As filed with the Securities and Exchange Commission on February 1, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule TO
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
HEMLOCK FEDERAL FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
Name of Subject Company (issuer)
HEMLOCK FEDERAL FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
Names of Filing Persons (identifying status as offeror, issuer or other person)
Commons Stock, $0.01 Par Value Per Share
- --------------------------------------------------------------------------------
Title of Class of Securities
423666 10 6
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CUSIP Number of Class of Securities
Maureen G. Partynski
Hemlock Federal Financial Corporation
5700 West 159th Street
Oak Forest, Illinois 60452
(708) 687-9400
- --------------------------------------------------------------------------------
Name, address, and telephone numbers of person
authorized to receive notices and communications on
behalf of filing persons
Copies to:
Martin L. Meyrowitz, P.C.
Beth A. Freedman
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20005
(202) 414-6100
February 1, 2000
- --------------------------------------------------------------------------------
Date Tender Offer First Published, Sent or Given to Security Holders
<PAGE>
CALCULATION OF FILING FEE
Transaction valuation* Amount of filing fee
- ----------------------------------- ---------------------------------------
$6,790,000 $1,358
- ----------------------------------- ---------------------------------------
* Calculated solely for the purpose of determining the filing fee, based upon
the purchase of 388,000 shares at the maximum tender offer price of $17.50 per
share.
[ ] Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[ ] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
<PAGE>
Item 1. Summary Term Sheet
The information set forth in "Summary" of the Offer to Purchase is
incorporated herein by reference.
Item 2. Subject Company Information
(a) The issuer of the securities to which this Schedule TO relates is
Hemlock Federal Financial Corporation, a Delaware corporation (the "Company"),
and the address of its principal executive office, and its mailing address, is
5700 West 159th Street, Oak Forest, Illinois 60452.
(b) This Schedule TO relates to the offer by the Company to purchase up
to 388,000 shares (or such lesser number of shares as are properly tendered) of
its common stock, $0.01 par value per share (the "Shares"), 1,617,762 of which
Shares were outstanding as of January 24, 2000.
(c) The information set forth in "Summary " and "Section 8, Price Range
of Shares; Dividends" of the Offer to Purchase is incorporated herein by
reference.
Item 3. Identity and Background of Filing Person.
(a) The Filing Person for which this schedule TO relates is the Subject
Company. For information regarding the Subject Company, see Item 2(a) above.
Item 4. Terms of the Transaction
(a) The information set forth in "Introduction" and "Section 11, Source
and Amount of Funds," "Section 9, Purpose of the Offer; Certain Effects of the
Offer," "Section 12, Interest of Directors and Officers; Transactions and
Arrangements Concerning Shares" and "Section 13, Effects of the Offer on the
Market for Shares; Registration under the Exchange Act" of the Offer to Purchase
is incorporated herein by reference.
(b) Securities will not be purchased from any officer, director or
affiliate of the Subject Company.
Item 5. Past Contacts, Transactions, Negotiations and Agreements.
(a) Not applicable.
(b) Not applicable.
<PAGE>
Item 6. Purposes of the Transaction and Plans and Proposals.
(a)-(c) The information set forth in "Introduction" and "Section 11,
Source and Amount of Funds," "Section 9, Purpose of the Offer; Certain Effects
of the Offer," and "Section 12, Interest of Directors and Officers; Transactions
and Arrangements Concerning Shares" of the Offer to Purchase is incorporated
herein by reference.
Item 7. Source and amount of Funds or Other Consideration.
(a) The information set forth in "Section 11, Source and Amount of
Funds" of the Offer to Purchase is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
Item 8. Interest in Securities of the Subject Company.
(a) Not applicable.
(b) Not applicable.
Item 9. Persons/Assets, Retained, Employed, Compensated, or Used.
The information set forth in "Introduction" and "Section 17,
Solicitation Fees and Expenses" of the Offer to Purchase is incorporated herein
by reference.
Item 10. Financial Statements.
(a)-(b) Not applicable.
Item 11. Additional Information.
(a) Not applicable.
(b) Not applicable.
<PAGE>
Item 12. Exhibits.
(a) (1) Form of Offer to Purchase, dated February 1, 2000 and form of
Letter of Transmittal (including Certification of Taxpayer
Identification Number on Form W-9).
(2) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees; form of Letter to Clients for
Use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees (including the Instruction Form); form of
Letter to Stockholders of the Company, dated February 1, 2000,
from Maureen G. Partynski, Chairman and Chief Executive
Officer of the Company; form of Memorandum, dated February 1,
2000, to the Company's employees; form of Question and Answer
Brochure; text of Press Release issued by the Company, dated
February 1, 2000; and text of Press Announcement to be
published in local and regional newspapers on or after
February 1, 2000.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) Not applicable.
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule TO is true, complete and
correct.
February 1, 2000 HEMLOCK FEDERAL FINANCIAL CORPORATION
By: /s/ Maureen G. Partynski
---------------------------------------
Maureen G. Partynski
Chairman and Chief Executive Officer
<PAGE>
EXHIBIT (A)(1)-1
HEMLOCK FEDERAL FINANCIAL CORPORATION
5700 West 159th Street
Oak Forest, Illinois 60452
(708) 687-9400
Offer to Purchase for Cash
Up to 388,000 Shares of its
Common Stock, Par Value $0.01 Per Share
At a Purchase Price Not Greater Than $17.50
Nor Less Than $15.00 Per Share
--------------------
THE OFFER TO PURCHASE, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE
AT 5:00 P.M., NEW YORK CITY TIME, ON WEDNESDAY, MARCH 1, 2000,
UNLESS THE OFFER TO PURCHASE IS EXTENDED
-------------------
Questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or other tender offer materials may
be directed to the Information Agent/ Dealer Manager at the address and
telephone number set forth on the back cover of this Offer to Purchase, and such
copies will be furnished promptly at the Company's expense. Stockholders may
also contact their local broker, dealer, commercial bank or trust company for
assistance concerning the Offer to Purchase.
No person has been authorized to make any recommendation on behalf of
the Company as to whether stockholders should tender shares pursuant to the
Offer to Purchase. No person has been authorized to give any information or to
make any representations in connection with the Offer to Purchase other than
those contained herein or in the related Letter of Transmittal. If given or
made, such recommendation and such other information and representations must
not be relied upon as having been authorized by the Company.
The Dealer Manager and Information Agent for the Offer to Purchase is:
Keefe, Bruyette & Woods, Inc.
The date of this Offer to Purchase is February 1, 2000
<PAGE>
TABLE OF CONTENTS
Section Page
SUMMARY ....................................................................1
1. NUMBER OF SHARES; PRORATION..............................................2
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES..............................3
3. PROCEDURE FOR TENDERING SHARES...........................................3
4. WITHDRAWAL RIGHTS........................................................5
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE...........6
6. CONDITIONAL TENDER OF SHARES.............................................7
7. CONDITIONS OF THE OFFER TO PURCHASE......................................7
8. PRICE RANGE OF SHARES; DIVIDENDS.........................................9
9. PURPOSE OF THE OFFER TO PURCHASE;
CERTAIN EFFECTS OF THE OFFER TO PURCHASE............................9
10. INFORMATION CONCERNING THE COMPANY.....................................11
11. SOURCE AND AMOUNT OF FUNDS.............................................19
12. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS
AND ARRANGEMENTS CONCERNING SHARES.................................19
13. EFFECTS OF THE OFFER TO PURCHASE ON THE MARKET FOR SHARES;
REGISTRATION UNDER THE EXCHANGE ACT................................20
14. LEGAL MATTERS; REGULATORY APPROVALS....................................20
15. FEDERAL INCOME TAX CONSEQUENCES........................................21
16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS....................23
17. SOLICITATION FEES AND EXPENSES.........................................24
18. WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION............................25
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To the Holders of Shares of Common Stock of
Hemlock Federal Financial Corporation
SUMMARY
Hemlock Federal Financial Corporation is inviting its stockholders to
sell shares of its common stock back to the Company for cash. Set forth below
are the material terms of this offer:
o The Company will agree to purchase up to 388,000 shares of its
common stock. See "Number of Shares; Proration" on page 2 in this
Offer to Purchase.
o The Company will purchase these shares within a price range of
$15.00 to $17.50 per share as determined by tendering stockholders.
See "Number of Shares; Proration" on page 2 in this Offer to
Purchase.
o Each stockholder must determine whether to sell stock, how much to
sell, and at what price the stockholder is willing to sell. See
"Number of Shares; Proration" on page 2 and "Procedures for
Tendering Shares" on page 3 of this Offer to Purchase.
o All shares will be acquired at the same purchase price. See "Number
of Shares; Proration" on page 2 of this Offer to Purchase.
o If more than 388,000 shares are tendered at or below the purchase
price the Company will first acquire shares held by persons who own
less than 100 shares and then will acquire shares from other
tendering stockholders on a pro rata basis. See "Number of Shares;
Proration" on page 2 and "Tenders by Holders of Fewer Than 100
Shares" on page 3 of this Offer to Purchase.
o The offer is not conditioned upon any minimum number of shares being
tendered. The offer is, however, subject to other conditions. See
"Conditions of the Offer to Purchase" on page 7 of this Offer to
Purchase.
o You must properly complete and execute the Letter of Transmittal by
5:00 p.m. on Wednesday, March 1, 2000 in order to sell your shares
to us in this offer. See "Procedure for Tendering Shares" on page 3
of this Offer to Purchase.
o This offer is scheduled to expire at 5:00 p.m. on Wednesday, March
1, 2000. See "Number of Shares; Proration" on page 2 of this Offer
to Purchase.
o The offering period may be extended by the Company making a public
announcement. See "Extension of Tender Period; Termination;
Amendments" on page 22 of this Offer to Purchase.
o Stockholders may withdraw tendered shares at any time prior to the
expiration of the offering, which is currently scheduled on March 1,
2000. Tenders will then be irrevocable until March 28, 2000, when
they may be withdrawn by stockholders if they have not been accepted
for payment by the Company. See "Withdrawal Rights" on page 5 of
this Offer to Purchase.
o Written notice of a withdrawal must be provided to the Depository.
The information required and method of notification is different if
you hold your shares directly or through a broker. See "Withdrawal
Rights" on page 5 of this Offer to Purchase.
o Once the price is set, conditional tenders and prorations will be
considered. Then checks for all accepted tenders will be issued by
the Depositary. See "Acceptance for Payment of Shares and Payment of
Purchase Price" on page 5 of this Offer to Purchase.
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o The Company expects to announce final results on any proration
within seven trading days of the expiration date. See "Acceptance
for Payment of Shares and Payment of Purchase Price" on page 6 of
this Offer to Purchase.
o Stockholders who don't tender will increase their percentage
ownership in the Company. This will include the executive officers
and directors of the Company and the trustee for the Company's
employee stock ownership plan who do not intend to tender any of
their shares. See "Purpose of the Offer to Purchase; Certain Effects
of the Offer to Purchase" on page 9 and "Interest of Directors and
Officers; Transaction and Arrangements Concerning Shares" on page 18
of this Offer to Purchase.
o Generally, stockholders will be expected to recognize gain or loss
on the tendered shares equal to the difference between the cash paid
by the Company and the stockholder's basis. See "Federal Income Tax
Consequences" on page 20 of this Offer to Purchase.
1. NUMBER OF SHARES; PRORATION
Upon the terms and subject to the conditions described herein and in
the Letter of Transmittal, the Company will purchase up to 388,000 shares that
are validly tendered on or prior to the Expiration Date (as defined below) (and
not properly withdrawn in accordance with Section 4) at a price (determined in
the manner set forth below) not greater than $17.50 nor less than $15.00 per
share. The later of 5:00 p.m., New York City time, on Wednesday, March 1, 2000,
or the latest time and date to which the Offer to Purchase is extended pursuant
to Section 16, is referred to herein as the "Expiration Date." If the Offer to
Purchase is oversubscribed as described below, only shares tendered at or below
the Purchase Price on or prior to the Expiration Date will be eligible for
proration. The proration period also expires on the Expiration Date.
The Company will determine the Purchase Price taking into consideration
the number of shares so tendered and the prices specified by tendering
stockholders. The Company will select the lowest Purchase Price that will enable
it to purchase 388,000 shares (or such lesser number of shares as is validly
tendered and not withdrawn at prices not greater than $17.50 nor less than
$15.00 per share) pursuant to the Offer to Purchase. Subject to Section 16, the
Company reserves the right to purchase more than 388,000 shares pursuant to the
Offer to Purchase, but does not currently plan to do so. The Offer to Purchase
is not conditioned on any minimum number of shares being tendered. The Offer to
Purchase is, however, subject to certain other conditions. See Section 7.
In accordance with Instruction 5 of the Letter of Transmittal, each
stockholder who wishes to tender shares must specify the price (not greater than
$17.50 nor less than $15.00 per share) at which the stockholder is willing to
have the Company purchase such shares. As promptly as practicable following the
Expiration Date, the Company will determine the Purchase Price (not greater than
$17.50 nor less than $15.00 per share) that it will pay for shares validly
tendered and not withdrawn pursuant to the Offer to Purchase, taking into
account the number of shares so tendered and the prices specified by tendering
stockholders. All shares purchased pursuant to the Offer to Purchase will be
purchased at the Purchase Price. All shares not purchased pursuant to the Offer
to Purchase, including shares tendered at prices greater than the Purchase Price
and shares not purchased because of proration or because they were conditionally
tendered and not accepted for purchase, will be returned to the tendering
stockholders at the Company's expense as promptly as practicable following the
Expiration Date.
Upon the terms and subject to the conditions of the Offer to Purchase,
if 388,000 or fewer shares have been validly tendered at or below the Purchase
Price and not withdrawn on or prior to the Expiration Date, the Company will
purchase all such shares. Upon the terms and subject to the conditions of the
Offer to Purchase, if more than 388,000 shares have been validly tendered at or
below the Purchase Price and not withdrawn on or prior to the Expiration Date,
the Company will purchase shares in the following order of priority:
(a) first, all shares validly tendered at or below the Purchase
Price and not withdrawn on or prior to the Expiration Date by or on behalf
of any stockholder who owned beneficially, as of the close of business on
January 24, 2000 and continues to own beneficially as of the Expiration
Date, an aggregate of fewer than
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<PAGE>
100 shares and who validly tenders all of such shares (partial and
conditional tenders will not qualify for this preference) and completes
the box captioned "Odd Lots" on the Letter of Transmittal; and
(b) then, after purchase of all of the foregoing shares, subject to
the conditional tender provisions described in Section 6, all other shares
validly tendered at or below the Purchase Price and not withdrawn on or
prior to the Expiration Date on a pro rata basis, if necessary (with
appropriate adjustments to avoid purchases of fractional shares).
If proration of tendered shares is required, (i) because of the
difficulty in determining the number of shares validly tendered, (ii) as a
result of the "odd lot" procedure described in Section 2,and (iii) as a result
of the conditional tender procedure described in Section 6, the Company does not
expect that it will be able to announce the final proration factor or to
commence payment for any shares purchased pursuant to the Offer to Purchase
until approximately seven Nasdaq National Market trading days after the
Expiration Date. Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Date. Holders of shares
may obtain such preliminary information from the Dealer Manager/Information
Agent.
The Company expressly reserves the right, in its sole discretion, at
any time or from time to time, to extend the period of time during which the
Offer to Purchase is open by giving oral or written notice of such extension to
the Depositary and making a public announcement thereof. See Section 16. There
can be no assurance, however, that the Company will exercise its right to extend
the Offer to Purchase.
For purposes of the Offer to Purchase, a "business day" means any day
other than a Saturday, Sunday or federal holiday and consists of the time period
from 12:01 a.m. through 12:00 midnight, New York City time.
Copies of this Offer to Purchase and the related Letter of Transmittal
are being mailed to record holders of shares and will be furnished to brokers,
banks and similar persons whose names, or the names of whose nominees, appear on
the Company's stockholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of shares.
2. TENDERS BY HOLDERS OF FEWER THAN 100 SHARES
Except to the extent that the Company's purchase would result in the
delisting of the shares on the Nasdaq National Market, all shares validly
tendered at or below the Purchase Price and not withdrawn on or prior to the
Expiration Date by or on behalf of any stockholder who owned beneficially, as of
the close of business on January 24, 2000, and continues to own beneficially as
of the Expiration Date, an aggregate of fewer than 100 shares, will be accepted
for purchase before proration, if any, of other tendered shares. Partial or
conditional tenders will not qualify for this preference, and it is not
available to beneficial holders of 100 or more shares, even if such holders have
separate stock certificates for fewer than 100 shares. By accepting the Offer to
Purchase, a stockholder owning beneficially fewer than 100 shares will avoid the
payment of brokerage commissions and the applicable odd lot discount payable in
a sale of such shares in a transaction effected on a securities exchange.
As of January 24, 2000, there were approximately 530 holders of record
of shares. Approximately 162 of these holders of record held individually fewer
than 100 shares and held in the aggregate approximately 5,898 shares. Because of
the large number of shares held in the names of brokers and nominees, the
Company is unable to estimate the number of beneficial owners of fewer than 100
shares or the aggregate number of shares they own. Any stockholder wishing to
tender all of his or her shares pursuant to this Section should complete the box
captioned "Odd Lots" on the Letter of Transmittal.
3. PROCEDURE FOR TENDERING SHARES
To tender shares validly pursuant to the Offer to Purchase, a properly
completed and duly executed Letter of Transmittal or facsimile thereof, together
with any required signature guarantees and any other documents required by the
Letter of Transmittal, must be received by the Depositary at its address set
forth on the back cover of this Offer to Purchase and either (i) certificates
for the shares to be tendered must be received by the Depositary at such address
or
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(ii) such shares must be delivered pursuant to the procedures for book-entry
transfer described below (and a confirmation of such delivery received by the
Depositary), in each case on or prior to the Expiration Date.
In accordance with instruction 5 of the Letter of Transmittal, in order
to tender shares pursuant to the Offer to Purchase, a stockholder must indicate
in the section captioned "Price (In Dollars) Per Share At Which Shares Are Being
Tendered" on the Letter of Transmittal either (i) the price (in multiples of
$0.25) at which such shares are being tendered, or (ii) that the shares are
being tendered at the Purchase Price determined by the Company in accordance
with the terms of this Offer to Purchase. For a tender of shares to be valid, a
price box, but only one price box, on each Letter or Transmittal must be
checked.
Stockholders wishing to tender shares at more than one price must
complete separate Letters of Transmittal for each price at which such shares are
being tendered. The same shares cannot be tendered at more than one price.
The Depositary will establish an account with respect to the shares at
The Depository Trust Company ("DTC") (hereinafter referred to as the "Book-Entry
Transfer Facility") for purposes of the Offer to Purchase within two business
days after the date of this Offer to Purchase, and any financial institution
that is a participant in the system of the Book-Entry Transfer Facility may make
delivery of shares by causing the Book-Entry Transfer Facility to transfer such
shares into the Depositary's account in accordance with the procedures of the
Book-Entry Transfer Facility. Although delivery of shares may be effected
through book-entry transfer, a properly completed and duly executed Letter of
Transmittal or a manually signed copy thereof, or an Agent's Message (as defined
below), together with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the Depositary
at its address set forth on the back cover of this Offer to Purchase on or prior
to the Expiration Date. Delivery of required documents to the Book-Entry
Transfer Facility in accordance with its procedures does not constitute delivery
to the Depositary and will not constitute a valid tender.
The term "Agent's Message" means a message transmitted by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a Book-Entry confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the shares, that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal and
that the Company may enforce such agreement against the participant.
Except as set forth below, all signatures on a Letter of Transmittal
must be guaranteed by a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
by a commercial bank, a trust company, a savings bank, a savings and loan
association or a credit union which has membership in an approved Signature
Guarantee Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"). Signatures on a Letter of Transmittal need not be
guaranteed if (a) the Letter of Transmittal is signed by the registered holder
of the shares (which term, for the purposes of this Section, includes a
participant in the Book-Entry Transfer Facility whose name appears on a security
position listing as the holder of the shares) tendered therewith and such holder
has not completed the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (b)
such shares are tendered for the account of an Eligible Institution. See
Instructions 1 and 6 of the Letter of Transmittal.
The method of delivery of shares and all other required documents is at
the option and risk of the tendering stockholder. If delivery is by mail,
registered mail with return receipt requested, properly insured, is recommended.
In all cases sufficient time should be allowed to assure timely delivery.
To prevent United States federal income tax backup withholding equal to
31% of the gross payments made pursuant to the Offer to Purchase, each tendering
stockholder must provide the Depositary with such stockholder's correct taxpayer
identification number and certain other information by properly completing the
substitute Form W-9 included in the Letter of Transmittal. Foreign stockholders
(as defined in Section 15) must submit a properly completed Form W-8 (which may
be obtained from the Depositary) in order to prevent backup withholding. In
general, backup withholding does not apply to corporations or to foreign
stockholders subject to 30% (or lower treaty rate) withholding on gross payments
received pursuant to the Offer to Purchase (as
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discussed in Section 15). For a discussion of certain federal income tax
consequences to tendering stockholders, see Section 15. Each stockholder is
urged to consult with his or her own tax advisor regarding his, her or its
qualification for exemption from backup withholding and the procedure for
obtaining any applicable exemption.
It is a violation of Rule 14e promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for a person to tender shares for
his or her own account unless the person so tendering (i) has a net long
position equal to or greater than the amount of (x) shares tendered or (y) other
securities immediately convertible into, exercisable or exchangeable for the
amount of shares tendered and will acquire such shares for tender by conversion,
exercise or exchange of such other securities and (ii) will cause such shares to
be delivered in accordance with the terms of the Offer to Purchase. Rule 14e-4
provides a similar restriction applicable to the tender on behalf of another
person. The tender of shares pursuant to any one of the procedures described
above will constitute the tendering stockholder's representation and warranty
that (i) such stockholder has a net long position in the shares being tendered
within the meaning of Rule 14e-4 promulgated under the Exchange Act, and (ii)
the tender of such shares complies with Rule 14e-4. The Company's acceptance for
payment of shares tendered pursuant to the Offer to Purchase will constitute a
binding agreement between the tendering stockholder and the Company upon the
terms and subject to the conditions of the Offer to Purchase.
All questions as to the Purchase Price, the form of documents, the
number of shares to be accepted and the validity, eligibility (including time of
receipt) and acceptance for payment of any tender of shares will be determined
by the Company, in its sole discretion, which determination shall be final and
binding on all parties. The Company reserves the absolute right to reject any or
all tenders of shares that it determines are not in proper form or the
acceptance for payment of or payment for shares that may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right to
waive any defect or irregularity in any tender of any particular shares. None of
the Company, the Dealer Manager/Information Agent, the Depositary or any other
person is or will be under any duty to give notice of any defect or irregularity
in tenders, nor shall any of them incur any liability for failure to give any
such notice.
Certificates for shares, together with a properly completed Letter of
Transmittal (or, in the case of a book-entry transfer, an Agent's Message) and
any other documents required by the Letter of Transmittal, must be delivered to
the Depositary and not to the Company. Any such documents delivered to the
Company will not be forwarded to the Depositary and therefore will not be deemed
to be properly tendered.
4. WITHDRAWAL RIGHTS
Tenders of shares made pursuant to the Offer to Purchase may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are
irrevocable, except that they may be withdrawn after 12:00 midnight, New York
City time, March 28, 2000 unless previously accepted for payment by the Company
as provided in this Offer to Purchase. If the Company extends the period of time
during which the Offer to Purchase is open, is delayed in purchasing shares or
is unable to purchase shares pursuant to the Offer to Purchase for any reason,
then, without prejudice to the Company's rights under the Offer to Purchase, the
Depositary may, on behalf of the Company, retain all shares tendered, and such
shares may not be withdrawn except as otherwise provided in this Section 4,
subject to Rule 13e-4(f)(5) under the Exchange Act, which provides that the
issuer making the tender offer shall either pay the consideration offered, or
return the tendered securities promptly after the termination or withdrawal of
the tender offer.
Withdrawal of Shares Held in Physical Form. Tenders of shares made
pursuant to the Offer to Purchase may not be withdrawn after the Expiration
Date, except that they may be withdrawn after 12:00 midnight, New York City
time, March 28, 2000 unless accepted for payment by the Company as provided in
this Offer to Purchase. For a withdrawal to be effective prior to that time, a
stockholder of shares held in physical form must provide a written, telegraphic
or facsimile transmission notice of withdrawal to the Depositary at it address
set forth on the back cover page of this Offer to Purchase before the Expiration
Date, which notice must contain: (A) the name of the person who tendered the
shares; (B) a description of the shares to be withdrawn; (C) the certificate
numbers shown on the particular certificates evidencing such shares; (D) the
signature of such stockholder executed in the same manner as the original
signature on the Letter of Transmittal (including any signature guarantee (if
such original signature was guaranteed)); and (E) if such shares are held by a
new beneficial owner, evidence satisfactory to the Company that the person
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withdrawing the tender has succeeded to the beneficial ownership of the shares.
A purported notice of withdrawal which lacks any of the required information
will not be an effective withdrawal of a tender previously made.
Withdrawal of Shares Held with the Book-Entry Transfer Facility.
Tenders of shares made pursuant to the Offer to Purchase may not be withdrawn
after the Expiration Date, except that they may be withdrawn after 12:00
midnight, New York City time, March 28, 2000 unless accepted for payment by the
Company as provided in this Offer to Purchase. For a withdrawal to be effective
prior to that time, a stockholder of shares held with the Book-Entry Transfer
Facility must (i) call his or her broker and instruct such broker to withdraw
the tender of shares by debiting the Depositary's account at the Book-Entry
Transfer Facility for all shares to be withdrawn; and (ii) instruct the broker
to provide a written, telegraphic or facsimile transmission notice of withdrawal
to the Depositary on or before the Expiration Date. Such notice of withdrawal
shall contain (A) the name of the person who tendered the shares; (B) a
description of the shares to be withdrawn; and (C) if such shares are held by a
new beneficial owner, evidence satisfactory to the Company that the person
withdrawing the tender has succeeded to the beneficial ownership of the shares.
A purported notice of withdrawal which lacks any of the required information
will not be an effective withdrawal of a tender previously made.
Any permitted withdrawals of tenders of shares may not be rescinded,
and any shares so withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer to Purchase; provided, however, that withdrawn shares may
be re-tendered by following the procedures for tendering prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt)
of any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties. None
of the Company, the Dealer Manager/Information Agent, the Depositary or any
other person is or will be under any duty to give notification of any defect or
irregularity in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. ACCEPTANCE FOR PAYMENT OF SHARES AND PAYMENT OF PURCHASE PRICE
Upon the terms and subject to the conditions of the Offer to Purchase
and as promptly as practicable after the Expiration Date, the Company will
determine the Purchase Price, taking into consideration the number of shares
tendered and the prices specified by tendering stockholders, announce the
Purchase Price, and (subject to the proration and conditional tender provisions
of the Offer to Purchase) accept for payment and pay the Purchase Price for
shares validly tendered and not withdrawn at or below the Purchase Price.
Thereafter, payment for all shares validly tendered on or prior to the
Expiration Date and accepted for payment pursuant to the Offer to Purchase will
be made by the Depositary by check as promptly as practicable. In all cases,
payment for shares accepted for payment pursuant to the Offer to Purchase will
be made only after timely receipt by the Depositary of certificates for such
shares (or of a timely confirmation of a book-entry transfer of such shares into
the Depositary's account at the Book-Entry Transfer Facility), a properly
completed and duly executed Letter of Transmittal or a manually signed copy
thereof, with any required signature guarantees, or in the case of a book-entry
delivery an Agent's Message, and any other required documents.
For purposes of the Offer to Purchase, the Company shall be deemed to
have accepted for payment (and thereby purchased), subject to proration and
conditional tenders, shares that are validly tendered and not withdrawn as, if
and when it gives oral or written notice to the Depositary of the Company's
acceptance for payment of such shares. In the event of proration, the Company
will determine the proration factor and pay for those tendered shares accepted
for payment as soon as practicable after the Expiration Date. However, the
Company does not expect to be able to announce the final results of any such
proration until approximately seven Nasdaq National Market trading days after
the Expiration Date. The Company will pay for shares that it has purchased
pursuant to the Offer to Purchase by depositing the aggregate Purchase Price
therefor with the Depositary. The Depositary will act as agent for tendering
stockholders for the purpose of receiving payment from the Company and
transmitting payment to tendering stockholders. Under no circumstances will
interest be paid on amounts to be paid to tendering stockholders, regardless of
any delay in making such payment.
Certificates for all shares not purchased, including all shares
tendered at prices greater than the Purchase Price, shares not purchased because
of proration and shares that were conditionally tendered and not accepted, will
be returned
6
<PAGE>
(or, in the case of shares tendered by book-entry transfer, such shares will be
credited to an account maintained with the Book-Entry Transfer Facility by the
participant therein who so delivered the shares) as promptly as practicable
following the Expiration Date without expense to the tendering stockholder.
Payment for shares may be delayed in the event of difficulty in
determining the number of shares properly tendered or if proration is required.
See Section 1. In addition, if certain events occur, the Company may not be
obligated to purchase shares pursuant to the Offer to Purchase. See Section 7.
The Company will pay or cause to be paid any stock transfer taxes with
respect to the sale and transfer of any shares to it or its order pursuant to
the Offer to Purchase. If, however, payment of the Purchase Price is to be made
to, or a portion of the shares delivered (whether in certificated form or by
book entry) but not tendered or not purchased are to be registered in the name
of, any person other than the registered holder, or if tendered shares are
registered in the name of any person other than the person signing the Letter of
Transmittal (unless such person is signing in a representative or fiduciary
capacity), the amount of any stock transfer taxes (whether imposed on the
registered holder, such other person or otherwise) payable on account of the
transfer to such person will be deducted from the Purchase Price unless
satisfactory evidence of the payment of such taxes, or exemption therefrom, is
submitted. See Instruction 7 to the Letter of Transmittal.
Any tendering stockholder or other payee who fails to complete fully
and sign the substitute Form W-9 included in the Letter of Transmittal (or, in
the case of a foreign individual, a Form W-8) may be subject to required federal
income tax withholding of 31% of the gross proceeds paid to such stockholder or
other payee pursuant to the Offer to Purchase. See Section 3.
6. CONDITIONAL TENDER OF SHARES
Under certain circumstances and subject to the exceptions set forth in
Section 1, the Company may prorate the number of shares purchased pursuant to
the Offer to Purchase. As discussed in Section 15, the number of shares to be
purchased from a particular stockholder might affect the tax treatment of such
purchase for the stockholder and the stockholder's decision whether to tender.
Each stockholder is urged to consult with his or her own tax advisor.
Accordingly, a stockholder may tender shares subject to the condition that a
specified minimum number of the stockholder's shares tendered pursuant to a
Letter of Transmittal must be purchased if any shares so tendered are purchased.
Any stockholder desiring to make such a conditional tender must so indicate in
the box captioned "Conditional Tender" in the Letter of Transmittal.
Any tendering stockholders wishing to make a conditional tender must
calculate and appropriately indicate the minimum number of shares to be
tendered. If the effect of accepting tenders on a pro rata basis would be to
reduce the number of shares to be purchased from any stockholder (tendered
pursuant to a Letter of Transmittal) below the minimum number so specified, the
tender will automatically be regarded as withdrawn (except as provided in the
next paragraph ) and all shares tendered by the stockholder pursuant to the
applicable Letter of Transmittal will be returned as promptly as practicable
thereafter.
If conditional tenders, that would otherwise be so regarded as
withdrawn, would cause the total number of shares to be purchased to fall below
388,000, then, to the extent feasible, the Company will select enough of such
conditional tenders that would otherwise have been so withdrawn to permit the
Company to purchase 388,000 shares. In selecting among these conditional
tenders, the Company will select by lot and will limit its purchase in each case
to the minimum number of shares designated by the stockholder in the applicable
Letter of Transmittal as a condition to his or her tender.
7. CONDITIONS OF THE OFFER TO PURCHASE
Notwithstanding any other provision of the Offer to Purchase, the
Company will not be required to accept for payment or pay for any shares
tendered, and may terminate or amend and may postpone (subject to the
requirements of the Exchange Act for prompt payment for or return of shares
tendered) the acceptance for payment of shares tendered, if at any time after
February 1, 2000 and at or before any of the following shall have occurred:
7
<PAGE>
(a) there shall have been threatened, instituted or pending any
action or proceeding by any government or governmental, regulatory or
administrative agency or authority or tribunal or any other person,
domestic or foreign, or before any court, authority, agency or tribunal
that (i) challenges the acquisition of shares pursuant to the Offer to
Purchase or otherwise in any manner relates to or affects the Offer to
Purchase or (ii) in the reasonable judgment of the Company, could
materially and adversely affect the business, condition (financial or
other), income, operations or prospects of the Company and its
subsidiaries, taken as a whole, or otherwise materially impair in any way
the contemplated future conduct of the business of the Company or any of
its subsidiaries or materially impair the Offer to Purchase's contemplated
benefits to the Company;
(b) there shall have been any action threatened, pending or taken,
or approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
amended, enforced or deemed to be applicable to the Offer to Purchase or
the Company or any of its subsidiaries, by any legislative body, court,
authority, agency or tribunal which, in the Company's sole judgment, would
or might directly or indirectly (i) make the acceptance for payment of, or
payment for, some or all of the shares illegal or otherwise restrict or
prohibit consummation of the Offer to Purchase, (ii) delay or restrict the
ability of the Company, or render the Company unable, to accept for
payment or pay for some or all of the shares, (iii) materially impair the
contemplated benefits of the Offer to Purchase to the Company or (iv)
materially affect the business, condition (financial or other), income,
operations or prospects of the Company and its subsidiaries, taken as a
whole, or otherwise materially impair in any way the contemplated future
conduct of the business of the Company or any of its subsidiaries;
(c) it shall have been publicly disclosed or the Company shall have
learned that (i) any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) has acquired or proposes to acquire
beneficial ownership of more than 5% of the outstanding shares whether
through the acquisition of stock, the formation of a group, the grant of
any option or right, or otherwise (other than as disclosed in a Schedule
13D or 13G on file with the Securities and Exchange Commission (the
"Commission") on February 1, 2000) or (ii) any such person or group that
on or prior to February 1, 2000 had filed such a Schedule with the
Commission thereafter shall have acquired or shall propose to acquire,
whether through the acquisition of stock, the formation of a group, the
grant of any option or right, or otherwise, beneficial ownership of
additional shares representing 2% or more of the outstanding shares;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market, (ii) any significant decline
in the market price of the shares or in the general level of market prices
of equity securities in the United States or abroad, (iii) any change in
the general political, market, economic or financial condition in the
United States or abroad that could have a material adverse effect on the
Company's business, condition (financial or otherwise) , income,
operations, prospects or ability to obtain financing generally or the
trading in the shares, (iv) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any
limitation on, or any event which, in the Company's reasonable judgment,
might affect the extension of credit by lending institutions in the United
States, (v) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States or (vi) in the case of any of the foregoing existing at the
time of the commencement of the Offer to Purchase, in the Company's
reasonable judgment, a material acceleration or worsening thereof;
(e) a tender or exchange offer with respect to some or all of the
shares (other than the Offer to Purchase), or a merger, acquisition or
other business combination proposal for the Company, shall have been
proposed, announced or made by another person or group (within the meaning
of Section 13(d) (3) of the Exchange Act);
(f ) there shall have occurred any event or events that has
resulted, or may in the reasonable judgment of the Company result,
directly or indirectly, in an actual or threatened change in the business,
condition (financial or other), income, operations, stock ownership or
prospects of the Company and its subsidiaries;
8
<PAGE>
and, in the reasonable judgment of the Company, such event or events make
it undesirable or inadvisable to proceed with the Offer to Purchase or
with such acceptance for payment.
The foregoing conditions are for the reasonable benefit of the Company
and may be asserted by the Company regardless of the circumstances (including
any action or inaction by the Company) giving rise to any of these conditions,
and any such condition may be waived by the Company, in whole or in part, at any
time and from time to time in its reasonable discretion. The failure by the
Company at any time to exercise any of the foregoing rights shall not be deemed
a waiver of the right and each of these rights shall be deemed an ongoing right
which may be asserted at any time and from time to time. Any determination by
the Company concerning the events described above will be final and binding on
all parties.
Acceptance of shares validly tendered in the Offer to Purchase is
subject to the condition that, as of the Expiration Date, and after giving pro
forma effect to the acceptance of shares validly tendered, the Company would
continue to have at least 400 stockholders and the shares would remain listed
for quotation on the Nasdaq National Market. This condition may not be waived.
The Exchange Act requires that all conditions to the Offer to Purchase
must be satisfied or waived before the Expiration Date.
8. PRICE RANGE OF SHARES; DIVIDENDS
The following table sets forth the high and low sales prices, and
dividends declared, for the shares as reported on the Nasdaq National Market for
the periods indicated. The Company's fiscal year end is December 31.
Dividends
High Low Declared
Fiscal 1998
1st Quarter $19.000 $17.000 $.07
2nd Quarter 19.000 17.375 .07
3rd Quarter 18.000 13.375 .08
4th Quarter 14.750 13.125 .08
Fiscal 1999
1st Quarter 13.250 12.625 .09
2nd Quarter 14.000 13.000 .09
3rd Quarter 14.250 13.500 .10
4th Quarter 14.500 12.875 .10
Fiscal 2000
1st Quarter (through
January 27, 2000) 14.875 14.0625 .11
On January 27, 2000, the closing price of the shares on the Nasdaq
National Market was $14.6875 per share. Stockholders are urged to obtain current
market quotations for the shares.
9. PURPOSE OF THE OFFER TO PURCHASE;
CERTAIN EFFECTS OF THE OFFER TO PURCHASE
The Company believes that the purchase of shares is an attractive use
of a portion of the Company's available capital on behalf of its stockholders
and is consistent with the Company's long-term goal of increasing stockholder
value. The Company believes it has adequate sources of capital to complete the
share repurchase and pursue business opportunities; including the recently
announced proposed acquisition of Midwest Savings Bank, located in Bolingbrook,
Illinois.
Over time, the Company's profitable operations have contributed to the
growth of a capital base that exceeds all applicable regulatory standards and
the amount of capital needed to support the Company's banking business. After
9
<PAGE>
evaluating a variety of alternatives to utilize more effectively its capital
base and to attempt to maximize stockholder value, the Company's management and
its Board of Directors believe that the purchase of shares pursuant to the Offer
to Purchase is a positive action that is intended to accomplish the desired
objectives. Other actions previously and currently employed, including periodic
open market purchases of shares, the acquisition of Midwest Savings Bank, the
Company's quarterly cash dividends, have enhanced stockholder value, but capital
remains at high levels, and this affects the Company's ability to produce
desired returns for stockholders.
The Offer to Purchase is designed to restructure the Company's balance
sheet in order to increase return on equity and earnings per share by reducing
the amount of equity and shares outstanding. Based upon the current market price
of its shares, the Company believes that the purchase of shares is an attractive
use of its funds. Following the purchase of the shares, the Company believes
funds provided by earnings, combined with its other sources of liquidity, will
be fully adequate to meet its funding needs for the foreseeable future. Upon
completion of the Offer to Purchase, the Company expects that it and its wholly
owned subsidiary bank, Hemlock Federal Bank for Savings (the "Bank"), will
continue to maintain the highest regulatory standards for capital, which is
designated as "well capitalized" under the prompt corrective action scheme
enacted by the Federal Deposit Insurance Corporation Improvement Act of 1991.
The Offer to Purchase will enable stockholders who are considering the
sale of all or a portion of their shares the opportunity to determine the price
or prices (not greater than $17.50 nor less than $15.00 per share) at which they
are willing to sell their shares, and, if any such shares are purchased pursuant
to the Offer to Purchase, to sell those shares for cash without the usual
transaction costs associated with open-market sales. The Offer to Purchase may
also give stockholders the opportunity to sell shares at prices greater than
market prices prevailing prior to the announcement of the Offer to Purchase. See
Section 8. In addition, qualifying stockholders owning beneficially fewer than
100 shares, whose shares are purchased pursuant to the Offer to Purchase, not
only will avoid the payment of brokerage commissions but will also avoid any
applicable odd lot discounts to the market price typically charged by brokers
for executing odd lot trades.
Stockholders who do not tender their shares pursuant to the Offer to
Purchase and stockholders who otherwise retain an equity interest in the Company
as a result of a partial tender of shares or a proration pursuant to Section 1
of the Offer to Purchase will continue to be owners of the Company with the
attendant risks and rewards associated with owning the equity securities of the
Company. As noted above, the Company, following completion of the Offer to
Purchase, will maintain the highest regulatory capital ranking. Consequently,
the Company believes that stockholders will not be subject to materially greater
risk as a result of the reduction of the capital base.
Stockholders who determine not to accept the Offer to Purchase will
realize a proportionate increase in their relative equity interest in the
Company and, thus, in the Company's earnings and assets, subject to any risks
resulting from the Company's purchase of shares and the Company's ability to
issue additional equity securities in the future. In addition, to the extent the
purchase of shares pursuant to the Offer to Purchase results in a reduction of
the number of stockholders of record, the Company's costs for services to
stockholders may be reduced. Finally, the Offer to Purchase may affect the
Company's ability to qualify for pooling-of-interests accounting treatment for
any merger transaction for approximately the next two years (which could limit
alternative stockholder enhancement vehicles during this period).
If fewer than 388,000 shares are purchased pursuant to the Offer to
Purchase, the Company may repurchase the remainder of such shares on the open
market, in privately negotiated transactions or otherwise. In the future, the
Company may determine to purchase additional shares on the open market, in
privately negotiated transactions, through one or more tender offers or
otherwise. Any such purchases may be on the same terms as, or on terms which are
more or less favorable to stockholders than, the terms of the Offer to Purchase.
However, Rule 13e-4 under the Exchange Act prohibits the Company and its
affiliates from purchasing any shares, other than pursuant to the Offer to
Purchase, until at least ten business days after the Expiration Date. Any future
purchases of shares by the Company would depend on many factors, including the
market price of the shares, the Company's business and financial position, and
general economic and market conditions.
Shares the Company acquires pursuant to the Offer to Purchase will be
restored to the status of authorized and unissued shares, or placed in the
Company's treasury, and will be available for the Company to issue without
further stockholder action (except as required by applicable law or the rules of
the Nasdaq National Market or any other
10
<PAGE>
securities exchange on which the shares are listed) for purposes including, but
not limited to, the acquisition of other businesses, the raising of additional
capital for use in the Company's business and the satisfaction of obligations
under existing or future employee benefit plans. The Company has no current
plans for reissuance of the shares repurchased pursuant to the Offer to
Purchase.
Neither the Company nor its Board of Directors makes any recommendation
to any stockholder as to whether to tender all or any shares. Each stockholder
must make his or her own decision whether to tender shares and, if so, how many
shares to tender and at what price. Directors, officers and employees of the
Company who own shares may participate in the Offer to Purchase on the same
basis as the Company's other stockholders. The Company has been advised that
none of the Directors or officers of the Company intend to tender shares
pursuant to the Offer to Purchase. The Company has also been advised that the
trustee of the ESOP does not intend to tender any shares pursuant to the Offer
to Purchase.
10. INFORMATION CONCERNING THE COMPANY
General
The Company, a Delaware corporation, is a unitary savings and loan
holding company which was organized in December 1996 at the direction of Hemlock
Federal Bank for Savings (the "Bank") for the purpose of owning all of the
outstanding stock of the Bank to be issued in connection with the Bank's
conversion from mutual to stock form. The Bank, founded in 1904, is a federally
chartered savings bank. The Bank is, and intends to continue to be an
independent, community-oriented financial institution. The main office of the
Company and the Bank is located at 5700 West 159th Street, Oak Forest, Illinois
60452.
The Bank serves the financial needs of communities in its market area
through its main office located in Oak Forest, Illinois and its three branch
offices located in Oak Lawn, Chicago and Lemont, Illinois. The Bank attracts
deposits from the general public and uses the deposits, together with borrowings
and other funds, to originate primarily loans secured by mortgages on
owner-occupied one- to four-family residences and, to a much lesser extent,
multi-family, consumer and other loans. These loans are generally originated
within the Bank's primary market area. The Bank also invests in mortgage-backed
securities, investment securities and other short-term liquid assets. Its
deposits are insured up to applicable limits by the Federal Deposit Insurance
Corporation ("FDIC").
The Bank's results of operations are dependent primarily on net
interest income and fee income. Net interest income is the difference between
the interest income earned on its loans, mortgage-backed securities and
investment portfolio and its cost of funds, consisting of interest paid on its
deposits and borrowed money. The Bank's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.
The Bank is subject to examination by the Office of Thrift Supervision
and the FDIC. The Company, as a savings and loan holding company, is subject to
examination by the Office of Thrift Supervision.
Since the time the Company went public, the Board of Directors has
continuously sought ways to maximize the Company's value. In December, a
stockholder submitted a proposal to the Company that it consider hiring an
investment banking firm to advise it on ways to maximize stockholder value.
Subsequently, the Board engaged Keefe, Bruyette & Woods, Inc. ("Keefe"), a firm
that specializes in financial institutions to analyze its business plan and
advise the Company on ways to maximize stockholder value. Keefe has been
familiar with the Company since it acted as investment banker during the
Company's mutual to stock conversion in 1997.
As part of its analysis of the Company's business plan, Keefe analyzed
several potential scenarios developed by management and presented them to the
Board of Directors. The Board determined, based on its discussions with Keefe,
that continuing to enhance shareholder value by remaining independent and
implementing its business plan (including the Offer to Purchase) would be in the
best interest of stockholders. This decision did not change when, in late
December, another stockholder announced his desire to acquire the Company at a
price of not less than $16.50 per share.
11
<PAGE>
In addition, as part of the Company's business plan, on January 10,
2000, the Company announced its agreement to acquire Midwest Savings Bank for
cash. The transaction is valued on a current basis at approximately $3.3
million, and management believes that it will be accretive to the Company's
earnings beginning in the first full quarter after operations are combined. The
transaction is expected to close in the second quarter of this year.
Summary Unaudited Historical Consolidated Financial Data and
Summary Unaudited Pro Forma Consolidated Financial Data
The following summary unaudited historical consolidated financial data
has been derived from the consolidated financial statements of the Company. The
data should be read in conjunction with the consolidated financial statements
and notes thereto included in the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1999. Copies of this report may be obtained as
described in Section 18 of this Offer to Purchase. The income statement data for
the nine months ended September 30, 1998 and 1999 and the balance sheet data as
of September 30, 1999 have been derived from the unaudited condensed
consolidated financial statements of the Company which, in the opinion of
management, include all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of financial position and results of
operations for such periods. Operating results for the three months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the entire year ending December 31, 1999.
Historical September 30, 1999
---------- ---------------------
September $15.00 per $17.50 per
30, 1999 Share Share
---------- ---------- ----------
Balance Sheet Data:
ASSETS
Cash and cash equivalents......................... $ 4,143 $ 2,323 $ 1,353
Securities........................................ 94,232 94,232 94,232
Loans receivable, net............................. 115,238 115,238 115,238
Other assets...................................... 7,562 7,562 7,562
-------- -------- --------
Total assets.................................. $221,175 $219,355 $218,385
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits.......................................... $151,380 $151,380 $151,380
Advances from FHLB................................ 39,500 43,500 43,500
Other liabilities................................. 3,644 3,644 3,644
-------- -------- --------
Total liabilities............................. 194,524 198,524 198,524
Stockholders' equity:
Common stock and additional paid-in capital,
net of unearned ESOP and unearned stock awards... 18,145 18,145 18,145
Treasury stock.................................... (6,080) (11,900) (12,870)
Retained earnings................................. 13,898 13,898 13,898
Accumulated other comprehensive income............ 688 688 688
-------- -------- --------
Total stockholders' equity ................... 26,651 20,831 19,861
-------- -------- --------
Total liabilities and stockholders' equity.... $221,175 $219,355 $218,385
======== ======== ========
Shares outstanding................................1,525,624 1,137,624 1,137,624
12
<PAGE>
<TABLE>
<CAPTION>
Historical
---------------------- Nine months ended
Nine months ended September 30, 1999
September 30, ------------------------
---------------------- $15.00 per $17.50 per
1998 1999 Share Share
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Income Statement Data:
Total interest income....................... $ 9,486 $ 10,250 $ 10,189 $ 10,156
Total interest expense...................... 5,058 5,300 5,465 5,465
--------- --------- --------- ---------
Net interest income..................... 4,428 4,950 4,724 4,691
Provision for loan losses................... 21 20 20 20
--------- --------- --------- ---------
Net interest income after provision
for loan losses........................ 4,407 4,930 4,704 4,671
Total non-interest income................... 540 509 509 509
Total non-interest expense.................. 3,027 3,444 3,444 3,444
--------- --------- --------- ---------
Income before income taxes.............. 1,920 1,995 1,769 1,736
Income taxes................................ 742 762 674 662
--------- --------- --------- ---------
Net income.............................. $ 1,178 $ 1,233 $ 1,095 $ 1,074
========= ========= ========= =========
Selected Financial Ratios:
Earnings per share - basic.................. $0.65 $0.79 $0.94 $0.92
===== ===== ===== =====
Earnings per share-diluted.................. $0.65 $0.79 $0.94 $0.92
===== ===== ===== =====
Ratio of earnings to fixed charges.......... 1.38% 1.38% 1.32% 1.32%
Return on average equity.................... 5.30% 6.11% 6.92% 7.12%
Book value per share(1)..................... $14.91 $15.69 $15.88 $15.14
Weighted average shares
outstanding-diluted...................... 1,820,000 1,558,000 1,170,000 1,170,000
<FN>
(1) Unearned ESOP shares and unearned stock award shares are considered to
be outstanding for book value per share purposes.
</FN>
</TABLE>
13
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORPORATION
Notes to Unaudited Pro Forma Financial Information
(1) The pro forma financial information reflects the repurchase of 388,000
shares at $15.00 and $17.50 per share, as appropriate.
(2) The balance sheet data gives effect to the purchase of shares as of the
balance sheet date. The income statement data give effect to the
purchase of shares as of the beginning of each period presented.
(3) The funds used to purchase shares were obtained through additional
borrowings and the liquidation of interest bearing deposits held in
other financial institutions. The pro forma data assumes a rate of
interest of 5.5% on additional borrowings and 4.5% on the interest
bearing deposits and an incremental tax rate of 38.74%.
(4) No effect has been given to the cost incurred in connection with the
Offer to Purchase. Such costs are not expected to be material and will
be capitalized as part of the cost of the shares purchased.
14
<PAGE>
The following summary combined unaudited pro forma consolidated
financial data reflects the proposed acquisition of Midwest and has been derived
from the historical consolidated financial statements of the Company and
Midwest. Such information has not been adjusted for certain costs and expenses
to be incurred as a result of the purchase of shares pursuant to the Offer to
Purchase. The summary combined unaudited pro forma consolidated financial data
should be read in conjunction with the summary historical consolidated financial
data included herein. The combined pro forma income statement data and balance
sheet data are not necessarily indicative of the financial position or results
of operations that would have been obtained had the Offer to Purchase been
completed as of the dates indicated. The pro forma consolidated financial data
does not reflect any anticipated cost reductions or changes in operations of
Midwest.
Pro Forma September 30, 1999
--------- ---------------------
September $15.00 per $17.50 per
30, 1999 Share Share
--------- ---------- ----------
Balance Sheet Data:
ASSETS
Cash and cash equivalents........................ $ 4,641 $ 2,821 $ 1,851
Securities....................................... 97,184 97,184 97,184
Loans receivable, net............................ 156,347 156,347 156,347
Other assets..................................... 9,881 9,881 9,881
Cash deposit premium............................. 610 610 610
-------- -------- --------
Total assets................................. $268,663 $266,843 $265,873
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits......................................... $180,137 $180,137 $180,137
Advances from FHLB............................... 57,000 61,000 61,000
Other liabilities................................ 4,875 4,875 4,875
-------- -------- --------
Total liabilities............................ 242,012 246,012 246,012
Stockholders' equity:
Common stock and additional
paid-in capital, net of
unearned ESOP and unearned stock awards....... 18,145 18,145 18,145
Treasury stock................................... (6,080) (11,900) (12,870)
Retained earnings................................ 13,898 13,898 13,898
Accumulated other comprehensive income........... 688 688 688
-------- -------- --------
Total stockholders' equity .................. 26,651 20,831 19,861
-------- -------- --------
Total liabilities and stockholders' equity... $268,663 $266,843 $265,873
======== ======== ========
Shares outstanding............................... 1,525,624 1,137,624 1,137,624
15
<PAGE>
The following summary combined unaudited pro forma consolidated
financial data reflects the proposed acquisition of Midwest and has been derived
from the historical consolidated financial statements of the Company and
Midwest. Such information has not been adjusted for certain costs and expenses
to be incurred as a result of the purchase of shares pursuant to the Offer to
Purchase. The summary combined unaudited pro forma consolidated financial data
should be read in conjunction with the summary historical consolidated financial
data included herein. The combined pro forma income statement data and balance
sheet data are not necessarily indicative of the financial position or results
of operations that would have been obtained had the Offer to Purchase been
completed as of the dates indicated. The pro forma consolidated financial data
does not reflect any anticipated cost reductions or changes in operations of
Midwest.
Pro Forma
--------------------------------------
Nine months ended
Nine months September 30, 1999
ended ------------------------
September $15.00 per $17.50 per
30, 1999 Share Share
----------- ---------- -----------
Income Statement Data:
Total interest income............... $12,562 $12,500 $12,468
Total interest expense.............. 6,740 6,905 6,905
-------- -------- --------
Net interest income................ 5,822 5,595 5,563
Provision for loan losses........... 20 20 20
-------- -------- --------
Net interest income after provision
for loan losses................ 5,802 5,575 5,543
Total non-interest income........... 712 712 712
Total non-interest expense.......... 4,601 4,601 4,601
-------- -------- --------
Income before income taxes...... 1,913 1,686 1,654
Income taxes........................ 720 632 620
-------- -------- --------
Net income...................... $ 1,193 $ 1,054 $ 1,034
======== ======== ========
Selected Financial Ratios:
Earnings per share - basic.......... $0.77 $0.90 $0.88
===== ===== =====
Earnings per share-diluted.......... $0.77 $0.90 $0.88
===== ===== =====
Ratio of earnings to fixed charges.. 1.28% 1.24% 1.24%
Return on average equity............ 6.11% 6.67% 6.85%
Book value per share(1)............. $15.69 $15.88 $15.14
Weighted average shares
outstanding-diluted.............. 1,558,000 1,170,000 1,170,000
(1) Unearned ESOP shares and unearned stock award shares are considered to
be outstanding for book value per share purposes.
16
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORPORATION
Notes to Combined Unaudited Pro Forma Financial Information
(1) The pro forma financial information reflects the repurchase of 388,000
shares at $15.00 and $17.50 per share, as appropriate.
(2) The balance sheet data gives effect to the purchase of shares as of the
balance sheet date. The income statement data give effect to the
purchase of shares as of the beginning of each period presented.
(3) The funds used to purchase shares were obtained through additional
borrowings and the liquidation of interest bearing deposits held in
other financial institutions. The pro forma data assumes a rate of
interest of 5.5% on additional borrowings and 4.5% on the interest
bearing deposits and an incremental tax rate of 38.74%.
(4) No effect has been given to the cost incurred in connection with the
Offer to Purchase. Such costs are not expected to be material and will
be capitalized as part of the cost of the shares purchased.
(5) The combined pro forma financial information reflects the pending
acquisition of all of the outstanding common stock of Midwest. Pro
forma information with respect to this acquisition is as follows:
<TABLE>
<CAPTION>
Historical Historical
Hemlock Midwest Pro Forma
9/30/99 9/30/99 Adjustments 9/30/99
--------- ------- ----------- --------
<S> <C> <C> <C> <C>
Cash and cash equivalents...... $ 4,143 $ 1,596 $(1,098) (b) $ 4,641
Securities..................... 94,232 2,952 --- 97,184
Loans receivable, net.......... 115,238 41,070 39 (c) 156,347
Other assets................... 7,562 2,057 262 (c) 9,881
Core deposit premium........... --- --- 610 (c) 610
-------- ------- -------- --------
$221,175 $47,675 $ (187) $268,663
======== ======= ======== ========
Deposits....................... $151,380 $28,710 $ 47 (c) $180,137
Advances from FHLB............. 39,500 14,500 3,000 (b) 57,000
Other liabilities.............. 3,644 1,108 123 (a) 4,875
-------- ------- -------- --------
Total liabilities.............. 194,524 44,318 3,170 242,012
Common stock, and
additional paid in
capital, net of unearned
ESOP and stock awards...... 18,145 1,497 (1,497)(a) 18,145
Treasury stock................. (6,080) (6,080)
Retained earnings.............. 13,898 1,860 (1,860)(a) 13,898
Accumulated other
comprehensive income....... 688 688
-------- ------- -------- --------
Total equity................... 26,651 3,357 (3,357) 26,651
-------- ------- -------- --------
$221,175 $47,675 $ (187) $268,663
======== ======= ========== ========
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Historical Historical
Hemlock Midwest Pro Forma
9/30/99 9/30/99 Adjustments 9/30/99
--------- ------- ----------- --------
<S> <C> <C> <C> <C>
Total interest income.......... $10,250 $2,353 $ (41)(b)(c) $12,562
Total interest expense......... 5,300 1,281 159 (b)(c) 6,740
-------- ------- -------- --------
Net interest income............ 4,950 1,072 200) 5,822
Provision for loan losses...... 20 20
-------- ------- -------- --------
Net interest income after
provision for loan losses.. 4,930 1,072 (200) 5,802
Total other income............. 509 203 --- 712
Total other expense............ 3,444 1,214 (57)(c) 4,601
-------- ------- -------- --------
Income before taxes............ 1,995 61 (143) 1,913
Income taxes................... 762 --- (42)(b) 720
-------- ------- -------- --------
Net income..................... $ 1,233 $ 61 $ (101) $ 1,193
======== ======== ======= ========
</TABLE>
Notes to Unaudited Combined Pro Forma Financial Information:
a) Pro forma reflects payment of purchase price of $3.3 million,
repayment of Midwest ESOP liability, payment of Midwest
employment contract liabilities and payment of Midwest
expenses related to the sale.
b) The funds used to purchase Midwest and pay various Midwest
liabilities were considered to have been proceeds from
additional FHLB advances and the liquidation of interest
bearing deposits held in other financial institutions. The pro
forma data assumes a rate of interest of 5.5% on the FHLB
advances and 4.5% on the interest bearing deposits and an
incremental tax rate of 38.74%.
c) The assets and liabilities of Midwest were assumed to be
adjusted to fair value at the assumed acquisition date. The
core deposit premium is assumed to amortize on a straight-line
basis over eight years. Premiums on loans were assumed to
amortize over seven years. Deposit premiums were assumed to
amortize over one year.
18
<PAGE>
11. SOURCE AND AMOUNT OF FUNDS
Assuming that the Company purchases the maximum of 388,000 shares
pursuant to the Offer to Purchase at the highest price of $17.50 per share, the
total amount required by the Company to purchase such shares will be $6.8
million, exclusive of fees and other expenses. The Company will fund this
purchase through the sale of marketable securities held in the Company's
portfolio.
12. INTEREST OF DIRECTORS AND OFFICERS; TRANSACTIONS
AND ARRANGEMENTS CONCERNING SHARES
As of January 24, 2000, the Company had 1,617,762 shares issued and
outstanding (including shares allocated pursuant to the Company's Employee Stock
Ownership Plan and Recognition and Retention Plan), and had reserved 184,641
shares for issuance upon exercise of outstanding stock options. The 388,000
shares that the Company is offering to purchase represent approximately 24% of
the outstanding shares. As of January 24, 2000, the Company's directors and
executive officers as a group (9 persons) beneficially owned an aggregate of
256,338 shares (including 64,780 shares covered by currently exercisable options
granted under the Company's Stock Option and Incentive Plan) representing
approximately 15.85% of the outstanding shares, assuming the exercise by such
persons of their currently exercisable options. Directors, officers and
employees of the Company who own shares may participate in the Offer to Purchase
on the same basis as the Company's other stockholders. The Company has been
advised that none of its directors or executive officers intend to tender shares
pursuant to the Offer to Purchase. As of January 24, 2000, 174,635 shares, or
approximately 10.80% of the outstanding shares, were held in the ESOP. The
Company has been advised that the trustee of the ESOP does not intend to tender
any shares pursuant to the Offer to Purchase. In addition, employees of the
Company not included in the categories discussed above beneficially owned an
aggregate of 27,113 shares of the Company's common stock through the Company's
profit-sharing plan.
Assuming the Company purchases 388,000 shares pursuant to the Offer to
Purchase, and neither the trustee of the ESOP nor any of the directors or
executive officers of the Company tender any shares pursuant to the Offer to
Purchase, then after the purchase of shares pursuant to the Offer to Purchase,
the Company's executive officers and directors as a group would own beneficially
approximately 20.84% of the outstanding shares, assuming the exercise by such
persons of their currently exercisable options. In addition, the ESOP would own
approximately 14.20% of the outstanding shares.
Neither the Company, nor any subsidiary of the Company nor, to the best
of the Company's knowledge, any of the Company's directors and executive
officers, nor any affiliate of any of the foregoing, had any transactions
involving the shares during the 60 days prior to the date hereof.
Except for outstanding options to purchase shares granted from to time
to time over recent years to certain directors and employees (including
executive officers) of the Company pursuant to the Company's Stock Option and
Incentive Plan, and except as otherwise described herein, neither the Company
nor, to the best of the Company's knowledge, any of its affiliates, directors or
executive officers, or any of the directors or executive officers of any of its
affiliates, is a party to any contract, arrangement, understanding or
relationship with any other person relating, directly or indirectly, to the
Offer to Purchase with respect to any securities of the Company including, but
not limited to, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any such securities, joint ventures,
loan or option arrangements, puts or calls, guaranties of loans, guaranties
against loss or the giving or withholding of proxies, consents or
authorizations.
Except as disclosed in this Offer to Purchase, the Company, its
directors and executive officers have no current plans or proposals which relate
to or would result in:
o the acquisition by any person of additional securities of the
Company or the disposition of securities of the Company;
o an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of
its subsidiaries;
19
<PAGE>
o a purchase, sale or transfer of a material amount of assets of
the Company or any of its subsidiaries;
o any change in the present Board of Directors or management of
the Company;
o any material change in the present dividend rate or policy, or
indebtedness or capitalization of the Company;
o any other material change in the Company's corporate structure
or business;
o any change in the Company's Certificate of Incorporation or
Bylaws or any actions which may impede the acquisition of
control of the Company by any person;
o a class of equity security of the Company being delisted from
a national securities exchange;
o a class of equity securities of the Company becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or
o the suspension of the Company's obligation to file reports
pursuant to Section 15(d) of the Exchange Act. See Section 10.
13. EFFECTS OF THE OFFER TO PURCHASE ON THE MARKET FOR SHARES;
REGISTRATION UNDER THE EXCHANGE ACT
The Company's purchase of shares pursuant to the Offer to Purchase will
reduce the number of shares that might otherwise be traded publicly and may
reduce the number of stockholders. Nonetheless, the Company anticipates that
there will be a sufficient number of shares outstanding and publicly traded
following consummation of the Offer to Purchase to ensure a continued trading
market for the shares. Based upon published guidelines of the Nasdaq National
Market, the Company believes that following its purchase of shares pursuant to
the Offer to Purchase, the Company's remaining shares will continue to qualify
to be quoted on the Nasdaq National Market.
The shares are currently "margin securities" under the rules of the
Federal Reserve Board. This has the effect, among other things, of allowing
brokers to extend credit to their customers using such shares as collateral. The
Company believes that, following the purchase of shares pursuant to the Offer to
Purchase, the shares will continue to be "margin securities" for purposes of the
Federal Reserve Board's margin regulations.
The shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its stockholders
and the U.S. Securities and Exchange Commission (the "Commission") and comply
with the Commission's proxy rules in connection with meetings of the Company's
stockholders.
14. LEGAL MATTERS; REGULATORY APPROVALS
The Company is not aware of any license or regulatory permit that
appears to be material to the Company's business that might be adversely
affected by the Company's acquisition of shares as contemplated herein or of any
approval or other action by, or any filing with, any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the acquisition or ownership of shares by the Company as
contemplated herein. Should any such approval or other action be required, the
Company presently contemplates that such approval or other action will be
sought. The Company is unable to predict whether it may determine that it is
required to delay the acceptance for payment of or payment for shares tendered
pursuant to the Offer to Purchase pending the outcome of any such matter. There
can be no assurance that any such approval or other action, if needed, would be
obtained or would be obtained without substantial conditions or that the failure
to obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company's obligations under the
Offer to Purchase to accept for payment and pay for shares is subject to certain
conditions. See Section 7.
20
<PAGE>
15. FEDERAL INCOME TAX CONSEQUENCES
General. The following is a discussion of the material United States
federal income tax consequences to stockholders with respect to a sale of shares
pursuant to the Offer to Purchase. The discussion is based upon the provisions
of the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, Internal Revenue Service ("IRS") rulings and judicial decisions,
all in effect as of the date hereof and all of which are subject to change
(possibly with retroactive effect) by subsequent legislative, judicial or
administrative action. The discussion does not address all aspects of United
States federal income taxation that may be relevant to a particular stockholder
in light of the stockholder's particular circumstances or to certain types of
holders subject to special treatment under the United States federal income tax
laws (such as certain financial institutions, tax-exempt organizations, life
insurance companies, dealers in securities or currencies, employee benefit plans
or stockholders holding the shares as part of a conversion transaction, as part
of a hedge or hedging transaction, or as a position in a straddle for tax
purposes). In addition, the discussion below does not consider the effect of any
foreign, state, local or other tax laws that may be applicable to particular
stockholders. The discussion assumes that the shares are held as "capital
assets" within the meaning of Section 1221 of the Code. The Company has neither
requested nor obtained a written opinion of counsel or a ruling from the IRS
with respect to the tax matters discussed below.
Each stockholder should consult his or her own tax advisor as to the
particular United States federal income tax consequences to that stockholder
tendering shares pursuant to the Offer to Purchase and the applicability and
effect of any state, local or foreign tax laws and recent changes in applicable
tax laws.
Characterization of the Surrender of Shares Pursuant to the Offer to
Purchase. The surrender of shares by a stockholder to the Company pursuant to
the Offer to Purchase will be a taxable transaction for United States federal
income tax purposes and may also be a taxable transaction under applicable
state, local and foreign tax laws. The United States federal income tax
consequences to a stockholder may vary depending upon the stockholder's
particular facts and circumstances. Under Section 302 of the Code, the surrender
of shares by a stockholder to the Company pursuant to the Offer to Purchase will
be treated as a "sale or exchange" of such shares for United States federal
income tax purposes (rather than as a distribution by the Company with respect
to the shares held by the tendering stockholder) if the receipt of cash upon
surrender (i) is "substantially disproportionate" with respect to the
stockholder, (ii) results in a "complete redemption" of the stockholder's
interest in the Company, or (iii) is "not essentially equivalent to a dividend"
with respect to the stockholder (each as described below).
If any of the above three tests is satisfied, and the surrender of the
shares is therefore treated as a "sale or exchange" of such shares for United
States federal income tax purposes, the tendering stockholder will recognize
gain or loss equal to the difference between the amount of cash received by the
stockholder and the stockholder's tax basis in the shares surrendered pursuant
to the Offer to Purchase. Any such gain or loss will be capital gain or loss,
and will be long term capital gain or loss if the shares have been held for more
than one year.
If none of the above three tests is satisfied, the tendering
stockholder will be treated as having received a distribution by the Company
with respect to the stockholder's shares in an amount equal to the cash received
by the stockholder pursuant to the Offer to Purchase. The distribution will be
treated as a dividend taxable as ordinary income to the extent of the Company's
current or accumulated earnings and profits for tax purposes. The amount of the
distribution in excess of the Company's current or accumulated earnings and
profits will be treated as a return of the stockholder's tax basis in the
shares, and then as gain from the sale or exchange of the shares. If a
stockholder is treated as having received a distribution by the Company with
respect to his or her shares, the stockholder's tax basis in his or her
remaining shares will generally be adjusted to take into account the
stockholders return of basis in the shares tendered.
Constructive Ownership. In determining whether any of the three tests
under Section 302 of the Code is satisfied, stockholders must take into account
not only the shares that are actually owned by the stockholder, but also shares
that are constructively owned by the stockholder within the meaning of Section
318 of the Code. Under Section 318 of the Code, a stockholder may constructively
own shares actually owned, and in some cases constructively owned, by certain
related individuals or entities and shares that the stockholder has the right to
acquire by exercise of an option or by conversion.
21
<PAGE>
Proration. Contemporaneous dispositions or acquisitions of shares by a
stockholder or related individuals or entities may be deemed to be part of a
single integrated transaction and may be taken into account in determining
whether any of the three tests under Section 302 of the Code has been satisfied.
Each stockholder should be aware that because proration may occur in the Offer
to Purchase, even if all the shares actually and constructively owned by a
stockholder are tendered pursuant to the Offer to Purchase, fewer than all of
these shares may be purchased by the Company. Thus, proration may affect whether
the surrender by a stockholder pursuant to the Offer to Purchase will meet any
of the three tests under Section 302 of the Code. See Section 6 for information
regarding each stockholder's option to make a conditional tender of a minimum
number of shares. A stockholder should consult his or her own tax advisor
regarding whether to make a conditional tender of a minimum number of shares,
and the appropriate calculation thereof.
Section 302 Tests. The receipt of cash by a stockholder will be
"substantially disproportionate" if the percentage of the outstanding shares in
the Company actually and constructively owned by the stockholder immediately
following the surrender of shares pursuant to the Offer to Purchase is less than
80% of the percentage of the outstanding shares actually and constructively
owned by the stockholder immediately before the sale of shares pursuant to the
Offer to Purchase. Stockholders should consult their tax advisors with respect
to the application of the "substantially disproportionate" test to their
particular situation.
The receipt of cash by a stockholder will be a "complete redemption" if
either (i) the stockholder owns no shares in the Company either actually or
constructively immediately after the shares are surrendered pursuant to the
Offer to Purchase, or (ii) the stockholder actually owns no shares in the
Company immediately after the surrender of shares pursuant to the Offer to
Purchase and, with respect to shares constructively owned by the stockholder
immediately after the Offer to Purchase, the stockholder is eligible to waive
(and effectively waives) constructive ownership of all such shares under
procedures described in Section 302(c) of the Code. A director, officer or
employee of the Company is not eligible to waive constructive ownership under
the procedures described in Section 302(c) of the Code.
Even if the receipt of cash by a stockholder fails to satisfy the
"substantially disproportionate" test or the "complete redemption" test, a
stockholder may nevertheless satisfy the "not essentially equivalent to a
dividend" test if the stockholder's surrender of shares pursuant to the Offer to
Purchase results in a "meaningful reduction" in the stockholder's interest in
the Company. Whether the receipt of cash by a stockholder will be "not
essentially equivalent to a dividend" will depend upon the individual
stockholder's facts and circumstances. The IRS has indicated in published
rulings that even a small reduction in the proportionate interest of a small
minority stockholder in a publicly held corporation who exercises no control
over corporate affairs may constitute such a "meaningful reduction."
Stockholders expecting to rely upon the "not essentially equivalent to a
dividend" test should consult their own tax advisors as to its application in
their particular situation.
Corporate Stockholder Dividend Treatment. If a sale of shares by a
corporate stockholder is treated as a dividend, the corporate stockholder may be
entitled to claim a deduction equal to 70% of the dividend under Section 243 of
the Code, subject to applicable limitations. Corporate stockholders should,
however, consider the effect of Section 246(c) of the Code, which disallows the
70% dividends-received deduction with respect to stock that is held for 45 days
or less. For this purpose, the length of time a taxpayer is deemed to have held
stock may be reduced by periods during which the taxpayer's risk of loss with
respect to the stock is diminished by reason of the existence of certain options
or other transactions. Moreover, under Section 246A of the Code, if a corporate
stockholder has incurred indebtedness directly attributable to an investment in
shares, the 70% dividends-received deduction may be reduced.
In addition, amounts received by a corporate stockholder pursuant to
the Offer to Purchase that are treated as a dividend may constitute an
"extraordinary dividend" under Section 1059 of the Code. The "extraordinary
dividend" rules of the Code are highly complicated. Accordingly, any corporate
shareholder that might have a dividend as a result of the sale of shares
pursuant to the Offer to Purchase should review the "extraordinary dividend"
rules to determine the applicability and impact of such rules to it.
Additional Tax Considerations. The distinction between long-term
capital gains and ordinary income is relevant because, in general, individuals
currently are subject to taxation at a reduced rate on their "net capital gain"
(i.e.,
22
<PAGE>
the excess of net long-term capital gains over net short-term capital losses)
for the year. Tax rates on long-term capital gain for individual shareholders
vary depending on the shareholders' income and holding period for the shares. In
particular, reduced tax rates apply to gains recognized by an individual from
the sale of capital assets held for more than one year (currently 20 percent or
less).
Stockholders are urged to consult their own tax advisors regarding any
possible impact on their obligation to make estimated tax payments as a result
of the recognition of any capital gain (or the receipt of any ordinary income)
caused by the surrender of any shares to the Company pursuant to the Offer to
Purchase.
Foreign Stockholders. The Company will withhold United States federal
income tax at a rate of 30% from gross proceeds paid pursuant to the Offer to
Purchase to a foreign stockholder or his agent, unless the Company determines
that a reduced rate of withholding is applicable pursuant to a tax treaty or
that an exemption from withholding is applicable because such gross proceeds are
effectively connected with the conduct of a trade or business by the foreign
stockholder within the United States. For this purpose, a foreign stockholder is
any stockholder that is not (i) a citizen or resident of the United States, (ii)
a domestic corporation or domestic partnership, (iii) an estate the income of
which from sources without the United States is effectively connected with the
conduct of a trade or business within the United States, or (iv) a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust, and one or more United States persons have the
authority to control all substantial decisions of the trust. Without definite
knowledge to the contrary, the Company will determine whether a stockholder is a
foreign stockholder by reference to the stockholder's address. A foreign
stockholder may be eligible to file for a refund of such tax or a portion of
such tax if such stockholder (i) meets the "complete redemption," "substantially
disproportionate" or "not essentially equivalent to a dividend" tests described
above, (ii) is entitled to a reduced rate of withholding pursuant to a treaty
and the Company withheld at a higher rate, or (iii) is otherwise able to
establish that no tax or a reduced amount of tax was due. In order to claim an
exemption from withholding on the ground that gross proceeds paid pursuant to
the Offer to Purchase are effectively connected with the conduct of a trade or
business by a foreign stockholder within the United States or that the foreign
stockholder is entitled to the benefits of a tax treaty, the foreign stockholder
must deliver to the Depositary (or other person who is otherwise required to
withhold United States tax) a properly executed statement claiming such
exemption or benefits. Such statements may be obtained from the Depositary.
Foreign stockholders are urged to consult their own tax advisors regarding the
application of United States federal income tax withholding, including
eligibility for a withholding tax reduction or exemption and the refund
procedures.
Backup Withholding. See Section 3 with respect to the application of
the United States federal income tax backup withholding.
The tax discussion set forth above is included for general information
only and may not apply to shares acquired in connection with the exercise of
stock options or pursuant to other compensation arrangements with the Company.
The tax consequences of a sale pursuant to the Offer to Purchase may vary
depending upon, among other things, the particular circumstances of the
tendering stockholder. No information is provided herein to the state, local or
foreign tax consequences of the transaction contemplated by the Offer to
Purchase. Stockholders are urged to consult their own tax advisors to determine
the particular federal, state, local and foreign tax consequences to them of
tendering shares pursuant to the Offer to Purchase and the effect of the stock
ownership attribution rules described above.
16. EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENTS
The Company expressly reserves the right, in its sole discretion and at
any time or from time to time, to extend the period of time during which the
Offer to Purchase is open by giving oral or written notice of such extension to
the Depositary and making a public announcement thereof. There can be no
assurance, however, that the Company will exercise its right to extend the Offer
to Purchase. During any such extension, all shares previously tendered will
remain subject to the Offer to Purchase, except to the extent that such shares
may be withdrawn as set forth in Section 4. The Company also expressly reserves
the right, in its sole discretion, (i) to terminate the Offer to Purchase and
not accept for payment any shares not previously accepted for payment or,
subject to Rule 13e-4(f)(5) under the Exchange Act which requires the Company
either to pay the consideration offered or to return the shares tendered
promptly after the
23
<PAGE>
termination or withdrawal of the Offer to Purchase, to postpone payment for
shares upon the occurrence of any of the conditions specified in Section 7
hereof, by giving oral or written notice of such termination to the Depositary
and making a public announcement thereof and (ii) at any time, or from time to
time, to amend the Offer to Purchase in any respect. Amendments to the Offer to
Purchase may be effected by public announcement. Without limiting the manner in
which the Company may choose to make public announcement of any extension,
termination or amendment, the Company shall have no obligation (except as
otherwise required by applicable law) to publish, advertise or otherwise
communicate any such public announcement, other than by making a release to the
Dow Jones News Service, except in the case of an announcement of an extension of
the Offer to Purchase, in which case the Company shall have no obligation to
publish, advertise or otherwise communicate such announcement other than by
issuing a notice of such extension by press release or other public
announcement, which notice shall be issued no later than [9:00 a.m.], New York
City time, on the next business day after the previously scheduled Expiration
Date. Material changes to information previously provided to holders of the
shares in this Offer to Purchase or in documents furnished subsequent thereto
will be disseminated to holders of shares in compliance with Rule 13e-4(e)(3)
promulgated by the Commission under the Exchange Act.
If the Company materially changes the terms of the Offer to Purchase or
the information concerning the Offer to Purchase, or if it waives a material
condition of the Offer to Purchase, the Company will extend the Offer to
Purchase to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the
Exchange Act. Those rules require that the minimum period during which an offer
must remain open following material changes in the terms of the offer or
information concerning the offer (other than a change in price, change in
dealer's soliciting fee or change in percentage of securities sought) will
depend on the facts and circumstances, including the relative materiality of
such terms or information. In a published release, the Commission has stated
that in its view, an offer should remain open for a minimum of five business
days from the date that notice of such a material change is first published,
sent or given. The Offer to Purchase will continue or be extended for at least
ten business days from the time the Company publishes, sends or gives to holders
of shares a notice that it will (a) increase or decrease the price it will pay
for shares or the amount of the Information Agents/Dealer Manager's soliciting
fee or (b) increase (except for an increase not exceeding 2% of the outstanding
shares) or decrease the number of shares it seeks.
17. SOLICITATION FEES AND EXPENSES
Keefe, Bruyette & Wood, Inc., will act as the Dealer Manager and
Information Agent for the Company in connection with the Offer to Purchase.
Keefe, as Information Agent, may contact stockholders by mail, telephone,
facsimile, telex, telegraph, other electronic means and personal interviews, and
may request brokers, dealers and other nominee stockholders to forward materials
relating to the Offer to Purchase to beneficial owners. The Company has agreed
to pay Keefe an advisory fee of $25,000 and, upon acceptance for and payment of
shares pursuant to the Offer to Purchase, a total of $.10 per share purchased by
the Company pursuant to the Offer to Purchase. Keefe will also be reimbursed for
certain out-of-pocket expenses. Keefe will also be indemnified against certain
liabilities, including liabilities under the federal securities laws, in
connection with the Offer to Purchase.
Keefe has rendered, is currently rendering and may continue to render
various investment banking and other advisory services to the Company. It has
received, and may continue to receive, customary compensation from the Company
for such services.
The Company has retained Registrar and Transfer Company as Depositary
in connection with the Offer to Purchase. The Depositary will receive reasonable
and customary compensation for its services and will also be reimbursed for
certain out-of-pocket expenses. The Company has agreed to indemnify the
Depositary against certain liabilities, including certain liabilities under the
federal securities laws, in connection with the Offer to Purchase. Neither the
Information Agent nor the Depositary has been retained to make solicitations or
recommendations in connection with the Offer to Purchase.
The Company will not pay any fees or commissions to any broker, dealer
or other person for soliciting tenders of shares pursuant to the Offer to
Purchase (other than the fee of the Dealer Manager). The Company will, upon
request, reimburse brokers, dealers, commercial banks and trust companies for
reasonable and customary handling and mailing expenses incurred by them in
forwarding materials relating to the Offer to Purchase to their customers.
24
<PAGE>
18. WHERE YOU CAN OBTAIN ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Certain information as of particular dates
concerning the Company's directors and officers, their remuneration, options
granted to them, the principal holders of the Company's securities and any
material interest of such persons in transactions with the Company is filed with
the Commission. The Company has also filed an Issuer Tender Offer Statement on
Schedule T0 with the Commission, which includes certain additional information
relating to the Offer to Purchase. Such reports, as well as such other material,
may be inspected and copies may be obtained at the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C., and should also be
available for inspection and copying at the regional offices of the Commission
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and Suite
1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material may be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Schedule T0 may
not be available at the Commission's regional offices.
The Offer to Purchase is being made to all holders of shares. The
Company is not aware of any state where the making of the Offer to Purchase is
prohibited by administrative or judicial action pursuant to a valid state
statute. If the Company becomes aware of any valid state statute prohibiting the
making of the Offer to Purchase, the Company will make a good faith effort to
comply with such statute. If, after such good faith effort, the Company cannot
comply with such statute, the Offer to Purchase will not be made to, nor will
tenders be accepted from or on behalf of, holders of shares in such state. In
those jurisdictions whose securities, blue sky or other laws require the Offer
to Purchase to be made by a licensed broker or dealer, the Offer to Purchase
shall be deemed to be made on behalf of the Company by the Dealer
Manager/Information Agent or one or more registered brokers or dealers licensed
under the laws of such jurisdictions.
HEMLOCK FEDERAL FINANCIAL CORPORATION
February 1, 2000
25
<PAGE>
The Dealer Manager and Information Agent for the Offer to Purchase is:
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Telephone: (877) 298-6520 (toll free)
Any questions concerning tender procedures or requests for additional
copies of this Offer to Purchase, the Letter of Transmittal or other tender
offer materials may be directed to the Dealer Manager/Information Agent.
The Depositary for the Offer to Purchase is:
<TABLE>
<CAPTION>
REGISTRAR AND TRANSFER COMPANY
<S> <C> <C>
By Mail or By Overnight Courier: For Assistance: By Hand:
(800) 368-5948 c/o The Depository Trust Co.
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016 55 Water Street, 1st Floor
Attention: Reorganization New York, New York 10041-0099
Department
By Facsimile:
(212) 587-3006
(For Eligible Institutions Only)
</TABLE>
Any questions concerning tender procedures may be directed to the
Depositary at (800)368-5948.
February 1, 2000
<PAGE>
EXHIBIT (A)(1)-2
HEMLOCK FEDERAL FINANCIAL CORPORATION
LETTER OF TRANSMITTAL
To Accompany Shares of Common Stock
of
Hemlock Federal Financial Corporation
Tendered Pursuant to the Offer to Purchase
Dated February 1, 2000
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON WEDNESDAY, MARCH 1, 2000, UNLESS THE OFFER IS EXTENDED.
To: REGISTRAR AND TRANSFER COMPANY, Depositary
<TABLE>
<S> <C> <C>
By Mail or By Overnight Courier: For Assistance: By Hand:
(800) 368-5948 c/o The Depository Trust Co.
10 Commerce Drive Transfer Agent Drop
Cranford, New Jersey 07016 55 Water Street, 1st Floor
Attention: Reorganization Department New York, New York 10041-0099
By Facsimile:
(212) 587-3006
(For Eligible Institutions Only)
</TABLE>
DESCRIPTION OF SHARES TENDERED
(See Instructions 3 and 4.)
- --------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
Shares Tendered
(Please Fill in Exactly as Name(s) Appear(s) on Certificate(s)
(Attach Additional List if Necessary)
-----------------------------------------------------------
Total Number
of Shares Number of
Certificate Represented by Shares
Number(s)* Certificate(s)* Tendered**
------------ --------------- -----------
TOTAL SHARES
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented
by any certificates delivered to the Depositary are being tendered. See
Instruction 4.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THE LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
("DTC") (hereinafter referred to as the "Book-Entry Transfer Facility") pursuant
to the procedures set forth in Section 3 of the Offer to Purchase (as defined
below).
Delivery of documents to the Company or to the Book-Entry Transfer
Facility does not constitute a valid delivery.
(BOX BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution
Account No.
Transaction Code No.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Hemlock Federal Financial Corporation,
a Delaware corporation (the "Company"), the above-described shares of its common
stock, par value $0.01 per share (the "Shares"), at a price per Share
hereinafter set forth, pursuant to the Company's offer to purchase up to 388,000
Shares, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated February 1, 2000 (the "Offer to Purchase"), receipt of which is
hereby acknowledged, and in this Letter of Transmittal (which together
constitute the "Offer").
Subject to, and effective upon, acceptance for payment of and payment
for the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned hereby
sells, assigns and transfers to, or upon the order of, the Company all right,
title and interest in and to all the Shares that are being tendered hereby or
orders the registration of such Shares tendered by book-entry transfer that are
purchased pursuant to the Offer to or upon the order of the Company and
irrevocably constitutes and appoints the Depositary the true and lawful agent
and attorney-in-fact of the undersigned with respect to such Shares, with full
power of substitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest), to (a) deliver certificates for such Shares, or
transfer ownership of such Shares on the account books maintained by the
Book-Entry Transfer Facility, together, in any such case, with all accompanying
evidences of transfer and authenticity, to or upon the order of the Company upon
receipt by the Depositary, as the undersigned's agent, of the Purchase Price (as
defined below) with respect to such Shares, (b) present certificates for such
Shares for cancellation and transfer on the books of the Company and (c) receive
all benefits and otherwise exercise all rights of beneficial ownership of such
Shares, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and that, when and to the extent the same are accepted for
payment by the Company, the Company will acquire good, marketable and
unencumbered title thereto, free and clear of all liens, restrictions, charges,
encumbrances, conditional sales agreements or other obligations relating to the
sale or transfer thereof, and the same will not be subject to any adverse
claims. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Company to be necessary or desirable
to complete the sale, assignment and transfer of the Shares tendered hereby.
The undersigned hereby represents and warrants that the undersigned has
read and agrees to all of the terms of the Offer. All authority herein conferred
or agreed to be conferred shall not be affected by, and shall survive the death
or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Except as stated in the Offer, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one
of the procedures described in Section 2 or 3 of the Offer to Purchase and in
the Instructions hereto will constitute the undersigned's acceptance of the
terms and conditions of the Offer, including the undersigned's representation
and warranty that (i) the undersigned has a net long position in the Shares
being tendered within the meaning of Rule 14e-4 promulgated under the Securities
Exchange Act of 1934, as amended, and (ii) the tender of such Shares complies
with Rule 14e-4. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the
undersigned and the Company upon the terms and subject to the conditions of the
Offer.
The undersigned understands that the Company will determine a single per
Share price (not greater than $17.50 nor less than $15.00 per Share) net to the
seller in cash, without interest thereon, (the "Purchase Price") that it will
pay for Shares validly tendered and not withdrawn pursuant to the Offer taking
into account the number of Shares so tendered and the prices specified by
tendering stockholders. The undersigned understands that the Company will select
the lowest Purchase Price that will enable it to purchase 388,000 Shares (or
such lesser number of Shares as are validly tendered and not withdrawn at prices
not greater than $17.50 nor less than $15.00 per Share) pursuant to the Offer.
The undersigned understands that all Shares properly tendered and not withdrawn
at prices at or below the Purchase Price will be purchased at the Purchase
Price, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions of the Offer, including its proration and conditional
tender provisions, and that the Company will return all other Shares, including
Shares tendered and not withdrawn at prices greater than the Purchase Price,
Shares not purchased because of proration and Shares that were conditionally
tendered and not accepted. The undersigned understands that tenders of Shares
pursuant to any one of the procedures described in Section 2 or 3 of the Offer
to Purchase and in the instructions hereto will constitute an agreement between
the undersigned and the Company upon the terms and subject to the conditions of
the Offer.
The undersigned recognizes that, under certain circumstances set forth
in the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may accept
for payment fewer than all of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the purchase price of any Shares purchased, and/or return
any Shares not tendered or not purchased, in the name(s) of the undersigned
(and, in the case of Shares tendered by book-entry transfer, by credit to the
account at the Book-Entry Transfer Facility). Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
Purchase Price of any Shares purchased and/or any certificates for Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the Purchase Price of
any Shares purchased and/or return any Shares not tendered or not purchased in
the name(s) of, and mail said check and/or any certificates to, the person(s) so
indicated. The undersigned recognizes that the Company has no obligation,
pursuant to the "Special Payment Instructions," to transfer any Shares from the
name of the registered holder(s) thereof if the Company does not accept for
payment any of the Shares so tendered.
<PAGE>
PRICE (IN DOLLARS) PER SHARE
AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 5)
CHECK ONLY ONE BOX. IF MORE THAN ONE BOX IS CHECKED, OR IF NO BOX
IS CHECKED, THERE IS NO VALID TENDER OF SHARES.
[ ] $15.00 [ ] $15.25 [ ] $15.50 [ ] $15.75
[ ] $16.00 [ ] $16.25 [ ] $16.50 [ ] $16.75
[ ] $17.00 [ ] $17.25 [ ] $17.50
If you do not wish to specify a Purchase Price, check the following box,
in which case you will be deemed to have tendered at the Purchase Price
determined by the Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per Share above). [ ]
ODD LOTS
(SEE INSTRUCTION 9)
This section is to be completed ONLY if Shares are being tendered by or on
behalf of a person owning beneficially, as of the close of business on January
24, 2000, and who continues to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares.
The undersigned either (check one box):
[ ] was the beneficial owner as of the close of business on January 24, 2000,
and continues to be the beneficial owner as of the Expiration Date, of an
aggregate of fewer than 100 Shares, all of which are being tendered, or
[ ] is a broker, dealer, commercial bank, trust company or other nominee that
(i) is tendering, for the beneficial owners thereof, Shares with respect
to which it is the record owner, and (ii) believes, based upon
representations made to it by each such beneficial owner, that such
beneficial owner owned beneficially as of the close of business on January
24, 2000, and continues to own beneficially as of the Expiration Date, an
aggregate of fewer than 100 Shares, and is tendering all of such Shares.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 6, 7 AND 8)
To be completed ONLY if the check for the purchase price of Shares purchased
and/or certificates for Shares not tendered or not purchased are to be issued in
the name of someone other than the undersigned.
Issue [ ] check
and/or [ ] certificate(s) to:
Name
(Please Print)
Address
(Include Zip Code)
(Taxpayer Identification or Social Security No.)
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 6, 7 AND 8)
To be completed ONLY if the check for the purchase price of Shares purchased
and/or certificates for Shares not tendered or not purchased are to be mailed to
someone other than the undersigned or to the undersigned at an address other
than that shown below the undersigned's signature(s).
Mail [ ] check
and/or [ ] certificate(s) to:
Name
(Please Print)
Address
------------------------------------------------------------------
(Include Zip Code)
CONDITIONAL TENDER
You may consider tender of your Shares upon the purchase by the Company of
a specified minimum number of your Shares tendered. See Section 6 in the Offer
to Purchase. Unless at least the minimum number of Shares tendered by you is
purchased by the Company, none of the Shares tendered hereby will be purchased.
It is your responsibility to calculate such minimum number of Shares, and you
are urged to consult your tax advisor. Unless this box has been completed and a
minimum specified, the tender will be deemed unconditional.
Minimum number of Shares that must be purchased, if any are purchased:
Shares
--------
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED IN THIS LETTER OF TRANSMITTAL)
(Signature(s) of Owner(s)
Dated ____________________________, 2000
Name(s)
Capacity (full title)
Address
(Include Zip Code)
Area Code and Telephone No.
(Must be signed by registered holder(s) exactly as name(s) appear(s) on stock
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please set forth full title and see Instruction 6.)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 6)
Name of Firm
Authorized Signature
Dated _________________, 2000
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is a
member of a registered national securities exchange or the National Association
of Securities Dealers, Inc., or by a commercial bank, a trust company, a savings
bank, a savings and loan association or a credit union which has membership in
an approved Signature Guarantee Medallion Program (an "Eligible Institution").
Signatures on this Letter of Transmittal need not be guaranteed (a) if this
Letter of Transmittal is signed by the registered holder(s) of the Shares (which
term, for purposes of this document, shall include any participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Shares) tendered herewith and such holder(s) have not completed
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are
tendered for the account of an Eligible Institution. See Instruction 6.
2. Delivery of Letter of Transmittal and Shares. This Letter of
Transmittal or, in the case of a book-entry transfer, an Agent's Message (as
defined below), is to be used either if certificates are to be forwarded
herewith or if delivery of Shares is to be made by book-entry transfer pursuant
to the procedures set forth in Section 3 of the Offer to Purchase. Certificates
for all physically delivered Shares, or a confirmation of a book-entry transfer
into the Depositary's account at the Book-Entry Transfer Facility of all Shares
delivered electronically, as well as a properly completed and duly executed
Letter of Transmittal (or manually signed copy thereof) and any other documents
required by this Letter of Transmittal, must be received by the Depositary at
one of its addresses set forth on the front page of this Letter of Transmittal
on or prior to the Expiration Date (as defined in the Offer to Purchase). The
term "Agent's Message" means a message transmitted by the Book-Entry Transfer
Facility to, and received by, the Depositary and forming a part of the
Book-Entry confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against the participant.
The method of delivery of this letter of transmittal, share certificates
and all other required documents is at the option and risk of the tendering
stockholder, and delivery will be deemed made only when actually received by the
depositary. If certificates for shares are sent by mail, registered mail with
return receipt requested, properly insured, is recommended.
Except as specifically permitted by Section 6 of the Offer to Purchase, no
alternative or contingent tenders will be accepted. See Section 1 of the Offer
to Purchase. By executing this Letter of Transmittal (or facsimile thereof), the
tendering stockholder waives any right to receive any notice of the acceptance
for payment of the Shares.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. Partial Tenders (Not Applicable to Stockholders Who Tender by
Book-Entry Transfer). If fewer than all the Shares represented by any
certificate delivered to the Depositary are to be tendered, fill in the number
of Shares that are to be tendered in the box entitled "Number of Shares
Tendered." In such case, a new certificate for the remainder of the Shares
represented by the old certificate will be sent to the person(s) signing this
Letter of Transmittal, unless otherwise provided in the "Special Payment
Instructions" or "Special Delivery Instructions" boxes on this Letter of
Transmittal, as promptly as practicable following the expiration or termination
of the Offer. All Shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
5. Indication of Price at Which Shares are Being Tendered. For Shares to
be validly tendered, the stockholder must check the box indicating (1) the price
per Share at which he or she is tendering Shares under "Price (In Dollars) Per
Share at Which Shares Are Being Tendered" in this Letter of Transmittal, or (2)
that such person is tendering Shares at the Purchase Price determined by the
Company pursuant to the terms of the Offering under this heading. Only one box
may be checked. If more than one box is checked or if no box is checked, there
is no valid tender of Shares. A stockholder wishing to tender portions of his or
her Share holdings at different prices must complete a separate Letter of
Transmittal for each price at which he or she wishes to tender each such portion
of his or her Shares. The same Shares cannot be tendered (unless previously
validly withdrawn as provided in Section 4 of the Offer to Purchase) at more
than one price.
6. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
hereby, the signature(s) must correspond with the name(s) as written on the face
of the certificates without alteration, enlargement or any change whatsoever.
If any of the Shares hereby are held of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock powers
are required unless payment of the purchase price is to be made to, or Shares
not tendered or not purchased are to be registered in the name of, any person
other than the registered holder(s). Signatures on any such certificates or
stock powers must be guaranteed by an Eligible Institution. See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on the certificates for such Shares. Signature(s) on any
such certificates or stock powers must be guaranteed by an Eligible Institution.
See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory to
the Company of the authority of such person so to act must be submitted.
7. Stock Transfer Taxes. The Company will pay or cause to be paid any
stock transfer taxes with respect to the sale and transfer of any Shares to it
or its order pursuant to the Offer. If, however, payment of the purchase price
is to be made to, or Shares not tendered or not purchased are to be registered
in the name of, any person other than the registered holder(s), or if tendered
Shares are registered in the name of any person other than the person(s) signing
this Letter of Transmittal, the amount of any stock transfer taxes (whether
imposed on the registered holder(s), such other person or otherwise) payable on
account of the transfer to such person will be deducted from the purchase price
unless satisfactory evidence of the payment of such taxes, or exemption
therefrom, is submitted. See Section 5 of the Offer to Purchase. Except as
provided in this instruction 7, it will not be necessary to affix transfer tax
stamps to the certificates representing shares tendered hereby.
8. Special Payment and Delivery Instructions. If the check for the
purchase price of any Shares purchased is to be issued in the name of, and/or
any Shares not tendered or not purchased are to be returned to, a person other
than the person(s) signing this Letter of Transmittal or if the check and/or any
certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to an
address other than that shown above in the box captioned "Description of Shares
Tendered," then the boxes captioned "Special Payment Instructions" and/or
"Special Delivery Instructions" on this Letter of Transmittal
<PAGE>
should be completed. Stockholders tendering Shares by book-entry transfer will
have any Shares not accepted for payment returned by crediting the account
maintained by such stockholder at the Book-Entry Transfer Facility from which
such transfer was made.
9. Odd Lots. As described in the Offer to Purchase, if fewer than all
Shares validly tendered at or below the Purchase Price and not withdrawn on or
prior to the Expiration Date are to be purchased, the Shares purchased first
will consist of all Shares tendered by any stockholder who owned beneficially as
of the close of business on January 24, 2000, and continues to own beneficially
as of the Expiration Date, an aggregate of fewer than 100 Shares and who validly
and unconditionally tendered all such Shares at or below the Purchase Price
(including by not designating a Purchase Price as described above). Partial or
conditional tenders of Shares will not qualify for this preference. This
preference will not be available unless the box captioned "Odd Lots" in this
Letter of transmittal is completed.
10. Substitute Form W-9 and Form W-8. The tendering stockholder is
required to provide the Depositary with either a correct Taxpayer Identification
Number ("TIN") on Substitute Form W-9, which is provided under "Important Tax
Information" below, or a properly completed Form W-8. Failure to provide the
information on either Substitute Form W-9 or Form W-8 may subject the tendering
stockholder to 31% federal income tax backup withholding on the payment of the
purchase price. The box in Part 2 of Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a number or
intends to apply for a number in the near future. If the box in Part 2 is
checked and the Depositary is not provided with a TIN by the time of payment,
the Depositary will withhold 31% on all payments of the purchase price
thereafter until a TIN is provided to the Depositary.
11. Requests for Assistance or Additional Copies. Any questions or
requests for assistance may be directed to the Information Agent/Dealer Manager
at their telephone number and address listed below. Requests for additional
copies of the Offer to Purchase, this Letter of Transmittal or other tender
offer materials may be directed to the Information Agent/Dealer Manager and such
copies will be furnished promptly at the Company's expense. Stockholders may
also contact their local broker, dealer, commercial bank or trust company for
assistance concerning the Offer.
12. Irregularities. All questions as to the Purchase Price, the form of
documents, and the validity, eligibility (including time of receipt) and
acceptance of any tender of Shares will be determined by the Company, in its
sole discretion, and its determination shall be final and binding. The Company
reserves the absolute right to reject any or all tenders of Shares that it
determines are not in proper form or the acceptance for payment of or payment
for Shares that may, in the opinion of the Company's counsel, be unlawful.
Except as otherwise provided in the Offer to Purchase, the Company also reserves
the absolute right to waive any of the conditions to the Offer or any defect or
irregularity in any tender of Shares and the Company's interpretation of the
terms and conditions of the Offer (including these instructions) shall be final
and binding. Unless waived, any defects or irregularities in connection with
tenders must be cured within such time as the Company shall determine. None of
the Company, the Information Agent/Dealer Manager, the Depositary, or any other
person shall be under any duty to give notice of any defect or irregularity in
tenders, nor shall any of them incur any liability for failure to give any such
notice. Tenders will not be deemed to have been made until all defects and
irregularities have been cured or waived.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED COPY THEREOF)
TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER
REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY, ON OR PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is his or her social security number. For businesses and
other entities, the number is the employer identification number. If the
Depositary is not provided with the correct TIN or properly completed Form W-8,
the stockholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such stockholder with respect to
Shares purchased pursuant to the Offer may be subject to backup withholding.
Certain stockholders (including, among others, all corporations and
certain foreign individuals and entities) are not subject to these backup
withholding and reporting requirements. In order for a noncorporate foreign
stockholder to qualify as an exempt recipient, that stockholder must complete
and sign a Form W-8, Certificate of Foreign Status, attesting to that
stockholder's exempt status. The Form W-8 can be obtained from the Depositary.
Exempt stockholders, other than noncorporate foreign stockholders, should
furnish their TIN, write "Exempt" on the face of the Substitute Form W-9 below
and sign, date and return the Substitute Form W-9 to the Depositary. See the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional instructions.
If federal income tax backup withholding applies, the Depositary is
required to withhold 31% of any payments made to the stockholder. Backup
withholding is not an additional tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of the
tax withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9 AND FORM W-8
To avoid backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
Substitute Form W-9 included in this Letter of Transmittal certifying that the
TIN provided on Substitute Form W-9 is correct and that (1) the stockholder has
not been notified by the Internal Revenue Service that he or she is subject to
federal income tax backup withholding as a result of failure to report all
interest or dividends or (2) the Internal Revenue Service has notified the
stockholder that he or she is no longer subject to federal income tax backup
withholding. Foreign stockholders must submit a properly completed Form W-8 in
order to avoid the applicable backup withholding; provided, however, that backup
withholding will not apply to foreign stockholders subject to 30% (or lower
treaty rate) withholding on gross payments received pursuant to the Offer.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the registered owner of the Shares.
If the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidance on which
number to report.
PAYER'S NAME: REGISTRAR AND TRANSFER COMPANY
<TABLE>
<S> <C>
PART 1 -- PLEASE PROVIDE YOUR TIN IN THE TIN _______________________
BOX AT RIGHT AND CERTIFY BY SIGNING AND Social Security Number
SUBSTITUTE DATING BELOW. or
Employer Identification Number
FORM W-9
DEPARTMENT OF THE
TREASURY INTERNAL
REVENUE SERVICE
PAYOR'S REQUEST
FOR TAXPAYER
IDENTIFICATION
NUMBER (TIN) AND
CERTIFICATION
________________________________________ PART 2: For Payees exempt from
NAME backup withholding, see the Important
(Please Print) Tax Information above and Guidelines
for Certification of Taxpayer
________________________________________ Identification Number of Substitute Form
W-9 enclosed herewith and complete as
________________________________________ instructed herein.
ADDRESS
Awaiting TIN [ ]
________________________________________
CITY STATE ZIP CODE
PART 3 -- CERTIFICATION-UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT (1) the number
shown on this form is my correct taxpayer identification number (or a TIN has not
been issued to me but I have mailed or delivered an application to receive a TIN
or intend to do so in the near future), (2) I am not subject to backup withholding
either because I have not been notified by the Internal Revenue Service (the "IRS")
that I am subject to backup withholding as a result of a failure to report all
interest or dividends or the IRS has notified me that I am no longer subject to
backup withholding, and (3) all other information provided on this form is true,
correct and complete.
SIGNATURE _________________________________ DATE___________________________
You must cross out item (2) above if you have been notified by the IRS that you are
currently subject to backup withholding because of underreporting interest or
dividends on your tax return.
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU
MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 2
OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all payments of the Purchase Price made to me thereafter will be withheld
until I provide a number.
Signature_____________________________ Date ___________________
The Information Agent/Dealer Manager:
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
TOLL FREE:
(877) 298-6520
<PAGE>
EXHIBIT (A)(2)-1
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Telephone: (877) 298-6520 (toll free)
HEMLOCK FEDERAL FINANCIAL CORPORATION
Offer To Purchase For Cash Up To
388,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $17.50
Nor Less Than $15.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2000,
UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Hemlock Federal Financial Corporation, a Delaware corporation (the
"Company"), has appointed us to act as Dealer Manager in connection with its
offer to purchase for cash up to 388,000 shares of its Common Stock, $0.01 par
value per share (the "Shares"), at prices not in excess of $17.50 nor less than
$15.00 per Share, specified by stockholders tendering their Shares, upon the
terms and subject to the conditions set forth in the Company's Offer to
Purchase, dated February 1, 2000, and in the related Letter of Transmittal
(which together constitute the "Offer").
The Company will determine the single per Share price, not in excess of
$17.50 nor less than $15.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares validly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 388,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $17.50 nor less than $15.00 per
Share). All Shares validly tendered at prices at or below the Purchase Price and
not withdrawn on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) will be purchased at the Purchase Price, subject to the terms
and conditions of the Offer, including the proration and conditional tender
provisions. See Sections 1 and 16 of the Offer to Purchase.
Upon the terms and subject to the conditions of the Offer, if, at the
expiration of the Offer, more than 388,000 Shares are validly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares (i) from
stockholders who owned beneficially as of the close of business on January 24,
2000 and continue to own beneficially as of the Expiration Date, an aggregate of
fewer than 100 Shares who properly tender all their Shares at or below the
Purchase Price, and (ii) then, on a pro rata basis, from all other stockholders
who properly tender their Shares at prices at or below the Purchase Price (and
do not withdraw them prior to the expiration of the Offer), other than
stockholders who tender conditionally, and for whom the condition is not
satisfied.
1
<PAGE>
See Sections 1, 2 and 6 of the Offer to Purchase. All Shares not purchased
pursuant to the Offer, including Shares tendered at prices greater than the
Purchase Price and Shares not purchased because of proration or because they
were conditionally tendered and not accepted for purchases will be returned to
the tendering stockholders at the Company's expense as promptly as practicable
following the Expiration Date.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED PURSUANT TO THE OFFER. SEE SECTION 7 OF THE OFFER TO PURCHASE.
No fees or commissions will be payable to brokers, dealers or any
person for soliciting tenders of Shares pursuant to the Offer other than the fee
paid to the Dealer Manager as described in the Offer to Purchase. The Company
will, upon request, reimburse brokers and banks for reasonable and customary
handling and mailing expenses incurred by them in forwarding materials relating
to the Offer to their customers. The Company will pay all stock transfer taxes
applicable to its purchase of Shares pursuant to the Offer, subject to
Instruction 7 of the Letter of Transmittal.
No broker, dealer, bank, trust company or fiduciary shall be deemed to
be the agent of the Company, other than Registrar and Transfer Company as
"Depositary," or Keefe, Bruyette & Woods, Inc. as the "Dealer Manager" and
"Information Agent," for purposes of the Offer.
For your information and for forwarding to your clients for whom you
hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated February 1, 2000;
2. Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the
name of your nominee, with space provided for obtaining such
clients' instructions with regard to the Offer;
3. Letter, dated February 1, 2000, from Maureen G. Partynski,
Chairman and Chief Executive Officer of the Company, to
stockholders of the Company;
4. Letter of Transmittal for your use and for the information of
your clients (together with accompanying Form W-9 and
guidelines); and
5. A return envelope addressed to Registrar and Transfer Company,
as Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON MARCH 1, 2000, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either
2
<PAGE>
certificate(s) representing the tendered Shares or confirmation of their
book-entry transfer, all in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be
addressed to the Depositary or the Information Agent/Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover page of
the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Dealer Manager/Information Agent, telephone: (877) 298-6520.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE
INFORMATION AGENT/DEALER MANAGER OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
3
<PAGE>
EXHIBIT (A)(2)-2
HEMLOCK FEDERAL FINANCIAL CORPORATION
Offer To Purchase For Cash Up To
388,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $17.50
Nor Less Than $15.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2000,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated
February 1, 2000, and the related Letter of Transmittal (which together
constitute the "Offer") in connection with the Offer by Hemlock Federal
Financial Corporation, a Delaware corporation (the "Company"), to purchase up to
388,000 shares of its Common Stock, $0.01 par value per share (the "Shares"), at
prices not in excess of $17.50 nor less than $15.00 per Share, as specified by
tendering stockholders, upon the terms and subject to the conditions set forth
in the Offer.
The Company will determine the single per Share price, not in excess of
$17.50 nor less than $15.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares validly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering stockholders. The Company will select the lowest Purchase Price that
will allow it to buy 388,000 Shares (or such lesser number of Shares as are
validly tendered at prices not in excess of $17.50 nor less than $15.00 per
Share). All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn on or prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase) will be purchased at the Purchase Price, subject to the
terms and conditions of the Offer, including the proration and conditional
tender provisions. See Sections 1 and 16 of the Offer to Purchase.
Upon the terms and subject to the conditions of the Offer, if, at the
expiration of the Offer, more than 388,000 Shares are validly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares (i) from
stockholders who owned beneficially as of the close of business on January 24,
2000, and continue to own beneficially as of the Expiration Date an aggregate of
fewer than 100 Shares who properly tender all their Shares at prices at or below
the Purchase Price, and (ii) then, on a pro rata basis, from all other
stockholders who properly tender at or below the Purchase Price (and do not
withdraw them prior to the expiration of the Offer), other than stockholders who
tender conditionally and for whom the condition is not satisfied. See Sections
1, 2 and 6 of the Offer to Purchase. All Shares not purchased pursuant to the
Offer, including Shares tendered at prices greater than the Purchase Price and
Shares not purchased because of proration or because they were conditionally
tendered and not accepted for purchase will be returned to the tendering
stockholders at the Company's expense as promptly as practicable following the
Expiration Date.
1
<PAGE>
We are the owner of record of Shares held for your account. As such, we
are the only ones who can tender your Shares, and then only pursuant to your
instructions. We are sending you the Letter of Transmittal for your information
only; you cannot use it to tender Shares we hold for your account.
Please instruct us as to whether you wish us to tender any or all of
the Shares we hold for your account on the terms and subject to the conditions
of the Offer.
We call your attention to the following:
1. You may tender Shares at prices not in excess of $17.50 nor
less than $15.00 per Share as indicated in the attached
Instruction Form, net to you in cash.
2. You may tender your Shares conditioned upon the Company's
purchasing all or a minimum number of your Shares.
3. The Offer is not conditioned on any minimum number of Shares
being tendered pursuant to the Offer.
4. The Offer, proration period and withdrawal rights will expire
at 5:00 p.m., New York City time, on March 1, 2000, unless the
Company extends the Offer.
5. The Offer is for 388,000 Shares, constituting approximately
24% of the Shares outstanding as of January 24, 2000.
6. Tendering stockholders will not be obligated to pay any
brokerage commissions, solicitation fees, or, subject to
Instruction 7 of the Letter of Transmittal, stock transfer
taxes on the Company's purchase of Shares pursuant to the
Offer.
7. If you beneficially held, as of the close of business on
January 24, 2000, an aggregate of fewer than 100 Shares and
you continue to beneficially own as of the Expiration Date an
aggregate of fewer than 100 Shares, and you instruct us to
tender on your behalf all such Shares at or below the Purchase
Price before the Expiration Date (as defined in the Offer to
Purchase) and complete the box captioned "Odd Lots" in the
attached Instruction Form, the Company, upon the terms and
subject to the conditions of the Offer, will accept all such
Shares for purchase before proration, if any, of the purchase
of other Shares validly tendered at or below the Purchase
Price.
8. If you wish to tender portions of your Shares at different
prices, you must complete a separate Instruction Form for each
price at which you wish to tender each such portion of your
Shares. We must submit separate Letters of Transmittal on your
behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the attached
Instruction Form. An envelope to return your
2
<PAGE>
Instruction Form to us is enclosed. If you authorize us to tender your Shares,
we will tender all such Shares unless you specify otherwise on the attached
Instruction Form.
YOUR INSTRUCTION FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE
OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON MARCH 1, 2000, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if more than
388,000 Shares have been validly tendered at prices at or below the Purchase
Price and not withdrawn on or prior to the Expiration Date (as defined in the
Offer to Purchase), the Company will purchase properly tendered Shares on the
basis set forth below:
(a) first, all Shares validly tendered and not withdrawn on or prior to
the Expiration Date by or on behalf of any stockholder who owned beneficially,
as of the close of business on January 24, 2000 and continues to own
beneficially as of the Expiration Date, an aggregate of fewer than 100 Shares
who:
(1) validly tenders all of such Shares at a price at or below
the Purchase Price (partial and conditional tenders will not qualify
for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter of
Transmittal; and
(b) second, after purchase of all of the forgoing Shares, all other
Shares validly and conditionally tendered at prices at or below the Purchase
Price in accordance with Section 6 of the Offer to Purchase for which the
condition was satisfied, and all other Shares validly and unconditionally
tendered at or below the Purchase Price and not withdrawn on or prior to the
Expiration Date on a pro rata basis (with appropriate adjustments to avoid
purchases of fractional Shares) as described in Section 1 of the Offer to
Purchase; and
(c) third, if necessary, Shares validly and conditionally tendered at
or below the Purchase Price and not withdrawn on or prior to the Expiration
Date, selected by lot in accordance with Section 6 of the Offer to Purchase.
You may condition your tender on the Company purchasing a minimum
number of your tendered Shares. In such case, if as a result of the proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. If so many conditional tenders
would be deemed withdrawn that the total number of such Shares to be purchased
falls below 388,000 Shares, then to the extent feasible, the Company will select
enough of such conditional tenders that would otherwise have been so withdrawn
to permit the Company to purchase 388,000 Shares. In selecting among such
conditional tenders, the Company will select by lot and will limit its purchase
in each case to the minimum number of Shares designated. See Sections 1 and 6 of
the Offer to Purchase.
3
<PAGE>
The Offer is being made to all holders of Shares. The Company is not
aware of any jurisdiction where the making of the Offer is not in compliance
with applicable law. If the Company becomes aware of any jurisdiction where the
making of the Offer is not in compliance with any valid applicable law, the
Company will make a good faith effort to comply with such law. If, after such
good faith effort, the Company cannot comply with such law, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in such jurisdiction. In any jurisdiction the securities or blue sky
laws of which require the Offer to be made by a licensed broker or dealer, the
Offer is being made on the Company's behalf by the Information Agent/Dealer
Manager or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
4
<PAGE>
EXHIBIT (A)(2)-3
HEMLOCK FEDERAL FINANCIAL CORPORATION
February 1, 2000
Dear Stockholders of Hemlock Federal Financial Corporation:
Over time, Hemlock Federal Financial Corporation's profitable
operations have contributed to the growth of a capital base that exceeds all
applicable regulatory standards and the amount of capital needed to support the
Company's banking business. On January 10, 2000, Hemlock Federal Financial
Corporation announced the acquisition by its wholly-owned subsidiary, Hemlock
Federal Bank for Savings, of Midwest Savings Bank. We believe this acquisition
is an excellent way to deploy our capital base and maximize shareholder value.
In addition, after evaluating a variety of other alternatives to utilize this
strong capital base more effectively and to maximize value to our stockholders,
we have determined that a repurchase of our own shares at this time would be in
the best interests of our shareholders. The Board of Directors has approved a
repurchase of 388,000 shares of the Company's common stock, or 24 percent of our
1,617,762 outstanding shares. A copy of the Offer to Purchase is enclosed.
The Company is conducting the offer through a procedure referred to as
a "Modified Dutch Auction." This procedure allows you to select the price at
which you are willing to sell, or tender, all or part of your shares within a
price range of not more than $17.50 per share and not less than $15.00 per
share. Upon expiration of the offer, we will select the lowest purchase price
from those shares tendered that will allow us to buy 388,000 shares. All shares
purchased in the offer will receive the same purchase price, even those shares
that are tendered below the purchase price. In addition, if you own less than
100 shares and tender all of your shares at or below the purchase price, you
will receive priority and have all of your shares purchased even if more than
388,000 shares are tendered. No brokerage fees or commissions will be charged to
you if you tender your shares.
We encourage each stockholder to read carefully the Offer to Purchase
and related materials. Neither Hemlock Federal Financial Corporation nor our
Board of Directors make any recommendation whether to tender shares to the
Company. You should make your decision independently after consulting with your
advisors.
To assist us with this offer, we have engaged Keefe, Bruyette & Woods,
Inc. to serve as the Dealer Manager and Information Agent. Representatives from
this firm may contact you by phone to make sure you have received the Offer to
Purchase and related materials and to answer any questions you may have. If you
need information or additional forms, please call the Information Agent/Dealer
Manager toll free at (877) 298-6520.
1
<PAGE>
Unless otherwise extended, the offer will expire at 5:00 p.m. New York
City time on March 1, 2000. We again encourage you to read carefully the
enclosed material.
As always, we appreciate your interest in Hemlock Federal Financial
Corporation.
Sincerely,
/s/ Maureen G. Partynski
-----------------------------------
Maureen G. Partynski
Chairman and Chief Executive Officer
2
<PAGE>
EXHIBIT (A)(2)-4
MEMO PLEASE CIRCULATE
DATE: February 1, 2000
TO: All Staff
FROM: Maureen G. Partynski, Chairman and CEO
RE: Tender Offer for Hemlock Federal Financial Corporation's Common
Stock
- --------------------------------------------------------------------------------
At Hemlock Federal Financial Corporation's Board of Directors
Meeting on Friday, January 28, 2000, the board approved the purchase of 388,000
shares of our common stock by means of what is termed a "Modified Dutch Auction
Tender." It is more fully described in the attached news release. We have made
every effort to communicate this action to members of the community as quickly
as possible. Below you will find the answers to some questions that are likely
to arise from our public announcement. We will provide further information if
additional questions come up.
Question: Why is Hemlock Federal Financial Corporation offering to repurchase
its stock?
Answer: Over time, Hemlock Federal Financial Corporation's profitable
operations have contributed to the growth of a capital base that
exceeds all applicable regulatory standards and the amount of
capital needed to support our banking business. After evaluating a
variety of alternatives to utilize more effectively our capital base
and to attempt to maximize stockholder value, Hemlock Federal
Financial Corporation's management and its Board of Directors
believe that the purchase of its stock pursuant to the tender offer
is a positive action that is intended to improve returns to our
stockholders. Our financial projections indicate that the purchase
of shares will increase earnings per share and return on
stockholders' equity.
Question: Who's idea was this?
Answer: With the assistance of Keefe, Bruyette & Woods, Inc., management has
conducted a detailed analysis of Hemlock Federal Financial
Corporation's capital structure to determine how to maximize
stockholder value by improving return on stockholders' equity while
maintaining a high level of financial security and preserving future
strategic options. Based upon the results of a series of financial
models developed by management with the assistance of Keefe,
Bruyette & Woods, a purchase of shares along with the acquisition of
Midwest Savings Bank appeared to be the best means to accomplish the
desired objectives. The Modified Dutch Auction Tender method was
determined to be the best way to acquire shares in the shortest
period of time.
1
<PAGE>
Question: How should I respond to questions?
Answer: Hemlock Federal Financial Corporation has hired a special
Information Agent to handle all questions. The Information Agent is
Keefe, Bruyette & Woods and their toll-free telephone number is
(877) 298-6520. Because Hemlock Federal Financial Corporation's the
purchaser of the shares, and because securities laws are involved,
it is highly important that all questions be referred to the
Information Agent. No member of Hemlock Federal Financial
Corporation's staff is allowed or authorized to answer any questions
or give any advice regarding the tender offer. We are aware that
many stockholders are customers of the bank and have ties or
relationships with staff members. You should handle these situations
as diplomatically as possible, but in any event, all questions must
be referred either to the Information Agent or the holder's broker
or investment advisor.
Question: What do I say if a stockholder asks, "Should I sell (tender) my
stock?"
Answer: Members of the Hemlock Federal Financial Corporation staff must not
give any investment advice to stockholders. The stockholder must
make his or her own investment decision. You should not express an
opinion as to whether you think the tender offer is a "good deal" or
a "bad deal." While the stockholder may call Keefe, Bruyette &
Woods, Inc., the Information Agent and Dealer Manager, they will not
receive investment advice from them. They should be directed to
contact their broker or investment advisor.
Question: What do I do if someone brings a Letter of Transmittal to me or my
office?
Answer: Because tenders must be received by the Depositary, Registrar and
Transfer Company within a limited amount of time, we cannot take the
responsibility for having any stockholder's tender delivered.
Stockholders must send tenders directly to Registrar and Transfer
Company at the address provided in the tender offer documents. That
address is:
Registrar and Transfer Company
10 Commerce Drive
Cranford, New Jersey 07016
Attn: Reorganization Department
Question: May employees of Hemlock Federal Financial Corporation tender shares
in the offer?
Answer: Yes. Employees who own shares of Hemlock Federal Financial
Corporation common stock are eligible to tender their shares. You
will receive a complete copy of the same documents that are being
provided to other stockholders.
2
<PAGE>
EXHIBIT (A)(2)-5
HEMLOCK FEDERAL FINANCIAL CORPORATION
QUESTIONS AND ANSWERS
ABOUT THE OFFER OF
HEMLOCK FEDERAL FINANCIAL CORPORATION
TO PURCHASE FOR CASH UP TO 388,000 SHARES
OF COMMON STOCK AT A PURCHASE PRICE OF
$15.00 TO $17.50 PER SHARE
February 1, 2000
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QUESTIONS AND ANSWERS ABOUT THE OFFER OF
HEMLOCK FEDERAL FINANCIAL CORPORATION
TO PURCHASE ITS STOCK
The following information is designed to answer frequently asked questions about
the offer by Hemlock Federal Financial Corporation to purchase shares of its
common stock. Stockholders are referred to the Offer to Purchase and Letter of
Transmittal for a detailed description of the terms and conditions of the offer.
Q. What Is This Offer To Purchase?
A. Hemlock Federal Financial Corporation is inviting its stockholders to
tender shares of its common stock, $0.01 par value per share (the
"Shares"), at prices not in excess of $17.50 nor less than $15.00 per Share
in cash, as specified by stockholders tendering their Shares, upon the
terms and subject to the conditions set forth in its Offer to Purchase,
dated February 1, 2000, and in the enclosed Letter of Transmittal (which
together constitute the "Offer"). The Company will determine the single per
Share price, not in excess of $17.50 nor less than $15.00 per Share, net to
the seller in cash (the "Purchase Price"), that it will pay for Shares
validly tendered pursuant to the Offer, taking into account the number of
Shares so tendered and the prices specified by tendering stockholders. The
Company will select the lowest Purchase Price that will allow it to buy
388,000 Shares (or such lesser number of Shares as are number tendered at
prices not in excess of $17.50 nor less than $15.00 per Share). This type
of issuer tender offer is commonly referred to as a "Modified Dutch
Auction."
Q. What Is A "Modified Dutch Auction?"
A. A Modified Dutch Auction is a process whereby a company makes a direct
tender offer to its own stockholders to purchase a specified number of
shares of its stock within a specified price range per share, and pays the
highest price at which it accepts shares to all stockholders whose shares
are accepted. In this case, Hemlock Federal Financial Corporation is making
a direct offer to all of its stockholders to purchase in the aggregate
388,000 Shares of its common stock at a price not in excess of $17.50 nor
less than $15.00 per Share. This process allows each stockholder to elect
whether to sell stock, and the price the stockholder is willing to sell at
within the given price range. After receiving tenders of Shares, at the
termination of the Offer, the Company will choose the lowest price within
the specified range that will permit it to purchase the amount of
securities sought and this price will become the Purchase Price.
Q. What Will Be The Final Purchase Price?
A. All Shares acquired in the Offer will be acquired at the Purchase Price.
The Company will select the lowest Purchase Price that will allow it to buy
up to 388,000 Shares. All stockholders tendering at or below the Purchase
Price will receive the price per share. For example, if 138,000 Shares are
tendered at $15.00 per Share, 250,000 Shares are tendered at $16.00 per
Share and 200,000 are tendered at $17.50 per Share, 388,000 Shares will be
purchased at $16.00 per Share from the persons who tendered at $15.00 and
$16.00, and the 200,000 Shares tendered at $17.50 per Share will be
returned and not purchased.
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Q. What Will Happen If More Than 388,000 Shares Are Tendered At Or Below The
Purchase Price?
A. In the event more than 388,000 Shares are tendered at or below the Purchase
Price, Shares tendered at or below the Purchase Price will be acquired by
the Company (i) first from any stockholder who owned beneficially, as of
the close of business on January 24, 2000 and continues to own beneficially
as of the termination of the Offer, an aggregate of fewer than 100 Shares
and who validly tenders all of such Shares, and (ii) then from all other
tendering stockholder subject to proration.
Q. At What Price May I Tender My Shares?
A. Stockholders may elect to tender their Shares in increments of a quarter of
a dollar ($.25) starting at $15.00 per Share up to and including $17.50 per
Share. The election as to the number of Shares and the price a stockholder
is willing to tender are to be indicated on the Letter of Transmittal.
Q. How Do I Tender My Shares?
A. If you hold your Shares in certificate form, you must return a properly
completed Letter of Transmittal (the blue form) and any other documents
required by the Letter of Transmittal, together with the certificates for
the Shares being tendered, to the Depositary, Registrar and Transfer
Company, which must be received by them by 5:00 p.m. New York City time on
March 1, 2000.
Q. How Do I Tender My Shares If My Shares Are Held By My Broker?
A. If your Shares are registered in street name with a broker, dealer,
commercial bank, trust company or other nominee, you will need to contact
your broker, bank or other nominee and instruct the nominee to make the
tender of your Shares for you. You cannot tender such Shares using the
Letter of Transmittal even though you may have received one for your
information.
If you are a broker and are tendering Shares in book-entry form for your
customers, you must comply with the Book-Entry Delivery procedure described
in Section 3 of the Offer to Purchase.
Q. What Do I Do If I Have Lost My Certificates, Or If They Have Been
Mutilated, Destroyed Or Stolen, But I Still Want To Tender Them?
A. Call the Depositary at (800) 368-5948 for instructions for tendering Shares
in such circumstances.
Q. Do I Have To Sell My Stock To The Company?
A. No. A stockholder is not required to tender any stock.
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Q. What Happens If I Do Not Tender My Stock To The Company To Purchase?
A. Nothing will happen if you do not tender any or all of your Shares. Your
Shares will remain outstanding without a change in the terms or ownership
rights. You will continue to own the same number of Shares without any
adjustment, and you will continue to receive the same dividend and voting
rights. However, since the Company will purchase up to 388,000 of its
outstanding Shares, the percentage of the outstanding stock which you own
will increase because the number of outstanding Shares will be reduced.
Q. What If The Terms Of The Offer Change?
A. In the event the Expiration Date is extended or if the terms of the Offer
are materially changed, the Company will generally give notice of the
change and at least 5 business days, and under certain circumstances at
least 10 business days, from such notice stockholders will be able to
change or withdraw their tender.
Q. Can I Tender Part Of My Stock At Different Prices?
A. Yes, you can elect to tender part of your stock at one price and an
additional amount at a second price. For example, if you owned 1,500
Shares, you could tender 500 Shares at $15.00, 500 Shares at $17.00 and
keep the remaining 500 Shares. However, you cannot tender the same stock at
different prices. In the prior example, the stockholder owning 1,500 Shares
cannot tender 1,500 at $15.00 and 1,500 at $17.00. If you tender some
Shares at one price and other Shares at a different price, you must use a
separate Letter of Transmittal for each price.
Q. Is There Any Brokerage Commission?
A. No. The Company will purchase stock directly from each stockholder at the
Purchase Price without the use of a broker.
Q. Can I Change Or Cancel My Tender?
A. You may increase or decrease the number of Shares indicated in the Letter
of Transmittal or withdraw it entirely up until 5:00 p.m. on March 1, 2000.
Generally after March 1, 2000, you cannot withdraw your tender. If you
desire to change or withdraw your tender, you are responsible to make
certain that a valid withdrawal is received by the March 1, 2000 deadline.
Except as discussed in the Offer to Purchase, tenders are irrevocable after
the March 1, 2000 deadline.
Q. Can You Summarize The Process By Which Shares Are Validly Tendered?
A. Generally, for certificated Shares you must complete the Letter of
Transmittal (the blue form) as follows:
- List the certificates and the number of Shares that you are
tendering in the box captioned "Description of Shares Tendered".
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- Check the box specifying the price at which you are tendering in
the box captioned "Price (in Dollars) Per Share at Which Shares
are Being Tendered".
- If you want to give us special payment instructions, complete the
box captioned "Special Payment Instructions".
- If you want to give us special delivery instructions, complete
the box captioned "Special Delivery Instructions".
- If you are an Odd Lot Holder who is tendering all your shares,
complete the box captioned "Odd Lots".
- If you want to make a conditional tender of Shares, complete the
box captioned "Conditional Tenders".
- If your Shares are being delivered by book-entry, complete the
box captioned "Box Below for Use By Eligible Institutions Only".
- Complete substitute Form W-9 to certify your tax identification
number.
- Sign the Letter of Transmittal in the box captioned "Sign Here"
(in certain circumstances, signatures must be guaranteed in this
Box).
You must deliver your Share certificates or comply with the book-entry
delivery requirements. See Section 3 of the Offer to Purchase. These
documents must be received by the Depositary, Registrar and Transfer
Company, no later than 5:00 p.m. on March 1, 2000. If you are tendering
Shares held by a broker, commercial bank, trust company or other nominee,
your instructions must be given to your nominee who will, on the basis of
your instructions, tender Shares for you. Please see Section 3 and the
Letter of Transmittal for more details about how to tender Shares.
Q. How Can I Get More Information?
A. If you have a question, please call our Information Agent/Dealer Manager,
Keefe, Bruyette & Woods at (877) 298-6520, from 8:30 a.m. - 5:30 p.m.,
Eastern Time, Monday through Friday.
This brochure is neither an offer to purchase nor a solicitation of an offer to
sell securities. The offer to purchase the stock of the Company is made only by
the Hemlock Federal Financial Corporation Offer to Purchase document dated
February 1, 2000 and the accompanying Letter of Transmittal.
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EXHIBIT (A)(2)-6
CONTACTS: Maureen G. Partynski, Chairman and CEO Patricia A. McJoynt
Michael R. Stevens, President and CFO Keefe, Bruyette & Woods, Inc.
of Hemlock Federal Financial Corporation (877) 298-6520
(708) 687-9400
Immediate
February 1, 2000
HEMLOCK FEDERAL FINANCIAL CORPORATION OFFERS TO BUY
UP TO 388,000 SHARES OF ITS COMMON STOCK
OAK FOREST, ILLINOIS: Hemlock Federal Financial Corporation (NASDAQ NMS:
HMLK) announced today that its Board of Directors has authorized the repurchase
of up to 388,000 shares of its common stock, which represents 24 percent of its
1,617,762 outstanding shares. The repurchase will be made through a "Modified
Dutch Auction Tender." Under this procedure, Hemlock Federal Financial
Corporation stockholders will be given the opportunity to sell part or all of
their shares to the Corporation at a price of not less than $15.00 per share and
not more than $17.50 per share. This price range represents a 4% percent premium
to a 22% percent premium to the January 28, 2000 closing price of $ 14.375 per
share. Based upon the minimum and maximum offering prices specified in the
offer, the aggregate purchase price, if 388,000 shares are purchased, would
range from $5.8 million to $6.8 million. The offer to purchase shares will
expire at 5:00 p.m. New York City time on March 1, 2000 unless extended by the
Corporation.
Under the procedures for a Modified Dutch Auction Tender, stockholders may
offer to sell all or a portion of the shares they own at a price not more than
the maximum price ($17.50) nor less than the minimum price ($15.00) specified in
the tender. Upon the expiration of the offer, Hemlock Federal Financial
Corporation will select the lowest purchase price that will allow it to buy
388,000 shares. All shares purchased in the offer will receive the same price.
If the number of shares tendered is equal to or less than 388,000 shares, the
purchase price will be the highest price specified by tendering stockholders. If
the number of shares tendered is greater than the number sought, the Corporation
will select the lowest price that will allow it to buy the number of shares it
seeks.
Maureen G. Partynski, Hemlock Federal's Chairman and Chief Executive
Officer, stated, "Hemlock Federal is making the tender offer because its Board
of Directors believes that the purchase of shares pursuant to the offer should
have beneficial effects on stockholder value while maintaining a strong capital
base to support the needs of our business and our customers. After studying a
number of alternatives, we selected the Modified Dutch Auction Tender, along
with the acquisition of Midwest Savings Bank, because it is a positive action
that has the potential for improving stockholder returns in an expeditious
manner. Based upon pro forma financial analyses, the purchase of shares should
have the effect of increasing earnings per share and raising the return on
stockholders' equity."
Hemlock Federal Financial Corporation is a savings and loan holding company
based in Oak Forest, Illinois and has approximately $221 million in total
assets. Its subsidiary bank, Hemlock Federal Bank for Savings has 4 offices,
located in Cook County, Illinois.
<PAGE>
Keefe, Bruyette & Woods, Inc. will act as the dealer manager and
information agent for the offer, and Registrar and Transfer Company will be the
depositary for the shares tendered. Questions to or requests for assistance may
be directed to Keefe, Bruyette & Woods, Inc., toll free at (877) 298-6520.
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares of Hemlock Federal Financial Corporation common stock. The
offer is made solely by the Offer to Purchase dated February 1, 2000 and the
related Letter of Transmittal.
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EXHIBIT (A)(2)-7
This announcement is neither an Offer to Purchase nor a solicitation of an offer
to sell shares of Hemlock Federal Financial Corporation common stock. The offer
is made solely by the Offer to Purchase, dated February 1, 2000, and the related
Letter of Transmittal, copies of which may be obtained from the Information
Agent.
HEMLOCK FEDERAL FINANCIAL CORPORATION
Offers to
Purchase For Cash up to 388,000 Shares of its
Common Stock
At a Purchase Price Not Greater Than $17.50 Nor Less
Than $15.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON MARCH 1, 2000,
UNLESS THE OFFER IS EXTENDED.
The Information Agent and Dealer Manager for the Offer is:
KEEFE, BRUYETTE & WOODS, INC.
211 Bradenton Drive
Dublin, Ohio 43017-5034
(877) 298-6520 (toll free)
