization and the
Conversion under any loan or credit agreement, note, mortgage, indenture, lease
or other agreement or instrument to which the Company, Mid-Iowa or any Company
Subsidiary is a party or to which its respective property is subject, except
those for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on First
Federal, whether prior to (if applicable) or following the consummation of the
transactions contemplated hereby.
8.6. No Amendments to Resolutions. Neither the Board of Directors of
the Company or Mid-Iowa nor any committee thereof shall have amended, modified,
rescinded or repealed the resolutions adopted by such Board of Directors with
respect to this Agreement or shall have adopted any other resolutions in
connection with this Agreement and the transactions contemplated hereby which
are inconsistent with such resolutions, except resolutions adopted consistent
with the express rights of Mid-Iowa under this Agreement.
8.7. Certificate of Mid-Iowa Officers. The Company shall have
furnished First Federal a certificate, signed by its Chief Executive Officer and
its Chief Financial Officer, dated the Closing Date, to the effect, based on his
knowledge, that the conditions described in Sections 8.1 through 8.6, and
Section 8.8, of this Agreement have been fully satisfied.
8.8. Corporate Proceedings. All action required to be taken by, or on
the part of the Company and Mid-Iowa to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement shall have been duly and validly taken by the
Company and Mid-Iowa.
8.9. Legal Opinion. First Federal shall have received an opinion,
dated the Closing Date, from legal counsel to Mid-Iowa, in the form specified on
Exhibit E.
8.10. Closing Book Value. Immediately prior to the Closing, the total
stockholders' equity account determined in accordance with generally accepted
accounting principles on a basis consistent with the Company Financial
Statements, of the Company shall not be less than $13.5 million, as reasonably
determined by First Federal's independent public accountant, in consultation
with the Company's independent public accountant; provided, however, that for
purposes of calculating total stockholders' equity, the Company's expense
associated with the severance payments due under the employment agreements
between Mid-Iowa and Xxxxx X. Xxxxx and Xxxx Xxxx dated as of October 19, 1992,
will not be counted.
8.11. Conversion. Bancorp and First Federal shall have consummated the
Conversion and the Offering.
36
8.12 Non-Competition Agreement. First Federal shall have received a
duly executed non-competition agreement, in substantially the form heretofore
agreed to between First Federal and the Company, from Xxxxx X. Xxxxx.
ARTICLE IX.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND MID-IOWA
The obligations of the Company and Mid-Iowa under this Agreement to
cause the transactions contemplated herein to be consummated shall be subject to
the satisfaction or written wavier by the Company or Mid-Iowa of the following
conditions:
9.1. Representations and Warranties. Each of the representations and
warranties of First Federal contained in this Agreement shall be true and
correct in all material respects (or where any statement in a representation or
warranty expressly contains a standard of materiality, such statement shall be
true and correct in all respects taking into consideration the standard of
materiality contained therein) at, or as of, the date of this Agreement and
(except to the extent such representation speaks as of an earlier date) and as
of any date subsequent, until and including the Closing Date (except as
otherwise contemplated or permitted by this Agreement) as though such
representations were made on and as of said date. Any information provided by
First Federal pursuant to Section 5.5 hereof as a supplement to the First
Federal Disclosure Schedule shall be true and correct in all material respects
as of the date such information is supplied to the Company or Mid-Iowa.
9.2. Performance and Compliance. First Federal shall have performed or
complied in all material respects with all covenants and agreements required by
this Agreement to be performed and satisfied by it on or prior to the Closing
Date.
9.3 Corporate Proceedings. All action required to be taken by, or on
the part of Bancorp and First Federal to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement shall have been duly and validly taken by Bancorp
and First Federal.
9.4. Certificate of First Federal Officers. First Federal shall have
furnished to Mid-Iowa a certificate, signed by its Chief Executive Officer and
its Chief Financial Officer and dated the Closing Date, to the effect, based on
their best knowledge, that the conditions described in Sections 9.1, 9.2 and 9.3
of this Agreement have been satisfied.
9.5. Legal Opinion. Mid-Iowa shall have received an opinion, dated as
of the Closing Date, from Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel
for First Federal, in the form specified on Exhibit F.
9.6. Opinion of Financial Advisor. The Company shall have received on
or before the date on which the Company Proxy Statement or other similar
document is to be mailed to holders
37
of Company Common Stock the written opinion of its investment or financial
advisor to the effect that the merger consideration payable to the Company's
stockholders pursuant to the Reorganization is fair from a financial point of
view to the stockholders of the Company.
ARTICLE X.
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
In addition to the provisions of Articles VIII and IX hereof, the
obligations of First Federal, the Company and Mid-Iowa to cause the transactions
contemplated herein to be consummated, shall be subject to the satisfaction or
written waiver by both First Federal and the Company of the following
conditions:
10.1. Governmental Approvals. The parties hereto shall have received
all necessary approvals of the transactions contemplated by this Agreement from
governmental agencies and authorities, including, without limitation, those of
the OTS and the FDIC, and each of such approvals shall remain in full force and
effect and all statutory waiting periods in connection therewith shall have
expired at the Closing Date and such approvals and the transactions contemplated
thereby shall not have been contested by any federal or state governmental
authority nor by any other third party by formal proceeding. Provided, however,
that no approval or consent referred to in this Section 10.1 shall be deemed to
have been received by First Federal if it shall include any non-standard term,
condition or requirement that, individually or in the aggregate (i) would have a
Material Adverse Effect on the business, results of operations, assets, or
financial condition of First Federal on a consolidated basis, or (ii) would
reduce the economic or business benefits of the transactions contemplated by
this Agreement to First Federal in so significant a manner that First Federal,
in its reasonable judgment, would not have entered into this Agreement.
10.2. No Injunctions or Restraints. No suit, action or proceeding
shall be pending or overtly threatened before any court or other governmental
agency by the federal or any state government in which it is sought to restrain
or prohibit the consummation of the Reorganization and no temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Reorganization shall be in effect.
10.3. Stockholder Approval. This Agreement shall have been duly
approved by the requisite affirmative vote of the stockholders of the Company as
contemplated by Section 7.1 hereof.
10.4 Corporate Proceedings. The obligations of the parties to this
Agreement required to be performed at or prior to the Closing Date shall have
been duly performed and complied with in all material respects. All action
required to be taken by, or on the part of, the parties to this Agreement to
authorize the execution, delivery and performance of this Agreement, and the
38
consummation of the transactions contemplated hereby, shall have been duly and
validly taken by the parties hereto.
ARTICLE XI.
TERMINATION
11.1. Reasons for Termination. This Agreement may be terminated and
the Reorganization abandoned at any time before the Closing Date, whether before
or after the approval or adoption of this Agreement by the stockholders of the
Company:
(a) By mutual written consent of the Board of Directors of First
Federal and the Board of Directors of the Company;
(b) By written notice from First Federal to the Company if:
(i) any condition set forth in Article VIII of this Agreement
shall have become impossible to substantially satisfy at any time or
has not been substantially satisfied or waived in writing; or
(ii) any condition set forth in Article X of this Agreement shall
have become impossible to substantially satisfy at any time or has not
been substantially satisfied or waived in writing, provided, however,
First Federal shall not have the right to terminate this Agreement
pursuant to this Section 11.1(b)(ii) if any condition imposed by
Section 10.1 hereof was not met due to the failure of First Federal to
perform or observe the covenants and agreements set forth in this
Agreement; or
(iii) any warranty or representation as set forth in Article III
hereof made by the Company or Mid-Iowa shall be discovered to be or to
have become untrue or incorrect in any material respect, or where any
statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be discovered to be or
to have become untrue or incorrect in any respect taking into
consideration the standard of materiality contained therein, in either
case where any such breach has not been cured within thirty (30) days
following receipt by the Company or Mid-Iowa of notice of such
discovery; or
(iv) The Company or Mid-Iowa shall have breached one or more
provisions of this Agreement in any material respect considering all
such breaches in the aggregate, where such breach has not been cured
within thirty (30) days following receipt by the Company or Mid-Iowa
of notice of such breach; or
(v) The Board of Directors of Bancorp and First Federal shall
have determined in their sole discretion, exercised in good faith,
that the Conversion has become inadvisable
39
or impractical by reason of (A) the issuance of any order, decree or
letter of a regulatory authority containing conditions or requirements
reasonably deemed objectionable to Bancorp of First Federal or (B)
unfavorable market conditions. In the event of termination of this
Agreement pursuant to this Section 11.1(b)(v), then the Company shall
be reimbursed pursuant to and in accordance with the provisions of
Section 12.2(c) hereof.
(c) By written notice from the Company to First Federal, if
(i) any condition set forth in Article IX of this Agreement
shall have become impossible to substantially satisfy at any time
or has not been substantially satisfied or waived in writing; or
(ii) any condition set forth in Article X of this Agreement
shall have become impossible to substantially satisfy at any time
or has not been substantially satisfied or waived in writing;
provided, however, the Company shall not have the right to
terminate this Agreement pursuant to this Section 11.1(c)(ii) if
any condition imposed by Section 10.1 hereof was not met due to
the failure of the Company or Mid-Iowa to perform or observe the
covenants and agreements set forth in this Agreement; or
(iii) any warranty or representation as set forth in Article
IV hereof made by First Federal shall be discovered to be or to
have become untrue or incorrect in any material respect, or where
any statement in a representation or warranty expressly includes a
standard of materiality, such statement shall be discovered to be
or to have become untrue or incorrect in any respect taking into
consideration the standard of materiality contained therein, in
either case where any such breach has not been cured within thirty
(30) days following receipt by First Federal of notice of such
discovery; or
(iv) First Federal shall have breached one or more provisions
of this Agreement in any material respect considering all such
breaches in the aggregate, where such breach has not been cured
within thirty (30) days following receipt by First Federal of
notice of such breach.
(d) By the Board of Directors of First Federal if the Board of
Directors of the Company shall not recommend, or shall withdraw or modify
in a manner adverse to First Federal, its recommendation to the holders of
Company Common Stock to approve this Agreement.
(e) By the Board of Directors of First Federal or the Company at any
time after the Company Shareholders' Meeting as contemplated in Section 7.1
if the stockholders of the Company have not approved this Agreement by the
requisite affirmative vote.
(f) By the Board of Directors of First Federal or the Company if the
Reorganization has not been consummated on or before August 31, 1999.
40
11.2. Effect of Termination. In the event of termination of this
Agreement by either the Company or First Federal as provided in Section 11.1
hereof, this Agreement shall forthwith become void, and there shall be no
liability or obligation on the part of First Federal or the Company or their
respective officers or directors except with respect to Sections 6.7, 7.9 and
12.2 hereof.
ARTICLE XII.
MISCELLANEOUS
12.1. Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Effective Time, except for the covenants and agreements which by their terms are
contemplated to be performed after the Effective Time.
12.2. Expenses and Termination Fee. (a) Except as otherwise provided
herein, all expenses incurred by First Federal and the Company in connection
with or related to the authorization, preparation and execution of this
Agreement, the solicitation of stockholder approvals and all other matters
related to the closing of the transactions contemplated thereby, including,
without limitation of the generality of the foregoing, all fees and expenses of
agents, financial advisors, representatives, counsel and accountants employed by
either such party or its Affiliates, shall be borne solely and entirely by the
party that has incurred the same.
(b) Mid-Iowa also hereby agrees to pay First Federal, and First
Federal shall be entitled to payment of, a fee (the "Fee") of $1.4 million, upon
the occurrence of any of the following events on or before the earlier of the
date this Agreement is terminated or August 31, 1999:
(i) if the Board of Directors of the Company recommends a
Superior Proposal and thereafter (A) the Company Shareholders'
Meeting shall not have been held or shall have been postponed,
delayed or enjoined prior to termination of this Agreement or (B)
the Company's shareholders do not approve this Agreement;
(ii) if the Board of Directors of the Company withdraws or
modifies its recommendation of approval of this Agreement, and
thereafter (A) the Company Shareholders' Meeting shall not have
been held or shall have been postponed, delayed or enjoined prior
to termination of this Agreement or (B) the Company's shareholders
do not approve this Agreement;
(iii) if the Company's shareholders do not approve this
Agreement after a Superior Proposal is made and within twelve (12)
months thereafter the Company enters into a definitive agreement
to be merged into or acquired by another entity (provided,
however, that Mid-Iowa shall pay all Expenses of First Federal, as
defined in Section 6.7. hereof, in an amount not to exceed
$250,000, within five business days following rejection of this
Agreement by Company shareholders);
41
(iv) if the Company or Mid-Iowa enters into an agreement to be
acquired by any other party; or
(v) if the Company both (1) fails to receive the opinion of
its financial advisor that the Merger is fair to the Company's
shareholders from a financial point of view, and such failure
occurs after a Superior Proposal is made, and (2) the
Reorganization is not consummated.
With the exception of the payment under subparagraph (iii) above,
which shall be paid within five business days following the Company's execution
of a definitive agreement of merger or acquisition (except that the Expenses of
First Federal shall be paid as provided in (iii) above), such payment shall be
made to First Federal in immediately available funds within five business days
after the occurrence of an event set forth above.
(c) First Federal agrees to reimburse the Company for all of the
reasonable Expenses of Mid-Iowa, as defined in Section 5.6 hereof, in an amount
not to exceed $250,000, incurred by the Company and Mid-Iowa in connection with
the transactions contemplated hereby in the event First Federal terminates this
Agreement pursuant to Section 11.1(b)(v).
12.3. Waivers; Amendments. At any time prior to the Closing Date,
either First Federal, by action taken by its Board of Directors, or any
committee or officers thereunto authorized, or the Company or Mid-Iowa, by
action taken by its Board of Directors, or any committee or officers thereunto
authorized, may waive the performance of any of the obligations of the other or
waive compliance by the other with any of the covenants or conditions contained
in this Agreement or agree to the amendment or modification of this Agreement by
an agreement in writing executed in the same manner as this Agreement; provided,
however, that after the favorable vote by the stockholders of the Company
pursuant to Section 7.1 of this Agreement any such action shall be taken only
if, in the opinion of the Company's Board of Directors, such waiver, amendment
or modification will not have a material adverse effect on the benefits intended
under this Agreement for the shareholders of the Company and will not require
resolicitation of any proxies from such shareholders.
12.4. Assignment; Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and assigns, but shall not be assigned by the parties hereto, by
operation of law or otherwise, without the prior written consent of the other
parties. Except with respect to the payment of benefits pursuant to Section 7.12
and the obligation of First Federal contained in Section 7.8, nothing in this
Agreement, express or implied, is intended to confer upon any third party any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
12.5. Entire Agreement. This Agreement supersedes any other agreement,
whether written or oral, that may have been made or entered into by the Company,
Mid-Iowa or First Federal or by any officer or officers of such parties relating
to the acquisition of the business or the capital stock of the Company or
Mid-Iowa by First Federal, except for the Confidentiality Agreement dated July
3, 1998, which shall remain in full force and affect. This Agreement and such
Confidentiality Agreement
42
constitute the entire agreement by the respective parties, and there are no
agreements or commitments except as set forth herein and therein.
12.6. Captions and Counterparts. The captions in this Agreement are
for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts, each of which shall
constitute one and the same instrument.
12.7. Certain Definitions. For purposes of this Agreement, the term:
(a) "Affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, another person;
(b) "Material Adverse Effect" shall mean a material adverse effect on
the operations, assets, or financial condition of the parties to this
Agreement other than the effects of any such change attributable to or
resulting from any change in law, regulation or generally accepted
accounting principles or regulatory accounting principles and other than
the effects of any change attributable to or resulting from changes in
economic conditions applicable to depository institutions generally or in
general levels of interest rates.
(c) "Mid-Iowa Reports" shall mean all reports, registrations and
statements, together with any amendments required to be made with respect
thereto, that were and are required by applicable law to be filed with the
OTS, the FDIC, and any other applicable state securities or bank regulatory
authorities by either Mid-Iowa or the Company; and
(d) "to the knowledge of First Federal" or "to the best knowledge of
First Federal" shall mean the actual knowledge of any member of the Board
of Directors or of any senior officer of First Federal.
(e) "to the knowledge of the Company or Mid-Iowa" or "to the best
knowledge of the Company or Mid-Iowa" shall mean the actual knowledge of
any member of the Board of Directors or of any senior officer of the
Company or Mid-Iowa.
12.8. Enforcement of this Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
43
12.9. Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the State of Iowa, except to the effect that
Federal Law applies, without regard to the conflicts of laws rules.
12.10. Notices. All notices given hereunder shall be in writing and
shall be hand delivered, sent by facsimile transmission or sent by a nationally
recognized overnight delivery service, addressed as follows:
(a) If to First Federal to:
First Federal Savings Bank of Siouxland
000 Xxxxxx Xxxxxx
Xxxxx Xxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President
and Chief Executive Officer
With A Copy To:
Xxxx Xxxxxx Xxxxxx Xxxxxxxx & Xxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(b) If to Mid-Iowa to:
Mid-Iowa Financial Corp.
000 Xxxx Xxxxxx Xxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxx, President and
Chief Executive Officer
with a copy to:
Housley Kantarian & Xxxxxxxxx, P.C.
Suite 700
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
Any notice provided hereunder shall be effective upon receipt thereof.
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
ATTEST: FIRST FEDERAL BANKSHARES, M.H.C.
By:/s/ Xxxxxxx Xxxxxx By:/s/Xxxxx X. Xxxxxxxx
--------------------- -------------------------------
Xxxxxxx Xxxxxx Xxxxx X. Xxxxxxxx, President
ATTEST: FIRST FEDERAL SAVINGS BANK OF SIOUXLAND
By:/s/ Xxxxxxx Xxxxxx By:/s/Xxxxx X. Xxxxxxxx
--------------------- -------------------------------
Xxxxxxx Xxxxxx Xxxxx X. Xxxxxxxx, President
ATTEST: MID-IOWA SAVINGS BANK, FSB
By:/s/ Xxxx X. Xxxx By:/s/Xxxxx X. Xxxxx
--------------------- -------------------------------
Xxxx X. Xxxx Xxxxx X. Xxxxx, President
ATTEST: MID-IOWA FINANCIAL CORP.
By:/s/ Xxxx X. Xxxx By:/s/Xxxxx X. Xxxxx
--------------------- -------------------------------
Xxxx X. Xxxx Xxxxx X. Xxxxx, President
45
