<PAGE> 1
As filed with the Securities and Exchange Commission on October 1, 1999
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
CAMCO FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
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DELAWARE 6035 51-0110823
- --------------------------------- ---------------------------- -------------------
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number Identification No.)
</TABLE>
814 Wheeling Avenue
Cambridge, Ohio 43725
(614) 432-5641
----------------------------------------------------
(Address, including ZIP Code, and telephone number,
including area code, of agent for service)
Copies to:
MR. LARRY A. CALDWELL TERRI R. ABARE, ESQ.
Camco Financial Corporation KATHLEEN M. MOLINSKY, ESQ.
814 Wheeling Avenue Vorys, Sater, Seymour and Pease LLP
Cambridge, Ohio 43725 221 E. Fourth Street
(740) 432-5641 Suite 2100, Atrium Two
Cincinnati, Ohio 45202
(513) 723-4000
Approximate date of commencement of proposed sale of the securities to
the public: As soon as practicable after this Registration Statement has become
effective and all other conditions to the consummation of the transactions have
been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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Title of each
class of securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price per unit(1) aggregate price registration fee
------------------- ------------ -------------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 1,365,554 shares $10.88 $26.6 million $7,405
par value per share of Common Stock
- -------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(f) on the basis of the market value of a share of
common stock of Westwood Homestead Financial Corporation on September
28, 1999, as determined pursuant to Rule 457(c).
<PAGE> 2
PROSPECTUS JOINT PROXY STATEMENT
CAMCO FINANCIAL CORPORATION CAMCO FINANCIAL CORPORATION
for issuance of up to AND
1,365,554 Shares of Common Stock WESTWOOD HOMESTEAD FINANCIAL CORPORATION
for
Special Meetings of Stockholders
On August 6, 1999, Camco Financial Corporation, Westwood Homestead
Financial Corporation and The Westwood Homestead Savings Bank executed a merger
agreement that provides for the merger of Westwood Homestead Financial into
Camco Financial.
We cannot complete the merger unless the holders of a majority of the
Westwood Homestead Financial shares, or 1,084,410 shares, and the holders of a
majority of the Camco shares, or 2,860,195 shares, approve it. The boards of
directors have scheduled special meetings for Westwood Homestead Financial's and
Camco Financial's stockholders to vote on the merger. The dates, times and
places of the special meetings are as follows:
If we complete the merger, each Westwood Homestead Financial
stockholder will receive $5.20 and .611 Camco Financial shares in exchange for
each Westwood Homestead Financial share owned immediately before we complete the
merger.
Camco Financial shares are listed on the Nasdaq National Market under
the symbol "CAFI." On ______________, 1999, the date before we printed this
prospectus/joint proxy statement, Camco Financial shares closed at $______.
Based on that $________ price, .611 shares of Camco Financial stock would be
valued at $________, and the total value of the stock and cash a Westwood
Homestead Financial stockholder would receive for each Westwood Homestead
Financial share would be $______.
At the Camco Financial special meeting of stockholders, the
stockholders will also be asked to approve a proposed amendment to increase the
authorized number of shares of Camco Financial from 9,000,000 to 15,000,000,
consisting of 14,900,000 shares of common stock and 100,000 shares of preferred
stock. The additional authorized shares will be available for possible
acquisitions or other corporate purposes such as stock dividends and stock
options.
This prospectus/joint proxy statement provides detailed information
about the merger. We encourage you to read this entire document carefully.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE CAMCO FINANCIAL SHARES TO BE ISSUED IN THE MERGER OR
DETERMINED IF THIS PROSPECTUS/JOINT PROXY STATEMENT IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CAMCO FINANCIAL SHARES
ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY.
Prospectus/Joint Proxy Statement dated _________, 1999, and first
mailed to stockholders of Westwood Homestead Financial and Camco Financial on or
about _________, 1999.
<PAGE> 3
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about our companies from documents that we have filed with the Securities and
Exchange Commission but have not included in or delivered with this document. If
you write or call us, we will send you these documents, excluding exhibits,
without charge. You can contact us at:
Camco Financial Corporation Westwood Homestead Financial Corporation
814 Wheeling Avenue 3002 Harrison Avenue
Cambridge, Ohio 43725 Cincinnati, Ohio 45211
Attention: Larry A. Caldwell Attention: Michael P. Brennan
(740) 432-5641 (513) 661-5735
Please request documents by _________ 1999. We will mail the documents
you request by first class mail, or another equally prompt means, by the next
business day after we receive your request.
See "Where You Can Find More Information" on page 50 for more
information about the documents referred to in this prospectus/joint proxy
statement.
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<PAGE> 4
TABLE OF CONTENTS
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<S> <C>
Summary ..................................................................................................................5
The companies..........................................................................................................5
The merger.............................................................................................................5
Background and reasons for the merger..................................................................................6
Recommendation to shareholders.........................................................................................6
Opinion of Charles Webb & Company......................................................................................6
Federal tax consequences of the merger.................................................................................6
Stock Option Agreement.................................................................................................7
Interests of directors and executive officers..........................................................................7
Termination and amendment of the merger agreement......................................................................7
Special meetings of shareholders......................................................................................8
Accounting treatment...................................................................................................8
Per share market price information.....................................................................................8
Comparative stock prices and dividends....................................................................................9
Selected consolidated financial data of Camco Financial..................................................................10
Selected consolidated financial data of Westwood Homestead Financial.....................................................11
Comparative per share data...............................................................................................13
Purpose of this document.................................................................................................13
The parties..............................................................................................................13
Westwood Homestead Financial.............................................................................................14
The merger...............................................................................................................14
Background and reasons for the merger.................................................................................14
Opinion of Charles Webb & Company.....................................................................................17
Opinion of Tucker Anthony Cleary Gull.................................................................................20
Recommendation of the boards of directors of Westwood Homestead Financial and Camco Financial.........................25
Exchange of Westwood Homestead Financial shares.......................................................................26
Fractional shares.....................................................................................................26
Exchange of certificates evidencing Camco Financial shares and Westwood Homestead Financial shares....................26
Representations, warranties and covenants.............................................................................26
Conditions............................................................................................................27
Effective time........................................................................................................28
Termination and amendment.............................................................................................29
Interests of directors and executive officers.........................................................................29
Resale of Camco Financial common shares...............................................................................30
Federal income tax consequences.......................................................................................31
Accounting treatment..................................................................................................32
Stock option agreement................................................................................................32
Proposed amendment to the Camco Financial certificate of incorporation...................................................34
The special meeting of Westwood Homestead Financial shareholders.........................................................35
Time, date and place..................................................................................................35
Purpose of the meeting................................................................................................35
Shares outstanding and entitled to vote; record date..................................................................35
Votes required........................................................................................................35
Voting and solicitation and revocation of proxies.....................................................................36
The special meeting of Camco Financial shareholders......................................................................36
Time, date and place..................................................................................................36
Purpose of the meeting................................................................................................36
Shares outstanding and entitled to vote; record date..................................................................36
Votes required........................................................................................................37
Voting and solicitation and revocation of proxies.....................................................................37
Pro forma unaudited condensed combined consolidated statements of financial condition....................................38
Pro forma unaudited condensed combined consolidated statements of earnings...............................................39
</TABLE>
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<TABLE>
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<S> <C>
Pro forma unaudited condensed combined consolidated statements of earnings...............................................40
Authorized Stock.........................................................................................................41
Special Meetings.........................................................................................................41
Preemptive Rights........................................................................................................41
Voting Rights............................................................................................................41
Comparison of rights of holders of Camco Financial shares and holders of Westwood Homestead Financial....................41
Authorized Stock.........................................................................................................42
Board of Directors.......................................................................................................42
Director Nominations.....................................................................................................42
Antitakeover Provisions..................................................................................................42
Antitakeover statutes applicable to Camco Financial and Westwood Homestead Financial.....................................46
Director and officer liability and indemnification.......................................................................48
Legal matters............................................................................................................50
Experts..................................................................................................................50
Proposals for the 2000 annual stockholders' meetings.....................................................................50
Where you can find more information......................................................................................51
</TABLE>
ANNEX A Agreement of Merger and Plan of Reorganization dated August 6,
1999, by and among Camco Financial Corporation, Westwood Homestead
Financial Corporation and The Westwood Homestead Savings Bank
ANNEX B Opinion of Charles Webb & Company, a division of Keefe, Bruyette &
Woods, Inc. dated _________, 1999
ANNEX C Opinion of Tucker Anthony Cleary Gull dated August 6, 1999
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<PAGE> 6
SUMMARY
This summary highlights selected information from this prospectus/joint
proxy statement. It does not contain all of the information that is important to
you. You should read carefully this entire document and the other documents
referred to in this document to fully understand the merger. To obtain more
information, see "Where You Can Find More Information" on pages 51 to 53. Page
references are included in this summary to direct you to a more complete
description of topics discussed in this document.
THE COMPANIES (PAGES 13 AND 14)
Camco Financial Corporation
814 Wheeling Avenue
Cambridge, Ohio 43275
(740) 432-5641
Camco Financial is a multiple savings and loan holding company
organized under Delaware law in 1970. Through its wholly-owned subsidiaries,
Cambridge Savings Bank, Marietta Savings Bank, First Federal Savings Bank of
Washington Court House, First Federal Bank for Savings and East Ohio Land Title
Agency, Inc., Camco is engaged in the financial services business in Ohio,
Kentucky and West Virginia.
Westwood Homestead Financial Corporation/
The Westwood Homestead Savings Bank
3002 Harrison Avenue
Cincinnati, Ohio 45211
(513) 661-5735
Westwood Homestead Financial is an Indiana corporation formed in March
1996 in connection with the conversion of The Westwood Homestead Savings Bank
from a mutual savings bank to a stock savings bank.
The Westwood Homestead Savings Bank, an Ohio savings bank, conducts
business from two offices located in the Cincinnati, Ohio area. The Westwood
Homestead Savings Bank is principally engaged in the business of accepting
deposits and originating conventional mortgage loans secured by residential real
estate.
THE MERGER (PAGES 14 THROUGH 34)
The Agreement of Merger and Plan of Reorganization provides for the
merger of Westwood Homestead Financial into Camco Financial. After the merger,
The Westwood Homestead Savings Bank will operate as a subsidiary of Camco
Financial under the name "The Westwood Homestead Savings Bank." The merger
cannot be completed unless the holders of a majority of the Westwood Homestead
Financial shares, or 1,084,410 shares, and a majority of the Camco Financial
shares, or 2,860,195 shares, approve the merger.
If the merger is completed, each Westwood Homestead Financial
stockholder will receive $5.20 and .611 Camco Financial shares for each Westwood
Homestead Financial share owned. Because the number of Camco Financial shares
you will receive is fixed and the market price of Camco Financial common shares
will fluctuate, we cannot be sure of the market value of the Camco Financial
shares you will receive in the merger. We urge you to obtain current price
quotations for the Camco Financial shares before casting your vote regarding the
merger. You may obtain current stock quotations for Camco Financial shares from
newspapers, the Internet or your broker.
We have attached the merger agreement to this document as Annex A and
incorporate it by reference into this prospectus/joint proxy statement. Please
read the merger agreement. It is the legal document that governs the merger.
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<PAGE> 7
BACKGROUND AND REASONS FOR THE MERGER (PAGES 14 THROUGH 17)
CAMCO FINANCIAL. Camco Financial's strategic plan is to deliver a wide
array of financial products and services through a network of community-based
financial institutions which benefit from centralized support provided by the
holding company structure while operating autonomously in their respective
markets under the direction of management personnel who maintain close ties to
the communities they serve. In pursuing growth, Camco Financial has paid
particular attention to opportunities in geographic areas contiguous to its
existing market areas, which currently consist of portions of central and
southern Ohio, northeastern Kentucky and northwestern West Virginia. The merger
with Westwood Homestead Financial provides Camco Financial the opportunity to
expand its market area into the more densely populated area of Cincinnati, Ohio.
Based upon these factors and the receipt of the opinion of its financial
advisor, Tucker Anthony Cleary Gull, that the consideration to be paid to
Westwood Homestead Financial stockholders in the merger was fair, from a
financial point of view, to the stockholders of Camco Financial, the board of
directors approved the merger agreement.
WESTWOOD HOMESTEAD FINANCIAL. Since 1996 when Westwood Homestead
Financial became a public company, its directors and management have sought to
enhance stockholder value through numerous capital management strategies such as
cash dividends, a return of capital to stockholders and stock repurchases. As a
result of its continuing assessment of methods by which to maximize long-term
stockholder value, in early 1999 Westwood Homestead Financial with the
assistance of its financial advisors, Charles Webb & Company, a Division of
Keefe, Bruyette & Woods, began to consider and explore certain strategic
combinations and sales. Based upon meetings with Camco Financial management, a
due diligence review of Camco Financial, an assessment of strategic alternatives
and the opinion of Charles Webb & Company that the consideration to be received
by Westwood Homestead Financial stockholders from Camco Financial in a merger
was fair, from a financial point of view, to the stockholders of Westwood
Homestead Financial, the board of directors approved the merger agreement.
RECOMMENDATIONS TO STOCKHOLDERS (PAGE 25)
The boards of directors of Camco Financial and Westwood Homestead
Financial believe that the merger is in the best interests of their companies
and their stockholders and unanimously recommend that you vote "FOR" the
proposal to adopt the merger agreement.
OPINION OF FINANCIAL ADVISORS (PAGES 17 THROUGH 25)
In deciding to approve the merger, the Westwood Homestead Financial
board of directors considered the opinion of its financial advisors, Charles
Webb & Company, dated August 6, 1999, that the per share merger consideration
was fair to Westwood Homestead Financial stockholders from a financial point of
view. The opinion, as updated as of _____________, is attached as Annex B to
this prospectus/joint proxy statement. We encourage you to read the opinion.
In deciding to approve the merger, the Camco Financial board of
directors considered the opinion of its financial advisors, Tucker Anthony
Cleary Gull dated August 6, 1999, that the per share merger consideration was
fair to Camco Financial stockholders from a financial point of view. The opinion
is attached as Annex C to this prospectus/joint proxy statement. We encourage
you to read the opinion.
FEDERAL TAX CONSEQUENCES OF THE MERGER (PAGES 31 AND 32)
You will not recognize a gain or loss for federal income tax purposes
on the value of the Camco Financial stock you receive in exchange for your
Westwood Homestead Financial shares. The Internal Revenue Service will treat,
however, the $5.20 payment for each Westwood Homestead Financial share exchanged
as a taxable distribution in redemption of your Westwood Homestead Financial
shares subject to taxation under Section 302 of the Internal Revenue Code of
1986, as amended.
Determining the actual tax consequences of the merger to you as an
individual taxpayer can be complicated. The tax implications will depend on your
specific situation and other variables that are not within
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<PAGE> 8
Camco Financial's or Westwood Homestead Financial's control or knowledge. You
should consult a tax advisor for a complete understanding of the merger's tax
consequences to you.
STOCK OPTION AGREEMENT (PAGE 32 THROUGH 34))
To increase the likelihood that the merger would be completed, Camco
Financial and Westwood Homestead Financial executed a stock option agreement in
which Westwood Homestead Financial granted Camco Financial an option to purchase
up to 19.9% of the outstanding common stock of Westwood Homestead Financial at a
purchase price of $10.50 per share. Camco Financial can exercise the option only
if specific events occur. These events relate to a competing transaction, if
any, involving a merger, business combination or other acquisition of Westwood
Homestead Financial or its stock. As of the date of this prospectus/joint proxy
statement, neither Camco Financial nor Westwood Homestead Financial is aware of
any such event.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS (PAGES 29 AND 30)
Some of the directors and officers of Westwood Homestead Financial and
The Westwood Homestead Savings Bank have interests in the merger that are
different from, or in addition to, their interests as shareholders of Westwood
Homestead Financial. These interests include the following:
- Michael P. Brennan, currently the President and Chief Executive
Officer of Westwood Homestead Financial and The Westwood Homestead
Savings Bank, will be appointed to the Camco Financial board of
directors and will continue to be a director of The Westwood
Homestead Savings Bank.
- At the completion of the merger, Camco Financial will assume the
Westwood Homestead Financial Corporation 1997 Stock Option Plan
and any outstanding options under the plan that have not been
exercised. The directors and executive officers of Westwood
Homestead Financial have, in the aggregate, options to acquire
253,021 Westwood Homestead Financial shares. Each of the Westwood
Homestead Financial options assumed by Camco Financial will become
an option to purchase a number of Camco Financial shares based on
the market value of Camco Financial shares at the time of the
completion of the merger.
- Michael P. Brennan, Gerald T. Mueller, currently the Vice
President/Director of Lending of The Westwood Homestead Savings
Bank, and John E. Essen, currently the Chief Financial Officer and
Treasurer of Westwood Homestead Financial and The Westwood
Homestead Savings Bank, will enter into a new employment or
severance agreement with The Westwood Homestead Savings Bank that
entitle these individuals to certain salary and other payments
upon certain terminations of employment.
- For three years after the merger, Camco Financial will indemnify
the officers and directors of Westwood Homestead Financial and The
Westwood Homestead Savings Bank for events occurring before the
merger to the maximum extent permitted by the certificate of
incorporation and bylaws of Camco Financial.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT (PAGE 29)
We may agree to terminate the merger at any time before the
consummation of the merger, even if you have voted to approve the merger. The
merger agreement allows either one of us to terminate the merger if:
- We do not complete the merger by June 30, 2000;
- We have not satisfied, or agreed to waive, conditions listed
in the merger agreement; or
- The representations, warranties or obligations of the other party
under the merger agreement cannot be satisfied.
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<PAGE> 9
If the merger is not completed because of the willful breach of the
merger agreement by one party, that party will be required to pay up to $250,000
of the merger-related expenses of the non-breaching party.
We may amend the merger agreement with the consent of our boards of
directors at any time before or after receiving stockholder approval of the
merger agreement. However, if the stockholders have already approved the merger,
we will not amend the merger agreement without their approval if the amendment
would materially and adversely affect their rights as stockholders.
SPECIAL MEETINGS OF STOCKHOLDERS (PAGES 35 THROUGH 37)
The Westwood Homestead Financial special meeting of stockholders will
take place at __________ on _________, 1999. If you owned Westwood Homestead
Financial common shares on _________, 1999, you are entitled to vote at the
special meeting. The holders of a majority of the outstanding Westwood Homestead
Financial common shares, or 1,084,410 shares, must vote in favor of the merger
agreement to approve the merger.
Each of the directors and executive officers of Westwood Homestead
Financial has agreed to vote all of their Westwood Homestead Financial common
shares for the adoption of the merger agreement. As of ___________, 1999, the
directors and executive officers, in the aggregate, owned or had voting power
with respect to _______________Westwood Homestead Financial shares, or _____% of
the outstanding shares.
The Camco Financial special meeting of stockholders will take place at
__________, on _________, 1999. If you owned Camco Financial shares on
_________, 1999, you are entitled to vote at the special meeting. The holders of
a majority of the outstanding Camco Financial shares, or 2,860,195 shares, must
vote in favor of the merger agreement to approve the merger and must vote in
favor of the amendment to the certificate of incorporation to approve the
amendment.
Each of the directors and executive officers of Camco Financial has
indicated that they intend to vote all of their Camco Financial shares for the
adoption of the merger agreement and the amendment of the certificate of
incorporation. As of ___________, 1999, the directors and executive officers, in
the aggregate, owned or had voting power with respect to _______________Camco
Financial shares, or _____% of the outstanding shares.
ACCOUNTING TREATMENT (PAGE 32)
The merger will be treated as a purchase for accounting purposes.
Accordingly, Camco Financial will record the assets and liabilities of Westwood
Homestead Financial on its books at fair value. The excess of the fair value of
the assets received over the fair value of the liabilities assumed will be
assigned to specific and unidentified intangible assets. The resulting
intangible assets will be amortized to operations over the estimated useful
life, presently estimated to be 20 years.
PER SHARE MARKET PRICE INFORMATION (PAGE 9)
Camco Financial shares are listed on Nasdaq. On August 5, 1999, the
last full trading day before the public announcement of the proposed merger,
Camco Financial shares closed at $12.25. On _____________, 1999, the day before
we printed this prospectus/joint proxy statement, Camco Financial shares closed
at $______.
Westwood Homestead Financial common shares are listed on Nasdaq. On
August 5, 1999, the last full trading day before the public announcement of the
proposed merger, Westwood Homestead Financial shares closed at $10.14. On
_____________, 1999, the day before we printed this prospectus/joint proxy
statement, Westwood Homestead Financial shares closed at $______.
The market value of .611 shares of Camco Financial would be $7.48 based
on Camco Financial's August 5, 1999, closing price and $_____ based on Camco
Financial's ______, 1999 closing price. Because the number of Camco Financial
shares you will receive is fixed and the market price of Camco Financial shares
will fluctuate, we cannot be certain of the market value of the Camco Financial
shares you will receive in the merger. You may obtain current stock quotations
for Camco Financial shares from a newspaper, the Internet or your broker.
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<PAGE> 10
COMPARATIVE STOCK PRICES AND DIVIDENDS
Camco Financial shares are listed on Nasdaq under the symbol "CAFI."
Westwood Homestead Financial shares are listed on Nasdaq under the symbol
"WEHO."
As of ____________, 1999 there were ____________ Camco Financial shares
outstanding and held by approximately ____ holders of record. As of ________,
1999 there were ___ Westwood Homestead Financial shares outstanding and held by
approximately ___ holders of record. The following table shows the high and low
bid prices for Camco Financial shares and Westwood Homestead Financial shares on
Nasdaq for the first two quarters of 1999, and for each quarter of 1998 and
1997, and the cash dividends per share declared during each of these periods.
ALL INFORMATION FOR CAMCO FINANCIAL REFLECTS THE CAMCO FINANCIAL THREE-FOR-TWO
STOCK SPLIT IN THE FORM OF A STOCK DIVIDEND PAID IN 1998, AND THE 5% STOCK
DIVIDENDS WHICH WERE PAID IN JULY 1997 AND 1999.
<TABLE>
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Quarter ended Camco Financial Westwood Homestead Financial
- ------------- ------------------------------------------- ---------------------------------------------
Market Price Cash dividends Market Price Cash dividends
High Low declared per share High Low declared per share
---- --- ------------------ ---- --- ------------------
<S> <C> <C> <C> <C> <C> <C>
June 30, 1999 $13.33 $12.14 $.1069 $11.63 $10.00 $ .11
March 31, 1999 14.88 13.10 .1140 10.50 10.13 .10
December 31, 1998 15.68 13.66 .1021 11.13 9.50 .10
September 30, 1998 18.45 14.85 .0974 12.88 10.25 .10
June 30, 1998 19.64 17.41 .0919 15.00 11.88 .09
March 31, 1998 17.50 15.84 .0886 17.13 13.25 .09
December 31, 1997 17.10 14.09 .1402 18.13 13.75 3.57
September 30, 1997 14.41 11.01 .0824 18.00 13.88 .07
June 30, 1997 11.31 10.55 .1329 14.50 12.38 .07
March 31, 1997 11.31 8.90 .1208 14.81 11.63 .07
</TABLE>
The following table shows (a) the last reported sales prices as of
August 5, 1999, the last trading day before the public announcement of the
signing of the merger agreement, and (b) the last reported sales prices as of
__________, 1999, the last practicable trading day before the date of this
prospectus/joint proxy statement, for the Camco Financial shares and the
Westwood Homestead Financial shares. The table also shows the equivalent pro
forma price of Westwood Homestead Financial shares, determined by adding $5.20
to the product of the price of a Camco Financial share on each date multiplied
by .611.
<TABLE>
<CAPTION>
Price per Equivalent price per
Price per Westwood Homestead Westwood Homestead
Camco Financial share Financial share Financial share
--------------------- --------------- ---------------
<S> <C> <C> <C>
August 5, 1999 $12.25 $10.14 $12.68
________, 1999
</TABLE>
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<PAGE> 11
SELECTED CONSOLIDATED FINANCIAL DATA OF CAMCO FINANCIAL
The tables below contain information regarding the financial condition
and earnings of Camco Financial for the five years ended December 31, 1998,
based on the audited consolidated financial statements of Camco Financial which
are incorporated into this document by reference. Camco Financial derived the
historical consolidated financial data for the six months ended June 30, 1999
and 1998, from its unaudited consolidated financial statements for those periods
which are incorporated into this document by reference. In the opinion of Camco
Financial management, Camco Financial has made all adjustments necessary for a
fair presentation of the unaudited consolidated statements of financial
condition and the interim results of operations.
<TABLE>
<CAPTION>
At June 30, At December 31,
CAMCO FINANCIAL -------------------- -------------------------------------------------------------
STATEMENT OF FINANCIAL CONDITION DATA: 1999 1998 1998 1997 1996 1995 1994
- -------------------------------------- ---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Total amount of:
Assets $727,058 $588,220 $637,135 $570,170 $517,488 $394,892 $371,489
Interest-bearing deposits in other
financial institutions 8,855 22,108 22,609 10,473 10,875 5,772 13,105
Investment securities available
for sale - at market 319 1,333 1,307 3,572 7,177 8,634 2,978
Investment securities held to
maturity - at cost 14,463 17,243 10,962 17,489 21,844 19,283 34,835
Mortgage-backed securities
available for sale - at market 7,228 4,294 3,476 8,447 10,148 11,954 1,464
Mortgage-backed securities held to
maturity - at cost 4,362 6,080 5,019 8,207 10,700 5,002 17,724
Loans receivable - net (1) 644,253 494,612 548,669 481,501 420,818 321,005 282,722
Deposits 457,762 428,807 443,227 422,368 398,161 326,996 307,643
FHLB advances and other borrowings 199,919 44,090 125,483 82,319 58,354 27,078 26,511
Stockholders' equity -
substantially restricted 61,391 58,182 60,139 55,331 51,391 34,029 30,885
</TABLE>
<TABLE>
<CAPTION>
Six months ended
June 30, Year ended December 31,
---------------- -----------------------------------------------
STATEMENT OF EARNINGS DATA: 1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands, except share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $23,551 $21,747 $44,283 $41,217 $32,812 $28,833 $22,896
Total interest expense 13,439 11,897 24,852 22,778 17,811 16,022 11,978
------- ------- ------- ------- ------- ------- -------
Net interest income 10,112 9,850 19,431 18,439 15,001 12,811 10,918
Provision for losses on loans 123 137 250 385 141 143 99
------- ------- ------- ------- ------- ------- -------
Net interest income after provision for
losses on loans 9,989 9,713 19,181 18,054 14,860 12,668 10,819
Other income 2,980 3,949 7,552 3,945 3,700 3,418 2,694
General, administrative and other expense 8,454 8,048 16,319 13,733 13,762 10,046 9,365
------- ------- ------- ------- ------- ------- -------
Earnings before federal income taxes 4,515 5,614 10,414 8,266 4,798 6,040 4,148
Federal income taxes 1,529 1,853 3,410 2,922 1,588 2,064 1,403
------- ------- ------- ------- ------- ------- -------
Net earnings $ 2,986 $ 3,761 $ 7,004 $ 5,344 $ 3,210 $ 3,976 $ 2,745
======= ======= ======= ======= ======= ======= =======
Earnings per share: (2)
Basic $ .52 $ .65 $ 1.22 $ .93 $ .71 $ .97 $ .75
======= ======= ======= ======= ======= ======= =======
Diluted $ .51 $ .63 $ 1.19 $ .91 $ .69 $ .97 $ .75
======= ======= ======= ======= ======= ======= =======
</TABLE>
- ----------------
(1) Includes loans held for sale.
(2) Earnings per share has been adjusted to give effect to a three-for-two
stock split which was effected during 1998, and the 5% stock dividends
which were effected during the years ended December 31, 1999, 1997,
1996 and 1995.
-10-
<PAGE> 12
<TABLE>
<CAPTION>
At or for the six months
ended June 30, (1) Year ended December 31,
------------------------ ----------------------------------------------------------
OTHER DATA: 1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets (2) .88% 1.30% 1.16% .98% .70% 1.04% .79%
Return on average equity (2) 9.83 13.25 12.13 10.01 7.52 12.25 9.69
Average equity to average assets (2) 8.91 9.79 9.56 9.81 9.36 8.47 8.12
Dividend payout ratio (3) 42.48 34.71 32.89 51.16 53.33 34.91 25.40
- --------------------------
</TABLE>
(1) Annualized where applicable.
(2) Ratios are based upon the mathematical average of the balances at the
beginning and the end of the year.
(3) Represents dividends per share divided by basic earnings per share.
SELECTED CONSOLIDATED FINANCIAL DATA OF WESTWOOD HOMESTEAD FINANCIAL
The tables below contain information regarding the financial condition
and earnings of Westwood Homestead Financial for the five years ended December
31, 1998, based on the audited consolidated financial statements of Westwood
Homestead Financial. Westwood Homestead Financial derived the historical
consolidated financial data for the six months ended June 30, 1999 and 1998,
from its unaudited consolidated financial statements. In the opinion of Westwood
Homestead Financial management, Westwood Homestead Financial has made all
adjustments necessary for a fair presentation of the unaudited consolidated
statements of financial condition and the interim results of operations. Please
read these tables together with the consolidated financial statements, including
the related notes, and other financial information of Westwood Homestead
Financial included elsewhere in this prospectus/joint proxy statement.
<TABLE>
<CAPTION>
At June 30, At December 31,
WESTWOOD HOMESTEAD FINANCIAL --------------- -----------------------------------------------------------
STATEMENT OF FINANCIAL CONDITION DATA: 1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Total amount of:
Assets $141,401 $126,339 $129,871 $134,259 $119,951 $96,638 $112,978
Interest-bearing deposits in other
financial institutions 1,626 8,810 4,316 9,114 12,903 14 97
Investment securities available
for sale - at market - - - 1,000 3,969 993 1,886
Mortgage-backed securities available
for sale - at market 5,986 1,771 1,529 2,151 15,034 17,380 32,560
Loans receivable - net 127,791 111,131 118,926 117,648 85,052 74,942 70,185
Deposits 91,079 83,920 87,336 88,234 79,083 81,748 92,526
FHLB advances and other borrowings 26,847 15,760 17,454 14,765 127 139 7,549
Stockholders' equity - substantially
restricted 22,778 26,009 23,977 30,146 39,982 14,190 12,279
</TABLE>
-11-
<PAGE> 13
<TABLE>
<CAPTION>
Six months ended
June 30, Year ended December 31,
------------------- ------------------------------------------------------
STATEMENT OF EARNINGS DATA: 1999 1998 1998 1997 1996 1995 1994
(Unaudited) (In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 5,137 $ 5,167 $ 10,219 $ 10,269 $ 7,875 $ 7,756 $ 7,653
Total interest expense 2,800 2,784 5,552 5,564 4,834 5,262 5,047
-------- -------- -------- -------- -------- -------- --------
Net interest income 2,337 2,383 4,667 4,705 3,041 2,494 2,606
Provision for loans losses 23 14 41 101 64 38 30
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for loan
losses 2,314 2,369 4,626 4,604 2,977 2,456 2,576
Non-interest income (loss) 168 406 582 (375) 132 (737) 79
Non-interest expenses 1,522 1,642 3,187 2,927 2,585 2,056 1,494
-------- -------- -------- -------- -------- -------- --------
Earnings (loss) before federal income taxes 960 1,133 2,021 1,302 524 (337) 1,161
Federal income taxes (benefit) 316 410 687 419 165 (114) 400
-------- -------- -------- -------- -------- -------- --------
Net earnings (loss) $ 644 $ 723 $ 1,334 $ 833 $ 359 $ (223) $ 761
======== ======== ======== ======== ======== ======== ========
Earnings per share:
Basic $.33 $.30 $.58 $.34 $.16 N/A N/A
==== ==== ==== ==== ====
Diluted $.33 $.30 $.58 $.34 $.16 N/A N/A
==== ==== ==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
At or for the six months
ended June 30, Year ended December 31,
------------------------ --------------------------------------------------------
OTHER DATA: 1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Return on average assets 0.97% 1.12% 1.04% 0.66% 0.34% (0.21)% 0.66%
Return on average equity 5.44 5.02 4.94 2.23 1.71 (1.59) 5.39
Average equity to average assets 17.82 22.30 21.10 29.62 19.88 13.51 12.33
Dividend payout ratio 63.64 60.00 65.52 1,111.76 N/A N/A N/A
</TABLE>
SELECTED CONSOLIDATED PRO FORMA DATA
The following table presents selected financial data for Camco and
Westwood Homestead Financial combined on a pro forma basis for the year ended
December 31, 1998, and for the six months ended June 30, 1999, as if the merger
had been effective on January 1, 1998 and January 1, 1999, respectively. The
companies derived the data for the year ended December 31, 1998, based on their
audited consolidated financial statements which are incorporated into this
document by reference, and the data for the six months ended June 30, 1999, from
their unaudited consolidated financial statements for those periods which are
incorporated into this document by reference. In the opinion of the companies'
management, all adjustments necessary for a fair presentation of the unaudited
interim data have been made.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1999 DECEMBER 31, 1998
------------- -----------------
(Dollars in thousands)
<S> <C> <C>
STATEMENT OF FINANCIAL CONDITION DATA (PERIOD END):
Assets $864,498 $763,045
Deposits 548,308 530,030
Loans receivable-net 766,608 667,595
Stockholders' equity, restricted 73,228 73,175
STATEMENT OF EARNINGS DATA:
Net interest income 12,099 23,397
Provision for loan losses 146 292
Net earnings 3,674 8,437
Stockholders' equity to total assets 8.47% 9.59%
</TABLE>
-12-
<PAGE> 14
COMPARATIVE PER SHARE DATA
Presented below are the book value per share and net earnings per share
of (a) Camco Financial on a historical basis, (b) Westwood Homestead Financial
on a historical basis, and (c) Camco Financial on a pro forma basis adjusted to
reflect the completion of the merger as of January 1, 1998. See "Pro forma
unaudited condensed combined consolidated statements of financial condition" on
page 38 and "Pro forma unaudited condensed combined statements of earnings" on
pages 39 and 40. The information in the following table is not necessarily
indicative of the results which actually would have been obtained if we had
completed the merger before the periods indicated.
<TABLE>
<CAPTION>
Year ended December 31,
Six months ended ---------------------------------------
June 30, 1999 1998 1997 1996
------------- ---- ---- ----
<S> <C> <C> <C> <C>
CAMCO FINANCIAL HISTORICAL
Earnings per share:
Basic $ .52 $ 1.22 $ .93 $ .71
Diluted .51 1.19 .91 .69
Book value per share 10.73 10.46 9.65 9.36
Cash dividends paid per share .22 .38 .48 .40
WESTWOOD HOMESTEAD FINANCIAL
HISTORICAL
Earnings per share:
Basic $ .33 $ .58 $ .34 $ .16
Diluted .33 .58 .34 .16
Book value per share 10.50 10.29 10.59 14.20
Cash dividends paid per share .21 .38 3.78 -
</TABLE>
Year ended December 31, 1998
CAMCO FINANCIAL PRO FORMA EQUIVALENT ----------------------------
Earnings per share:
Basic $ 1.21
Diluted 1.18
Book value per share 10.97
Cash dividends paid per share .1834
PURPOSE OF THIS DOCUMENT
This prospectus/joint proxy statement serves as both a prospectus of
Camco Financial for the issuance of up to 1,365,554 Camco Financial shares in
connection with the merger and a joint proxy statement of Camco Financial and
Westwood Homestead Financial for their special meetings of stockholders. We will
mail this prospectus/joint proxy statement to Camco Financial and Westwood
Homestead Financial stockholders on or about ___________, 1999.
Camco Financial provided all information in this prospectus/joint proxy
statement relating to it, and Westwood Homestead Financial and The Westwood
Homestead Savings Bank provided all information in this prospectus/joint proxy
statement relating to them. Each party is responsible for the accuracy of its
information.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR
TO WHICH WE HAVE REFERRED IN THIS DOCUMENT. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
THE PARTIES
CAMCO FINANCIAL
Camco Financial is a multiple savings and loan holding company
organized under Delaware law. Since its incorporation in 1970, Camco Financial
has evolved into a full-service provider of financial products to the
communities served by its banking subsidiaries. Utilizing a common marketing
theme committed to personalized
-13-
<PAGE> 15
customer service, Camco Financial and its affiliates have grown from $22.4
million in consolidated assets in 1970 to $727.1 million in consolidated assets
at June 30, 1999. This rate of growth is largely attributable to the
acquisitions of Marietta Savings Bank, First Federal Savings Bank of Washington
Court House, First Federal Bank for Savings and Germantown Federal Savings Bank,
which Camco Financial merged into First Federal Savings Bank of Washington Court
House. Camco Financial has also grown through its continued expansion of product
lines.
Camco Financial's primary lending activities include the origination of
conventional fixed-rate and variable-rate mortgage loans for the acquisition,
construction or refinancing of single-family homes located in Camco Financial's
primary market area. Camco Financial also originates construction and permanent
mortgage loans on multifamily properties and nonresidential properties. In
addition, Camco Financial makes a variety of consumer loans.
Camco Financial operates 31 offices in 23 communities throughout
central and southern Ohio, northeastern Kentucky and northwestern West Virginia.
At June 30, 1999, Camco Financial's consolidated assets totaled $727.1 million,
its deposits totaled $457.8 million and its tangible stockholders' equity
totaled $58.1 million.
WESTWOOD HOMESTEAD FINANCIAL
Westwood Homestead Financial was incorporated under the laws of the
State of Indiana in 1996 for the purpose of becoming the holding company of The
Westwood Homestead Savings Bank. Westwood Homestead Financial is headquartered
in Cincinnati, Ohio, and its business activities are limited to the State of
Ohio.
The primary lending activity of The Westwood Homestead Savings Bank is
the origination of conventional mortgage loans for the purpose of purchasing or
refinancing one- to four-family residential properties in its primary market
area of Cincinnati, Ohio. The Westwood Homestead Savings Bank also originates
multi-family real estate loans, nonresidential real estate loans and a limited
number of residential construction and consumer loans. In recent years, The
Westwood Homestead Savings Bank has purchased participation interests in loans
secured by multifamily and nonresidential real estate located in its primary
market area.
Westwood Homestead Financial operates through the main office and a
branch office of The Westwood Homestead Savings Bank in Cincinnati, Ohio. At
June 30, 1999, Westwood Homestead Financial's consolidated assets totaled $141.4
million, its deposits totaled $91.1 million and its tangible stockholders'
equity totaled $22.8 million.
THE MERGER
BACKGROUND AND REASONS FOR THE MERGER
WESTWOOD HOMESTEAD FINANCIAL. From Westwood Homestead Financial's
inception as a publicly owned company in September 1996, the board of directors
of Westwood Homestead Financial has actively reviewed Westwood Homestead
Financial's strategic alternatives for enhancing long-term value for Westwood
Homestead Financial's stockholders. With the assistance of Charles Webb &
Company, Westwood Homestead Financial's financial advisors, the Board has
explored numerous capital management strategies and other alternatives for
enhancing stockholder value as an independent company. Some of these
alternatives were implemented, including paying a regular cash dividend,
effecting a return of capital and undertaking three stock repurchase programs.
Westwood Homestead Financial completed two stock repurchase programs, one for
10% of its outstanding stock and one for 9%, and initiated a third for 10% which
was suspended in view of pending merger discussions. Several other alternatives,
including branch purchases and acquisitions of other financial institutions,
were pursued but failed to materialize for a number of reasons. Certain other
alternatives, including a
-14-
<PAGE> 16
possible tender offer for Westwood Homestead Financial's common stock, were
considered but not deemed in the best interests of Westwood Homestead Financial
and its stockholders. As a result of its continuing assessment of ways in which
to maximize long-term stockholder value, Westwood Homestead Financial's board
began to consider the possibility of a strategic combination or sale of Westwood
Homestead Financial in early 1999.
On April 21, 1999, Larry A. Caldwell, President and Chief Executive
Officer of Camco Financial, contacted Michael P. Brennan, President and Chief
Executive Officer of Westwood Homestead Financial and The Westwood Homestead
Savings Bank, and expressed an interest in meeting with Westwood Homestead
Financial's Mergers and Acquisitions Committee to explore a possible transaction
that could benefit Westwood Homestead Financial's stockholders. During
approximately the same period, Mr. Brennan met with the chief executive officer
of another bank holding company that had expressed an interest in acquiring
Westwood Homestead Financial. On May 3, 1999, Mr. Caldwell visited with Mr.
Brennan, toured Westwood Homestead Financial's offices and met Westwood
Homestead Financial's two other senior officers. Following that meeting,
management of Westwood Homestead Financial furnished Camco Financial with
certain public information regarding Westwood Homestead Financial.
On June 1, 1999, Mr. Caldwell made a presentation to Westwood Homestead
Financial's Mergers and Acquisitions Committee in which he explained Camco
Financial's philosophy, mission statement and growth prospects. Following this
presentation, the Mergers and Acquisitions Committee unanimously agreed to
convene the full board to discuss Mr. Caldwell's presentation.
On June 7, 1999, the Mergers and Acquisitions Committee updated the
full board regarding Mr. Caldwell's presentation of Camco Financial's interest
in Westwood Homestead Financial. Following its discussions, the board authorized
Mr. Brennan to invite Mr. Caldwell to address the full board.
In the middle of June 1999, the chief executive officer of the other
bank holding company verbally indicated to Mr. Brennan a preliminary interest in
acquiring Westwood Homestead Financial at a per share price of $13.25 in stock
of the prospective buyer. No other terms of the indication of interest were
indicated. Mr. Brennan subsequently conveyed this information to the Westwood
Homestead Financial board.
On June 15, 1999, Mr. Caldwell discussed Camco Financial's interest in
a strategic combination with Westwood Homestead Financial before the full
Westwood Homestead Financial board. At the conclusion of this meeting, the board
unanimously agreed to move forward with a possible strategic alliance with Camco
Financial.
Following the June 15 meeting, a Charles Webb & Company representative
and Mr. Brennan spoke with the representative of a third entity, a mutual thrift
institution, who expressed an interest in pursuing a merger with Westwood
Homestead Financial on a cash basis. No terms were mentioned or discussed.
During the same period, Mr. Caldwell indicated to Charles Webb &
Company that Camco Financial was not particularly interested in participating in
a bidding process for Westwood Homestead Financial.
On June 28, 1999, Camco Financial furnished Charles Webb & Company with
a written expression of interest in a strategic combination at a per share price
of $13.00 (60% in Camco Financial stock and 40% in cash) and on certain other
specified terms. At a special meeting of Westwood Homestead Financial's board on
that day, attended by Charles Webb & Company and telephonically by Westwood
Homestead Financial's legal counsel, the Board discussed Camco Financial's
expression of interest and statement of terms. The Charles Webb & Company
representative analyzed for Westwood Homestead Financial's board the transaction
proposed by Camco Financial as well as the terms of the other verbal indications
of interest. The board considered the specificity of the terms of Camco
Financial's written bid relative to the other expression of interest. The board
also considered the relative impact of the proposed transactions on Westwood
Homestead Financial's stockholders and, pursuant to Westwood Homestead
Financial's articles of incorporation, on The Westwood Homestead Savings Bank's
employees, customers and community members. The board reviewed management's
growth projections for Westwood Homestead Financial and other aspects of
Westwood Homestead Financial's business plan, as well as Charles Webb &
Company's financial analysis of the Camco Financial indication of interest and
the concern that Camco
-15-
<PAGE> 17
Financial would withdraw its offer if a bidding process was conducted. On the
basis of all these factors, the board approved proceeding with Camco Financial
on an exclusive basis.
On July 1, 1999, six directors and two senior officers of Westwood
Homestead Financial visited the Camco Financial corporate office in Cambridge,
Ohio, and two Camco Financial subsidiary banks. Following that visit, the board
authorized commencement of negotiations of a definitive agreement for a
strategic combination with Camco Financial based on the terms contained in Camco
Financial's June 28, 1999 written indication of interest.
From July 6 through July 9, 1999, Camco Financial and Westwood
Homestead Financial conducted due diligence reviews of each other's businesses
and operations. At a special meeting of Westwood Homestead Financial's board on
July 26, 1999, attended by Charles Webb & Company and telephonically by Westwood
Homestead Financial's legal counsel, the board reviewed several outstanding
issues regarding the proposed transaction with Camco Financial. Both Charles
Webb & Company and legal counsel presented their analysis of the outstanding
issues and Charles Webb & Company analyzed the proposed transaction from a
financial standpoint. The Charles Webb & Company representative also thoroughly
reviewed the strategic alternatives that the board had reviewed since The
Westwood Homestead Savings Bank's conversion to stock form, including the
potential mergers and acquisitions that the board had explored which had not
materialized. Members of Westwood Homestead Financial's management discussed
with the board their expectations for Westwood Homestead Financial's future
return on equity and indicated that even with substantial balance sheet growth,
Westwood Homestead Financial would likely not be able to achieve the desired
results for stockholders.
At a special meeting of Westwood Homestead Financial's board on August
3, 1999, attended telephonically by legal counsel, the board discussed the
progress of negotiations with Camco Financial and the issues then outstanding.
On August 6, 1999 the board again convened, with Charles Webb & Company and
legal counsel attending telephonically, to review the definitive agreement that
had been negotiated with Camco Financial. The Charles Webb & Company
representative furnished the board with a written financial analysis of the
proposed transaction and presented her opinion that the consideration to be
received by Westwood Homestead Financial stockholders in the strategic alliance
with Camco Financial is fair to stockholders from a financial point of view. The
board then unanimously approved the merger agreement.
In reaching its determination that the merger is in the best interests
of Westwood Homestead Financial and its stockholders, Westwood Homestead
Financial's board considered, among other things:
- the consideration to be paid in connection with the merger
and the value being offered to Westwood Homestead Financial's
stockholders in relation to the market value, book value and
earnings per share of Westwood Homestead Financial's common
stock;
- the social and economic effects of the transaction on
Westwood Homestead Financial and The Westwood Homestead
Savings Bank, employees, depositors, loan and other customers,
creditors and other elements of the communities in which
Westwood Homestead Financial and The Westwood Homestead
Savings Bank operate or are located;
- the business and financial condition and the long term equity
growth and earnings prospects of Camco Financial;
- the competence, experience and integrity of Camco Financial
and its management; and
- the opinion of Charles Webb & Company that the consideration
to be received in the merger is fair to Westwood Homestead
Financial stockholders from a financial point of view.
-16-
<PAGE> 18
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE ADOPTION OF THE MERGER AGREEMENT.
CAMCO FINANCIAL. Camco Financial's strategic plan is to deliver a wide
array of financial products and services through a network of community-based
financial institutions which benefit from the centralized support provided by
the holding company structure while operating autonomously in their respective
markets under the direction of management personnel who maintain close ties to
the communities they serve. Since adopting the holding company structure in 1970
with a single thrift charter, the Camco Financial group has expanded over the
years to include four geographically distinct financial institution charters and
several subsidiaries engaged in mortgage-related activities.
In pursuing growth, Camco Financial has paid particular attention to
opportunities in geographic areas contiguous to its existing markets. Camco
Financial's current markets include portions of central, southwest and southeast
Ohio, and the corridor from Marietta to Canton, Ohio which runs along I-77.
Camco Financial also currently has banking locations in northeast Kentucky and
loan production offices in western West Virginia.
The merger will allow Camco Financial the unique opportunity to achieve
further geographic extension and diversification, while maintaining geographic
proximity to its existing markets. Camco Financial management believes that the
broad-based economic diversity of the Cincinnati market, along with the
additional geographic diversity, will lessen the impact on Camco Financial's net
income in the event of an economic downturn in any individual industry or
market.
Camco Financial, as a specialist in community banking, also anticipates
additional growth opportunities in the Cincinnati market as a result of the
pending mergers of Fidelity Financial of Ohio, Inc. and OHSL Financial into the
Provident Bank. Introduction of Camco Financial's "Advantage Banking" program
offers an additional opportunity to expand The Westwood Homestead Savings Bank's
lending and deposit relationships with its existing customer base and to attract
new customers. The Westwood Homestead Savings Bank has an experienced management
team which Camco Financial believes will enable the bank to maintain a strong
relationship with the local community while Camco Financial management provides
the support necessary to allow the local bank's management to expand the range
of products and services.
Another potential impact of the merger is increased liquidity of Camco
Shares due to the issuance of additional Camco Shares. As of ____, 1999, Camco
Financial had__ shares outstanding which were held by approximately ___
shareholders. If all of the outstanding options to purchase Westwood Homestead
Financial shares are exercised before the merger is completed, Camco Financial
will issue up to 1,365,554 shares in connection with the merger. This will
represent a 23.9% increase in the number of outstanding shares of Camco
Financial. The number of Camco Financial stockholders will also increase by
approximately 425 as a result of the merger.
Based upon all of the foregoing and the receipt and review of the
opinion of its financial advisor, Tucker Anthony Cleary Gull, the directors of
Camco Financial concluded that the terms of the merger, as set out in the merger
agreement, were fair to, and in the best interests of, the Camco Financial
stockholders and, on August 6, 1999, authorized the appropriate officers of
Camco Financial to execute the merger agreement.
OPINION OF CHARLES WEBB & COMPANY
In July 1999, Westwood Homestead Financial asked Charles Webb & Company
to evaluate a potential strategic combination between Westwood Homestead
Financial and Camco Financial and review any specific proposals for a strategic
alliance that might be received regarding an alliance with Westwood Homestead
Financial. Charles Webb & Company, as part of its investment banking business,
is regularly engaged in the evaluation of businesses and securities in
connection with mergers and acquisitions, negotiated underwritings, and
distributions of listed and unlisted securities. Charles Webb & Company is
familiar with the market for common stocks of publicly traded banks, thrifts and
bank and thrift holding companies. The Westwood Homestead Financial board
selected Charles Webb & Company on the basis of the firm's reputation and its
experience and
-17-
<PAGE> 19
expertise in transactions similar to the merger and its prior work for and
relationship with Westwood Homestead Financial.
Pursuant to its engagement, Charles Webb & Company was asked to render
an opinion as to the fairness, from a financial point of view, of the merger
consideration to stockholders of Westwood Homestead Financial. Charles Webb &
Company delivered its opinion to the Westwood Homestead Financial Board that, as
of August 6, 1999, the merger consideration is fair, from a financial point of
view, to the stockholders of Westwood Homestead Financial. No limitations were
imposed by the Westwood Homestead Financial board upon Charles Webb & Company
with respect to the investigations made or procedures followed by it in
rendering its opinion. Charles Webb & Company has consented to the inclusion
herein of the summary of its opinion to the Westwood Homestead Financial Board
and to the reference to the entire opinion attached hereto as Annex B.
THE FULL TEXT OF THE OPINION OF CHARLES WEBB & COMPANY, WHICH IS ATTACHED AS
ANNEX B TO THIS PROSPECTUS/JOINT PROXY STATEMENT, SETS FORTH CERTAIN ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY CHARLES
WEBB & COMPANY, AND SHOULD BE READ IN ITS ENTIRETY. THE SUMMARY OF THE OPINION
OF CHARLES WEBB & COMPANY SET FORTH IN THIS PROSPECTUS/JOINT PROXY STATEMENT IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE OPINION.
In rendering its opinion, Charles Webb & Company performed the
following analysis:
- reviewed the merger agreement;
- reviewed Westwood Homestead Financial's annual reports, proxy
statements and Forms 10-K for the 1998, 1997 and 1996 fiscal
years and Camco Financial's annual reports, proxy statements
and Forms 10-K for the 1998, 1997 and 1996 fiscal years and
certain other information considered relevant;
- discussed with senior management and the boards of directors
of Westwood Homestead Financial and its wholly-owned
subsidiary, The Westwood Homestead Savings Bank, the past
review of strategic alliances that were discussed or analyzed,
current position and prospective outlook for Westwood
Homestead Financial to enhance future stockholder value;
- discussed with senior management of Westwood Homestead
Financial the company's operations, financial performance and
future plans and prospects;
- considered historical quotations, levels of activity and
prices of recorded transactions in Westwood Homestead
Financial's and Camco Financial's common stock;
- reviewed financial and stock market data of other thrifts in a
comparable asset range to Westwood Homestead Financial;
- reviewed financial and stock market data of other thrifts in a
comparable asset range to Camco Financial;
- reviewed certain recent business combinations with thrifts as
the acquired company, which Charles Webb & Company deemed
comparable in whole or in part; and
- performed other analyses which Charles Webb & Company
considered appropriate.
In rendering its opinion, Charles Webb & Company assumed and relied
upon the accuracy and completeness of the financial information provided to it
by Westwood Homestead Financial and Camco Financial. In its review, with the
consent of the Westwood Homestead Financial board, Charles Webb & Company did
not undertake any independent verification of the information provided to it,
nor did it make any independent
-18-
<PAGE> 20
appraisal or evaluation of the assets or liabilities nor of potential exposure
resulting from Year 2000 issues, if any, of Westwood Homestead Financial or
Camco Financial, and potential or contingent liabilities of Westwood Homestead
Financial or Camco Financial.
In rendering its opinion, Charles Webb & Company analyzed certain
comparable merger and acquisition transactions of pending thrift deals,
comparing the merger consideration relative to:
- tangible book value;
- last twelve months earnings per share;
- total assets;
- total deposits;
- and premium to core deposits.
Charles Webb & Company also evaluated and took into consideration the
resulting pro forma earnings per share and book value per share for the combined
company relative to Camco Financial's current status. This pro forma analysis
demonstrated that the per share merger consideration to be received by Westwood
Homestead Financial stockholders was in an historically acceptable range in
relation to dilution and accretion.
The information in the following table summarizes the comparable group
results analyzed by Charles Webb & Company with respect to the merger. The
summary does not purport to be a complete description of the analysis performed
by Charles Webb & Company and should not be construed independently of the other
information considered by Charles Webb & Company in rendering its opinion.
Selecting portions of Charles Webb & Company's analysis or isolating certain
aspects of the comparable transactions without considering all analysis and
factors, could create an incomplete or potentially misleading view of the
evaluation process.
<TABLE>
<CAPTION>
Price to:
-------------------------------------------------------------------------
Core
Tangible Last 12 deposit
book value (2) months EPS (3) Deposits Assets premium
-------------- -------------- -------- ------ -------
<S> <C> <C> <C> <C> <C>
Consideration to Westwood Homestead
Financial - $12.53 per share (1): 120.8% 20.8x 29.9% 19.39% 5.85%
Price to:
-------------------------------------------------------------------------
Core
Tangible Last 12 deposit
33 Transactions book value months EPS Deposits Assets premium
---------- ---------- -------- ------ -------
Median of pending transactions 171.7% 23.4x 25.5% 18.4% 11.4%
Average of pending transactions 178.4 24.3 28.9 20.3 13.4
High of pending transactions 397.9 59.6 66.6 40.5 38.3
Low of pending transactions 103.8 12.9 16.3 9.4 1.9
</TABLE>
- ---------------------------
(1) Based on Camco Financial closing price of $12.00 on August 6, 1999 and
per share merger consideration on of .611 Camco Financial shares and
$5.20 in cash to be received for each Westwood Homestead Financial
share.
(2) Assumes Westwood Homestead Financial tangible book value of $10.50.
(3) Assumes earnings per share of $0.61 for the last twelve months ending
June 30, 1999.
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Based on the above information Charles Webb & Company concluded that
the above comparable group analysis as it relates to the per share merger
consideration and overall market conditions, was fair from a financial point of
view relative to comparable transactions. Further, the fairness analysis
considered:
- the relative market performance of the thrift stocks in
general, especially small cap stocks, over the past year;
- the relative historical returns on equity of Camco Financial
(10.50%) and Westwood Homestead Financial (5.45%); and
- the expected performance of each company given additional
considerations such as the business plan, asset mix, net
interest margin, net interest spread and asset quality.
In preparing its analysis, Charles Webb & Company made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of Charles
Webb & Company and Westwood Homestead Financial. The analyses performed by
Charles Webb & Company are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses and do not purport to be appraisals or reflect the prices at which
a business may be sold.
Charles Webb & Company will receive a fee of approximately $150,000 for
services rendered in connection with advising and issuing a fairness opinion
regarding the merger. As of the date of the prospectus/joint proxy statement,
Charles Webb & Company has received $50,000 of such fee. The remainder of the
fee is due upon completion of the merger.
OPINION OF TUCKER ANTHONY CLEARY GULL
Tucker Anthony Cleary Gull was retained by Camco Financial in June 1999
for the purpose of providing financial advice and consultation in connection
with a potential acquisition of Westwood Homestead Financial, including
assistance in developing an overall strategy for the acquisition, providing
advice on the valuation of Westwood Homestead Financial and the transaction
structure, providing assistance in bid presentations, negotiations and related
strategy and analysis, and, if appropriate, rendering a fairness opinion in
connection with a proposed acquisition. Camco Financial selected Tucker Anthony
Cleary Gull because of its familiarity with Camco Financial and Tucker Anthony
Cleary Gull's experience and reputation in the area of valuation and financial
advisory work generally, and in relation to financial institutions specifically.
Tucker Anthony Cleary Gull is a nationally recognized investment banking firm
and is regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, leveraged buyouts, negotiated
underwritings, private placements and valuations for corporate and other
purposes. From time to time, Tucker Anthony Cleary Gull and its affiliates may
hold long or short positions in Camco Financial common stock.
Tucker Anthony Cleary Gull has rendered a written opinion to the board
of directors of Camco Financial to the effect that, as of August 6, 1999, the
consideration to be paid to the holders of Westwood Homestead stockholders in
the merger pursuant to the agreement is fair, from a financial point of view, to
Camco Financial stockholders. THE FULL TEXT OF THE FAIRNESS OPINION DATED AS OF
AUGUST 6, 1999, SETTING FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS
CONSIDERED AND CERTAIN LIMITATIONS ON THE REVIEW UNDERTAKEN BY TUCKER ANTHONY
CLEARY GULL, IS INCLUDED AS ANNEX C OF THIS DOCUMENT. CAMCO FINANCIAL
STOCKHOLDERS ARE URGED TO READ THE FAIRNESS OPINION IN ITS ENTIRETY. This
opinion is directed to the board of directors of Camco Financial only and does
not constitute a recommendation to a Camco Financial stockholder as to how such
stockholder should vote at the special meeting. Tucker Anthony Cleary Gull does
not believe any person other than Camco's board of directors has the legal right
to rely on the opinion and, absent any controlling precedent, would resist any
assertion otherwise.
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As compensation for its services as financial advisor, including
issuing of the opinions, Camco Financial has agreed to pay Tucker Anthony Cleary
Gull a total of $100,000, of which amount $60,000 has been paid as of the date
of this document. Camco Financial has also agreed to reimburse Tucker Anthony
Cleary Gull for its out-of-pocket expenses and to indemnify Tucker Anthony
Cleary Gull against certain liabilities arising out of its services.
In arriving at its opinion Tucker Anthony Cleary Gull, among other
things:
- reviewed the August 5, 1999 draft of the merger agreement;
- reviewed certain historical financial and other information
concerning Camco Financial for the five years ended December
31, 1998, and the quarter ended March 31, 1999;
- reviewed certain historical financial and other information
concerning Westwood Homestead Financial for the five years
ended December 31, 1998 and for the quarter ended March 31,
1999;
- held discussions with the senior management of Camco Financial
and Westwood Homestead Financial regarding their past and
current financial performance, financial condition and future
prospects;
- reviewed certain internal financial data, projections and
other information of Camco Financial and Westwood Homestead
Financial, including financial projections prepared by
management;
- analyzed certain publicly available information of other
financial institutions that it deemed comparable or otherwise
relevant to its inquiry, and compared Camco Financial and
Westwood Homestead Financial from a financial point of view
with certain of these institutions;
- compared the consideration to be paid by Camco Financial
pursuant to the merger agreement with the consideration paid
in other acquisitions of financial institutions that it deemed
comparable or otherwise relevant to its inquiry;
- reviewed publicly available earnings estimates, historical
trading activity and ownership data of Camco Financial common
stock and considered the prospects for dividends and price
movement; and
- considered such other financial studies, analyses and
investigations and reviewed such other information as it
deemed appropriate to enable it to render its opinion.
In its review, Tucker Anthony Cleary Gull also took into account an
assessment of general economic, market and financial conditions and certain
industry trends and related matters. Tucker Anthony Cleary Gull's opinions were
necessarily based upon conditions as they existed and could be evaluated on the
date thereof and the information made available to Tucker Anthony Cleary Gull
through the date thereof. No limitations were imposed by the boards of directors
of Camco Financial or Westwood Homestead Financial upon Tucker Anthony Cleary
Gull with respect to the investigations made or procedures followed by Tucker
Anthony Cleary Gull in its review and analysis. In its review and analysis and
in arriving at its opinions, Tucker Anthony Cleary Gull assumed and relied upon
the accuracy and completeness of all the financial information publicly
available or provided to it by Camco Financial and Westwood Homestead Financial,
and did not attempt to verify any of such information. Tucker Anthony Cleary
Gull assumed that the financial projections of Camco Financial and Westwood
Homestead Financial provided to it with respect to the results of operations
likely to be achieved by each company were prepared on a basis reflecting the
best currently available estimates and judgments of Camco Financial's and
Westwood Homestead Financial's management as to future financial performance and
results, and that such forecasts and estimates would be realized in the amounts
and in the time periods estimated. Tucker Anthony Cleary Gull also assumed,
without independent verification, that the current and projected aggregate
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<PAGE> 23
reserves for possible loan losses for Camco Financial and Westwood Homestead
Financial were adequate to cover such losses. Tucker Anthony Cleary Gull did not
make or obtain any independent evaluations or appraisals of any assets or
liabilities of Camco Financial, Westwood Homestead Financial or any of their
respective subsidiaries nor did it verify any of Camco Financial's or Westwood
Homestead Financial's books or records or review any individual loan credit
files.
On August 6, 1999, Tucker Anthony Cleary Gull made a presentation, and
subsequently rendered a written fairness opinion, to Camco Financial's board of
directors. Set forth below is a summary of the main elements of the financial
analyses performed by Tucker Anthony Cleary Gull in connection with rendering
its written opinion of August 6, 1999. The following is not a complete
description of the analyses performed by Tucker Anthony Cleary Gull or of the
presentation of Tucker Anthony Cleary Gull to Camco Financial's board of
directors. Taken as whole, Tucker Anthony Cleary Gull believes these analyses
support the conclusion that the consideration to be paid to Westwood Homestead
Financial stockholders is fair, from a financial point of view, to the Camco
Financial stockholders.
Acquisition Price/Exchange Ratio Analysis. Tucker Anthony Cleary Gull
considered the ranges of possible acquisition prices and exchange ratios which
could result under the merger and the impact of these on its analyses.
Stock Trading Analysis. Tucker Anthony Cleary Gull examined the
historical trading prices, trading volume activity and market pricing multiples
of Camco Financial and Westwood Homestead Financial common stock; compared the
historical trading prices of Camco Financial common stock in relation to
movements in certain stock indices, specifically an index of Camco Financial's
selected reference companies; compared the historical trading prices of Westwood
Homestead Financial's common stock in relation to movements in certain stock
indices, specifically an index of Westwood Homestead Financial selected
reference companies; and compared historical trading prices of Camco Financial
and Westwood Homestead Financial to the Nasdaq Community Bank Index; and the
Standard & Poor 500 Index.
Contribution Analysis. Tucker Anthony Cleary Gull analyzed the
contribution of each of Camco Financial and Westwood Homestead Financial to
among other things, the stockholders' equity and after-tax net income of the pro
forma combined company. This analysis showed that, among other factors, Westwood
Homestead Financial would have contributed 16%, 16%, and 17% of the assets,
stockholders' equity and net income, respectively, of the pro forma combined
company as of and for the twelve months ended March 31, 1999. This compared with
a proposed ownership of 18% of the combined company to be held by the holders of
Westwood Homestead Financial common stock following the merger.
Pro Forma Merger Analysis. Based on projections provided by Camco
Financial, Tucker Anthony Cleary Gull analyzed certain pro forma effects of the
merger. This analysis indicated that, while the merger would be initially
dilutive to tangible book value per share, the merger would be accretive to
earnings in the first full year following the close of the merger. In this
analysis, Tucker Anthony Cleary Gull assumed that Camco Financial performed in
accordance with the earnings forecasts and achieved expected synergies provided
to Tucker Anthony Cleary Gull by Camco Financial's senior management.
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<PAGE> 24
Analysis of Selected Publicly Traded Companies. Tucker Anthony Cleary
Gull compared selected financial data and financial ratios of Camco Financial
and Westwood Homestead Financial to the corresponding data and ratios of certain
publicly traded institutions. The institutions included in the comparison to
Camco Financial were:
- FFY Financial Corp. - Fidelity Bancorp, Inc.
- First Defiance Financial Corp. - First Northern Capital Corp.
- Harrington Financial Group, Inc. - HMN Financial, Inc.
- Home Federal Bancorp - Metropolitan Financial Corp.
- NASB Financial, Inc. - Ottawa Financial Corp.
The institutions included in the comparison to Westwood Homestead Financial
were:
- Advance Financial Bancorp; - AMB Financial Corp.
- Carolina Fincorp, Inc. - CBES Bancorp, Inc.
- Empire Federal Bancorp, Inc. - FFD Financial Corp.
- Lexington B&L Financial Corp. - River Valley Bancorp
- WHG Bancshares Corp.
The selected thrifts compared to Camco Financial exhibited certain
characteristics including asset size, geographic proximity and business risk
similar to those exhibited by Camco Financial. The selected thrifts compared to
Westwood Homestead Financial were selected based upon when they conducted their
conversion from a mutual to stock company, their asset size, net worth ratio and
operating performance.
The comparison of Camco Financial to its selected peer group based on
financial data as of March 31, 1999 for Camco Financial and for the most recent
financial data available for the peer group indicated the following:
- the ratio of Camco Financial's net loans to assets was 87.1%
compared to an average of 76.8% for its peer group;
- the ratio of Camco Financial's loan loss reserves to
non-performing assets was 47.0% compared to 162.6% for its
peer group;
- the ratio of Camco Financial's equity to total assets was 9.2%
compared to an average of 8.3% for its peer group;
- the latest quarter annualized return on assets for Camco
Financial was 0.96% compared to an average of 1.09% for its
peer group;
- the latest quarter annualized return on equity for Camco
Financial was 10.36% compared to an average of 12.28% for its
peer group;
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<PAGE> 25
- the ratio of Camco Financial's market price to its book value
per common share was 114% compared to an average of 143% for
its peer group;
- the price/earnings ratio for the trailing twelve months
earnings for Camco Financial was 10.9x compared to an average
of 13.1x for its peer group; and
- the average latest quarter annualized dividend yield for Camco
Financial was 3.5% compared to 2.4% for its peer group.
The comparison of Westwood Homestead Financial to its selected peer
group based on financial data as of June 30, 1999 for Westwood Homestead
Financial and for the most recent financial data available for the peer group
indicated the following:
- the ratio of Westwood Homestead Financial's net loans to
assets was 90.4% compared to an average of 71.5% for its peer
group;
- the ratio of Westwood Homestead Financial's equity to total
assets was 16.1% compared to an average of 14.5% its peer
group;
- the latest quarter annualized return on assets for Westwood
Homestead Financial was 0.92% compared to an average of 0.71%
for its peer group;
- the latest quarter annualized return on equity for Westwood
Homestead Financial was 5.39% compared to an average of 5.07%
for its peer group.
- the ratio of Westwood Homestead Financial's market price to
its book value per common share was 105% compared to an
average of 87% for its peer group;
- the price/earnings ratio for the trailing twelve months
earnings for Westwood Homestead Financial was 18.1x compared
to an average of 18.2x for its peer group; and
- the average latest quarter annualized dividend yield for
Westwood Homestead Financial was 4.0% compared to 3.2% for its
peer group.
Analysis of Selected Acquisition Transactions. Tucker Anthony Cleary
Gull reviewed and performed analysis of 42 unassisted acquisitions of thrift
institutions in the U.S. with a transaction size ranging from $10.0 million to
$50.0 million announced since January 1, 1998, and 49 acquisitions of thrift
institutions in the Midwest announced since January 1, 1998, comparing the
target financial institutions' capital structure and profitability to Westwood
Homestead Financial's current results of operations and financial condition. The
selected U.S. transactions and selected Midwest transactions were chosen because
they represented merger and acquisition transactions which involved target
financial institutions exhibiting certain characteristics, including asset size,
geographic proximity and business risk, similar to those exhibited by Westwood
Homestead Financial. Excluding the highest and lowest ratios, the target
financial institutions involved in the selected U.S. transactions and the
selected Midwest transactions had an average return on assets for the latest
twelve months prior to announcement date of 0.76% and 0.86% and an average
return on equity for the latest twelve months prior to announcement date of
6.65% and 9.67%, respectively, compared to 0.97% and 5.13%, respectively, for
Westwood Homestead Financial. Set forth below is a summary of the analysis with
respect to the selected U.S. transactions and the selected Midwest transactions.
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<TABLE>
<CAPTION>
Selected U.S. Selected Midwest
Transactions Transactions
------------------------- ------------------------
Offer Offer
Offer(1) Median Percentile(2) Median Percentile(2)
-------- ------ ------------- ------ -------------
<S> <C> <C> <C> <C> <C>
Price/Trailing
Twelve Months Earnings 19.6x 19.9x 33.6% 23.8x 28.9%
Price/Book Value 107.9% 151.1% 5.1% 187.9% 2.2%
Price/Tangible
Book Value 107.9% 151.1% 5.1% 194.3% 2.2%
</TABLE>
- ---------------------------
(1) Based upon a value of $12.53 (based on the August 6, 1999 closing price of
Camco Financial stock of $12.00 and an exchange ratio of .611 Camco
Financial shares and $5.20 in cash for each share of Westwood Homestead
Financial). The aggregate estimated purchase price assumes that 1,961,000
shares are outstanding exclusive of certain shares held by Westwood
Homestead Financial's stock benefit plans which will be retired as part of
the transaction resulting in an estimated aggregate purchase price of
$24,575,000. Westwood Homestead Financial's earnings for the last twelve
months ending June 30,1999, were $1,255,000.
(2) Position of the Camco Financial offer in relation to percentile rankings of
the selected transactions.
The foregoing is a summary of the main elements of the financial
analyses performed by Tucker Anthony Cleary Gull, but it does not purport to be
a complete description of such analyses. The preparation of a fairness opinion
involves various determinations as to the most appropriate and relevant methods
of financial analysis and the application of these methods to the particular
circumstances and, therefore, such an opinion is not readily susceptible to a
summary description. Accordingly, notwithstanding the separate factors
summarized above, Tucker Anthony Cleary Gull believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors
considered by it, without considering all analyses and factors, or attempting to
ascribe relative weights to some or all of such analyses or factors, could
create an incomplete view of the evaluation process underlying Tucker Anthony
Cleary Gull's opinion. In addition, Tucker Anthony Cleary Gull may have used the
various analyses for different purposes and may have deemed various assumptions
more or less probable than other assumptions, so that the ranges of valuations
resulting from any particular analysis described above should not be taken to be
Tucker Anthony Cleary Gull's view of the actual value of Westwood Homestead
Financial to Camco Financial. The fact that any specific analysis has been
referred to in the summary above is not meant to indicate that such analysis was
given more weight than any other analyses.
In performing its analyses, Tucker Anthony Cleary Gull made numerous
assumptions with respect to industry performance, general business and economic
conditions, and other matters, many of which are beyond the control of Camco
Financial and Westwood Homestead Financial. The analyses performed by Tucker
Anthony Cleary Gull are not necessarily indicative of actual values or actual
future results, which may be significantly more or less favorable than those
suggested by such analyses. Such analyses were prepared solely as a part of
Tucker Anthony Cleary Gull's analysis of the fairness, from a financial point of
view, to Camco Financial stockholders of the consideration to be paid in the
merger to Westwood Homestead Financial stockholders, and were provided to Camco
Financial's board of directors in connection with the delivery of Tucker Anthony
Cleary Gull's opinion. The analyses do not purport to be appraisals or to
reflect the prices at which Westwood Homestead Financial or Camco Financial
might actually be sold or the prices at which any securities may trade at the
present time or at any time in the future. In addition, as described above,
Tucker Anthony Cleary Gull's opinion is just one of the many factors taken into
consideration by Camco's Board of Directors.
RECOMMENDATION OF THE BOARDS OF DIRECTORS OF WESTWOOD HOMESTEAD FINANCIAL AND
CAMCO FINANCIAL
The board of directors of Westwood Homestead Financial unanimously
recommends that the Westwood Homestead Financial stockholders vote FOR the
adoption of the merger agreement. The board of directors believes that the terms
of the merger are fair to, and in the best interests of, Westwood Homestead
Financial's stockholders.
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<PAGE> 27
The board of directors of Camco Financial unanimously recommends that
the Camco Financial stockholders vote FOR the adoption of the merger agreement.
The board of directors believes that the terms of the merger are fair to, and in
the best interests of, Camco Financial's stockholders.
EXCHANGE OF WESTWOOD HOMESTEAD FINANCIAL SHARES
If the holders of at least 1,084,410 Westwood Homestead Financial
shares and the holders of at least 2,860,195 Camco shares approve the merger, if
all necessary regulatory approvals are received and if all conditions to the
completion of the merger are satisfied or waived, Westwood Homestead Financial
will merge with Camco Financial. After the merger, Camco Financial will be the
continuing and surviving corporation and each Westwood Homestead Financial share
will be converted into the right to receive $5.20 and .611 Camco Financial
shares.
Based on the _________ Westwood Homestead Financial common shares
issued and outstanding on ______________, 1999, the total number of Camco
Financial shares to be issued to Westwood Homestead Financial stockholders would
be ____________ and the total amount of cash to be distributed to Westwood
Homestead Financial stockholders would be ____________. Based on the number of
Camco Financial shares issued and outstanding on ______________, 1999, the total
number of outstanding shares of Camco Financial after the merger would be
_____________, of which ____% would be held by the former Westwood Homestead
Financial stockholders.
FRACTIONAL SHARES
Camco Financial will not issue fractional shares in the merger.
Instead, Camco Financial will pay to each Westwood Homestead Financial
stockholder who otherwise would be entitled to receive a fraction of a Camco
Financial share, cash based on the average of the bid and asked price quotes of
Camco Financial shares on Nasdaq on the last day of trading before the
completion of the merger.
EXCHANGE OF CERTIFICATES EVIDENCING CAMCO FINANCIAL SHARES AND WESTWOOD
HOMESTEAD FINANCIAL SHARES
After the merger is effective, Camco Financial will mail to you a form
letter of transmittal containing instructions for surrendering your Westwood
Homestead Financial stock certificates. When you surrender your certificates for
cancellation, together with a duly executed letter of transmittal, you will be
entitled to receive a certificate for the number of Camco Financial shares to
which you are entitled under the merger agreement. Until you surrender your
certificates, Camco Financial will not pay you any dividends or other
distributions and your rights as a stockholder of Camco Financial will be
suspended.
If you have lost or misplaced your Westwood Homestead Financial stock
certificate, you should immediately call Theresa Crawford of Firstar at (513)
_________. She will mail to you instructions for replacing the lost certificate.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Each of Camco Financial, Westwood Homestead Financial and The Westwood
Homestead Savings Bank has made representations and warranties in the merger
agreement regarding:
- corporate organization,
- authority and capital,
- financial condition,
- past conduct of business,
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<PAGE> 28
- legal proceedings, and
- business condition.
In addition, Westwood Homestead Financial and The Westwood Homestead
Savings Bank have made representations and warranties regarding:
- investments,
- properties,
- taxes,
- contracts,
- employee benefit plans, and
- other matters.
During the period between August 6, 1999, and the completion of the
merger, each of Westwood Homestead Financial and The Westwood Homestead Savings
Bank has agreed to conduct its business only in the ordinary and usual course
unless Camco Financial agrees in writing. Westwood Homestead Financial may not
solicit or initiate any proposals or offers from any person, or discuss or
negotiate with any person or entity, in respect of any acquisition or purchase
of all or a material amount of the assets of, any equity security of, or any
merger, consolidation or business combination with, Westwood Homestead
Financial, except as required by the good faith exercise of the fiduciary duties
of the board of directors of Westwood Homestead Financial.
Westwood Homestead Financial has also agreed to do the following
immediately before completion of the merger to the extent such actions are
permitted by law and are consistent with generally accepted accounting
principles:
- to implement policies regarding excess facilities and equipment
capacity, severance costs, litigation matters, write-off or
write-down of various assets and other appropriate accounting
adjustments; and
- to recognize for financial accounting purposes the expenses of
the merger and any restructuring charges to be incurred in
connection with the merger, to the extent permitted by law,
generally accepted accounting principles and the fiduciary duties
of the officers and directors.
Camco Financial has agreed to indemnify the officers and directors of
Westwood Homestead Financial for a three-year period beginning upon completion
of the merger against liabilities incurred before the merger.
CONDITIONS
Camco Financial, Westwood Homestead Financial and The Westwood
Homestead Savings Bank may complete the merger only if the merger agreement is
approved by holders of a majority of the outstanding Westwood Homestead
Financial shares and by holders of a majority of the outstanding Camco Financial
shares and the parties receive regulatory approvals from the Office of Thrift
Supervision and the Ohio Division of Financial Institutions. In addition, Camco
Financial will not be required to complete the merger unless the following
conditions are satisfied:
- the truth, in all material respects, of all of Westwood Homestead
Financial's representations and warranties in the merger
agreement;
- Westwood Homestead Financial's satisfaction, in all material
respects, of its obligations in the merger agreement;
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<PAGE> 29
- the absence of a material adverse change in Westwood Homestead
Financial or The Westwood Homestead Savings Bank after August 6,
1999;
- Westwood Homestead Financial stockholders' equity at the time of
the merger being not less than $22,778,105, exclusive of expenses
related to the merger and reserves, accruals and charges taken or
established by Westwood Homestead Financial at the request of
Camco Financial and realized or unrealized losses on securities
classified as available for sale in Westwood Homestead Financial's
audited financial statements; and
- the receipt by Camco Financial of a determination letter from the
Internal Revenue Service that The Westwood Homestead Financial
Corporation Employee Stock Ownership Plan is qualified upon its
termination and that the per share merger consideration received
by the ESOP in connection with the merger, together with all other
ESOP assets, may be immediately allocated to the ESOP
participants' accounts, and that certain amendments to the ESOP
have been approved.
Westwood Homestead Financial will not be required to complete the
merger unless the following conditions are satisfied:
- the truth, in all material respects, of all of Camco Financial's
representations and warranties in the merger agreement;
- Camco Financial's satisfaction, in all material respects, of its
obligations in the merger agreement;
- the absence of a material adverse change in Camco Financial after
August 6, 1999; and
- the receipt of a written opinion of Charles Webb & Company, dated
within three days of the date of this prospectus/joint proxy
statement, stating that the per share merger consideration to be
received by Westwood Homestead Financial stockholders is fair from
a financial point of view.
Camco Financial and Westwood Homestead Financial may waive any of the
conditions unless the waiver is prohibited by law.
Camco Financial has submitted applications to the Office of Thrift
Supervision and the Ohio Division of Financial Institutions seeking approval of
the merger. We anticipate that the Office of Thrift Supervision and the Ohio
Division of Financial Institutions will approve the merger. Camco Financial and
Westwood Homestead Financial are not aware of any basis for disapproving the
merger but there can be no assurance that all requisite approvals will be
obtained, that such approvals will be received on a timely basis or that such
approvals will not impose conditions or requirements which, individually or in
the aggregate, would so materially reduce the economic or business benefits of
the transactions contemplated by the merger to Camco Financial and Westwood
Homestead Financial that, had such condition or requirement been known, neither
Camco Financial nor Westwood Homestead Financial, in its reasonable judgment,
would have entered into the merger agreement.
EFFECTIVE TIME
Following the satisfaction or waiver of all conditions in the merger
agreement, we will file a Certificate of Merger as soon as practicable with the
Secretary of State of the State of Delaware in order to complete the merger. We
anticipate that we will complete the merger in January 2000.
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<PAGE> 30
TERMINATION AND AMENDMENT
Either Camco Financial or Westwood Homestead Financial may terminate
the merger agreement or the merger under the circumstances described below,
whether or not the stockholders already have voted to approve the merger
agreement. Termination may occur by the mutual agreement of Camco Financial and
Westwood Homestead Financial, or by either party if:
- the merger is not consummated by June 30, 2000;
- the conditions listed in the merger agreement have not been
satisfied or waived; or
- an event occurs that would preclude satisfaction of or compliance
with any of the conditions in the merger agreement.
If the merger is not completed because of the willful breach of the
merger agreement by one party, that party will be required to pay up to $250,000
of the merger-related expenses of the non-breaching party.
The merger agreement may be amended at any time before or after the
special meetings of stockholders. An amendment of the merger agreement which
materially and adversely affects the rights of the stockholders of Westwood
Homestead Financial and Camco Financial and which takes place after the special
meetings of stockholders, however, will not be made without further approval of
the Westwood Homestead Financial and Camco Financial stockholders. If necessary,
Westwood Homestead Financial and Camco Financial will seek approval at
subsequent meetings of stockholders.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS
Certain members of Westwood Homestead Financial management have
interests in the merger in addition to their interests solely as Westwood
Homestead Financial shareholders.
BOARD OF CAMCO FINANCIAL. Michael P. Brennan will be appointed to the
Camco Financial board of directors.
EMPLOYMENT AND SEVERANCE AGREEMENTS. In connection with the merger, The
Westwood Homestead Savings Bank will enter into new employment agreements with
Michael P. Brennan and Gerald T. Mueller, and a severance agreement with John E.
Essen. The terms of each of Mr. Brennan's employment agreement and Mr. Essen's
severance agreement will be three years. Mr. Mueller's employment agreement will
have a one-year term, but upon the expiration of that agreement he will enter
into a two-year severance agreement with The Westwood Homestead Savings Bank.
The employment agreements will provide for performance reviews by the board of
directors not less often than annually and for the inclusion of the officers in
any formally established employee benefit, bonus, pension, and profit-sharing
plans for which senior management personnel are eligible and for vacation and
sick leave in accordance with the prevailing policies.
The employment agreements will be terminable by The Westwood Homestead
Savings Bank at any time. In the event of termination for "just cause," as
defined in the employment agreements, the employee will have no right to receive
any compensation or other benefits for any period after such termination. In the
event of termination other than for just cause or in connection with a "change
of control," as defined in the employment agreements, the employee will be
entitled to a continuation of salary payments for a period of time equal to the
remaining term of the employment agreement.
Each employment agreement also will contain provisions with respect to
the occurrence of a "change of control" and (1) the termination of the
employee's employment for any reason other than just cause, or (2) a
constructive termination resulting from a change in the capacity or
circumstances in which the employee is employed or a material reduction in his
responsibilities, authority, compensation, or other benefits provided under
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<PAGE> 31
the employment agreement without the employee's written consent. In the event of
any such occurrence, the employee will be entitled to payment of an amount equal
to 2.99 times the employee's annual compensation immediately preceding the
termination of his employment. In addition, the employee will be entitled to
continued coverage under all benefit plans until the end of the term of his
employment agreement. The maximum which the employee may receive, however, is
limited to an amount which will not result in the imposition of a penalty tax
pursuant to Section 280G(b)(3) of the Internal Revenue Code of 1986, as amended.
The severance agreements will contain provisions with respect to the
occurrence of a change of control and (1) the termination of the employee's
employment within twelve months of the change of control, for any reason other
than just cause, or (2) a constructive termination resulting from a change in
the capacity or circumstances in which the employee is employed or a material
reduction in his responsibilities, authority, compensation, or other benefits
provided under the employment agreement without the employee's written consent.
In the event of any such occurrence, the employee will be entitled to the
payment of an amount equal to the difference between the product of (x) 2.99
times the employee's annual compensation immediately preceding the termination
of his employment and (y) the sum of any other parachute payments the employee
receives on account of the change in control.
ASSUMPTION OF STOCK OPTIONS. At the completion of the merger, each
outstanding option to purchase Westwood Homestead Financial shares will be
converted automatically into an option to purchase Camco Financial shares. Camco
Financial shall assume each Westwood Homestead Financial option and the Westwood
Homestead Financial Corporation 1997 Stock Option Plan and operate the plan
according to its terms except that after the merger is completed Camco Financial
and its compensation committee will be substituted for Westwood Homestead
Financial and its committee which presently operates the option plan.
The number of Camco Financial shares subject to the assumed options
will be adjusted by multiplying the number of shares subject to the option
before the completion of the merger by the value of the per share merger
consideration ($12.53 as of August 6, 1999) divided by the market value of a
Camco Financial share ($12.00 as of August 6, 1999). The exercise price of an
assumed option will also be adjusted by dividing the per share exercise price of
the option by the value of the per share merger consideration ($_______ as of
__________, 1999) divided by the market value of a Camco Financial share
($_______ as of ___________, 1999). Camco Financial has also agreed to register
the Camco Financial shares issuable upon exercise of the assumed Westwood
Homestead Financial options under the Securities Act.
INDEMNIFICATION AND INSURANCE. For a period of three years after the
merger is completed, Camco Financial will indemnify the former directors of
Westwood Homestead Financial for their acts and omissions occurring prior to the
completion of the merger to the extent permitted by Camco Financial's
certificate of incorporation and bylaws. Similarly, for three years after the
merger The Westwood Homestead Savings Bank will indemnify its current and former
directors, agents and employees to the extent permitted under Ohio law, except
for claims against Camco Financial, its subsidiaries, Westwood Homestead
Financial or The Westwood Homestead Savings Bank arising out of or in connection
with the merger. Camco Financial has also agreed to extend its directors' and
officers' liability insurance to cover the directors and officers of Westwood
Homestead Financial and The Westwood Homestead Savings Bank for three years
following the completion of the merger.
RESALE OF CAMCO FINANCIAL COMMON SHARES
Camco Financial has registered the Camco Financial common shares to be
issued in the merger with the Securities and Exchange Commission under the
Securities Act of 1933, as amended. The Camco Financial shares will be freely
transferable, except for Camco Financial common shares received by persons who
may be deemed to be affiliates of Westwood Homestead Financial. The term
"affiliate" is defined in Rule 145 promulgated under the Securities Act and
generally includes executive officers and directors. Affiliates may not sell
their Camco Financial common shares, except (a) pursuant to an effective
registration statement under the Securities Act covering their Camco Financial
common shares or (b) in compliance with Rule 145 or another applicable exemption
from the registration requirements of the Securities Act.
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<PAGE> 32
FEDERAL INCOME TAX CONSEQUENCES
It is anticipated that the merger will qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended. Even though the merger will be a "tax-free"
reorganization, Westwood Homestead Financial stockholders will receive tax free
only the shares of Camco Financial in accordance with Section 354 of the Code.
Since Westwood Homestead Financial stockholders will receive cash boot for each
share of Westwood Homestead Financial, in addition to receiving shares of Camco
Financial, their gain, if any, must be recognized, but not in excess of the cash
received. A Westwood Homestead Financial stockholder may not recognize any loss
which may be realized on the exchange of Westwood Homestead Financial shares for
both Camco Financial shares and cash.
Federal law provides that, if the exchange has the "effect of the
distribution of a dividend," the taxpayer's recognized gain must be so treated
to the extent of his ratable share of earnings and profits. Such dividend will
qualify for the dividends-received deduction generally allowed to corporations,
subject to certain limitations. In determining whether the receipt of boot has
the effect of the distribution of a dividend, the courts and the Internal
Revenue Service agree that the principles developed in interpreting the
redemption provisions of Section 302 of the Code are applicable to cases under
Section 356.
Camco Financial and Westwood Homestead Financial have received an
opinion of Vorys, Sater, Seymour and Pease LLP that the merger will produce the
following material federal income tax consequences:
- The merger will constitute a reorganization under Section
368(a)(1)(A) of the Code. Camco Financial and Westwood
Homestead Financial will each be a party to the
reorganization.
- No gain or loss will be recognized to Westwood Homestead
Financial upon the transfer of its assets to Camco Financial
in exchange for shares of Camco Financial, cash boot, and the
assumption by Camco Financial of liabilities of Westwood
Homestead Financial.
- No gain or loss will be recognized to Camco Financial on the
receipt of the assets of Westwood Homestead Financial in
exchange for shares of Camco Financial and cash.
- The basis of the assets of Westwood Homestead Financial in
the hands of Camco Financial will be the same as the basis of
such assets in the hands of Westwood Homestead Financial
immediately prior to the merger.
- The holding period of the assets of Westwood Homestead
Financial to be received by Camco Financial will include the
period during which the assets were held by Westwood Homestead
Financial.
- The gain, if any, to be realized by a Westwood Homestead
Financial stockholder who receives Camco Financial shares and
cash in exchange for his or her Westwood Homestead Financial
shares will be recognized, but not in excess of the amount of
cash received. If the exchange has the effect of the
distribution of a dividend (determined with the application of
Section 318), then the amount of gain recognized that is not
in excess of such stockholder's ratable share of undistributed
earnings and profits will be treated as a dividend. The
determination of whether the exchange has the effect of a
distribution of a dividend will be made on a
stockholder-by-stockholder basis. No loss will be recognized
pursuant to Section 356(c).
- The basis of the Camco Financial shares to be received by a
Westwood Homestead Financial stockholder will be the same as
the basis of the Westwood Homestead Financial shares
surrendered in exchange therefore, decreased by the amount of
cash received, and increased by the amount of gain which was
recognized on the exchange. The holding period of the shares
of Camco Financial to be received by such Westwood Homestead
Financial stockholder will be the
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<PAGE> 33
same as the holding period of the shares of Westwood Homestead
Financial surrendered in exchange therefore.
BECAUSE OF THE COMPLEXITIES OF THE FEDERAL, STATE AND LOCAL TAX LAWS,
WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISOR.
ACCOUNTING TREATMENT
The merger will be treated as a purchase for accounting purposes.
Accordingly, Camco Financial will record the assets and liabilities of Westwood
Homestead Financial on its books at fair value. The excess of the fair value of
the assets received over the fair value of the liabilities assumed will be
assigned to specific and unidentified intangible assets. The resulting
intangible assets will be amortized to operations over the estimated useful
life, presently estimated to be 20 years.
STOCK OPTION AGREEMENT
Camco Financial and Westwood Homestead Financial executed a stock
option agreement in which Westwood Homestead Financial granted Camco Financial
an option to purchase up to 19.9% of the outstanding common shares of Westwood
Homestead Financial at a price of $10.50 per share.
Camco may only exercise the option if both an "initial triggering
event" and a "subsequent triggering event" occur before the occurrence of an
"exercise termination event" and Camco Financial has given Westwood Homestead
Financial the appropriate written notice of its intent to exercise the option.
The term "initial triggering event" shall mean any of the following
events or transactions:
- Westwood Homestead Financial, without having received Camco
Financial's prior written consent, enters into an agreement to
engage in a merger or consolidation, or any similar
transaction, involving itself or The Westwood Homestead
Savings Bank; there is a purchase, lease or other acquisition
of all or any substantial part of the assets or deposits of
Westwood Homestead Financial or The Westwood Homestead Savings
Bank; there is a purchase or other acquisition (including by
way of merger, consolidation, share exchange or otherwise) of
securities representing 10% or more of the voting power of
Westwood Homestead Financial or The Westwood Homestead Savings
Bank; or any substantially similar transaction.
- Any person, other than Camco Financial or one of its
subsidiaries, acquires beneficial ownership or the right to
acquire beneficial ownership of 20% or more of the outstanding
Westwood Homestead Financial shares;
- The board of Westwood Homestead, without having received
Camco Financial's prior written consent, withdraws or
modifies, or publicly announces its interest to withdraw or
modify in any manner adverse in any respect to Camco
Financial, its recommendation that the Westwood Homestead
Financial shareholders approve the merger agreement in
anticipation of engaging in an acquisition transaction;
- Westwood Homestead Financial or The Westwood Homestead
Savings Bank authorizes, recommends or proposes, or publicly
announces its intention to authorize, recommend or propose, an
agreement to engage in an acquisition transaction with any
person other than Camco Financial or one of its subsidiaries;
- Any person other than Camco Financial or one of its
subsidiaries files with the Securities and Exchange Commission
a registration statement or tender offer materials with
respect to a potential exchange or tender offer that would
constitute an acquisition transaction (or files a
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<PAGE> 34
preliminary proxy statement with the SEC with respect to a
potential vote by its stockholders to approve the issuance of
shares to be offered in such an exchange offer);
- After a bona fide written proposal is made by any person,
other than Camco Financial or one of its subsidiaries, to
Westwood Homestead Financial or its stockholders to engage in
an acquisition transaction, Westwood Homestead Financial
breaches any covenant or obligation contained in the merger
agreement and such breach entitles Camco Financial to
terminate the merger agreement (whether immediately or after
the giving of notice or passage of time or both) and shall not
have been cured prior to the appropriate notice date; or
- any person other than Camco Financial or one of its
subsidiaries files an application or notice with the Federal
Reserve Board or other federal or state bank regulatory or
antitrust authority, which application or notice is accepted
for processing, for approval to engage in an acquisition
transaction.
The term "subsequent triggering event" shall mean any of the following
events or transactions:
- The acquisition by any person (other than Westwood Homestead
Financial or The Westwood Homestead Savings Bank ) of
beneficial ownership of 25% or more of the then outstanding
Westwood Homestead Financial shares; or
- Westwood Homestead Financial, without having received Camco
Financial's prior written consent, enters into an agreement
involving a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of
securities representing 25% or more of the voting power of
Westwood Homestead Financial or The Westwood Homestead Savings
Bank.
Each of the following will be an "exercise termination event" under the
stock option agreement:
- the effective time of the merger
- the termination of the merger agreement in accordance with its
provisions if such termination occurs prior to the occurrence
of an initial triggering event, except a termination by Camco
Financial pursuant to a willful termination of the merger
agreement (unless the breach by Westwood Homestead Financial
giving rise to such right of termination was non-volitional);
or
- the passage of 12 months after termination of the merger
agreement if such termination follows the occurrence of an
initial triggering event or is a termination by Camco
Financial pursuant to a willful breach of the merger agreement
(unless the breach by Westwood Homestead Financial giving rise
to such right of termination is non-volitional), provided that
if an initial triggering event continues or occurs beyond such
termination and prior to the passage of such 12-month-period,
the exercise termination event shall be 12 months from the
expiration of the last initial triggering event to occur but
in no event more than 18 months after such termination.
The stock option agreement is intended to increase the likelihood that
the merger will be completed. The existence of the option could significantly
increase the cost to a potential acquiror of acquiring Westwood Homestead
Financial. The increased cost might discourage a potential acquiror from
considering or proposing an acquisition or might result in a potential acquiror
proposing to pay a lower per share price to acquire Westwood Homestead Financial
than it might otherwise have proposed to pay. Moreover, the exercise or
repurchase of the option is likely to prevent any other acquiror of Westwood
Homestead Financial from accounting for an acquisition of Westwood Homestead
Financial using the pooling of interests accounting method for a period of two
years.
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<PAGE> 35
The stock option agreement, therefore, may discourage persons who might
be interested in acquiring Westwood Homestead Financial from considering or
proposing an acquisition before the merger is completed, including persons who
were prepared to pay a higher price than Camco Financial.
PROPOSED AMENDMENT TO THE CAMCO FINANCIAL
CERTIFICATE OF INCORPORATION
The Camco Financial certificate of incorporation currently authorizes
9,000,000 shares of capital stock, $1.00 par value per share, consisting of
8,900,000 shares of common stock, $1.00 par value per share, and 100,000 shares
of preferred stock, $1.00 par value per share. As of ______________, 1999, there
were __________ Camco Financial shares issued and outstanding, _________ Camco
Financial shares reserved for issuance upon the exercise of options and no
shares of preferred stock issued. In connection with the merger, Camco Financial
will issue up to ___________ shares to Westwood Homestead Financial stockholders
and will have to reserve approximately __________ shares for options issued to
holders of Westwood Homestead Financial options. Therefore, only __________
common shares are available for future acquisitions, stock dividends, stock
options or other corporate purposes.
The amendment to the certificate of incorporation provides for the
authorization of 15,000,000 shares of capital stock, of which 14,900,000 shares
shall be common stock, and 100,000 shares shall be preferred stock. The board of
directors of Camco Financial believes an increase in the total authorized Camco
Financial shares will enable Camco Financial to better meet its future business
needs. In order to have sufficient authorized but unissued shares available to
effect possible acquisitions of financial institutions or for other corporate
purposes, such as stock dividends or stock options, the board of directors
believes it is advisable to increase the authorized number of Camco Financial
shares by 6,000,000 to 15,000,000. The proposed increase in the number of
authorized shares will give Camco Financial greater flexibility in responding
quickly to advantageous business opportunities. Depending on the means by which
an acquisition is completed, Camco Financial stockholders may not be required to
vote on the acquisition. Other issuances of authorized Camco Financial shares
also may not be subject to stockholder vote. The board of directors of Camco
Financial recommends that the stockholders approve the following amendment to
Article FOURTH of the Camco Financial certificate of incorporation to read as
follows:
FOURTH: The total number of shares of stock which the corporation shall
have the authority to issue is Fifteen Million (15,000,000), of which
stock Fourteen Million Nine Hundred Thousand (14,900,000) shares shall
be common shares of the par value One Dollar ($1.00) each, amounting in
the aggregate to Fourteen Million Nine Hundred Thousand Dollars
($14,900,000), and One Hundred Thousand (100,000) shares shall be
preferred shares of the par value One Dollar ($1.00) each, amounting in
the aggregate to One Hundred Thousand Dollars ($100,000). There is
hereby granted to the Board of Directors of the corporation the
authority to fix by resolution or resolutions any and all powers,
designations, preferences and relative, participating, optional or
other rights, or the qualifications, limitations or restrictions
thereof, of shares of the preferred stock, or of any series of the
preferred stock, of the corporation that are permitted by the General
Corporation Law of Delaware to be fixed by the Board of Directors, and
such grant of authority shall include the power to specify the number
of shares to any series of the preferred stock of the corporation.
Since authorized shares of Camco Financial can be issued without
further stockholder approval or preemptive rights in existing stockholders, the
Board of Directors could dilute the voting power of existing stockholders and
increase the number of shares which would have to be purchased to obtain control
of Camco Financial. Under certain circumstances, the issuance of new shares may
discourage certain potential business combinations which some stockholders may
believe to be in their best interest and make more difficult management changes
which might occur if the potential business combination were successful.
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<PAGE> 36
All Camco Financial shares, including those now authorized and those
which would be authorized by the amendment, are equal in rank and have the same
voting, dividend and liquidation rights. Holders of Camco Financial shares do
not have preemptive rights.
The affirmative vote of the holders of a majority of the outstanding
shares of Camco Financial is required to adopt the amendment to the certificate
of incorporation.
The board of directors of Camco Financial recommends that the
stockholders of Camco Financial vote for the amendment. Unless a contrary choice
is specified, proxies solicited by the board will be voted for the amendment.
THE SPECIAL MEETING OF WESTWOOD HOMESTEAD FINANCIAL STOCKHOLDERS
TIME, DATE AND PLACE
The Westwood Homestead Financial special meeting of stockholders will
be held at ___________, Eastern Time, on _____________, 1999, at _____________.
PURPOSE OF THE MEETING
At the special meeting of stockholders, you will be asked to consider
and vote upon a proposal to adopt the merger agreement.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
Only stockholders of record on ______________, 1999, will be entitled
to notice of and to vote at the special meeting of stockholders. At the close of
business on ____________, 1999 there were 2,168,818 Westwood Homestead Financial
shares outstanding and entitled to vote. The Westwood Homestead Financial shares
were held of record by approximately___ stockholders. Each Westwood Homestead
Financial share entitles the holder to one vote on all matters properly
presented at the special meeting of stockholders.
VOTES REQUIRED
The holders of a majority of the outstanding Westwood Homestead
Financial shares, or 1,084,410 shares, must vote in favor of the merger
agreement. As of ____________, 1999, the directors and executive officers of
Westwood Homestead Financial owned or had voting power, in the aggregate, with
respect to _____________ Westwood Homestead Financial common shares, or ____% of
the outstanding Westwood Homestead Financial common shares. The directors and
executive officers of Westwood Homestead Financial have agreed to vote all of
their Westwood Homestead Financial common shares for the adoption of the merger
agreement.
A quorum, consisting of the holders of over 50% of the outstanding
Westwood Homestead Financial common shares, voting in person or by proxy, must
be present at the special meeting before any action can be taken.
Under Indiana law, shares which are held by a nominee for a beneficial
owner and which are represented in person or by proxy at the special meeting
will be counted as being present for purposes of establishing a quorum. If you
abstain or fail to vote your shares, it will be the same as a vote against the
approval and adoption of the merger agreement. If your proxy is signed and
dated, but no vote is specified, it will be voted "FOR" the adoption of the
merger agreement.
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<PAGE> 37
VOTING AND SOLICITATION AND REVOCATION OF PROXIES
With each copy of this prospectus/joint proxy statement mailed to
Westwood Homestead Financial stockholders, we included a form of proxy for use
at the special meeting of stockholders. This proxy is solicited by the Westwood
Homestead Financial board of directors. Whether or not you attend the special
meeting, the Westwood Homestead Financial board of directors urges you to use
the enclosed proxy. You attendance at the special meeting will not, by itself,
serve as a revocation of a proxy. If you have executed a proxy, you may revoke
it at any time before the vote by:
- filing with the Secretary of Westwood Homestead Financial, at
3002 Harrison Avenue, Cincinnati, Ohio 45211, a written notice
of revocation;
- executing and returning a later-dated proxy prior to a vote being
taken at the special meeting; or
- attending the special meeting and giving notice of revocation in
person.
We do not expect any matter other than the merger to be brought before
the Westwood Homestead Financial special meeting of stockholders. The persons
named as proxies will act at the direction of the Westwood Homestead Financial
board of directors in voting with respect to any other matters which properly
come before the special meeting.
Westwood Homestead Financial will pay its expenses incurred in
connection with preparing and mailing this prospectus/joint proxy statement, the
accompanying proxy and any other related materials and all other costs incurred
in connection with the solicitation of proxies on behalf of the Westwood
Homestead Financial board of directors. Proxies will be solicited by mail and
may be further solicited, for no additional compensation, by officers, directors
or employees of Westwood Homestead Financial. Westwood Homestead Financial will
also pay the standard charges and expenses of brokerage houses, voting trustees,
banks, associations and other custodians, nominees and fiduciaries, who are
record holders of Westwood Homestead Financial common shares not beneficially
owned by them, for forwarding the proxy materials to, and obtaining proxies
from, the beneficial owners of Westwood Homestead Financial common shares
entitled to vote at the special meeting of stockholders.
THE SPECIAL MEETING OF CAMCO FINANCIAL STOCKHOLDERS
TIME, DATE AND PLACE
The Camco Financial special meeting of stockholders will be held at
___________, Eastern Time, on _____________, 1999, at _____________.
PURPOSE OF THE MEETING
At the special meeting of stockholders, you will be asked to consider
and vote upon a proposal to adopt the merger agreement and to the approve an
amendment to the certificate of incorporation to increase the number of
authorized shares of common stock from 8,900,00 to 14,900,000.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
Only stockholders of record on ______________, 1999, will be entitled
to notice of and to vote at the special meeting of stockholders. At the close of
business on ____________, 1999 there were _______________ Camco Financial common
shares outstanding and entitled to vote. The Camco Financial shares were held of
record by approximately___ stockholders. Each Camco Financial share entitles the
holder to one vote on all matters properly presented at the special meeting of
stockholders.
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<PAGE> 38
VOTES REQUIRED
The holders of a majority of the outstanding Camco Financial shares, or
2,860,195 shares, must vote in favor of the merger agreement and the amendment
of the certificate of incorporation. As of ____________, 1999, the directors and
executive officers of Camco Financial owned or had voting power, in the
aggregate, with respect to _____________ Camco Financial common shares, or ____%
of the outstanding Camco Financial common shares. The directors and executive
officers of Camco Financial have indicated their intent to vote all of their
Camco Financial common shares for the adoption of the merger and the approval of
the amendment to the certificate of incorporation.
A quorum, consisting of the holders of over 50% of the outstanding
Camco Financial common shares, voting in person or by proxy, must be present at
the special meeting before any action can be taken.
Under Delaware law, shares which are held by a nominee for a beneficial
owner and which are represented in person or by proxy at the special meeting
will be counted as being present for purposes of establishing a quorum. If you
abstain or fail to vote your shares, it will be the same as a vote against the
adoption of the merger agreement and the approval of the amendment to the
certificate of incorporation. If your proxy is signed and dated, but no vote is
specified, it will be voted "FOR" the adoption of the merger agreement and the
approval of the amendment to the certificate of incorporation.
VOTING AND SOLICITATION AND REVOCATION OF PROXIES
With each copy of this prospectus/joint proxy statement mailed to Camco
Financial stockholders, we included a form of proxy for use at the special
meeting of stockholders. This proxy is solicited by the Camco Financial board of
directors. Whether or not you attend the special meeting, the Camco Financial
board of directors urges you to use the enclosed proxy. Your attendance at the
special meeting will not, by itself, serve as a revocation of a proxy. If you
have executed a proxy, you may revoke it at any time before the vote by:
- filing with the Secretary of Camco Financial, at 814 Wheeling
Avenue, Cambridge, Ohio 43725, a written notice of revocation;
- executing and returning a later-dated proxy prior to the special
meeting; or
- attending the special meeting and giving notice of revocation in
person.
We do not expect any matter other than the merger to be brought before
the Camco Financial special meeting of stockholders. The persons named as
proxies will use their best judgment in voting with respect to any other matters
which properly come before the special meeting.
Camco Financial will pay its expenses incurred in connection with
preparing and mailing this prospectus/joint proxy statement, the accompanying
proxy and any other related materials and all other costs incurred in connection
with the solicitation of proxies on behalf of the Camco Financial board of
directors. Proxies will be solicited by mail and may be further solicited, for
no additional compensation, by officers, directors or employees of Camco
Financial. Camco Financial will also pay the standard charges and expenses of
brokerage houses, voting trustees, banks, associations and other custodians,
nominees and fiduciaries, who are record holders of Camco Financial common
shares not beneficially owned by them, for forwarding the proxy materials to,
and obtaining proxies from, the beneficial owners of Camco Financial common
shares entitled to vote at the special meeting of stockholders.
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<PAGE> 39
PRO FORMA UNAUDITED CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
At June 30, 1999
-------------------------------------------------------------
Westwood Acquisition
Camco Homestead adjustments Pro forma
Financial Financial Dr (Cr) combined
--------- ---------- ----------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents $ 20,363 $ 2,824 $ 474 (1) $ 19,245
6,000 (2)
(10,416)(3)
Investments designated as available for sale - at market 319 - - 319
Investment securities held to maturity - at cost 14,463 - - 14,463
Mortgage-backed securities designated as available for sale -
at market 7,228 5,986 - 13,214
Mortgage-backed securities held to maturity - at cost 4,362 - - 4,362
Loans receivable - net 639,633 127,791 (816)(4) 766,608
Loans held for sale - at lower of cost or market 4,620 - - 4,620
Office premises and equipment - net 10,717 2,166 - 12,883
Real estate acquired through foreclosure 869 - - 869
Federal Home Loan Bank stock - at cost 10,341 1,364 - 11,705
Goodwill net of accumulated amortization 3,327 - 797 4,124
Other assets 10,816 1,270 - 12,086
---------- ---------- ------------ ----------
TOTAL ASSETS $727,058 $141,401 $ (3,961) $864,498
======== ======== ======== ========
Liabilities
Deposits $457,762 $ 91,079 $ 533 (4) $548,308
Advances from Federal Home Loan Bank 199,919 26,847 (428)(4) 233,194
(6,000)(2)
Other liabilities 7,986 697 (1,085)(5) 9,768
---------- ----------- --------- ----------
Total liabilities 665,667 118,623 (6,980) 791,270
Stockholders' equity
Common stock 5,480 28 28 (6) 6,704
(1,224)(6)
Additional paid-in capital 30,372 18,801 8,188 (6) 40,985
Employee benefit plans - (3,515) (3,515)(6) -
Retained earnings - substantially restricted 26,021 15,738 15,738 (6) 26,021
Treasury stock (458) (8,289) (8,289)(6) (458)
Unrealized gain (loss) on investment securities designated as
available for sale (24) 15 15 (24)
------------- ------------ ------------ ------------
(6)
Total stockholders' equity 61,391 22,778 10,941 73,228
---------- --------- -------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $727,058 $141,401 $ 3,961 $864,498
======== ======== ========= ========
</TABLE>
- --------------------------
(1) Reflects proceeds from assumed exercise of in the money stock options.
(2) Reflects assumed borrowing to finance acquisition.
(3) Reflects cash payment of $5.20 per share for total assumed outstanding WHFC
shares of 2,004,168.
(4) Fair value adjustments applied to assets and liabilities.
(5) Reflects accrual of acquisition costs.
(6) Reflects elimination of WHFC equity accounts and issuance of 1,223,936
shares of Camco common stock at fair value.
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<PAGE> 40
PRO FORMA UNAUDITED CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
Six months ended June 30, 1999
-----------------------------------------------------------------
Westwood Acquisition
Camco Homestead adjustments Pro forma
Financial Financial Dr (Cr) combined (1)
--------- --------- ----------- ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Interest income:
Loans $22,030 $4,915 $ - $26,945
Mortgage-backed securities 341 76 - 417
Investment securities 394 - - 394
Interest-bearing and other 786 146 110 (2) 822
------- ------ ----- -------
Total interest income 23,551 5,137 110 28,578
------- ------ ----- -------
Interest expense:
Deposits 9,417 2,216 - 11,633
Borrowings 4,022 584 240 (3) 4,846
------- ------ ----- -------
Total interest expense 13,439 2,800 240 16,479
------- ------ ----- -------
Net interest income 10,112 2,337 350 12,099
Provision for loan losses 123 23 - 146
------- ------ ----- -------
Net interest income after provision for
loan losses 9,989 2,314 350 11,953
Other income 2,980 168 - 3,148
General, administrative and other expense 8,454 1,522 (427) (4) 9,549
------- ------ ----- -------
Earnings before income taxes 4,515 960 (77) 5,552
Income taxes 1,529 316 33 (5) 1,878
------- ------ ----- -------
Net earnings $ 2,986 $ 644 $ (44) $3,674
======= ====== ===== =======
Earnings per common share
Basic (6) $.52 $.33
==== ====
Diluted $.51 $.33
==== ====
Pro forma earnings per common share
Basic (7) $.53
====
Diluted (8) $.53
====
</TABLE>
- ---------------------------
(1) The pro forma unaudited condensed combined consolidated statements of
earnings reflect that the merger has been accounted for as a purchase.
Accordingly, Camco Financial's and Westwood Homestead Financial's
revenue and expense accounts have been adjusted for the effects of
purchase price adjustments during each of the periods presented.
(2) Reflects reduction of interest income on interest-earning assets used
to fund acquisition. Assumes a foregone interest rate of 5.00%.
(3) Assumed cost of borrowing used to fund acquisition, calculated using an
assumed interest rate of 8.00%.
(4) Assumed synergies attendant to the acquisition, comprised primarily of
compensation and stock benefit plan expense totaling $372,000 and
franchise tax expense of $75,000, net of goodwill amortization of
$20,000.
(5) Tax effect computed at an assumed incremental rate.
(6) Camco Financial historic weighted average shares outstanding totaled
5,738,710 and 5,746,577 for the six-month period ended June 30, 1999,
for purposes of computing basic and diluted earnings per share,
respectively. Westwood Homestead Financial historic weighted average
shares outstanding totaled 1,964,116 and 1,965,467 for the six-month
period ended June 30, 1999, for purposes of computing basic and diluted
earnings per share, respectively.
(7) Pro forma basic earnings per common share is based on 6,962,646
weighted average shares outstanding for the six-month period ended
June 30, 1999.
(8) Pro forma diluted earnings per common share is based on 6,970,513
weighted average shares outstanding for the six-month period ended
June 30, 1999.
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<PAGE> 41
PRO FORMA UNAUDITED CONDENSED COMBINED CONSOLIDATED STATEMENTS OF EARNINGS
<TABLE>
<CAPTION>
For the year ended December 31,
1998 (1)
--------------------------------------------------------
Westwood Acquisition
Camco Homestead adjustments Pro forma
Financial Financial Dr (Cr) combined (1)
--------- ---------- ----------- ------------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
Interest Income:
Loans $40,478 $ 9,704 $ - $50,182
Mortgage-backed securities 779 127 - 906
Investment securities 1,037 - - 1,037
Interest-bearing deposits and other 1,989 388 221 (2) 2,156
-------- --------- ----- --------
Total interest income 44,283 10,219 221 54,281
Interest Expense:
Deposits 19,538 4,565 - 24,103
Interest on borrowings 5,314 987 480 (3) 6,781
-------- -------- ----- --------
Total interest expense 24,852 5,552 480 30,884
------- ------- ----- -------
Net interest income 19,431 4,667 701 23,397
Provision for loan losses 250 42 - 292
--------- --------- -------- ---------
Net interest income after provision for loan
losses 19,181 4,625 701 23,105
Other income 7,552 583 - 8,135
General, administrative and other expense 16,319 3,187 (853)(4) 18,653
------- ------- ------ -------
Earnings before income taxes 10,414 2,021 (152) 12,587
Income taxes 3,410 687 53 (5) 4,150
--------- -------- ------- --------
Net earnings $ 7,004 $1,334 $(99) $ 8,437
======== ====== ==== ========
Earnings per common share (6)
Basic $1.22 $.58
===== ====
Diluted $1.19 $.58
===== ====
Pro forma earnings per common share
Basic (7) $1.21
=====
Diluted (8) $1.18
=====
</TABLE>
- ---------------------------
(1) The pro forma unaudited condensed combined consolidated statements of
earnings reflect the merger using the purchase method of accounting.
(2) Reflects reduction of interest income on interest-earning assets used
to fund acquisition. Assumes a foregone interest rate of 5.00%.
(3) Assumed cost of borrowing used to fund acquisition, calculated using an
assumed interest rate of 8.00%.
(4) Assumed synergies attendant to the acquisition, comprised primarily of
reduced compensation and stock benefit plan expenses totaling $744,000
and franchise tax expense of $150,000, net of goodwill amortization of
$40,000.
(5) Tax effect computed at assumed incremental rate.
(6) Camco Financial historic weighted average shares outstanding totaled
5,751,918 and 5,903,073 for the year ended December 31, 1998, for
purposes of computing basic and diluted earnings per share,
respectively. Such share totals have been adjusted to give effect to
the 5% stock dividend paid by Camco Financial in July 1999. Westwood
Homestead Financial historic weighted average shares outstanding
totaled 2,302,807 and 2,307,510 for year ended December 31, 1998.
(7) Pro forma basic earnings per common share is based on 6,975,854
weighted average shares outstanding for the year ended December 31,
1998.
(8) Pro forma diluted earnings per common share is based on 7,127,009
weighted average shares outstanding for the year ended December 31,
1998.
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<PAGE> 42
DESCRIPTION OF CAMCO FINANCIAL SHARES
AUTHORIZED STOCK
Camco Financial's authorized capital stock consists of 8,900,000 shares
of common stock, par value $1.00 per share, and 100,000 shares of preferred
stock, par value $1.00 share.
The proposed amendment to the certificate of incorporation would
increase the authorized shares from 9,000,000 to 15,000,000, consisting of
14,900,000 shares of common stock, $1.00 par value, and 100,000 shares of
preferred stock, $1.00 par value.
The board of directors is authorized to issue, without shareholder
approval, the preferred shares and to fix the designations, preferences or other
special rights of such shares and the qualifications, limitations and
restrictions thereof. The issuance of preferred shares and any conversion rights
which may be specified by the board of directors for the preferred shares could
adversely affect the voting power of holders of the common shares. In addition,
if the purchase price of the preferred shares is less than the book value of the
common shares, the book value of the common shares could be adversely affected.
No preferred shares will be issued in connection with this offering, and the
board of directors has no present intention to issue any of the preferred
shares.
SPECIAL MEETINGS
Special meetings of stockholders of Camco Financial may be called only
by the president or by a majority of the board of directors of Camco Financial.
PREEMPTIVE RIGHTS
The Camco Financial certificate of incorporation does not grant
preemptive rights to the holders of Camco Financial shares. Under Delaware law,
preemptive rights do not exist unless they are specifically granted by the
corporation's certificate of incorporation.
VOTING RIGHTS
The holders of Camco Financial shares of common stock are entitled to
cast one vote per share on all matters submitted to stockholders for their
approval. The certificate of incorporation does not provide for cumulative
voting in the election of directors.
COMPARISON OF RIGHTS OF HOLDERS OF CAMCO FINANCIAL SHARES
AND HOLDERS OF WESTWOOD HOMESTEAD FINANCIAL
As a result of the merger, all of the stockholders of Westwood
Homestead Financial at the effective time of the merger will become stockholders
of Camco Financial. There are certain differences between the rights of Camco
Financial stockholders and the rights of Westwood Homestead Financial
stockholders arising from the distinctions between the Camco Financial
certificate of incorporation and by-laws and Westwood Homestead Financial
articles of incorporation and by-laws. However, the rights of the holders of
Camco Financial shares and those of holders of Westwood Homestead Financial are
similar in most material aspects. The differences are addressed below.
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<PAGE> 43
AUTHORIZED STOCK
The Camco Financial certificate authorizes 8,900,000 common shares and
100,000 preferred shares. Westwood Homestead Financial articles of incorporation
authorize 15,000,000 common shares and 1,000,000 preferred shares.
BOARD OF DIRECTORS
Camco Financial's by-laws provide for a classified board of directors
consisting of nine directors, or such other number as determined by the board,
divided into three classes and elected for three-year terms. Pursuant to the
by-laws, the number of directors is currently fixed at nine. Therefore, it would
take two annual elections to replace a majority of the board. The by-laws
require that any stockholder nomination for the election of directors must be
submitted in writing, containing specific information regarding the nominee, by
the later of the March 31st immediately preceding the annual meeting of
stockholders or the sixtieth day before the first anniversary of the most recent
annual meeting.
Vacancies on Camco Financial's board may be filled by a majority of the
directors then in office. If a majority of the directors then in office
constitutes less than a majority of the board, any stockholders holding at least
10% of Camco Financial's shares may ask the Delaware Court to order an election
to fill the vacancy and replace directors selected by those directors in office.
Camco Financial's certificate of incorporation authorizes the removal
of a director for cause by a vote of not less than 80% of Camco Financial's
shares.
The articles of incorporation of Westwood Homestead Financial provide
that the board of directors is to be divided into three classes, as nearly equal
in number as possible, which shall be elected for staggered three-year terms.
Westwood Homestead Financial's articles of incorporation provide that a
director may be removed only for cause by the affirmative vote of the holders of
at least two-thirds of the directors then in office. The articles of
incorporation further provide that any vacancy occurring in the board of
directors, including a vacancy created by an increase in the number of
directors, shall be filled for the remainder of the unexpired term by a
two-thirds vote of the directors then in office.
DIRECTOR NOMINATIONS
Camco Financial stockholders generally must submit director nominations
by the March 31st preceding the annual meeting, which is scheduled for the
fourth Tuesday in May. Westwood Homestead Financial stockholders generally must
submit director nominations not less than 30 days nor more than 60 days prior to
the meeting or, if less than 31 day's notice of the meeting is provided, than
within 10 days after the mailing of such notice.
ANTITAKEOVER PROVISIONS
The Camco Financial certificate of incorporation and the Camco
Financial by-laws contain certain provisions that could deter or prohibit
non-negotiated changes in the control of Camco Financial. The Camco Financial
certificate of incorporation requires the approval of the holders of (i) at
least 80% of Camco Financial's outstanding shares of voting stock, and (ii) at
least a majority of Camco Financial's outstanding shares of voting stock, not
including shares held by a "Substantial Stockholder," to approve certain
"Business Combinations" as defined therein, and related transactions. Under
Delaware law, absent this provision, Business Combinations, including mergers,
consolidations and sales of substantially all of the assets of Camco Financial
must, subject to certain exceptions, be approved by the vote of the holders of a
majority of Camco Financial's outstanding voting shares. The increased voting
requirements in the Camco Financial certificate of incorporation apply in
connection with Business Combinations involving a "Substantial Stockholder,"
except in cases where the proposed
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<PAGE> 44
transaction has been approved in advance by three-fourths of the members of
Camco Financial's board of directors provided that a majority of the members on
the board are continuing directors (a continuing director being defined as a
person who was (i) a member of the board on May 26, 1987, (ii) elected by the
stockholders or appointed by the board after May 26, 1987, and prior to the date
as of which the Substantial Stockholder in question became a Substantial
Stockholder, or (iii) appointed as a director by three-fourths of the board if
and only if a majority of the board at the time of appointment consisted of
continuing directors).
The term "Substantial Stockholder" is defined to include any
individual, corporation, partnership or other entity, except for Camco Financial
or a subsidiary of Camco Financial, which owns beneficially or controls,
directly or indirectly, 15% or more of the outstanding voting shares of Camco
Financial. A "Business Combination" is defined to include:
- any merger or consolidation of Camco Financial or a
subsidiary of Camco Financial with or into any Substantial
Stockholder or with or into any other corporation which after
such merger or consolidation, would be an Affiliate of a
Substantial Stockholder as defined in the Camco Financial
certificate;
- any sale, lease, exchange, mortgage, transfer, pledge or
other disposition of all or substantial part of the assets of
Camco Financial or of a subsidiary of Camco Financial to any
Substantial Stockholder (the term "substantial part" is
defined to include more than 10% of Camco Financial's total
assets);
- the adoption of any plan or proposal for the liquidation or
dissolution of Camco Financial, if, as of the record date for
the determination of stockholders entitled to notice thereof
and to vote thereon, any person shall be a Substantial
Stockholder;
- the issuance or transfer of Camco Financial Equity
Securities, as defined in the Camco Financial certificate,
having an aggregate value equaling or exceeding 60% of Camco
Financial's stockholders' equity to a Substantial Stockholder
in exchange for cash, securities or other property; or
- any reclassification of the securities of Camco Financial,
any recapitalization involving the securities of Camco
Financial or any reorganization, merger, or consolidation of
Camco Financial that has the effect of increasing, directly or
indirectly, a Substantial Stockholder's proportionate share of
outstanding shares of any class of equity securities of Camco
Financial or a subsidiary of Camco Financial.
In view of the various provisions of the Camco Financial certificate of
incorporation, the aggregate stock ownership by the directors and officers of
Camco Financial may have the effect of facilitating the perpetuation of current
management and discouraging proxy contests and takeover attempts. Officers and
directors will have a significant influence over the vote on such a transaction
and may be able to defeat such a proposal. The board of directors of Camco
Financial believe that such provisions are in the best interests of the
shareholders by encouraging prospective acquirers to negotiate a proposed
acquisition with the directors. Such provisions could, however, adversely affect
the market value of Camco Financial's shares or deprive stockholders of the
opportunity to sell their shares for premium prices.
Westwood Homestead Financial's articles of incorporation require the
approval of the holders of (i) at least 80% of Westwood Homestead Financial's
outstanding shares of voting stock, and (ii) at least a majority of Westwood
Homestead Financial's outstanding shares of voting stock, not including shares
held by a "Related Person," to approve certain "Business Combinations" as
defined therein, and related transactions. This provision is not applicable to
the merger with Camco Financial. Under the Indiana Business Corporate Law,
absent this provision, Business Combinations, including mergers, consolidations
and sales of substantially all of the assets of Westwood Homestead Financial
must, subject to certain exceptions, be approved by the vote of the
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<PAGE> 45
holders of a majority of the outstanding shares of Westwood Homestead Financial.
The articles of incorporation apply in connection with business combinations
involving a "Related Person," except in cases where the proposed transaction has
been approved in advance by a majority of those members of Westwood Homestead
Financial's board of directors who are unaffiliated with the Related Person and
who were directors prior to the time when the Related Person became a Related
Person. The term "Related Person" is defined to include any individual,
corporation, partnership or other entity which owns beneficially or controls,
directly or indirectly, 10% or more of the outstanding shares of common stock of
Westwood Homestead Financial. A "Business Combination" is defined to include
- any merger or consolidation of Westwood Homestead Financial with
or into any Related Person;
- any sale, lease, exchange, mortgage, transfer, or other
disposition of all or a substantial part of the assets of
Westwood Homestead Financial or of a subsidiary to any Related
Person (the term "substantial part" is defined to include more
than 25% of Westwood Homestead Financial's total assets);
- any merger or consolidation of a Related Person with or into
Westwood Homestead Financial or a subsidiary of Westwood
Homestead Financial;
- any sale, lease, exchange, transfer or other disposition of all
or any substantial part of the assets of a Related Person to
Westwood Homestead Financial or a subsidiary of Westwood
Homestead Financial;
- the issuance of any securities of Westwood Homestead Financial or
a subsidiary of Westwood Homestead Financial to a Related Person;
- the acquisition by Westwood Homestead Financial of any securities
of the Related Person;
- any reclassification of the Westwood Homestead Financial common
shares, or any recapitalization involving the ; and
- any agreement, contract or other arrangement providing for any of
the above transactions.
LIMITATIONS ON CALL OF MEETINGS OF STOCKHOLDERS
The certificate of incorporation of Camco Financial provides that
special meetings of stockholders may be called only by the President or by the
board of directors pursuant to a resolution adopted by a majority of the whole
board.
Westwood Homestead Financial's articles of incorporation provide that
special meetings of stockholders may only be called by Westwood Homestead
Financial's board of directors, an appropriate committee appointed by the board
of directors, the Chairman of the board of directors, or by the President of
Westwood Homestead Financial.
ABSENCE OF CUMULATIVE VOTING
The certificate of incorporation of Camco Financial does not provide
for cumulative voting in the election of directors. Westwood Homestead
Financial's articles of incorporation provide that there shall not be cumulative
voting by stockholders for the election of Westwood Homestead Financial's
directors.
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<PAGE> 46
RESTRICTIONS ON ACQUISITIONS OF SECURITIES
The articles of incorporation provide that for a period of five years
from the effective date of the conversion of The Westwood Homestead Savings Bank
from mutual to stock form, no person may acquire or offer to acquire, directly
or indirectly, the beneficial ownership of more than 10% of any class of equity
security of Westwood Homestead Financial, unless such offer or acquisition shall
have been approved in advance by a two-thirds vote of Westwood Homestead
Financial's continuing directors. This provision does not apply to any employee
stock benefit plan of Westwood Homestead Financial. In addition, during such
five-year period, no shares beneficially owned in violation of the foregoing
percentage limitation, as determined by Westwood Homestead Financial's board of
directors, shall be entitled to vote in connection with any matter submitted to
stockholders for a vote. Under Westwood Homestead Financial's articles of
incorporation, the restriction on voting shares beneficially owned in violation
of the foregoing limitations is imposed automatically. In order to prevent the
imposition of such restrictions, the board of directors must take affirmative
action approving in advance a particular offer to acquire or acquisition. The
board took such action in connection with the merger with Camco Financial.
BOARD CONSIDERATION OF CERTAIN NONMONETARY FACTORS IN THE EVENT OF AN OFFER BY
ANOTHER PARTY
When considering any offer of another party to make a tender offer or
exchange offer, to merge or consolidate or to acquire a substantial part of
Camco Financial, the board of directors of Camco Financial shall give due
consideration to all relevant factors including the best interests of the
shareholders, the best interests of depositors of Camco Financial's banking
subsidiaries and the effects of the transaction upon its employees, suppliers,
customers and each community served by its banking subsidiaries.
The articles of incorporation of Westwood Homestead Financial require
the board of directors, in evaluating a Business Combination or a tender or
exchange offer, to consider, in addition to the adequacy of the amount to be
paid in connection with any such transaction, certain specified factors and any
other factors the board deems relevant, including (i) the social and economic
effects of the transaction on Westwood Homestead Financial and its subsidiaries,
employees, depositors, loan and other customers, creditors and other elements of
the communities in which Westwood Homestead Financial and its subsidiaries
operate or are located; (ii) the business and financial condition and earnings
prospects of the acquiring person or entity; and (iii) the competence,
experience and integrity of the acquiring person or entity and its or their
management.
AMENDMENT OF BYLAWS
The bylaws of Camco Financial may be amended by the affirmative vote of
a majority of the whole board of directors or by the affirmative vote of at
least 80% of the stockholders of Camco Financial.
Westwood Homestead Financial's articles of incorporation provide that
Westwood Homestead Financial's bylaws may be amended only by Westwood Homestead
Financial's board of directors. The bylaws cannot be made, repealed, amended or
rescinded by the stockholders Westwood Homestead Financial.
AMENDMENT OF ARTICLES OF INCORPORATION
Both Camco Financial's certificate of incorporation and Westwood
Homestead Financial's articles of incorporation provide that specified
provisions contained in those respective documents may not be repealed or
amended except upon the affirmative vote of not less than 80% of the outstanding
shares of each company entitled to vote generally in the election of directors,
after giving effect to any limits on voting rights. This requirement exceeds the
majority vote of the outstanding stock that would otherwise be required by state
law for the repeal or amendment of a certificate provision. The provisions
include:
- governing the calling of special meetings, the absence of
cumulative voting rights and the requirement that stockholder
action be taken only at annual or special meetings,
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<PAGE> 47
- requiring written notice to nominations for the election of
directors and new business proposals,
- governing the number of directors, the filling of vacancies on
the board of directors and classification of the board of
directors,
- providing the mechanism for removing directors,
- limiting the acquisition of more than 10% of the capital stock of
Westwood Homestead Financial or The Westwood Homestead Savings
Bank (except, with the prior approval of the continuing directors
of Westwood Homestead Financial),
- governing the requirement for the approval of certain business
combinations,
- regarding the consideration of certain nonmonetary factors in the
event of an offer by another party,
- providing for the indemnification of directors, officers,
employees and agents,
- pertaining to the elimination of the liability of the directors
to Westwood Homestead Financial and its stockholders for monetary
damages, with certain exceptions, for breach of fiduciary duty,
and
- governing the required stockholder vote for amending the
certificate of incorporation, the articles of incorporation or
bylaws of Westwood Homestead Financial and Camco Financial.
ANTITAKEOVER STATUTES APPLICABLE TO CAMCO FINANCIAL AND
WESTWOOD HOMESTEAD FINANCIAL
Certain federal and state laws can make a change in control more
difficult, even if desired by the holders of the majority of the Camco Financial
or Westwood Homestead Financial shares. The statutes described below apply to
both Camco Financial and Westwood Homestead Financial.
DELAWARE ANTI-TAKEOVER STATUTE. The Delaware General Corporate Law
imposes limits on liability of persons who acquire more than 15% of the
outstanding stock of a Delaware corporation, such as Camco Financial, to effect
a merger with or acquisition of such corporation for three years after the
person's acquisition of stock of the corporation. Such a transaction may be
effected, generally, if
- the buyer, while acquiring the 15% interest, acquires at least
85% of the corporation's outstanding stock (the 85% requirement
excludes shares held by directors who are also officers and
certain shares held under employee stock plans);
- the board of directors of the corporation pre-approves the
transaction; or
- the transaction is subsequently approved by the target
corporation's board of directors and two-thirds of the shares of
outstanding stock of the corporation (excluding shares held by
the bidder).
However, these provisions of the Delaware General Corporate Law do not
apply to Delaware corporations with less than 2,000 stockholders or which do not
have voting stock listed on a national exchange or listed for quotation with a
registered national securities association. Camco Financial has fewer than 2,000
stockholders. Camco Financial shares are traded on a registered securities
association. Camco Financial could otherwise exempt itself from the requirements
of the statute by adopting an amendment to its certificate of
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<PAGE> 48
incorporation or by-laws electing not to be governed by this provision. At the
present time, Camco Financial has not adopted any such amendment.
INDIANA ANTI-TAKEOVER STATUTE. The Indiana Business Corporate Law
contains a statute designed to provide Indiana corporations with additional
protection against hostile takeovers. The takeover statute, which is codified in
Chapter 43 of the Indiana Business Corporation Law among other things, prohibits
Westwood Homestead Financial from engaging in certain business combinations
(including a merger) with an "interested Shareholder", who is a person who is
the beneficial owner of 10% or more of Westwood Homestead Financial's
outstanding voting stock, during the five-year period following the date such
person became an interested stockholder. This restriction does not apply if (i)
before such person became an interested stockholder, the board of directors
approved the transaction in which the interested stockholder becomes an
interested stockholder or approved the business combination; or (ii) upon
consummation of the transaction which resulted in the stockholders becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of Westwood Homestead Financial outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding, those shares owned by (i) persons who are directors and also
officers and (ii) employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least two-thirds of the outstanding
voting stock which is not owned by the Interested Stockholder. Westwood
Homestead Financial has not exempted itself from the requirements of the statute
by adopting an amendment to its articles of incorporation.
The Indiana Control Share Acquisitions Statute also provides that if
shares are acquired equal to or greater than certain thresholds of voting power
(that is, 20%, 33 1/3% and 50% of all voting shares ), the shares will not be
entitled to any voting rights unless specifically granted by the adoption of a
resolution by the holders of at least a majority of the shares entitled to vote.
In addition, in the event a control share acquisition of a majority of the
outstanding shares of stock is made and voting rights are approved for these
shares, the remaining stockholders will be entitled to have their shares
redeemed at fair value by the corporation.
FEDERAL REGULATION. Office of Thrift Supervision regulations prohibit
any person, without prior approval of the Office of Thrift Supervision, from
acquiring or making an offer to acquire more than 10% of the stock of any
converted savings institution if such person is, or after consummation of such
acquisition would be, the beneficial owner of more than 10% of such stock. In
the event that any person, directly or indirectly, violates this regulation, the
securities beneficially owned by such person in excess of 10% may not be counted
as shares entitled to vote and may not be voted by any person or counted as
voting shares in connection with any matter submitted to a vote of stockholders.
Like the charter provisions outlined above, these federal regulations can make a
change in control more difficult, even if desired by the holders of a majority
of the shares of stock. The board of directors reserves the right to ask the
Office of Thrift Supervision or other federal regulators to enforce these
restrictions against persons seeking to obtain control of Camco Financial,
whether in a proxy solicitation or otherwise.
Federal law provides that no company, "directly or indirectly or acting
in concert with one or more persons, or through one or more subsidiaries, or
through one or more transactions," may acquire "control" of a savings
association at any time without the prior approval of the Office of Thrift
Supervision. In addition, federal regulations require that, prior to obtaining
control of a savings association, a person, other than a company, must give 60
days' prior notice to the Office of Thrift Supervision and have received no
Office of Thrift Supervision objection to such acquisition of control. Any
company that acquires such control becomes a "savings and loan holding company"
subject to registration, examination and regulation as a savings and loan
company. Under federal law (as well as the regulations referred to below) the
term "savings bank" includes state and federally chartered Savings Association
Insurance Fund-insured institutions and federally chartered savings banks whose
accounts are insured by the Federal Deposit Insurance Corporation's Savings
Association Insurance Fund and holding companies thereof.
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<PAGE> 49
Control, as defined under federal law, in general means ownership,
control or holding irrevocable proxies representing more than 25% of any class
of voting stock, control in any manner of the election of a majority of the
savings association's directors, or a determination by the Office of Thrift
Supervision that the acquirer has the power to direct, or directly or indirectly
to exercise a controlling influence over, the management or policies of the
institution. Acquisition of more than 10% of any class of savings association's
voting stock, if the acquirer also is subject to any one of eight "control
factors," constitutes a rebuttable determination of control under the
regulations. The determination of control may be rebutted by submission to the
Office of Thrift Supervision, prior to the acquisition of stock or the
occurrence of any other circumstances giving rise to such determination, of a
statement setting forth facts and circumstances which would support a finding
that no control relationship will exist and containing certain undertakings. The
regulations provide that persons or companies which acquire beneficial ownership
exceeding 10% or more of any class of a savings bank's stock must file with the
Office of Thrift Supervision a certification that the holder is not in control
of such institution, is not subject to a rebuttable determination of control and
will take no action which would result in a determination or rebuttable
determination of control without prior notice to or approval of the Office of
Thrift Supervision, as applicable.
The Change in Bank Control Act provides that no person acting directly
or indirectly, or through or in concert with one or more persons, other than a
company, may acquire control of a bank holding company unless at least 60 days
prior written notice is given to the Federal Reserve Bank and the Federal
Reserve Bank has not objected to the proposed acquisition.
The Bank Holding Company Act prohibits any company, directly or
indirectly, or acting in concert with one or more other persons, or through one
or more subsidiaries or transactions, from acquiring control of an insured
institution without the prior approval of the Federal Reserve Bank. In addition,
any company that acquires such control becomes a bank holding company subject to
registration, examination and regulation of a bank holding company by the
Federal Reserve Bank.
The term "control" for purposes of the Change in Bank Control Act and
the Bank Holding Company Act includes the power, directly or indirectly, to vote
more than 25% of any class of voting stock of the savings bank or to control, in
any manner, the election of a majority of the directors of the savings bank. It
also includes a determination by the Federal Reserve Bank that such company or
person has the power, directly, to exercise a controlling influence over or to
direct the management or policies of the savings bank.
Federal Reserve Bank regulations also set forth certain rebuttable
control determinations which arise upon (a) the acquisition of any voting
securities of a bank holding company if, after the transaction, the acquiring
person (or persons acting in concert) owns, controls, or holds with power to
vote 25 percent or more of any class of voting securities of the institution; or
(b) the acquisition of any voting securities of a bank holding company if, after
the transaction, the acquiring person (or persons acting in concert) owns,
controls or holds with power to vote 10 percent of more (but less than 25
percent) of any class of voting securities of the institution and if (i) the
institution has registered securities under Section 12 of the Exchange Act or
(ii) no other person will own a greater percentage of that class of voting
securities immediately after the transaction.
The regulations also specify the criteria which the Federal Reserve
Bank uses to evaluate control applications. The Federal Reserve Bank is
empowered to disapprove an acquisition of control if it finds, among other
things, that (i) the acquisition would substantially lessen competition, (ii)
the financial condition of the acquiring person might jeopardize the institution
or its depositors, of (iii) the competency, experience, or integrity of the
acquiring person indicates that it would not be in the interest of the
depositors, the institution, or the public to permit the acquisition of control
by such person.
DIRECTOR AND OFFICER LIABILITY AND INDEMNIFICATION
The by-laws of Camco Financial provide that Camco Financial shall
indemnify its directors or officers against expenses (including, without
limitation, attorney's fees, filing fees, court reporter's fees and transcript
costs), judgments, fines and amounts paid in settlement by reason of the fact
that they are or were directors,
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<PAGE> 50
officers, employees or agents of Camco Financial or, at the request of Camco
Financial, were serving another organization in a similar capacity, if the
directors or officers acted in good faith and in a manner they reasonably
believed to be in the best interest of Camco Financial. With regard to criminal
matters, directors and officers must be indemnified by Camco Financial if the
directors or officers had no reasonable cause to believe their conduct was
unlawful. Directors or officers claiming indemnification shall be presumed to
have acted in good faith and in a manner they reasonably believed to be not
opposed to the best interests of Camco Financial and, with respect to any
criminal matter, to have had no reasonable cause to believe their conduct was
unlawful.
Camco Financial shall not indemnify any officer or director of Camco
Financial who was a party to any completed action or suit instituted by (or in
the right of) Camco Financial for any matter asserted in such action as to which
the officer or director shall have been adjudged to be liable for acting with
reckless disregard for the best interests of Camco Financial or misconduct
(other than negligence) in the performance of his duty to Camco Financial.
However, should the court in which such action was brought determine that the
officer or director is fairly and reasonably entitled to such indemnity, Camco
Financial shall indemnify such officer or director to the extent permitted by
the court.
Any indemnification not precluded by judgment shall be made by Camco
Financial only upon determination that the director has met the applicable
standard of conduct. Such determination may be made only
- by a majority vote of a quorum of disinterested directors,
- if such a quorum is not obtainable of if a majority of a quorum
of disinterested directors so directs, in a written opinion by
independent legal counsel,
- by the stockholders or
- by the court, if any, in which such action was brought.
Expenses incurred in defending any action, suit or proceeding shall be paid by
Camco Financial in advance upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount if the director or officer is not
entitled to be indemnified by Camco.
In addition, Camco Financial has agreed to indemnity each of its
directors and officers against expenses (including, without limitation,
attorney's fees, court reporters' fees and transcript costs), judgments, fines,
and amounts paid in settlement by reason of fact that he is or was a director,
officer, employee or agent of Camco Financial or, at the request of Camco
Financial, was serving another organization in a similar capacity, if the
director or officer acted in good faith and in a manner he reasonably believed
to be in the best interest of Camco Financial and if, with respect to any
criminal action or proceeding, such director or officer had no reason to believe
that his conduct was unlawful. Such indemnification shall be made, however, only
upon a determination by the directors or stockholders of Camco Financial, the
Court of Common Pleas of Franklin County or written opinion of legal counsel
appointed by Camco Financial that the director or officer has adhered to the
appropriate standard of conduct.
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<PAGE> 51
Article XVIII of Westwood Homestead Financial's articles of
incorporation provides for indemnification of Westwood Homestead Financial's
directors and officers. In the case of a threatened, pending or completed action
or suit by or in the name of Westwood Homestead Financial, Westwood Homestead
Financial shall indemnify a director or officer for amounts actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if the director or officer: (i) is successful on the merits or
otherwise; or (ii) acted in good faith in the transaction which is the subject
of the suit or action, and in a manner he reasonably believed to be in, or not
opposed to, the best interest of Westwood Homestead Financial. However, no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged liable to Westwood Homestead Financial,
unless the court in which the action is brought determines that indemnification
is proper. In the case of a threatened, pending or completed action or
proceeding (whether criminal, administrative or investigative) other than a suit
by or in the right of Westwood Homestead Financial (a "nonderivative suit"),
against an officer or director, Westwood Homestead Financial shall indemnify the
director or officer for amounts reasonably incurred by him in connection with
the defense or settlement of the nonderivative suit if the director or officer:
(i) is successful on the merits or otherwise; or (ii) acted in good faith in the
transaction which is the subject of the nonderivative suit and in a manner he
reasonably believed to be in, or not opposed to, the best interests of Westwood
Homestead Financial.
LEGAL MATTERS
The validity of the issuance of Camco Financial common shares being
offered by this document and the federal income tax consequences of the merger
have been passed by Vorys, Sater, Seymour and Pease LLP, Suite 2100, Atrium Two,
221 East Fourth Street, P.O. Box 0236, Cincinnati, Ohio 45201-0236.
EXPERTS
The consolidated financial statements of Camco Financial as of December
31, 1998 and 1997, and for each of the years in the three-year period ended
December 31, 1998, included in its Annual Report on Form 10-K, have been
incorporated by reference in this prospectus/joint proxy statement and in the
registration statement in reliance upon the report of Grant Thornton LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Westwood Homestead Financial
as of December 31, 1998 and 1997, and for each of the years in the three-year
period ended December 31, 1998, included in its Annual Report on Form 10-K, have
been incorporated by reference in this prospectus/joint proxy statement and in
the registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
PROPOSALS FOR THE 2000 ANNUAL STOCKHOLDERS' MEETINGS
For Camco stockholders, pursuant to Rule 14a-8 under the Exchange Act,
the deadline for the submission in the proxy statement and form of proxy to be
used in connection with Camco Financial's 2000 annual meeting of stockholders is
__________________. In addition, pursuant to Camco Financial's bylaws, the
deadline for submission of shareholder proposals for consideration at the 2000
annual meeting of stockholders other than those submitted pursuant to the
Exchange Act is ____________________.
Westwood Homestead Financial will only hold an annual meeting in 2000
if the merger has not been completed by ______, 2000. If you are a Westwood
Homestead Financial stockholder and would like to include a proposal in the
Westwood Homestead Financial proxy statement for the 2000 Annual meeting of
Stockholders, Westwood Homestead Financial must receive your proposal by ______.
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<PAGE> 52
Stockholder proposals, other than those submitted pursuant to the
Exchange Act, must be submitted in writing, delivered or mailed by first class
United States mail, postage prepaid, to the secretary of Westwood Homestead
Financial not fewer than 30 days nor more than 60 days prior to any such
meeting; provided, however, that if notice or public disclosure of the meeting
is given fewer than 31 days before the meeting, such written notice shall be
delivered or mailed to the secretary of Westwood Homestead Financial not later
than the close of the 10th day following the day on which notice of the meeting
was mailed to shareholders.
WHERE YOU CAN FIND MORE INFORMATION
Camco Financial has filed with the Securities and Exchange Commission a
Registration Statement on Form S-4 under the Securities Act for the Camco
Financial shares to be issued to Westwood Homestead Financial stockholders in
the merger. This prospectus/joint proxy statement is a part of the Registration
Statement on Form S-4. The rules and regulations of the Securities and Exchange
Commission permit us to omit information, exhibits and undertakings which are
contained in the Registration Statement on Form S-4 from this document.
In addition, we file reports, proxy statements and other information
with the Securities and Exchange Commission under the Exchange Act. You can
inspect and copy the Registration Statement and its exhibits, as well as the
reports, proxy statements and other information filed with the Securities and
Exchange Commission by Camco Financial, at the following locations:
Securities and Exchange Chicago Regional Office New York Regional Office
Commission's Public 500 West Madison Street 7 World Trade Center
Reference Room Suite 1400 Suite 1300
450 Fifth Street, N.W. Chicago, Illinois 60661 New York, New York 10048
Washington, D.C. 20549
Please call the Securities and Exchange Commission for more information
on the operation of the Public Reference Room at 1-800-SEC-0330. CAMCO FINANCIAL
IS AN ELECTRONIC FILER, AND THE SECURITIES AND EXCHANGE COMMISSION MAINTAINS A
WEB SITE THAT CONTAINS REPORTS, PROXY AND INFORMATION STATEMENTS AND OTHER
INFORMATION REGARDING REGISTRANTS THAT FILE ELECTRONICALLY WITH THE SECURITIES
AND EXCHANGE COMMISSION AT THE FOLLOWING WEB ADDRESS: (HTTP://WWW.SEC.GOV).
The Securities and Exchange Commission allows us to "incorporate by
reference" into this prospectus/joint proxy statement, which means that the
companies can disclose important information to you by referring you to another
document filed separately with the Securities and Exchange Commission. The
information incorporated by reference is considered to be part of this
prospectus/joint proxy statement, except for any information superseded by
information contained in later-filed documents incorporated by reference in this
prospectus/joint proxy statement. You should read the information relating to
the companies contained in this prospectus/joint proxy statement and the
information in the documents incorporated by reference.
This document incorporates by reference the documents listed below that
we have previously filed with the Securities and Exchange Commission and any
future filings made by it with the Securities and Exchange Commission before the
special meetings of stockholders under Sections 13(a), 13(c), or 15(d) of the
Securities Exchange Act of 1934, as amended.
CAMCO FINANCIAL
Commission Filings (File No. 0-25196) Period/Date
- ------------------------------------- -----------
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999
and June 30, 1999
Current Reports on Form 8-K Filed on August 13, 1999
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<PAGE> 53
WESTWOOD HOMESTEAD FINANCIAL
Commission Filings (File No. 0-21385) Period/Date
- ------------------------------------ -----------
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Reports on Form 10-Q Quarters ended March 31, 1999
and June 30, 1999
Current Reports on Form 8-K Filed on August 12, 1999
We have included copies of the 1998 Annual Report to stockholders of
Camco Financial and Westwood Homestead Financial and the Quarterly Reports on
Form 10-Q for the quarter ended June 30, 1999 of Camco Financial and Westwood
Homestead Financial, with this document.
YOU CAN RECEIVE THE DOCUMENTS INCORPORATED BY REFERENCE (WITHOUT
EXHIBITS, UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS/JOINT PROXY STATEMENT) WITHOUT CHARGE BY CALLING OR WRITING THE
FOLLOWING PERSONS:
Camco Financial Corporation Westwood Homestead Financial Corporation
814 Wheeling Avenue 3002 Harrison Avenue
Cambridge, Ohio 43725 Cincinnati, Ohio 45211
Attention: Larry A. Caldwell Attention: Michael P. Brennan
(740) 432-5641 (513) 661-5735
PLEASE REQUEST DOCUMENTS BY _________, 1999. YOU MAY ALSO OBTAIN COPIES
OF THE DOCUMENTS FROM THE SECURITIES AND EXCHANGE COMMISSION THROUGH ITS WEBSITE
AT THE ADDRESS PROVIDED ABOVE.
Following the merger, Camco Financial will continue to be regulated by
the information, reporting and proxy statement requirements of the Securities
Exchange Act of 1934, as amended.
<PAGE> 54
Annex A
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
(hereinafter referred to as the "AGREEMENT") is made and entered into this 6th
day of August, 1999, by and among Camco Financial Corporation, a Delaware
corporation (hereinafter referred to as "CAMCO"); Westwood Homestead Financial
Corporation, an Indiana corporation (hereinafter referred to as "WHFC"), and The
Westwood Homestead Savings Bank, a savings bank organized under Chapter 1161 of
the laws of the State of Ohio (hereinafter referred to as the "BANK");
WITNESSETH:
WHEREAS, the authorized capital of CAMCO consists of 8,900,000
shares of common stock, par value One Dollar ($1.00) per share (hereinafter
referred to as the "CAMCO SHARES"), 5,720,888 of which are issued and
outstanding, 369,521 of which are reserved for issuance upon the exercise of
outstanding stock options and 100,000 preferred shares, par value One Dollar
($1.00) per share, none of which is issued or outstanding;
WHEREAS, the authorized capital of WHFC consists of 15,000,000
common shares, par value One Cent ($0.01) per share, 2,168,818 of which are
issued and outstanding and held of record by approximately 425 shareholders
(hereinafter referred to as the "WHFC SHARES"), and 279,192 of which are
reserved for issuance upon the exercise of outstanding stock options
(hereinafter referred to as the "WHFC OPTIONS"), and 1,000,000 preferred shares,
par value One Cent ($0.01) per share, none of which is issued or outstanding;
WHEREAS, the authorized capital of the BANK consists of
5,000,000 common shares, par value One Dollar ($1.00) per share, 100,000 of
which are issued and outstanding and are owned of record by WHFC;
WHEREAS, the Boards of Directors of CAMCO, WHFC and the BANK
believe that the merger of WHFC with and into CAMCO is in the best interest of
each party and its respective shareholders; and
WHEREAS, as a condition and inducement to CAMCO's willingness
to enter into the AGREEMENT: (i) WHFC is concurrently entering into a stock
option agreement with CAMCO (the "WHFC STOCK OPTION AGREEMENT") in substantially
the form attached hereto as Exhibit "A", pursuant to which WHFC is granting to
CAMCO the option to purchase WHFC SHARES under certain circumstances, and (ii)
certain shareholders of WHFC are concurrently entering into a shareholder
agreement with CAMCO (the "WHFC SHAREHOLDER AGREEMENT") in substantially the
form attached hereto as Exhibit "B", pursuant to which, among other things, such
shareholders will agree to vote their WHFC SHARES in favor of this AGREEMENT and
the transactions contemplated hereby;
<PAGE> 55
NOW THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, CAMCO, WHFC and the BANK, each
intending to be legally bound, hereby agree as follows:
ARTICLE ONE
THE MERGER
SECTION 1.01. MERGER; SURVIVING CORPORATION. Subject to the
terms and conditions of this AGREEMENT, and pursuant to the provisions of the
Delaware General Corporation Law (hereinafter referred to as the "DGCL"), the
Indiana Business Corporation Law (hereinafter referred to as the "IBCL"), and
applicable federal laws and regulations, WHFC shall merge with and into CAMCO
(hereinafter referred to as the "MERGER") at the EFFECTIVE TIME (hereinafter
defined). CAMCO shall be the continuing, surviving and resulting corporation in
the MERGER and shall continue to exist as a Delaware corporation. CAMCO shall be
the only one of CAMCO and WHFC to continue its separate corporate existence
after the EFFECTIVE TIME. The name of the continuing, surviving and resulting
corporation shall remain "Camco Financial Corporation". From and after the
MERGER, CAMCO, as the surviving corporation, shall possess all assets and
property of every description, and every interest in the assets and property,
wherever located, and the rights, privileges, immunities, powers, franchises and
authority, of a public as well as a private nature, of CAMCO and WHFC and all
obligations belonging or due to each of them.
SECTION 1.02. CLOSING. (a) The closing of the MERGER pursuant
to this AGREEMENT (hereinafter referred to as the "CLOSING") shall take place at
a date and time agreed to by CAMCO and WHFC as soon as practicable after the
satisfaction or waiver of the last of the conditions to the MERGER set forth in
Article Seven of this AGREEMENT, but in no event prior to January 2, 2000.
(b) On the day of the CLOSING, CAMCO and WHFC shall cause Certificates of Merger
in respect of the MERGER to be filed in the Office of the Delaware Secretary of
State and the Office of the Indiana Secretary of State. The MERGER shall become
effective at the latest to occur of the time (i) the Delaware Certificate of
merger is filed with the Delaware Secretary of State, (ii) the Indiana
Certificate of Merger is filed with the Indiana Secretary of State or (iii) the
date and time indicated on such filings (hereinafter referred to as the
"EFFECTIVE TIME").
SECTION 1.03. ADOPTION BY SHAREHOLDERS. (a) This AGREEMENT
shall be submitted for consideration and adoption by the shareholders of WHFC
and CAMCO entitled to vote at an annual meeting of shareholders or a special
meeting of shareholders called for such purpose to be held at a time, date and
place to be determined by the Board of Directors of WHFC and CAMCO,
respectively, subject to applicable laws and regulations.
(b) This AGREEMENT shall be considered and adopted by WHFC,
as the sole shareholder of the BANK.
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SECTION 1.04. REGULATORY FILINGS. (a) CAMCO shall prepare and
cause to be filed with the Office of Thrift Supervision (hereinafter referred to
as the "OTS"), and the Superintendent of the Division of Financial Institutions
of the Ohio Department of Commerce (hereinafter referred to as the "DIVISION")
such applications, notices or other instruments as may be required for approval
of the MERGER (hereinafter referred to collectively as the "REGULATORY
APPLICATIONS"). WHFC and the BANK shall have the right to review and approve in
advance all characterizations of the information relating to WHFC or the BANK,
as the case may be, which appear in any REGULATORY APPLICATION. In addition,
CAMCO shall furnish to WHFC for review a copy of each REGULATORY APPLICATION
prior to its filing.
(b) CAMCO shall prepare and cause to be filed with the
Securities and Exchange Commission (hereinafter referred to as the "SEC") a
registration statement on Form S-4, or such other form as may be required by the
SEC (hereinafter referred to as the "REGISTRATION STATEMENT"), to register under
the Securities Act of 1933 the CAMCO SHARES to be issued to shareholders of WHFC
in the MERGER as provided in Section 2.01 of this AGREEMENT and shall use all
reasonable efforts to have the REGISTRATION STATEMENT, as amended, declared
effective by the SEC as promptly as possible. CAMCO shall provide copies of the
REGISTRATION STATEMENT and all amendments to WHFC upon filing, keep WHFC
reasonably informed as to the status of the REGISTRATION STATEMENT and provide
WHFC with copies of all responses from the SEC. CAMCO shall also use its best
efforts to obtain all necessary state securities law or "Blue Sky" permits and
approvals required to carry out the transactions contemplated by this AGREEMENT,
and WHFC shall furnish all information concerning WHFC as may be reasonably
requested in connection with any such action.
(c) CAMCO and WHFC shall prepare a joint proxy statement (the
"JOINT PROXY STATEMENT") for use in connection with the CAMCO and the WHFC
shareholder meetings. The parties hereto shall provide each other with any
information concerning itself that the other party may reasonably request in
connection with the JOINT PROXY STATEMENT and CAMCO shall notify WHFC promptly
of the receipt of any comments from the SEC with respect to the JOINT PROXY
STATEMENT and any requests by the SEC for any amendment or supplement thereto
for additional information and shall provide to WHFC promptly copies of all
correspondence between CAMCO or any of its representatives and the SEC. CAMCO
shall give WHFC and its counsel the opportunity to review and comment on the
JOINT PROXY STATEMENT prior to its being filed with the SEC and shall give WHFC
and its counsel the opportunity to review and comment on all amendments and
supplements to the JOINT PROXY STATEMENT and all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC. Each of WHFC and CAMCO agrees to use all reasonable
efforts, after consultation with the other party hereto, to respond promptly to
all such comments of and requests by the SEC and to cause the JOINT PROXY
STATEMENT and all required amendments and supplements thereto to be mailed to
the respective stockholders of WHFC and CAMCO at the earliest practicable time.
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<PAGE> 57
(d) The BANK shall coordinate with CAMCO the BANK's filing of
an application with the OTS pursuant to 12 U.S.C. 1467(a)(L) (the "10-L
Election") for election to be deemed a savings association for purposes of
Section 12 U.S.C. 1467(a), such application to be effective concurrently with
the EFFECTIVE TIME.
(e) WHFC shall take all steps necessary to de-register as a
bank holding company under the Bank Holding Company Act, such de-registration to
be effective concurrently with the EFFECTIVE TIME.
SECTION 1.05. CERTIFICATE OF INCORPORATION AND BYLAWS OF CAMCO
AS THE SURVIVING CORPORATION. The Certificate of Incorporation and Bylaws of
Camco Financial Corporation, as in effect immediately prior to the EFFECTIVE
TIME, shall be the Certificate of Incorporation and Bylaws of the surviving
corporation of the MERGER, until either is thereafter amended in accordance with
applicable law.
ARTICLE TWO
CONVERSION AND CANCELLATION OF WHFC SHARES
SECTION 2.01. CONVERSION AND CANCELLATION OF WHFC SHARES. At
the EFFECTIVE TIME and as a result of the MERGER, automatically and without
further act of CAMCO, WHFC, the BANK or the holders of CAMCO SHARES or WHFC
SHARES, the following shall occur:
(a) Each WHFC SHARE shall be cancelled and extinguished and,
in substitution and exchange therefor, the holders thereof shall be entitled,
subject to and upon compliance with Section 2.03 of this AGREEMENT, to receive
from CAMCO $5.20 and 0.611 CAMCO SHARE (subject to possible adjustment as set
forth in Section 2.01(a)(i) and Section 2.01(a)(ii),below (the "PER SHARE MERGER
CONSIDERATION") without any interest thereon from the EFFECTIVE TIME until the
time of payment,
(i) The CAMCO share portion of the PER SHARE
MERGER CONSIDERATION shall be adjusted to
reflect any stock split, stock dividend or
distributions in, or combinations or
subdivisions of, CAMCO SHARES, between the
date hereof and the EFFECTIVE TIME.
(ii) No fractional shares will be issued, and
cash will be paid in lieu of fractional
shares based on the average of the bid and
asked price quotes of the CAMCO SHARES as
reported on The Nasdaq National Market
System by a mutually agreed upon
authoritative source on the last day of
trading of CAMCO SHARES prior to the date
of CLOSING ("CAMCO SHARES MARKET VALUE").
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<PAGE> 58
(b) CAMCO SHARES issued and outstanding before the EFFECTIVE
TIME shall remain issued and outstanding after the EFFECTIVE TIME.
(c) Any treasury shares held by WHFC and any WHFC SHARES owned
by CAMCO for its own account shall be cancelled and retired at the EFFECTIVE
TIME and no consideration shall be issued in exchange therefor.
SECTION 2.02. WHFC OPTIONS.
(a) At the EFFECTIVE TIME, the Westwood Homestead Financial
Corporation 1997 Stock Option Plan (the "OPTION PLAN") and WHFC OPTIONS not yet
exercised at such time, shall be assumed by CAMCO. No option to purchase WHFC
SHARES granted under the OPTION PLAN after December 31, 1998 shall be valid in
any respect.
The number of CAMCO SHARES to be issued upon the exercise of a
WHFC OPTION which is exercised after the EFFECTIVE TIME shall be equal to the
number of WHFC SHARES subject to such WHFC OPTIONS immediately prior to the date
of the CLOSING multiplied by the OPTION EXCHANGE RATIO (as hereinafter defined)
(with the product rounded down to the next whole share), and the per share
exercise price shall be adjusted by dividing the per share exercise price under
each such WHFC OPTION by the OPTION EXCHANGE RATIO (with the quotient rounded up
to the next whole cent). CAMCO and its Compensation Committee shall be
substituted for WHFC and the Committee of the WHFC Board of Directors
administering the OPTION PLAN. Each WHFC OPTION shall, in accordance with its
terms, be subject to further adjustment as appropriate to reflect any stock
split, dividends payable in stock, recapitalization or other similar transaction
subsequent to the EFFECTIVE TIME. The OPTION EXCHANGE RATIO is the value of the
PER SHARE MERGER CONSIDERATION (the CAMCO share portion determined by using the
CAMCO SHARES MARKET VALUE) divided by the CAMCO SHARES MARKET VALUE.
(b) The CAMCO SHARES covered by the WHFC OPTIONS to be issued
pursuant to Section 2.02(a) shall be covered by a registration statement filed
with the SEC and effective at the EFFECTIVE TIME, and CAMCO shall take all
actions necessary to maintain the effectiveness of such registration statement
until all WHFC OPTIONS have been exercised or terminated. When CAMCO SHARES are
issued upon the exercise of WHFC OPTIONS, such CAMCO SHARES shall be duly
authorized, validly issued, fully paid and non-assessable and not subject to or
in violation of any preemptive rights. CAMCO shall reserve sufficient CAMCO
SHARES for issuance with respect to such options. CAMCO shall also take any
reasonable action required to be taken under any applicable state blue sky or
securities laws in connection with the issuance of such shares.
(c) Except as provided in this Section 2.02, all other terms
and conditions of the OPTION PLAN and award grants thereunder shall remain as
now existing.
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<PAGE> 59
(d) In respect of any stock option which is an "Incentive
Stock Option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (hereinafter referred to as the "CODE"), the conversion hereby
provided for shall comply with the requirements of Section 424(a) of the CODE,
including the requirement that such converted options shall not give to the
holder thereof any benefits additional to those which such holder had prior to
such conversion under the option as originally granted. It is intended that the
foregoing assumption shall be undertaken in a manner that will not constitute a
"modification" as defined in Section 424(h) of the CODE as to any stock option
which is an "Incentive Stock Option".
(e) Any holder of any WHFC OPTION may exercise such options at
any time, prior to the date of the CLOSING as provided in the OPTION PLAN.
SECTION 2.03. SHARE CERTIFICATES IN THE MERGER. (a) Seven
business days after the EFFECTIVE TIME or as soon thereafter as practicable
after the EFFECTIVE TIME, and CAMCO shall use its reasonable best efforts to
accomplish such within seven business days, CAMCO shall mail to each holder of
record of WHFC SHARES a form letter of transmittal and instructions for use in
effecting the surrender for exchange of the certificates formerly evidencing the
WHFC SHARES cancelled and extinguished as a result of the MERGER (hereinafter
referred to collectively as the "CERTIFICATES" and individually as the
"CERTIFICATE"). Such letter of transmittal shall specify that the risk of loss
and title to CERTIFICATES shall pass only upon delivery of such certificates as
specified in the Letter of Transmittal. Upon surrender of a CERTIFICATE for
cancellation, together with such letter of transmittal, duly executed, the
holder of such CERTIFICATE shall be entitled to receive in exchange therefor the
consideration to which the holder is entitled in accordance with the provisions
of this AGREEMENT, and the CERTIFICATE so surrendered shall thereafter be
cancelled forthwith. CAMCO may, at its election, designate an exchange agent to
discharge its duties pursuant to this Section 2.03.
(b) In the event that any holder of WHFC SHARES cancelled and
extinguished in accordance with this AGREEMENT is unable to deliver the
CERTIFICATE which evidences such WHFC SHARES, CAMCO, in the absence of actual
notice that any WHFC SHARES theretofore evidenced by any such CERTIFICATE have
been acquired by a bona fide purchaser, shall deliver to such holder the
consideration to which such holder is entitled in accordance with the provisions
of this AGREEMENT upon the presentation of all of the following:
(i) Evidence to the reasonable satisfaction of
CAMCO that any such CERTIFICATE has been
lost, wrongfully taken or destroyed;
(ii) Such security or indemnity as may be
reasonably requested by CAMCO to indemnify
and hold CAMCO harmless; and
(iii) Evidence to the reasonable satisfaction of
CAMCO that such person is the owner of the
WHFC SHARES theretofore represented by
each CERTIFICATE claimed by him to be
lost, wrongfully taken or destroyed and
that he is the person who
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<PAGE> 60
would be entitled to present each such
CERTIFICATE for exchange pursuant to this
AGREEMENT.
(c) In the event that delivery of the consideration provided
for herein is to be made to a person other than the person in whose name the
CERTIFICATE surrendered is registered, the CERTIFICATE so surrendered shall be
properly endorsed or otherwise in proper form for transfer and the person
requesting such issuance or payment shall pay any transfer or other taxes
required by reason of the issuance or payment to a person other than the
registered holder of the CERTIFICATE surrendered or establish to the
satisfaction of CAMCO that such tax has been paid or is not applicable. Until
surrendered in accordance with the provisions of this Section 2.03, each
CERTIFICATE shall represent for all purposes only the right to receive the
number of CAMCO SHARES and cash consideration determined pursuant to this
AGREEMENT.
(d) No dividends or other distributions declared after the
EFFECTIVE TIME with respect to CAMCO SHARES and payable to the holders of record
thereof after the EFFECTIVE TIME shall be paid to the holder of any
unsurrendered CERTIFICATE until the holder thereof shall surrender such
CERTIFICATE. Subject to the effect, if any, of applicable law, after the
subsequent surrender and exchange of a CERTIFICATE, the record holder thereof
shall be entitled to receive any such dividends or other distributions, without
any interest thereon, which theretofore had become payable with respect to the
CAMCO SHARES represented by such CERTIFICATE.
(e) No consideration provided for herein shall be delivered by
CAMCO to any former holder of WHFC SHARES in accordance with this AGREEMENT
until such holder shall have complied with this Section 2.03.
SECTION 2.04. PAYMENT IN SATISFACTION OF RIGHTS. All payments
made upon the surrender of CERTIFICATES pursuant to this Article Two shall be
deemed to have been made in full satisfaction of all rights pertaining to the
shares evidenced by such CERTIFICATES.
SECTION 2.05. NO FURTHER REGISTRATION OR TRANSFER. After the
EFFECTIVE TIME, there shall be no further registration or transfer of WHFC
SHARES on the stock transfer books of WHFC. In the event that, after the
EFFECTIVE TIME, CERTIFICATES evidencing such WHFC SHARES are presented for
transfer, they shall be cancelled and exchanged as provided in this Article Two.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF WHFC AND THE BANK
WHFC and the BANK represent and warrant to CAMCO that each of
the following statements is true and accurate in all material respects, except
as otherwise disclosed in a schedule provided by WHFC and the BANK to CAMCO
prior to the execution of this AGREEMENT (hereinafter referred to as the "WHFC
DISCLOSURE SCHEDULE"):
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SECTION 3.01. ORGANIZATION AND STANDING. (a) WHFC is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Indiana and has the corporate power and authority to own or hold
under lease all of its properties and assets and to conduct its business and
operations as presently conducted. WHFC is registered as a bank holding company
under the Bank Holding Company Act. WHFC is in compliance in all material
respects with all applicable local, state or federal laws and regulations,
except to the extent that failure to be in compliance would not have a material
adverse effect on WHFC and the BANK taken as a whole.
(b) The BANK is a savings bank duly organized and validly
existing under the laws of the State of Ohio and has the corporate power and
authority to own or hold under lease all of its properties and assets and to
conduct its business and operations as presently conducted. The BANK is a member
of the Federal Home Loan Bank of Cincinnati (hereinafter referred to as the
"FHLB"). The deposit accounts of the BANK are insured up to applicable limits by
the Savings Association Insurance Fund administered by the Federal Deposit
Insurance Corporation (the "FDIC") (hereinafter referred to as the "SAIF"). The
BANK is in compliance in all material respects with all applicable local, state
or federal banking laws and regulations, including, without limitation, the
regulations of the FDIC and the DIVISION, except to the extent that failure to
be in compliance would not have a material adverse effect on WHFC and the BANK,
taken as a whole. The BANK is a "qualified thrift lender" as defined in 12
U.S.C. 1467(a)(m) and applicable regulations.
SECTION 3.02. QUALIFICATION. WHFC and the BANK are each either
duly qualified to do business and in good standing in each jurisdiction in which
such qualification is required or the failure to so qualify would not have a
material adverse effect on the business of WHFC or the BANK.
SECTION 3.03. AUTHORITY OF WHFC AND THE BANK. This AGREEMENT
has been duly executed and delivered by WHFC and the BANK. Subject to the
adoption of this AGREEMENT by the WHFC shareholders, to the adoption of this
AGREEMENT by WHFC as the sole shareholder of the BANK, and to the filing of all
requisite regulatory notices and the receipt of all requisite regulatory
approvals, (a) WHFC has all requisite corporate power and authority to enter
into this AGREEMENT and to perform all of its obligations hereunder; (b) the
BANK has all requisite corporate power and authority to enter into this
AGREEMENT and to perform all of its obligations hereunder and thereunder; (c)
the execution and delivery of this AGREEMENT and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action by WHFC and the BANK; and (d) subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
applicability affecting the enforcement of creditors' rights generally, and the
effect of rules of law governing specific performance, injunctive relief and
other equitable remedies on the enforceability of such documents, and except to
the extent such enforceability may be limited by laws relating to safety and
soundness of insured depository institutions as set forth in 12 U.S.C.
ss.1818(b) or by the appointment of a conservator by the FDIC, (i) this
AGREEMENT is the valid and binding agreement of WHFC, enforceable against WHFC
in accordance with its terms, and
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(ii) this AGREEMENT is the valid and binding agreement of the BANK, enforceable
against the BANK in accordance with its terms.
SECTION 3.04. GOVERNING DOCUMENTS. WHFC has made available, or
will promptly make available, to CAMCO true and accurate copies of its Articles
of Incorporation and Bylaws and has granted CAMCO access to all records of all
meetings and other corporate actions occurring before the EFFECTIVE TIME by the
shareholders, Board of Directors and Committees of the Board of Directors of
WHFC. The BANK has made available, or will promptly make available, to CAMCO
true and accurate copies of its Articles of Incorporation, Constitution and
Bylaws and has granted or will grant to CAMCO access to all records of all
meetings and other corporate actions occurring before the EFFECTIVE TIME by the
shareholders, Board of Directors and Committees of the Board of Directors of the
BANK. The minute books of WHFC and the BANK contain, in all material respects,
complete and accurate records of all meetings and other corporate actions of
their shareholders, Boards of Directors and Committees of the Boards of
Directors.
SECTION 3.05. NO CONFLICTS. The execution and delivery of this
AGREEMENT and, subject to the adoption of this AGREEMENT by the shareholders of
WHFC and to the regulatory filings and approvals referenced in Section 1.04 of
this AGREEMENT, the consummation of the transactions contemplated hereby will
not (a) conflict with or violate any provision of or result in the breach of any
provision of the Articles of Incorporation or Bylaws of WHFC or the Articles of
Incorporation or Constitution of the BANK; (b) conflict with or violate any
provision of or result in the breach or the acceleration of or entitle any party
to accelerate (whether upon or after the giving of notice or lapse of time or
both) any obligation under, or otherwise materially affect the terms of, any
mortgage, lien, lease, agreement, license, instrument, order, arbitration award,
judgment or decree to which WHFC or the BANK is a party or by which WHFC or the
BANK or their property or assets are bound; (c) require the consent of any party
to any agreement or commitment to which WHFC or the BANK is a party or by which
WHFC or the BANK or their property or assets are bound, the failure to obtain
which could, individually or in the aggregate with all the other failures to
obtain required consents, have a material adverse effect on the business,
operations, condition (financial or otherwise) or prospects of WHFC or the BANK;
(d) result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any property or assets of WHFC or the BANK;
or (e) violate or conflict with any applicable law, ordinance, rule or
regulation, including, without limitation, the rules and regulations of, or
conditions of approval of applications or notices to, the Federal Reserve Board,
the FDIC or the DIVISION.
SECTION 3.06. CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required in connection with the execution and delivery of this
AGREEMENT by WHFC or the BANK or the consummation by WHFC or the BANK of the
transactions contemplated hereby, except for the filings, authorizations
consents or approvals referenced in Sections 1.02, 1.03 and 1.04 of this
AGREEMENT.
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SECTION 3.07. CAPITALIZATION. (a) The authorized capital of
WHFC consists solely of (i) 15,000,000 common shares, One Cent ($0.01) par value
per share, 2,168,818 of which are issued and outstanding and held of record by
approximately 425 shareholders and 279,192 of which are reserved for issuance
upon the exercise of WHFC OPTIONS, and (ii) 1,000,000 preferred shares, One Cent
($0.01) par value, none of which is issued or outstanding. All of the
outstanding WHFC SHARES are duly authorized, validly issued, fully paid and
nonassessable, were issued in full compliance with all applicable laws and
regulations, and were not issued in violation of the preemptive right of any
shareholder of WHFC. Upon the exercise of the WHFC OPTIONS prior to the date of
the CLOSING, the WHFC SHARES to be issued in connection with the exercise of
such WHFC OPTIONS will be duly authorized, validly issued, fully paid and
nonassessable, will be issued in full compliance with all applicable laws and
regulations, and will not be issued in violation of the preemptive right of any
shareholder of WHFC. Except for the WHFC OPTIONS, each of which is identified by
type (e.g. incentive stock options or non-qualified stock options), name of
recipient, award date, expiration date, number of shares and exercise price per
share (as such price may have been adjusted) in Section 3.07 of the WHFC
DISCLOSURE SCHEDULE, and the WHFC STOCK OPTION AGREEMENT with CAMCO provided for
herein, there are no outstanding subscription rights, options, conversion
rights, warrants or other agreements or commitments of any nature whatsoever
(either firm or conditional) obligating WHFC to issue, deliver or sell, cause to
be issued, delivered or sold, or restricting WHFC from selling any additional
WHFC SHARES, or obligating WHFC to grant, extend or enter into any such
agreement or commitment.
(b) The authorized capital of the BANK consists of 5,000,000
common shares, par value One Dollar ($1.00) per share, 100,000 of which are
issued and outstanding and held of record by WHFC. All of the outstanding common
shares of the BANK are duly authorized, validly issued, fully paid and
nonassessable, were issued in full compliance with all applicable laws and
regulations, and were not issued in violation of the preemptive right of any
shareholder of the BANK. There are no outstanding subscription rights, options,
conversion rights, warrants or other agreements or commitments of any nature
whatsoever (either firm or conditional) obligating the BANK to issue, deliver or
sell, or to cause to be issued, delivered or sold, any additional BANK SHARES.
SECTION 3.08. SEC DOCUMENTS AND REGULATORY REPORTS. (a) WHFC
has delivered or made available to CAMCO a complete copy of all reports,
prospectuses, offering circulars, proxy statements, registration statements and
all similar documents filed, or required to be filed, pursuant to the Securities
Act of 1933, as amended, and the Securities Act of 1934, as amended, and
regulations issued pursuant thereto or mailed by WHFC or the BANK to the members
or shareholders since August 15, 1996 ("SECURITIES DOCUMENTS"). The SECURITIES
DOCUMENTS were timely filed, did not, as of the dates on which such reports were
filed with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
(b) Since August 15, 1996 each of WHFC and the BANK has duly
filed with the Federal Reserve Board, the FDIC and the Division, as the case may
be, in correct form the
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reports required to be filed under applicable law and regulations and such
reports were in all material respects complete and accurate and in compliance
with the requirements of applicable law and regulation, and WHFC has previously
delivered or made available to CAMCO accurate and complete copies of all such
reports. In connection with the most recent examination of WHFC or the BANK by
the Federal Reserve Board, the FDIC and the Division, neither WHFC nor the BANK
was required to correct or change any action, procedure or proceeding which has
not been corrected or changed as required.
SECTION 3.09. FINANCIAL STATEMENTS. (a) The consolidated
statements of financial condition of WHFC and its subsidiaries as of December
31, 1998 and 1997 and the related consolidated statements of income, statements
of stockholder equity and cash flows for each of the three fiscal years ended
December 31, 1998, 1997 and 1996 together with the notes thereto, examined and
reported upon by KPMG LLP, independent certified public accountants, complete
copies of which have previously been delivered to CAMCO (hereinafter referred to
as the "WHFC Audited Financials") have been prepared in conformity with
generally accepted accounting principles ("GAAP") applied on a consistent basis,
except as stated therein, and fairly present the consolidated financial position
of WHFC at such date and the consolidated results of its operations and cash
flows for such periods.
(b) The unaudited consolidated statements of financial
condition of WHFC as of March 31, 1999 and March 31, 1998 and related unaudited
consolidated statements of income, statements of stockholders equity and cash
flow for the three months then ended included in the WHFC Quarterly Report on
Form 10-Q for the quarter ended March 31, 1999 as currently on file with the
SEC, and previously delivered to CAMCO, (hereinafter referred to as the "WHFC
INTERIM FINANCIALS") fairly present the financial position of WHFC at such dates
and the results of its operations and cash flows for such periods and have been
prepared in accordance with GAAP applied on a consistent basis, subject to
normal recurring year-end adjustments, or as otherwise may be specified therein.
(c) The audits of WHFC and the BANK have been conducted in all
material respects in compliance with generally accepted auditing standards. The
book and records of WHFC and the BANK are being maintained in material
compliance with applicable legal and accounting requirements, and such books and
records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of WHFC
and the BANK.
(d) Except as disclosed in the WHFC INTERIM FINANCIALS, as of
March 31, 1999, WHFC had no liabilities or obligations material to the business
condition (financial or otherwise) of WHFC and its consolidated subsidiaries
taken as a whole, whether accrued, absolute, contingent or otherwise, and
whether due or to become due.
(e) The WHFC AUDITED FINANCIALS and WHFC INTERIM FINANCIALS
did not, as of the dates thereof, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the information
contained therein, in light of the circumstances under which they were made, not
misleading.
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SECTION 3.10. ABSENCE OF MATERIAL ADVERSE CHANGE: CONDUCT OF
BUSINESS. Since March 31, 1999, there have been no material adverse changes in
the financial condition, assets, liabilities, obligations, properties, business
or prospects of WHFC or the BANK, taken as a whole; WHFC and the BANK have
conducted business only in the ordinary and usual course; and WHFC and the BANK
have not:
(a) Except for the WHFC STOCK OPTION AGREEMENT,
authorized the creation or issuance of, issued, sold
or disposed of, or created any obligation to issue,
sell or dispose of, any stock, notes, bonds or other
securities, or any obligation convertible into or
exchangeable for, any shares of their capital stock;
(b) Declared, set aside, paid or made any dividend or
other distributions on their capital stock or
directly or indirectly redeemed, purchased or
acquired any shares thereof or entered into any
agreement in respect of the foregoing; except a cash
dividend paid by WHFC on May 24, 1999 in the amount
of $0.11 per share and a cash dividend of $.12 per
share declared by the Board of Directors on July 26,
1999;
(c) Effected any stock split, recapitalization,
combination, exchange of shares, readjustment or
other reclassification;
(d) Amended their Articles of Incorporation, Constitution
or Bylaws;
(e) Purchased, sold, assigned or transferred any material
tangible asset or any material patent, trademark,
trade name, copyright, license, franchise, design or
other intangible asset or property;
(f) Mortgaged, pledged or granted or suffered to exist
any lien or other encumbrance or charge on any assets
or properties, tangible or intangible, except for
liens for taxes not yet due and payable and such
other liens, encumbrances or charges which do not
materially adversely affect their financial position;
(g) Cancelled any material debts or waived any material
claims other than for adequate consideration;
(h) Incurred any material obligation or liability
(absolute or contingent), including, without
limitation, any tax liability, or paid any material
liability or obligation (absolute or contingent)
other than liabilities and obligations incurred or
paid in the ordinary course of business and
consistent with past practice, and liabilities
incurred in connection with the transaction,
contemplated by this AGREEMENT or the WHFC STOCK
OPTION AGREEMENT;
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(i) Experienced any material change in the amount or
general composition of their deposit liabilities;
(j) Entered into or amended any employment contract with
any of their employees, increased the compensation
payable to any officer or director or any relative of
any such employee or director, or become obligated to
increase any such compensation;
(k) Adopted or amended in any material respect any
employee benefit plan, severance plan or collective
bargaining agreement or made any awards or
distributions under any employee benefit plan not
consistent with past practice or custom;
(l) Incurred any damage, destruction or similar loss,
whether or not covered by insurance, materially
affecting their businesses or properties;
(m) Acquired any stock or other equity interest in any
corporation, partnership, trust, joint venture or
other entity;
(n) Made any (i) material investment (except investments
made in the ordinary course of business and
consistent with past practice) or (ii) material
capital expenditure or commitment for any material
addition to property, plant or equipment; or
(o) Agreed, whether in writing or otherwise, to take any
action described in this Section 3.10.
SECTION 3.11. PROPERTIES. (a) A list and brief description of
all material fixed assets owned by WHFC or the BANK (hereinafter referred to as
the "PERSONAL PROPERTY") carried on the books of WHFC or the BANK as of the date
hereof, is set forth in Section 3.11(a) of the WHFC DISCLOSURE SCHEDULE. All
PERSONAL PROPERTY has been maintained in good working order, ordinary wear and
tear excepted. WHFC or the BANK owns and has good title to all of the PERSONAL
PROPERTY, free and clear of any mortgage, lien, pledge, charge, claim,
conditional sales or other agreement, lease, right or encumbrance, except (i) to
the extent stated or reserved against in the WHFC AUDITED FINANCIALS and (ii)
such other exceptions which are not material in character, amount or extent and
do not materially detract from the value of or interfere with the use of the
properties or assets subject thereto or affected thereby.
(b) To the knowledge of the BANK, the documentation governing
or relating to the loan and credit-related assets (hereinafter referred to as
the "LOAN ASSETS") representing the loan portfolio of the BANK (hereinafter
referred to as "LOAN DOCUMENTATION") is legally sufficient in all material
respects for the purposes intended thereby and creates enforceable rights of the
BANK in accordance with the terms of such LOAN
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DOCUMENTATION, subject to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws of general applicability affecting the
enforcement of creditors' rights generally, and the effect of rules of law
governing specific performance, injunctive relief and other equitable remedies
on the enforceability of such documents. To the knowledge of the BANK, no debtor
under any of the LOAN DOCUMENTATION has asserted any claim or defense with
respect to the subject matter thereof.
(c) A description of each parcel of real property owned by
WHFC or the BANK (hereinafter referred to as the "REAL PROPERTIES") is set forth
in Section 3.11(c) of the WHFC DISCLOSURE SCHEDULE. WHFC or the BANK is the
owner of the REAL PROPERTIES in fee simple and has good and marketable title to
the REAL PROPERTIES free of any liens, claims, charges, encumbrances or security
interests of any kind, except (i) liens for real estate taxes and assessments
not yet delinquent and (ii) utility, access and other easements, rights of way,
restrictions and exceptions which do not impair the REAL PROPERTIES for the use
and business being conducted thereon. No party leases any of the REAL PROPERTIES
from WHFC or the BANK.
(d) Neither WHFC nor the BANK has received notification from
any governmental entity within the two-year period immediately preceding the
date hereof of contemplated improvements to the REAL PROPERTIES or surrounding
area or community by a public authority, the costs of which are to be assessed
as special taxes against the REAL PROPERTIES in the future.
(e) A description of all real property leased by WHFC or the
BANK from a third party (hereinafter referred to as the "LEASED REAL PROPERTY")
is set forth in Section 3.11(e) of the WHFC DISCLOSURE SCHEDULE. True and
correct copies of all leases in respect of the LEASED REAL PROPERTY (hereinafter
referred to as the "REAL PROPERTY LEASES") and all attachments, amendments and
addenda thereto have been delivered by WHFC and the BANK to CAMCO. The REAL
PROPERTY LEASES create, in accordance with their terms, valid, binding leasehold
interests of WHFC or the BANK in all of the LEASED REAL PROPERTY, free and clear
of all liens, claims, charges, encumbrances or security interests of any kind.
WHFC and the BANK have complied in all material respects with all of the
provisions of the REAL PROPERTY LEASES required on their part to be complied
with and are not in default with respect to any of their obligations (including
payment obligations) under any of the REAL PROPERTY LEASES.
(f) A description of all personal property leased by WHFC or
the BANK from a third party (hereinafter referred to as the "LEASED PERSONAL
PROPERTY") is set forth in Section 3.11(f) of the WHFC DISCLOSURE SCHEDULE. The
PERSONAL PROPERTY LEASES create, in accordance with their terms, valid and
binding leasehold interests of WHFC or the BANK in all of the LEASED PERSONAL
PROPERTY, free and clear of all liens, claims, charges, encumbrances or security
interests of any kind. WHFC and the BANK have complied in all material respects
with all of the provisions under the PERSONAL PROPERTY LEASES required on their
part to be complied with and are not in default with respect to any of their
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obligations (including payment obligations) under any of the PERSONAL PROPERTY
LEASES.
SECTION 3.12. ALLOWANCE FOR LOAN LOSSES. The allowance for
loan losses reflected on the WHFC AUDITED FINANCIALS is adequate as of the date
hereof in all material respects under the requirements of GAAP to provide for
reasonably anticipated losses on outstanding loans.
SECTION 3.13. INVESTMENTS. Section 3.13 of the WHFC DISCLOSURE
SCHEDULE sets forth (a) a true, accurate and complete list of all investments,
other than investments in the PERSONAL PROPERTY, LOAN ASSETS and REAL
PROPERTIES, owned by WHFC or the BANK (hereafter referred to as the
"INVESTMENTS") as of the date hereof, the name of the registered holder thereof,
the location of the certificates therefor or other evidence thereof and any
stock powers or other authority for transfer granted with respect thereto and
(b) a true, accurate and complete list of the names of each bank or other
depository in which either WHFC or the BANK has an account or safe deposit box,
including, without limitation, accounts with the FHLB, and the names of all
persons authorized to draw thereon or to have access thereto. The INVESTMENTS
are owned by WHFC or the BANK free and clear of all liens, pledges, claims,
security interests, encumbrances, charges or restrictions of any kind and may be
freely disposed of by WHFC or the BANK at any time. Neither WHFC nor the BANK is
a party to or has any interest in any repurchase agreements or reverse
repurchase agreements. There are no outstanding letters of credit issued by the
BANK.
SECTION 3.14. DERIVATIVE TRANSACTIONS. Neither WHFC nor the
BANK is a party to any futures contract, option contract, interest rate caps,
interest rate floors, interest rate exchange agreements or other derivative
instruments.
SECTION 3.15. TAXES. (a) WHFC and the BANK have duly and
timely filed all federal, state, county and local income, profits, franchise,
excise, sales, customs, property, use, occupation, withholding, social security
and other tax and information returns and reports required to have been filed by
them through the date hereof, except to the extent that all such failures to
file, taken together, are not reasonably likely to have a material adverse
effect on WHFC and the BANK taken as a whole, and have paid or accrued all taxes
and duties (and all interest and penalties with respect thereto) due or claimed
to be due by WHFC or the BANK. Neither WHFC nor the BANK has, to their
knowledge, any liability for any taxes or duties (or interest or penalties with
respect thereto) of any nature whatsoever, and there is no basis for any
additional material claims or assessments. True copies of the federal, state and
local income tax returns of WHFC or the BANK for each of the three tax years
ended December 31, 1998, 1997 and 1996, have been delivered to CAMCO.
(b) There are no federal, state or local tax returns or reports not
filed which would be due but for an extension of time for filing having been
granted, except as disclosed in Section 3.15(b) of the DISCLOSURE SCHEDULE.
Neither WHFC nor the BANK has executed or filed with the Internal Revenue
Service (hereinafter referred to as the "IRS") or any state or local tax
authority any agreement extending the period for assessment and collection of
any tax, nor is
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WHFC or the BANK a party to any action or proceeding of any governmental
authority for assessment or collection of taxes, except tax liens or levies
against customers of the BANK. There is no outstanding assessment or claim for
collection of taxes against WHFC or the BANK. Neither WHFC nor the BANK has
received any notice of deficiency, proposed deficiency or assessment from the
IRS or any other governmental agency with respect to any federal, state or local
taxes. No tax return of WHFC or the BANK is currently the subject of any audit
by the IRS or any other governmental agency. No material deficiencies have been
asserted in connection with the tax returns of WHFC or the BANK, and WHFC and
the BANK have no reason to believe that any deficiency would be asserted
relating thereto. Except as disclosed in Section 3.15(b) of the DISCLOSURE
SCHEDULE: (i) neither WHFC nor the BANK has ever been a member of an "affiliated
group of corporations" (within the meaning of Section 1504(a) of the CODE)
filing consolidated returns, other than the affiliated group of which WHFC is
the parent; and (ii) neither WHFC nor the BANK is a party to any tax sharing
agreement.
SECTION 3.16. MATERIAL CONTRACTS. (a) Except as set forth in
Section 3.16(a) of the WHFC DISCLOSURE SCHEDULE, neither WHFC nor the BANK is a
party to or bound by any written or oral (i) contract or commitment for capital
expenditures in excess of $15,000 for any one project or $30,000 in the
aggregate; (ii) contract or commitment made in the ordinary course of business
for the purchase of materials or supplies or for the performance of services
involving payments to or by WHFC or the BANK of an amount exceeding $15,000 in
the aggregate or extending for more than six months from the date hereof; (iii)
contract or option for the purchase of any property, real or personal, for an
amount exceeding $15,000; (iv) letter of credit or indemnity calling for payment
of more than $15,000; (v) guarantee agreement; (vi) instrument granting any
person authority to transact business on behalf of WHFC or the BANK; (vii)
contracts or commitments to make loans (including unfunded commitments and lines
of credit) to any one person (together with "affiliates" of that person) in
excess of $100,000 in the aggregate, except for contracts or commitments entered
into in the ordinary course of business; (viii) employment, management,
consulting, deferred compensation, severance or other similar contract with any
director, officer or employee of WHFC or the BANK; (ix) note, debenture or loan
agreement pursuant to which WHFC or the BANK has incurred indebtedness other
than deposit liabilities and advances from the FHLB; (x) loan participation
agreement; (xi) loan servicing agreement; (xii) contract or commitment relating
to a real estate development project consisting of the development of more than
one single family dwelling; (xiii) commitment to make any acquisition,
development and construction loan; (xiv) commitment or agreement to do any of
the foregoing; or (xv) other contract, agreement or commitment made outside the
ordinary course of business. (The contracts, agreements, commitments and other
arrangements described in clauses (i) through (xv) of this Section 3.16(a) are
hereinafter collectively referred to as the "CONTRACTS").
(b) Except as set forth in the DISCLOSURE SCHEDULE, WHFC or
the BANK has previously delivered to CAMCO (i) copies of all of the CONTRACTS
and (ii) all form lending agreements and deposit forms used by the BANK in the
ordinary course of business.
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(c) Neither WHFC nor the BANK is in material default under any
CONTRACT and no claim of such default by any party has been made or is now, to
the knowledge of WHFC or the BANK, threatened, except to the extent such a
default would not have a material adverse effect on WHFC and the BANK taken as a
whole. To the knowledge of WHFC and the BANK there does not exist any event
which, with notice or lapse of time or both, would constitute a material default
by WHFC or the BANK under, or would excuse performance by any party thereto
from, any CONTRACT, except to the extent such a default would not have a
material adverse effect on WHFC and the BANK taken as a whole.
SECTION 3.17. INSURANCE. All material properties and
operations of WHFC and the BANK are insured in amounts and types as are
customary for savings banks similarly situated. The performance by the officers
and employees of WHFC and the BANK of their duties is bonded in such amounts and
against such risks as are usually insured against or bonded by entities
similarly situated, under valid and enforceable policies of insurance or bonds
issued by insurers or bonding companies of recognized responsibility, financial
or otherwise.
SECTION 3.18. LITIGATION. Except as set forth in Section 3.18
of the WHFC DISCLOSURE SCHEDULE, (a) there are no material actions, suits,
proceedings or investigations pending or threatened against or affecting the
business, operations or financial condition of WHFC or the BANK in any court or
before any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, (b) neither the management
of WHFC nor the BANK has any knowledge of any basis for any such action, suit,
proceeding or investigation, and (c) neither WHFC nor the BANK is in default in
respect of any judgment, order, writ, injunction or decree of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality.
SECTION 3.19. PERMITS AND LICENSES. WHFC and the BANK each has
all material permits, licenses, orders and approvals of all federal, state or
local governmental or regulatory bodies required for it to conduct its business
as presently conducted, and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
AGREEMENT.
SECTION 3.20. EMPLOYEE BENEFIT PLANS; ERISA. (a) Section
3.20(a) of the WHFC DISCLOSURE SCHEDULE sets forth a true and complete list of
all qualified pension or profit-sharing plans, deferred compensation,
consulting, bonus, group insurance plans or agreements and all other incentive,
welfare or employee benefit plans or agreements maintained for the benefit of
employees or former employees of WHFC or the BANK. Copies of such plans and
agreements, together with (i) , when applicable, the most recent actuarial and
financial reports prepared with respect to any such plan, (ii) the most recent
annual reports filed with any government agency and (iii) all rulings and
determination letters received from governmental agencies and any open requests
for rulings or letters that pertain to any such plan, have been delivered to
CAMCO.
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(b) Except as may be disclosed in Section 3.20(b) of the WHFC
DISCLOSURE SCHEDULE, WHFC and the BANK do not currently maintain any "employee
pension benefit plan," as defined in Section 3(2) of ERISA, (each such plan,
together with any related trust or other funding mechanism, as maintained by
WHFC or the BANK, hereinafter referred to as a "PENSION BENEFIT PLAN"), which is
intended to be qualified under Section 401(a) of the CODE.
(c) Neither WHFC nor the BANK currently maintains, nor have
they ever maintained, any PENSION BENEFIT PLAN subject to the provisions of
Title IV of The Employee Retirement Income Security Act of 1974, as amended
(hereinafter referred to as "ERISA").
(d) WHFC and the BANK do not currently participate in, nor
have they ever participated in, any multiemployer plan, as such term is defined
in Section 3(37) of ERISA.
(e) All of the PENSION BENEFIT PLANS have complied and comply
currently in all material respects, both as to form and operation, with the
provisions of ERISA and the CODE, where required in order to be tax-qualified
under Section 401(a) of the CODE, and all other applicable laws, rules and
regulations. Neither WHFC nor the BANK is aware of any event which might
jeopardize the tax qualified status of any PENSION BENEFIT PLAN. Each PENSION
BENEFIT PLAN which is intended to be qualified under Section 401(a) of the CODE
has received a determination letter from the IRS which considers amendments made
to the CODE by the Tax Reform Act of 1986. All reports required by any
governmental agency with respect to each PENSION BENEFIT PLAN have been timely
filed with such agency and, where required, distributed to participants and
beneficiaries of such PENSION BENEFIT PLAN within the time required by law.
(f) Each "employee welfare benefit plan," as defined in
Section 3(1) of ERISA, (each such plan together with any related trust or other
funding mechanism, as maintained by WHFC or the BANK, hereinafter referred to as
a "WELFARE BENEFIT PLAN") has been administered to date in all material respects
in compliance with the requirements of the CODE and ERISA, and, where
applicable, all state insurance laws, and all reports required by any
governmental agency with respect to each WELFARE BENEFIT PLAN has been timely
filed with such agency and, where required, distributed to participants and
beneficiaries of such WELFARE BENEFIT PLAN within the time required by law, and
each Plan which constitutes a "group health plan" as defined in Section
5000(b)(1) of the CODE, is and has been administered in material compliance with
the continuation of coverage provisions contained in Section 4980B of the CODE.
(g) Neither WHFC nor the BANK nor, to the knowledge of WHFC or
the BANK, any plan fiduciary of any WELFARE BENEFIT PLAN or PENSION BENEFIT PLAN
has engaged in any transaction in violation of Section 406(a) or (b) of ERISA
(for which no exemption exists under Section 408 of ERISA) or any "prohibited
transaction" (as defined in Section 4975(c)(1) of the CODE) for which no
exemption exists under Section 4975(c)(1) of the CODE.
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(h) Each PENSION BENEFIT PLAN which is intended to be an
employee stock ownership plan ("ESOP"), or defined in Section 4975(e)(7) of the
CODE, is and has been administered in substantial compliance with the applicable
provisions of Sections 4975 and 409 of the CODE and the regulations thereunder;
and any outstanding loan to which any such ESOP is a party constitutes an
"exempt loan" as described in Section 54.4975-7 of the IRS Regulations.
(i) The ESOP is in compliance with all applicable laws,
including the Change in Bank Control Act of 1978, 12 USC 1817(j).
SECTION 3.21. ENVIRONMENTAL MATTERS. (a) WHFC and the BANK, to
the knowledge of WHFC or the BANK, are in material compliance with all
applicable ENVIRONMENTAL LAWS (hereinafter defined). WHFC and the BANK have not
received any written or oral communication from any organization, person or
otherwise, which alleges that either (i) WHFC or the BANK is not in compliance
with all applicable ENVIRONMENTAL LAWS or (ii) any properties or assets of WHFC
or the BANK may have been affected by any MATERIALS OF ENVIRONMENTAL CONCERN
(hereinafter defined). All permits and other governmental authorizations
currently held or being applied for by WHFC or the BANK pursuant to the
ENVIRONMENTAL LAWS are set forth in Section 3.21(a) of the WHFC DISCLOSURE
SCHEDULE.
(b) There is no ENVIRONMENTAL CLAIM (hereinafter defined)
pending or, to the knowledge of WHFC or the BANK, threatened (i) against WHFC or
the BANK, (ii) against any person or entity whose liability for any
ENVIRONMENTAL CLAIM has or may have been retained or assumed by WHFC or the BANK
either contractually or by operation of law, or (iii) against any real or
personal property which WHFC or the BANK owns, leases, manages, supervises or
participates in the management of, or, to the knowledge of WHFC or the BANK, in
which WHFC or the BANK holds a security interest in connection with a loan or
loan participation, other than such as would not, either individually or in the
aggregate, have a material adverse effect on WHFC or the BANK.
(c) There are no present or, to the knowledge of WHFC and the
BANK, past activities, conditions, or incidents, including, without limitation,
the release or disposal of any MATERIAL OF ENVIRONMENTAL CONCERN, that could
reasonably form the basis of any ENVIRONMENTAL CLAIM against WHFC or the BANK or
against any person or entity whose liability for any ENVIRONMENTAL CLAIM has or
may have been retained or assumed by WHFC or the BANK, either contractually or
by operation of law, other than such as would not, either individually or in the
aggregate, have a material adverse effect on WHFC or the BANK.
(d) Section 3.21(d) of the WHFC DISCLOSURE SCHEDULE sets forth
an accurate and complete list of outstanding loans of the BANK as to which the
borrower has submitted (or is required to submit) to the BANK any environmental
audits or reports regarding any real property securing such loan and a brief
description of the environmental audit or report,
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to the extent applicable. WHFC and the BANK will make available to CAMCO all
such environmental audits and reports.
(e) As used in this AGREEMENT:
(i) "ENVIRONMENTAL CLAIM" means any claim, cause of
action or notice (written or oral) by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (I) the presence, or release into the environment, of any
MATERIAL OF ENVIRONMENTAL CONCERN at any location, whether or not owned by WHFC
or the BANK or (II) circumstances forming the basis of any violation, or alleged
violation, of any ENVIRONMENTAL LAW;
(ii) "ENVIRONMENTAL LAWS" means all laws and
regulations relating to pollution or protection of human health or the
environment including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of MATERIALS OF
ENVIRONMENTAL CONCERN, or otherwise relating to the use, treatment, storage,
disposal, transport or handling of MATERIALS OF ENVIRONMENTAL CONCERN; and
(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" shall mean
(I) any "hazardous waste" as defined in 42 U.S.C. Section 6903, as amended from
time to time, and regulations promulgated thereunder from time to time; (II) any
"hazardous substance" as defined in 42 U.S.C. Section 9601, as amended from time
to time, and regulations promulgated thereunder from time to time; (III)
asbestos; (IV) PCB's; (V) any substance the presence of which on WHFC's or the
BANK's property is prohibited by any applicable law, ordinance, or regulation;
(VI) petroleum products; and (VII) underground storage tanks and above ground
storage tanks.
SECTION 3.22. EMPLOYMENT MATTERS. WHFC and the BANK are in
compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours and have not and are not engaged in any unfair labor practice,
except where such failure to comply or such practice would not have a material
adverse effect on the financial condition, results of operations, business or
prospects of WHFC and the BANK taken as a whole. No unfair labor practice
complaint against WHFC or the BANK is pending before any governmental agency or
court and there is no labor strike, dispute, slowdown or stoppage actually
pending, or to the knowledge of WHFC and the BANK, threatened against or
involving WHFC or the BANK. No representation question exists in respect of the
employees of WHFC or the BANK and no labor grievance which might have a material
adverse effect upon WHFC or the BANK or the conduct of their businesses is
pending or, to the knowledge of WHFC or the BANK, threatened. Neither WHFC nor
the BANK has entered into any collective bargaining agreement with any labor
organization with respect to any group of employees of WHFC or the BANK, and, to
the knowledge of WHFC and the BANK, there is no present effort nor existing
proposal to attempt to unionize any group of employees of WHFC or the BANK.
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SECTION 3.23. UNTRUE STATEMENTS AND OMISSIONS. The
certificates, statements and other information furnished to CAMCO in writing by
or on behalf of WHFC and the BANK in connection with the transactions
contemplated hereby, including, but not limited to, disclosures and information
set forth in the WHFC DISCLOSURE SCHEDULE, but excluding statements or
information pertaining to parties unrelated to WHFC or the BANK, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3.24. PROXY MATERIALS. None of the information
relating to WHFC or the BANK included in the JOINT PROXY STATEMENT which is to
be mailed to the shareholders of WHFC and CAMCO in connection with any meeting
of shareholders convened in accordance with Sections 1.03, 6.02 and 6.03 of this
AGREEMENT will, at the time the JOINT PROXY STATEMENT is mailed or at the time
of the meeting to which the JOINT PROXY STATEMENT relates, contain any untrue
statement of a material fact, or omit to state any material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not false or misleading, except to the extent it contains
information about CAMCO provided in writing to WHFC or the BANK by CAMCO.
SECTION 3.25. BROKERS. Except for amounts payable to Charles
Webb & Company, a division of Keefe, Bruyette & Webb, Inc. (hereinafter referred
to as "WEBB"), as disclosed in Section 3.25 of the WHFC DISCLOSURE SCHEDULE,
there are no claims or agreements for brokerage commission, finder's fees, or
similar compensation in connection with the transactions contemplated by this
AGREEMENT payable by WHFC or the BANK.
SECTION 3.26. REGULATORY ENFORCEMENT. Neither WHFC nor the
BANK is subject to, or has received any notice or advice that it is or may
become subject to, any order, agreement or memorandum of understanding of any
federal or state agency charged with the supervision or regulation of banks or
savings banks or engaged in the insurance of deposits or any other governmental
agency having supervisory or regulatory authority with respect to WHFC or the
BANK; neither WHFC nor the BANK has received any notice or advice that it is not
in substantial compliance with any statute or regulation, except where failure
to comply would not have a material adverse effect upon WHFC and the BANK taken
as a whole; and WHFC and the BANK have received no notice from any governmental
authority threatening to revoke any license, franchise, permit or governmental
authorization.
SECTION 3.27. TAX TREATMENT OF MERGER. Neither WHFC nor the
BANK has taken any action that is reasonably likely to prevent the transactions
contemplated hereby, including the MERGER, from qualifying as a reorganization
within the meaning of Section 368(a) of the CODE.
SECTION 3.28. SUBSIDIARIES: EQUITY INTEREST. The term
"subsidiary" means an organization or entity which is consolidated or is
eligible to be consolidated with a party to this AGREEMENT for financial
reporting purposes. Except for the BANK, WHFC has no subsidiaries. Except for
shares of the BANK owned by WHFC and of the Federal Home Loan
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Bank of Cincinnati owned by the BANK or as set forth in Section 3.28 of the WHFC
DISCLOSURE SCHEDULE, neither WHFC nor the BANK owns, beneficially or otherwise,
any shares of EQUITY SECURITIES (as defined below) or similar interest of any
corporation, bank, business trust, association or similar organization. "EQUITY
SECURITIES" of an issuer means capital stock or other equity securities of such
issuer, options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into, shares of any capital stock or other equity securities of any issuer, or
contracts, commitments, understandings or arrangements by which such issuer is
or may become bound to issue additional shares of its capital stock or other
equity securities of such issuer, or options, warrants, scrip or rights to
purchase, acquire, subscribe to, calls on or commitments for any shares of its
capital stock or other equity securities. Neither WHFC nor the BANK is a party
to any partnership or joint venture.
SECTION 3.29. MANAGEMENT RECOGNITION PLAN. The WHFC DISCLOSURE
SCHEDULE lists the names of the recipients, award dates, forfeitures,
distribution dates and number of shares awarded and unawarded relating to and
arising out of the Management Recognition Plan of WHFC. Thirty-three thousand,
sixty (33,060) WHFC SHARES are unawarded and may be returned to WHFC at the
direction of the WHFC Board of Directors. No trustee reports or accounts have
ever been made.
SECTION 3.30. YEAR 2000. WHFC and the BANK have delivered to
CAMCO a complete and accurate copy of its year 2000 plan, including an estimate
of the anticipated associated costs for addressing the issues set forth in the
applicable statements of the Federal Financial Institutions Examination Council
and such plan is in material compliance with the schedule set forth in such
statements.
SECTION 3.31. FAIRNESS OPINION. WHFC has received an opinion
of Webb to the effect that, as of the date hereof, the consideration to be
received by the shareholders of WHFC pursuant to this AGREEMENT is fair from a
financial point of view to the shareholders of WHFC.
SECTION 3.32. REQUIRED VOTE; ANTI-TAKEOVER PROVISIONS. (a) The
affirmative vote of the holders of a majority of the issued and outstanding
shares of WHFC is the only vote of shareholders of WHFC required to approve this
AGREEMENT and the transactions contemplated hereby on behalf of WHFC.
(b) Neither WHFC nor the BANK is an "interested shareholder"
of CAMCO within the meaning of Section 203(c)5 of the DGCL.
(c) The Board of Directors of WHFC has taken all necessary
steps by all required votes so that the provisions of Article XIV of WHFC's
Articles of Incorporation do not and will not apply to this AGREEMENT and the
WHFC STOCK OPTION AGREEMENT and the transactions contemplated hereby and
thereby.
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(d) This AGREEMENT and the WHFC STOCK OPTION AGREEMENT have
been approved by more than two-thirds of WHFC's "continuing directors" as
defined in WHFC's Articles of Incorporation.
SECTION 3.33. NO APPRAISAL RIGHTS. Shareholders of WHFC are
not entitled to the rights described in Section 23-1-44-8 of the IBCL.
SECTION 3.34. DISABILITY PLANS. WHFC and the BANK are parties
to or participant in or sponsor only one disability benefit plan or disability
salary continuation plan.
SECTION 3.35. GRANTOR TRUST AGREEMENT. The Grantor Trust of
June 22, 1998 has never been funded with cash or other assets by WHFC or the
BANK and no reports or accounts have ever been made by the Trustee.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF CAMCO
CAMCO represents and warrants to WHFC and the BANK that each
of the following statements is true and accurate in all material respects:
SECTION 4.01. ORGANIZATION AND STANDING. CAMCO is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to own or
hold under lease all of its properties and assets and to conduct its business
and operations as presently conducted. CAMCO is registered as a savings and loan
holding company under the Home Owners Loan Act ("HOLA"). CAMCO is in compliance
in all material respects with all applicable local, state and federal laws and
regulations, including without limitation, the OTS Regulations.
SECTION 4.02. QUALIFICATION. CAMCO is either duly qualified to
do business and in good standing in each jurisdiction in which such
qualification is required or the failure to so qualify would not have a material
adverse effect on the business of CAMCO.
SECTION 4.03. AUTHORITY OF CAMCO. This AGREEMENT has been duly
executed and delivered by CAMCO. Subject to the adoption of this AGREEMENT by
the CAMCO shareholders and to the filing of all requisite regulatory notices and
the receipt of all requisite regulatory approvals,(a) CAMCO has all requisite
corporate power and authority to enter into this AGREEMENT and to perform its
obligations hereunder; (b) the execution and delivery of this AGREEMENT and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action by CAMCO; and (c) subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of
general applicability affecting the enforcement of creditors' rights generally,
and the effect of rules of law governing specific performance, injunctive relief
and other equitable remedies on the enforceability of such documents, and except
to the extent such enforceability may be limited by laws relating to safety and
soundness of insured depository institutions as set forth in 12 U.S.C
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Section 1818(b) or by the appointment of a conservator by the FDIC, this
AGREEMENT is the valid and binding agreement of CAMCO, enforceable against CAMCO
in accordance with its terms.
SECTION 4.04. GOVERNING DOCUMENTS. CAMCO has made available,
or will promptly make available, to WHFC true and accurate copies of the CAMCO
Certificate of Incorporation and Bylaws and has granted WHFC access to all
records of all meetings and other corporate actions occurring before the
EFFECTIVE TIME by the stockholders, Board of Directors and Committees of the
Board of Directors of CAMCO. The minute books of CAMCO contain, in all material
respects, complete and accurate records of all meetings and other corporate
actions of their shareholders, Boards of Directors and Committees of the Boards
of Directors.
SECTION 4.05. NO CONFLICTS. The execution and delivery of this
AGREEMENT and, subject to the adoption of this AGREEMENT by the shareholders of
CAMCO and the regulatory filings and approvals referenced in Section 1.04 of
this AGREEMENT, the consummation of the transactions contemplated hereby will
not (a) conflict with or violate any provision of or result in the breach of any
provision of the Certificate of Incorporation or Bylaws of CAMCO; (b) conflict
with or violate any provision of or result in the breach or the acceleration of
or entitle any party to accelerate (whether upon or after the giving of notice
or lapse of time or both) any obligation under, or otherwise materially affect
the terms of, any mortgage, lien, lease, agreement, license, instrument, order,
arbitration award, judgment or decree to which CAMCO is a party or by which
CAMCO or its property or assets is bound; (c) require the consent of any party
to any agreement or commitment to which CAMCO is a party or by which CAMCO or
its property or assets is bound, the failure to obtain which could, individually
or in the aggregate with all the other failures to obtain required consents,
have a material adverse effect on the business, operations, condition (financial
or otherwise) or prospects of CAMCO; (d) result in the creation or imposition of
any lien, charge, pledge, security interest or other encumbrance upon any
property or assets of CAMCO; or (e) violate or conflict with any applicable law,
ordinance, rule or regulation, including, without limitation, the rules and
regulations of or conditions of approval of applications or notices to the OTS
or the FDIC.
SECTION 4.06. CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required in connection with the execution and delivery of this
AGREEMENT by CAMCO or the consummation by CAMCO of the transactions contemplated
hereby, except for filings, authorizations, consents or approvals referenced in
Sections 1.02, 1.03 and 1.04 of this AGREEMENT.
SECTION 4.07. CAPITALIZATION. The authorized capital of CAMCO
consists solely of (i) 8,900,000 shares of common stock, par value One Dollar
($1.00) per share, 5,720,888 of which are issued and outstanding and 369,521 of
which are reserved for issuance upon the exercise of outstanding stock options
(the "CAMCO OPTIONS"), and (ii) 100,000 preferred shares, One Dollar ($1.00) par
value per share, none of which is issued or outstanding. All of the outstanding
CAMCO SHARES are, and, when issued in accordance with this AGREEMENT, the CAMCO
SHARES to be issued upon exchange for the WHFC SHARES shall be, duly authorized,
validly issued, fully paid and nonassessable, issued in full compliance with all
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applicable laws, and not issued in violation of the preemptive right of any
person. Except for the CAMCO OPTIONS, there are no outstanding subscription
rights, options, conversion rights, warrants or other agreements or commitments
of any nature whatsoever (either firm or conditional) obligating CAMCO to issue,
deliver or sell, cause to be issued, delivered or sold, or restricting CAMCO
from selling any additional CAMCO SHARES, or obligating CAMCO to grant, extend
or enter into any such agreement or commitment.
SECTION 4.08. SEC REPORTS. CAMCO has delivered to WHFC copies
of the following documents, each of which has been filed with the SEC
(hereinafter referred to as the "CAMCO SEC FILINGS"):
(a) The Annual Reports on Form 10-K for each of the
fiscal years ended December 31, 1998, 1997 and 1996;
(b) The Annual Report to Stockholders for each of the
fiscal years ended December 31, 1998, 1997 and 1996;
(c) The Proxy Statement for use in connection with each
of the 1999, 1998 and 1997 Annual Meetings of
Stockholders; and
(d) The Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999.
The CAMCO SEC FILINGS did not, as of the dates on which such reports were filed
with the SEC, contain any untrue statement of a material fact or omit any
material fact required to be stated therein or necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.09. FINANCIAL STATEMENTS. (a) The consolidated
statements of financial condition of CAMCO as of December 31, 1998 and 1997, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three fiscal years ended December 31, 1998, 1997 and 1996,
together with notes thereon, examined and reported upon by Grant Thornton,
L.L.P., (hereinafter referred to as "GRANT") complete copies of which have
previously been delivered to WHFC (hereinafter referred to as the "CAMCO AUDITED
FINANCIALS"), have been prepared in conformity with GAAP applied on a consistent
basis and fairly present the financial position of CAMCO at such dates and the
results of its operations and cash flows for such periods.
(b) The unaudited consolidated statements of financial
condition of CAMCO as of March 31, 1999 and March 31, 1998, and the related
unaudited consolidated statements of earnings, stockholders' equity and cash
flows for each of the three months ended March 31, 1999 and 1998, complete
copies of which have previously been delivered to WHFC (hereinafter referred to
as the "CAMCO INTERIM FINANCIALS"), have been prepared in conformity with GAAP
applied on a consistent basis and fairly present the financial position of CAMCO
at such dates and the results of its operations and cash flows for such periods.
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(c) The audits of CAMCO have been conducted in all material
respects in accordance with GAAP. The books and records of CAMCO are being
maintained in material compliance with applicable legal and accounting
requirements and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of CAMCO.
(d) Except as disclosed in the CAMCO INTERIM FINANCIALS, as of
March 31, 1999, CAMCO had no liabilities or obligations material to the business
condition (financial or otherwise) of CAMCO taken as a whole, whether accrued,
absolute, contingent or otherwise, and whether due or to become due.
(e) The CAMCO AUDITED FINANCIALS and the CAMCO INTERIM
FINANCIALS did not, as of the dates thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
information contained therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4.10. ABSENCE OF MATERIAL ADVERSE CHANGE. Since March
31, 1999, there have been no material adverse changes in the financial
condition, assets, liabilities, obligations, properties, business or prospects
of CAMCO and its consolidated subsidiaries, taken as a whole.
SECTION 4.11. ALLOWANCE FOR LOAN LOSSES. The allowance for
loan losses reflected on the CAMCO AUDITED FINANCIALS is adequate as of the date
hereof in all material respects under the requirements of GAAP to provide for
reasonably anticipated losses on outstanding loans.
SECTION 4.12. REPORTS AND RECORDS. CAMCO has filed all reports
and maintained all records required to be filed or maintained by them under
various rules and regulations of the SEC, the OTS or the FDIC. All such
documents and reports complied in all material respects with applicable
requirements of laws and regulations in effect at the time of the filing of such
documents and contained in all material respects the information required to be
stated therein. None of such documents, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
SECTION 4.13. TAXES. CAMCO has duly and timely filed all
federal, state, county and local income, profits, franchise, excise, sales,
customs, property, use, occupation, withholding, social security and other tax
and information returns and reports required to have been filed by them through
the date hereof, and has paid or accrued all taxes and duties (and all interest
and penalties with respect thereto) due or claimed to be due by CAMCO. CAMCO has
no liability for any taxes or duties (or interest or penalties with respect
thereto) of any nature whatsoever, and there is no basis for any additional
material claims or assessments, other than with respect to liabilities for taxes
and duties which may have accrued since December 31, 1999, in the ordinary
course of business. No proposed additional taxes, interest or penalties have
been asserted by applicable taxing authorities.
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SECTION 4.14. PERMITS AND LICENSES. CAMCO has all material
permits, licenses, orders and approvals of all federal, state or local
governmental or regulatory bodies required for it to conduct its business as
presently conducted and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
AGREEMENT.
SECTION 4.15. UNTRUE STATEMENTS AND OMISSIONS. The
certificates, statements and other information furnished to WHFC in writing by
or on behalf of CAMCO in connection with the transactions contemplated hereby do
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
SECTION 4.16. PROXY MATERIALS. None of the information
relating to CAMCO or included in the JOINT PROXY STATEMENT will, at the time the
JOINT PROXY STATEMENT is mailed or at the time of the meetings to which the
JOINT PROXY STATEMENT relates, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not false or misleading.
SECTION 4.17. BROKERS. Except for amounts payable to Tucker,
Anthony, Cleary, Gull, there are no claims or agreements for brokerage
commissions, finder's fees, or similar compensation in connection with the
transactions contemplated by this AGREEMENT payable by CAMCO.
SECTION 4.18. REGULATORY ENFORCEMENT. CAMCO is not subject to,
nor has it received any notice or advice that it is not in substantial
compliance with any statute or regulation, or that it is or may become subject
to, any order, agreement or memorandum of understanding of any federal or state
agency charged with the supervision or regulation of savings banks, savings
associations or holding companies of savings banks or savings associations or
engaged in the insurance of deposits or any other governmental agency having
supervisory or regulatory authority with respect to CAMCO, and CAMCO has
received no notice from any governmental agency threatening to revoke any
license, franchise, permit or governmental authority.
SECTION 4.19. TAX TREATMENT OF MERGER. CAMCO has taken no
action or has any knowledge of any fact or circumstance that is reasonably
likely to prevent the transactions contemplated hereby, including the MERGER,
from qualifying as a "reorganization" within the meaning of Section 368(a) of
the CODE.
SECTION 4.20. WHFC SHARES OWNED BY CAMCO. Except as provided
in the WHFC STOCK OPTION AGREEMENT, neither CAMCO nor any of its subsidiaries
beneficially own any WHFC SHARES.
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SECTION 4.21. FAIRNESS OPINION. CAMCO has received an opinion
of Tucker, Anthony, Cleary, Gull to the effect that as of the date hereof the
consideration to be paid to the shareholders of WHFC pursuant to this AGREEMENT
is fair from a financial point of view to the shareholders of CAMCO.
SECTION 4.22. LITIGATION. Except as disclosed in the CAMCO SEC
FILINGS, (a) there are no material actions, suits, proceedings or investigations
pending or threatened against or affecting the business, operations or financial
condition of CAMCO in any court or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
(b) the management of CAMCO has no knowledge of any basis for any such action,
suit, proceeding or investigation, and (c) CAMCO is not in default in respect of
any judgment, order, writ, injunction or decree of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality.
SECTION 4.23. REQUIRED VOTE. The affirmative vote of the
holders of a majority of the issued and outstanding shares of CAMCO is the only
vote of shareholders of CAMCO required to approve this AGREEMENT and the
transactions contemplated hereby on behalf of CAMCO.
SECTION 4.24. MATERIAL CONTRACTS. CAMCO is not in material
default under any material contract and no claim of such default by any party
has been made or is now, to the knowledge of CAMCO, threatened. There does not
exist any event which, with notice or lapse of time or both, would constitute a
material default by CAMCO under, or would excuse performance by any party
thereto from, any material contract.
SECTION 4.25. INSURANCE. All material properties and
operations of CAMCO are adequately insured for its benefit. The performance by
the officers and employees of CAMCO of their duties is bonded in such amounts
and against such risks as are usually insured against or bonded by entities
similarly situated, under valid and enforceable policies of insurance or bonds
issued by insurers or bonding companies of recognized responsibility, financial
or otherwise.
SECTION 4.26. ENVIRONMENTAL MATTERS. (a) CAMCO, to its
knowledge, is in material compliance with all applicable ENVIRONMENTAL LAWS.
CAMCO has not received any written or oral communication from any organization,
person or otherwise, which alleges that either (i) CAMCO is not in compliance
with all applicable ENVIRONMENTAL LAWS or (ii) any properties or assets of CAMCO
may have been affected by any MATERIALS OF ENVIRONMENTAL CONCERN.
(b) There is no ENVIRONMENTAL CLAIM pending or, to the
knowledge of CAMCO, threatened (i) against CAMCO, (ii) against any person or
entity whose liability for any ENVIRONMENTAL CLAIM has or may have been retained
or assumed by CAMCO either contractually or by operation of law, or (iii)
against any real or personal property which CAMCO owns, leases, manages,
supervises or participates in the management of, or, to the knowledge of CAMCO,
in which CAMCO holds a security interest in connection with a loan or loan
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participation, other than such as would not, either individually or in the
aggregate, have a material adverse effect on CAMCO.
(c) There are no present or, to the knowledge of CAMCO, past
activities, conditions, or incidents, including, without limitation, the release
or disposal of any MATERIAL OF ENVIRONMENTAL CONCERN that could reasonably form
the basis of any environmental claim against CAMCO or against any person or
entity whose liability for any environmental claim has or may have been retained
or assumed by CAMCO, either contractually or by operation of law, other than
such as would not, either individually or in the aggregate, have a material
adverse effect on CAMCO.
SECTION 4.27. YEAR 2000. CAMCO's Year 2000 Plan is in material
compliance with the applicable statements of the Federal Financial Institutions
Examination Council.
ARTICLE FIVE
COVENANTS
SECTION 5.01. CONDUCT OF WHFC'S AND THE BANK'S BUSINESS. From
the date of this AGREEMENT until the EFFECTIVE TIME, WHFC and the BANK, except
with the prior written consent of CAMCO, which shall not be unreasonably
withheld, will each conduct its business only in the ordinary course, in
accordance with past practices and policies and in compliance with all
applicable statutes, rules and regulations. Notwithstanding the foregoing,
without the prior written consent of CAMCO, which shall not be unreasonably
withheld, neither WHFC nor the BANK will:
(a) Except for the WHFC STOCK OPTION AGREEMENT, authorize
or agree to authorize the creation or issuance of, or
issue, sell or dispose of, or create any obligation
to issue, sell or dispose of, any stock, notes, bonds
or other securities of which WHFC or the BANK is the
issuer, or any obligations convertible into or
exchangeable for any shares of its capital stock,
other than WHFC SHARES issued in connection with the
exercise of WHFC OPTIONS;
(b) Declare, set aside, pay or make any dividend or other
distribution on its capital stock, or directly or
indirectly redeem, purchase or otherwise acquire any
shares thereof or enter into any agreement with
respect to the foregoing, except that WHFC may
declare and pay a regular quarterly cash dividend of
$0.12 per share in each calendar quarter between the
date of this AGREEMENT and the EFFECTIVE TIME. CAMCO
and WHFC will coordinate dividends so that only one
dividend will be paid in each calendar quarter.
(c) Effect any stock split, recapitalization,
combination, exchange of shares, readjustment or
other reclassification;
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(d) Amend their Articles of Incorporation, Constitution
or Bylaws;
(e) Purchase, sell, assign or transfer any material
tangible asset or any material patent, trademark,
trade name, copyright, license, franchise, design or
other intangible assets or property, other than in
the ordinary course of business and in accordance
with past practice;
(f) Mortgage, pledge, grant or suffer to exist any lien
or other encumbrance or charge on any assets or
properties, tangible or intangible, except for liens
for taxes not yet delinquent, assets pledged as
collateral to secure borrowings from the FHLB or to
secure public deposits and such other liens,
encumbrances or charges which do not materially or
adversely affect its financial position;
(g) Waive any rights of material value or cancel any
material debts or claims;
(h) Incur any material obligation or liability (absolute
or contingent), including, without limitation, any
tax liability, or pay any material liability or
obligation (absolute or contingent), other than
liabilities and obligations incurred in the ordinary
course of business and borrowings from the FHLB;
(i) Cause any material adverse change in the amount or
general composition of deposit liabilities or other
liabilities;
(j) Except as specifically provided herein, enter into or
amend any employment contract with any of its
employees, increase the compensation payable to any
officer or director or any relative of any such
officer or director or become obligated to increase
any such compensation, provided, that officers who
are not a party to an employment contract or
severance agreement may receive increases in
compensation consistent with past practice;
(k) Except as specifically provided herein, adopt or
amend in any material respect any employee or
director benefit plan, severance plan or collective
bargaining agreement or make awards or distributions
under any employee benefit plan not consistent with
past practice or custom;
(l) Acquire any stock or other equity interest in any
corporation, partnership, trust, joint venture or
other entity, except FHLB stock;
(m) Make any material capital expenditure or commitment
for any material addition to property, plant, or
equipment;
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(n) Originate or issue a commitment to originate any loan
secured by one- to four-family residential real
estate in a principal amount of $400,000 or more or
any loan secured by nonresidential real estate in a
principal amount of $400,000 or more;
(o) Except for FHLB advances, the aggregate amount of
which at any time shall not exceed Thirty-three
Million Dollars ($33,000,000), plus such additional
amount as may be obtained with the right of
prepayment at any time without penalty or premium,
and deposit taking in the ordinary course of its
business, borrow or agree to borrow any funds,
including but not limited to repurchase transactions,
or indirectly guarantee or agree to guarantee any
obligations of others;
(p) Establish any new lending programs or make any
changes in its policies concerning which persons may
approve loans;
(q) Enter into any securities transactions for its own
account or purchase or otherwise acquire any
investment security for its own account other than
U.S. government and U.S. agency obligations and
deposits in an overnight account at the FHLB;
(r) Increase or decrease the rate of interest paid on
time deposits or certificates of deposits, except in
a manner and pursuant to policies consistent with
past practices in relation to rates prevailing in the
BANK's market;
(s) Foreclose upon or otherwise take title to or
possession or control of any real property without
first obtaining a Phase I Environmental Report
thereon which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waste
materials including asbestos and petroleum products;
provided, however, that the BANK shall not be
required to obtain such a report with respect to
single-family, non-agriculture residential property
of one acre or less to be foreclosed upon unless it
has reason to believe such property may contain any
such pollutants, contaminants, waste materials
including asbestos or petroleum products; or
(t) Agree, whether in writing or otherwise, to take any
action described in this Section 5.01.
SECTION 5.02. ACQUISITION TRANSACTIONS. WHFC and the BANK
shall (i) not, directly or indirectly, solicit or initiate any proposals or
offers from any person or entity, or negotiate with any such person or entity,
regarding any acquisition or purchase of all or a material amount of the assets
of, any equity securities of, or any merger, consolidation or business
combination with, WHFC or the BANK (hereinafter collectively referred to as
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"ACQUISITION TRANSACTIONS"), (ii) not disclose to any person any information not
customarily disclosed publicly or provide access to its properties, books or
records or otherwise assist or encourage any person in connection with any of
the foregoing, and (iii) give CAMCO prompt notice of any such inquiries, offers
or proposals. The foregoing shall not apply however to the consideration of an
inquiry, offer or proposal not solicited by WHFC or the BANK or any of their
respective officers, directors, agents or affiliates which relates to the
possible sale or other disposition of WHFC SHARES or the BANK SHARES by
shareholders or the possible sale or other disposition of all or substantially
all of WHFC's or the BANK's assets to, or merger or consolidation with, another
corporation or association if and to the extent that the board of directors of
WHFC reasonably determines in good faith after consultation with Webb and
counsel to WHFC that failure to consider such ACQUISITION TRANSACTION could
reasonably be expected to constitute a breach of its fiduciary duties to the
shareholders of WHFC; provided, however, that WHFC shall give CAMCO prompt
notice of any such proposal of an ACQUISITION TRANSACTION and keep CAMCO
promptly informed regarding the substance thereof and the response of the board
of directors of WHFC thereto.
SECTION 5.03. ACCOUNTING POLICIES. Before the EFFECTIVE TIME
and at the request of CAMCO, WHFC or the BANK shall promptly (a) establish and
take such reserves and accruals to conform the BANK's loan, accrual and reserve
policies to CAMCO's policies; (b) establish and take such accruals, reserves and
charges in order to implement such policies in respect of excess facilities and
equipment capacity, severance costs, litigation matters, write-off or write-down
of various assets and other appropriate accounting adjustments; and (c)
recognize for financial accounting purposes such expenses of the MERGER and
restructuring charges related to or to be incurred in connection with the
MERGER, to the extent permitted by law and consistent with GAAP and with the
fiduciary duties of the officers and directors of WHFC and the BANK; provided,
however, that neither WHFC nor the BANK shall be obligated to make any such
changes or adjustments unless they have received a written certification from
CAMCO that all conditions set forth in Sections 7.01(a) through (e), have been
satisfied or waived and further provided that no basis for termination of this
AGREEMENT by any party pursuant to Article Eight is then extant.
. SECTION 5.04 TAX REPRESENTATION. WHFC and the BANK will use their
reasonable efforts to cause the MERGER, and will take no action which would
cause the MERGER not, to qualify for treatment as a "reorganization" within the
meaning of Section 368(a) of the CODE for federal income tax purposes.
ARTICLE SIX
FURTHER AGREEMENTS
SECTION 6.01. REGULATORY APPROVALS; COOPERATION. (a) CAMCO
shall use its best efforts to file within 45 days of the date hereof all
REGULATORY APPLICATIONS required in order to consummate the MERGER. CAMCO shall
keep WHFC reasonably informed as to the status of such applications and make
available to WHFC copies of such
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applications as filed and any supplementary filed materials and all responses
from the regulatory authorities. WHFC and the BANK shall have the right to
review and approve in advance all characterizations of the information relating
to WHFC or the BANK, as the case may be, which appear in any REGULATORY
APPLICATION. In addition, CAMCO shall furnish to WHFC for review a copy of each
REGULATORY APPLICATION prior to its filing.
(b) WHFC and the BANK will cooperate and will cause their
respective directors, officers, employees, agents and advisors to cooperate, to
the extent reasonable or necessary, with CAMCO in connection with the
preparation of the REGULATORY APPLICATIONS and the REGISTRATION STATEMENT.
(c) CAMCO will cooperate and will cause its directors,
officers, employees, agents and advisors to cooperate, to the extent reasonable
or necessary, with WHFC in connection with the preparation of the REGISTRATION
STATEMENT and the JOINT PROXY STATEMENT.
SECTION 6.02. SPECIAL MEETING OF SHAREHOLDERS OF WHFC. WHFC
shall take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders for the purpose of voting upon this AGREEMENT as
required by applicable law. WHFC shall use its reasonable efforts to hold such
meeting as soon as practicable following the date of this AGREEMENT. The Board
of Directors of WHFC shall (i) to the extent consistent with their fiduciary
duties, recommend to its shareholders the adoption of this AGREEMENT and the
approval of the transactions contemplated hereby and any other matters to be
submitted to the shareholders in connection therewith and (ii) use their
reasonable efforts to obtain the necessary adoptions by the shareholders of this
AGREEMENT, any amendments hereto, and the transactions contemplated hereby.
Notwithstanding the foregoing, if the Board of Directors of WHFC shall have
reasonably determined in good faith in accordance with Section 5.02 of this
AGREEMENT that such recommendation is reasonably likely to constitute a breach
of its fiduciary duties to the shareholders of WHFC, then the Board of Directors
of WHFC shall not be obligated to recommend to its shareholders adoption of this
AGREEMENT or to present this AGREEMENT to the shareholders of WHFC for their
adoption at a meeting or to hold a meeting for such purpose.
SECTION 6.03. SPECIAL MEETING OF SHAREHOLDERS OF CAMCO. CAMCO
shall take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders for the purpose of voting upon this AGREEMENT as
required by applicable law. CAMCO shall use its reasonable efforts to hold such
meeting as soon as practicable following the date of this AGREEMENT. The Board
of Directors of CAMCO shall (i) recommend to its stockholders the adoption of
this AGREEMENT and the approval of the transactions contemplated hereby and any
other matters to be submitted to the shareholders in connection therewith and
(ii) use their reasonable efforts to obtain the necessary adoption by the
shareholders of this AGREEMENT, any amendments hereto, and the transactions
contemplated hereby.
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SECTION 6.04. AFFILIATES COMPLIANCE WITH THE 1933 ACT. (a)
Within 45 days after the date of this AGREEMENT, WHFC shall identify to CAMCO
all persons who WHFC reasonably believes to be "affiliates," as defined in
paragraphs (c) and (d) of Rule 145 under the 1933 ACT (hereinafter referred to
as the "AFFILIATES"). Thereafter and until the EFFECTIVE TIME, WHFC shall
identify to CAMCO each additional person whom it reasonably believes to have
thereafter become its AFFILIATE.
(b) WHFC shall use its best efforts to obtain from each person
who is identified as an AFFILIATE for delivery to CAMCO before the EFFECTIVE
DATE a written agreement in which such AFFILIATE confirms that the CAMCO SHARES
received by such AFFILIATE in the MERGER shall be transferable only in
accordance with Rule 145 of the 1933 ACT.
SECTION 6.05. EMPLOYEES. (a) All employees of the BANK on July
1, 1999 who are actively employed at the EFFECTIVE TIME shall, upon satisfactory
review of employment files and subject to CAMCO employee standards of
performance, continue as employees of the BANK at the EFFECTIVE TIME and, with
respect to employees who are not currently covered by a written employment or
severance agreement with the BANK, shall be employed as at will employees at the
same base compensation they are receiving from the BANK. Any employee who is
currently covered by a written employment or severance agreement will continue
his employment in accordance with the terms of such written agreement except as
provided in this AGREEMENT. Except as specifically provided in this AGREEMENT,
no employee of the BANK shall be entitled to be eligible for or participate in
any qualified or non-qualified employee benefit program or plan maintained by
CAMCO or its subsidiaries.
(b) Prior to the EFFECTIVE TIME and subject to CAMCO's
approval, CAMCO will authorize the BANK to enter into a new employment agreement
with Michael P. Brennan effective at such time for a term of three years and
otherwise upon substantially identical terms and conditions (including
compensation) as are contained in the employment agreement of February 6, 1995
as amended on March 25, 1996, February 18, 1997 and June 22, 1998, except that:
(i) the transactions contemplated by this AGREEMENT will not be deemed a change
of control and the employee will waive all rights under the existing or new
contract with respect to this transaction as set forth in this AGREEMENT, and
will execute a written release of all claims pursuant to his existing employment
contract; and (ii) the provisions of the 1998 amendment related to the Westwood
Homestead Grantor Trust shall not be applicable and the Westwood Homestead
Grantor Trust shall be terminated with respect to said employment contract.
(c) Prior to the EFFECTIVE TIME, BANK will: (i) enter into an
employment agreement with Gerald T. Mueller, effective as of the EFFECTIVE TIME
and upon substantially identical terms and conditions as the new employment
agreement with Michael P. Brennan entered into pursuant to Section 6.05(b)
hereof (other than compensation), except that the term of such agreement shall
be one year and Mr. Mueller's compensation from the BANK shall not be increased
without prior consent of CAMCO; and (ii) enter into a new severance agreement
with Gerald T. Mueller effective upon the expiration of the employment agreement
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for a term of two years and otherwise upon substantially identical terms and
conditions as are contained in the severance agreement of September 27, 1996 as
amended June 22, 1998, provided that Paragraph 1(d) as amended shall be
eliminated in its entirety and no comparable provision shall be contained in the
new severance agreement. The obligations of CAMCO pursuant to this Section
6.05(c) will be subject to Mr. Mueller's execution of a written release of all
claims pursuant to his existing severance agreement and the amendment or
termination of any applicable Grantor Trust to eliminate any funding obligation
associated with such severance agreement.
(d) Prior to the EFFECTIVE TIME, the BANK will enter into a
new three-year severance agreement effective at the EFFECTIVE TIME with John E.
Essen upon substantially identical terms and conditions as are contained in the
severance agreement of September 27, 1996 as amended June 22, 1998, provided
that Paragraph 1(d) as amended shall be eliminated in its entirety and no
comparable provision shall be contained in the new severance agreement, and that
the new severance agreement will permit Mr. Essen to voluntarily terminate
employment for any reason during the twelve-month period after the EFFECTIVE
TIME and be paid, by the BANK, the maximum termination benefit provided under
Paragraph 1 of his existing agreement. The obligations of CAMCO pursuant to this
Section 6.05(d) will be subject to Mr. Essen's execution of a written release of
all claims pursuant to his existing severance agreement and the amendment or
termination of any applicable Grantor Trust to eliminate any funding obligation
associated with such severance agreement.
SECTION 6.06. EMPLOYEE BENEFITS. (a)(i) The health insurance
plan currently sponsored by the BANK for the benefits of its employees and
administered through the Ohio League of Financial Institutions will continue to
be the health insurance plan of the BANK, provided, CAMCO may in its discretion
in the future provide coverage under the health insurance plan maintained by
CAMCO for the benefit of the employees of CAMCO and its subsidiaries; provided,
that all waiting periods and pre-existing condition limitations shall be waived
and employees are given full credit for claims arising prior to the change in
health plans for purposes of deductibles, out-of-pocket maximums, benefit
maximums and all other similar limitations for the applicable plan year in which
any transition is made and provided, further, that such plan shall permit the
continued coverage of all individuals entitled to purchase health insurance
through the plan of the BANK. If such waiting periods, pre-existing condition
limitations and other provisions are not waived, CAMCO shall keep in place, so
long as legally possible, the health insurance plan currently maintained by the
BANK, provided that CAMCO may in its discretion keep the health insurance plan
maintained by the BANK in place, in lieu of providing coverage to BANK employees
under the health insurance plan maintained by CAMCO for employees of CAMCO and
its subsidiaries.
(ii) The BANK will allow no new additions to beneficiaries of
its supplemental medical retirement health insurance plan and the supplemental
medical retirement health insurance plan will be terminated or amended prior to
the EFFECTIVE TIME to allow only for the current one beneficiary to be covered.
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(b) WHFC and the BANK shall take all steps necessary to
terminate WHFC's 401(k) Plan as promptly as possible and prior to the EFFECTIVE
TIME, and to file as soon as possible, an Application for Determination with the
Internal Revenue Service (the "IRS") regarding tax qualification upon
termination. WHFC's Employee Stock Ownership Plan (the "ESOP") shall be
terminated and the ESOP's net assets shall be distributed as promptly as
possible. Subject to applicable law and regulation, commencing as promptly as
possible following both the termination of WHFC's 401(k) Plan and the final
distribution under the ESOP pursuant to 6.06(c) of this AGREEMENT, or such
earlier date as may be required under the CODE or ERISA, employees of the BANK
shall become participants in the CAMCO 401(k) Plan in accordance with the terms
and conditions of such Plan as then in effect, with prior service credit given
for their years of employment by the BANK for eligibility and vesting purposes.
Except as otherwise provided herein, after the EFFECTIVE TIME, BANK employees
shall be entitled to participate in all CAMCO employee benefit plans and
programs generally available to employees of CAMCO and its subsidiaries,
including, without limitation, all vacation and sick leave programs and the
Return on Equity Cash Bonus Plan. BANK employees shall be given full credit for
prior service for purposes of vesting, eligibility for participation and benefit
levels and all waiting periods shall be waived. CAMCO shall honor all accrued
vacation leave for employees of BANK following the EFFECTIVE TIME.
(c)(i) WHFC and the BANK are authorized to commence
termination of the ESOP and to file as soon as possible an Application for
Determination with the IRS regarding tax qualification upon termination. No
additional contribution shall be made to the ESOP by CAMCO, WHFC or the BANK
except as necessary to make the minimum required payment under the current
exempt loan (the "LOAN") between WHFC and the ESOP; provided, however, that all
such contribution shall be deductible by WHFC and the BANK under Section 404 of
the CODE and the allocations of such contribution shall otherwise be in
compliance with Section 415 of the CODE. All WHFC SHARES held by the Trustee of
the ESOP at the EFFECTIVE TIME shall be exchanged by the Trustee for the PER
SHARE MERGER CONSIDERATION in accordance with this AGREEMENT and the cash
proceeds paid by CAMCO to the ESOP with respect to the unallocated WHFC SHARES
owned by the ESOP shall be applied against the LOAN. To the extent that such
cash proceeds together with other cash owned by the ESOP are insufficient to
retire the LOAN, the Trustee for the ESOP shall dispose of shares held in the
suspense account of the ESOP for the purpose of retiring the LOAN. Any shares
and other assets remaining in the suspense account following repayment of the
LOAN in full including interest will be available for allocation and
distribution as promptly as possible to participants (as defined in the ESOP) in
accordance with the provisions of the ESOP and applicable law. It is the intent
of the parties that the ESOP be terminated and distributions made concurrently
with the CLOSING to the extent possible.
(ii) In the event that the IRS determines that the allocation
of assets remaining in the suspense account following repayment of the LOAN in
full is subject to the limits on annual additions pursuant to Section 415 of the
CODE, then CAMCO will make all reasonable efforts, to the extent permissible
under applicable provisions of the CODE and related Treasury Regulations to
continue the ESOP trust through the last day of the ESOP plan year following the
ESOP plan year during which the EFFECTIVE TIME occurs, solely for the benefit of
those
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individuals who are participants in the ESOP immediately before the EFFECTIVE
TIME, and to allocate such remaining assets to ESOP participants in accordance
with the terms of the ESOP to the full extent permissible under Section 415 of
the CODE between the EFFECTIVE TIME and the last day of the ESOP plan year
following the ESOP plan year during which the EFFECTIVE TIME occurs. In the
event that all assets held by the ESOP trust are allocated prior to the last day
of the ESOP plan year during which the EFFECTIVE TIME occurs, the ESOP trust
shall be immediately terminated and participants' ESOP accounts will be
distributed as soon as practicable thereafter.
(iii) The provisions in this paragraph 6.06(c) are expressly
subject to (x) WHFC and the BANK making all necessary amendments to the ESOP
which amendments have been approved by the IRS and are in effect at the
EFFECTIVE TIME; (y) such amendments include, without limitation, the amendment
of Section 17.3 of the ESOP to eliminate the provisions of such section added by
the 1997 amendment to the ESOP dated November 10, 1997 and to make all
provisions of the PLAN consistent with this AGREEMENT; and (z) all amendments
are satisfactory to CAMCO.
SECTION 6.07. BOARD OF DIRECTORS. (a) The present members of
the Board of Directors of the BANK will continue as directors of the BANK
following the EFFECTIVE TIME. The BANK's non-employee directors' fees and health
insurance benefits for current directors will be maintained at the same level as
fixed by the shareholders at the 1999 Annual Meeting of the BANK.
(b) The BANK will add two persons to its Board of Directors at
the EFFECTIVE TIME to be designated by CAMCO. If necessary, WHFC as sole
shareholder of the BANK will cause the Constitution of the BANK to be amended
prior to the EFFECTIVE TIME to provide for the additional directors. CAMCO shall
modify the resolution adopted at the November 24, 1998 Board meeting setting the
maximum number of directors of a subsidiary bank at seven to except out the BANK
from these limitations.
(c) CAMCO will add Michael P. Brennan to its Board of
Directors at the EFFECTIVE TIME subject to compliance with Section 6.05(b). If
necessary CAMCO shall take all actions prior to the EFFECTIVE TIME to increase
the size of its Board of Directors from nine to ten. CAMCO agrees to re-nominate
Mr. Brennan for at least one additional three year term.
(d) Subject to the fiduciary duty of its Board of Directors,
CAMCO as sole shareholder of the BANK after the EFFECTIVE TIME will vote the
shares of the BANK for the re-election of the current members of the Board of
Directors (other than Carl H. Heimerdinger who is retiring) to three-year terms
at the next annual meeting of shareholders at which their terms expire.
(e) (i) Neither the directors to be selected by CAMCO nor any
other new directors of the BANK will be entitled to benefits under the Westwood
Homestead Savings Bank Directors Retirement Plan (the "PLAN"), as amended, dated
January 1, 1995, provided, that the PLAN shall be amended so that Quarterly
Accruals under the PLAN shall be determined based
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on actuarial calculations of amounts required to fund targeted benefits rather
than on quarterly financial expense determined under generally accepted
accounting principles; (ii) except as specifically provided in this Section
6.07(e) the PLAN shall be honored by CAMCO in accordance with the terms of said
PLAN; (iii) the PLAN and the applicable Trust Agreement (either in existence or
to be established) shall provide for and incorporate the provisions of this
Section 6.07(e). WHFC or the BANK shall obtain all necessary approvals or
consents required to be obtained to effect the provisions of this Section
6.07(e); (iv) prior to the EFFECTIVE TIME, the amount by which the PLAN is
underfunded will be actuarially determined by the parties using the payments
required by Article VIII. Payment will be made to the Trust provided for in the
PLAN in accordance with Article VIII in an amount not greater $204,541. No
further funds or other consideration of any type will be provided thereafter by
CAMCO, WHFC or the BANK. The BANK will provide to CAMCO written agreements of
all beneficiaries to this satisfaction of all obligations of CAMCO, WHFC and the
BANK under the PLAN or otherwise; and (v) the existing Trustee shall continue as
Trustee. No person who is an officer, director or employee of CAMCO shall become
a Trustee and at all times the selection of any replacement trustee shall be
done by individuals constituting the WHFC Board as of the date hereof.
SECTION 6.08. MANAGEMENT RECOGNITION PLAN. Except as
specifically provided in this Section 6.08, the existing Management Recognition
Plan (the "PLAN") and grants of award as listed in Section 3.29 of the WHFC
DISCLOSURE SCHEDULE in an amount not to exceed 49,226 WHFC SHARES shall be
honored by CAMCO in accordance with the terms of said PLAN and grants of award
and applicable law and regulations. Prior to the CLOSING, the PLAN shall be
amended to delete Section 7.05 as added June 22, 1998 and, if lawful, to add a
new Section 7.05 to provide that a participant may elect, in the event of a
change of control, (i) to receive distribution as provided in 7.01(b) of the
PLAN or (ii) to receive distribution as provided in Section 7.01(a) of the PLAN.
The Westwood Homestead Financial Corporation "Grantor Trust Agreement" of June
22, 1998 shall be terminated with respect to the PLAN and shall have no
application to the PLAN and the Trust of March 10, 1997. If necessary the Trust
of March 10, 1997 shall be re-established. No awards granted subsequent to June
30, 1998 will be valid in any respect except for awards to Gerald T. Mueller and
John E. Essen in an aggregate total of 5,000 WHFC SHARES and included in the
above-mentioned 49,226 WHFC SHARES and new directors of the BANK will receive no
awards. Prior to the EFFECTIVE TIME, WHFC shall direct the Management
Recognition Plan Committee and/or the Trustee, if appropriate, to return the
33,060 unawarded WHFC SHARES to WHFC and the Committee and/or the Trustee shall
promptly effect such directive. At the EFFECTIVE TIME the persons composing the
Trustee of the PLAN shall resign and persons designated by CAMCO shall become
the Trustee. At the EFFECTIVE TIME, the Management Recognition Plan Committee
shall resign and CAMCO shall appoint a new committee.
SECTION 6.09. ACCESS. Until the EFFECTIVE TIME, WHFC and the
BANK shall afford to CAMCO, and CAMCO shall afford to WHFC and the BANK, and to
their respective officers and representatives (including, without limitation,
counsel, financial advisers and independent accountants), reasonable access to
their properties, personnel, books, records and affairs. Such access shall
include, but shall not be limited to, (i) permitting verification, by audit or
otherwise, of any representation or warranty made hereunder; (ii) authorizing
release of
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any information (including the work papers of such independent auditors and
financial consultants); (iii) consistent with applicable regulations or
procedures, furnishing regular and special examination reports since the date of
this AGREEMENT; and (iv) delivering copies of all documents or reports or
correspondence filed and any correspondence with any federal regulatory or
supervisory agency from the date of this AGREEMENT. Each party shall furnish the
other party with such additional financial and operating data and other
information as to its businesses and properties as may be reasonably requested.
SECTION 6.10. CONFIDENTIALITY. The parties acknowledge the
confidential and proprietary nature of the information as hereinafter described
which has heretofore been exchanged and which will be received from each other
hereunder (hereinafter referred to as the "INFORMATION") and agree to hold and
keep the same confidential. Such INFORMATION will include any and all financial,
technical, commercial, marketing, customer or other information concerning the
business, operations and affairs of a party that may be provided to the other,
irrespective of the form of the communications, by such party's employees or
agents. Such INFORMATION shall not include information that is or becomes
generally available to the public other than as a result of a disclosure by a
party or its representatives in violation of this AGREEMENT, or INFORMATION
which is required to be furnished or used in connection with legal proceedings.
The parties agree that the INFORMATION will be used solely for the purposes
contemplated by this AGREEMENT and that such INFORMATION will not be disclosed
to any person other than employees and agents of a party who are directly
involved in evaluating the transaction. The INFORMATION shall not be used in any
way detrimental to a party, including use directly or indirectly in the conduct
of the other party's business or enterprise in which such party may have an
interest, now or in the future, and whether or not now in competition with such
other party. Upon the written request of the disclosing party, upon termination
of this AGREEMENT, the other parties will promptly return or destroy INFORMATION
in their possession and certify to the disclosing party that the party has done
so.
SECTION 6.11. PRESS RELEASES. CAMCO and WHFC shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the MERGER and shall not issue any such press release
or make any such public statement without obtaining the prior consent of the
other party, except as may be required by law or by obligations pursuant to any
listing agreement with any national securities association.
SECTION 6.12. COSTS AND EXPENSES; TERMINATION FEE. Whether or
not the MERGER is consummated, all costs and expenses incurred in connection
with this AGREEMENT, the JOINT PROXY STATEMENT, the REGISTRATION STATEMENT and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses. WHFC and the BANK hereby agree that if this AGREEMENT is
terminated as a result of a willful breach by WHFC or the BANK, then WHFC or the
BANK shall promptly (and in any event within ten (10) business days after such
termination) pay all reasonable EXPENSES of CAMCO in an amount not to exceed
$250,000. CAMCO hereby agrees that if this AGREEMENT is terminated as a result
of a willful breach by CAMCO, then CAMCO shall promptly (and in any event within
ten (10) business days after such termination) pay all reasonable EXPENSES of
the WHFC and the BANK in an amount not to exceed $250,000. For
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purposes of this Section 6.12, the "EXPENSES" of a party shall include all
reasonable out-of-pocket expenses of that party (including all fees and expenses
of counsel, accountants, financial advisors, experts and consultants to that
party) incurred by it or on its behalf in connection with the consummation of
the transactions contemplated by this AGREEMENT.
SECTION 6.13. REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do or cause
to be done all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this AGREEMENT.
SECTION 6.14. NOTIFICATION OF EVENTS. At all times from the
date of this AGREEMENT until the EFFECTIVE TIME, each party shall promptly
notify the other in writing of any materially adverse business conditions
threatening its normal business operations or of the occurrence of any event or
the failure of any event to occur which might reasonably be expected to result
in a breach of or a failure to comply with any representation, warranty,
covenant, condition or agreement contained in this AGREEMENT or of the
commencement of any action, suit, proceeding or investigation against it.
SECTION 6.15. VOTING AGREEMENT. Concurrently with the
execution and delivery of this AGREEMENT, or not later than ten days thereafter,
and as a condition and material inducement to CAMCO's willingness to enter into
this AGREEMENT, each of the directors and executive officers of WHFC and the
BANK shall enter into WHFC Shareholder Agreement in the form attached hereto as
Exhibit B.
SECTION 6.16. STOCK OPTION AGREEMENT. Concurrently with the
execution and delivery of this AGREEMENT and as a condition and material
inducement to CAMCO's willingness to enter into this AGREEMENT, WHFC is entering
into the WHFC STOCK OPTION AGREEMENT.
SECTION 6.17. INDEMNIFICATION. Nothing in this AGREEMENT is
intended to affect any rights to indemnification to which any officer or
director of WHFC or the BANK may be entitled pursuant to the Articles of
Incorporation, Constitution or Bylaws of WHFC or the BANK in effect prior to the
EFFECTIVE TIME. From the EFFECTIVE TIME and continuing for a period of three
years thereafter, the current and former officers and directors of WHFC and the
BANK shall be indemnified by CAMCO from their acts and omissions occurring prior
to the EFFECTIVE TIME to the maximum extent permitted by the Certificate of
Incorporation and Bylaws of CAMCO but subject to any applicable limitations of
Delaware law. From the EFFECTIVE TIME and continuing for a period of three years
thereafter, the current and former officers and directors of the BANK shall be
indemnified by the BANK for their acts and omissions occurring prior to the
EFFECTIVE TIME to the extent permitted by Ohio law. As a condition to receiving
such indemnification, the party claiming indemnification shall assign to CAMCO,
by separate writing, all right, title and interest in and to the proceeds of the
claiming party's applicable insurance coverage, if any, including insurance
maintained or provided by CAMCO or WHFC or the BANK to the extent of such
indemnity. No person shall be entitled to
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such indemnification with respect to a claim (i) if such person fails to
cooperate in the defense and investigation of such claim as to which
indemnification may be made, (ii) made by such person against CAMCO, its
subsidiaries, WHFC or the BANK arising out of or in connection with this
AGREEMENT, the transactions contemplated hereby or the conduct of the business
of CAMCO, its subsidiaries, WHFC or the BANK, or (iii) if such person fails to
deliver such notices as may be required under any applicable directors and
officers liability insurance policy to preserve any possible claims of which the
claiming party is aware, to the extent such failure results in the denial of
payment under such policy.
Subject to WHFC and the BANK providing all requested
information and representations to CAMCO's directors' and officers' liability
insurance carrier, CAMCO shall add a rider, to be effective at the EFFECTIVE
TIME, to CAMCO's existing directors' and officers' liability insurance policy
covering the acts and omissions of the officers and directors of WHFC and the
BANK occurring prior to the EFFECTIVE TIME and to continue such rider for a
period of three years.
SECTION 6.18. CONDUCT OF CAMCO BUSINESS. From the date of this
AGREEMENT until the EFFECTIVE TIME, CAMCO shall:
(a) Use all reasonable efforts to preserve intact its business
organization and assets and maintain its rights, franchises and existing
relationships with customer, suppliers, employees and business associates;
(b) Notify WHFC in writing within five business days of (i)
the existence of any adverse business conditions threatening the normal business
operations of CAMCO, (ii) the occurrence of any event or the failure of any
event to occur which might result in a breach of or a failure to comply with any
representations, warranty, covenant, condition or agreement by or pertaining to
CAMCO contained in this AGREEMENT, (iii) the commencement of any material
action, suit, proceeding, or investigation against CAMCO and (iv) the tender of
any offer to acquire CAMCO by merger or otherwise;
(c) Take no action that would adversely affect the ability of
CAMCO to obtain any necessary approvals of governmental authorities required for
the transactions contemplated hereby without the imposition of a burdensome
restriction or condition, or adversely affect the ability of CAMCO to perform
its covenants and agreements under this AGREEMENT;
(d) Take all action necessary to cause to be listed on The
Nasdaq Stock Market the CAMCO SHARES to be issued pursuant to this AGREEMENT;
and
(e) Use all reasonable efforts to obtain any consent,
authorization or approval of, or waiver or exemption by, any governmental entity
or third party required to be obtained or made by it in connection with the
Merger.
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SECTION 6.19. ACTIONS BY WHFC OR THE BANK. (a) If necessary, a
notice or rebuttal of presumption, as appropriate, shall be filed by the ESOP
with the Federal Reserve Board pursuant to 12 USC 1817(j) and the notice shall
be effective or the Federal Reserve Board shall approve the rebuttal and find no
control of WHFC prior to the CLOSING.
(b) WHFC or the BANK shall obtain, prior to closing, an owners
title insurance policy with respect to each of the real properties listed in
Section 3.11(c) of the WHFC DISCLOSURE SCHEDULE showing title in WHFC or the
BANK and as set forth in Section 3.11(c) and in an appropriate amount of
coverage.
(c) The WHFC STOCK OPTION AGREEMENT will be executed on a date
subsequent to the date hereof.
ARTICLE SEVEN
CLOSING MATTERS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF CAMCO, WHFC AND THE
BANK. Notwithstanding any other provision of this AGREEMENT, the obligations of
CAMCO, WHFC and the BANK to effect the MERGER shall be subject to the
fulfillment of each of the following conditions:
(a) This AGREEMENT shall have been validly adopted by the
affirmative vote of the holders of at least the
number of outstanding WHFC SHARES required under
Indiana law and WHFC's Articles of Incorporation and
Bylaws;
(b) The AGREEMENT shall have been validly adopted by the
affirmative vote of the holders of at least the
number of outstanding CAMCO SHARES required under
Delaware law and CAMCO's Certificate of Incorporation
and Bylaws;
(c) All permits, approvals, consents, authorizations,
exemptions or waivers of any federal or state
governmental body or agency necessary or appropriate
for consummation of the MERGER shall have been
obtained and all notices required to be filed shall
have been filed and any objection or waiting period
with respect to such notice shall have expired
including the 10-L Election by the BANK and the
de-registering of WHFC as a Bank Holding Company.
(d) All waivers, consents and approval of every person,
in addition to those required under subsections (a),
(b) and (c) of this Section 7.01, necessary or
appropriate for the consummation of the MERGER shall
have been obtained;
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(e) There shall not be in effect any federal or state
law, rule or regulation or any order or decision of a
court of competent jurisdiction which prevents or
materially delays the consummation of the MERGER;
(f) CAMCO and WHFC shall have received an opinion of
Vorys, Sater, Seymour and Pease LLP (which opinion
shall not have been withdrawn at or prior to the
CLOSING) to the effect that the MERGER, when
consummated in accordance with the terms hereof, will
constitute a reorganization within the meaning of
Section 368(a)(1)(A) of the CODE and that no gain or
loss will be recognized by WHFC shareholders to the
extent they receive CAMCO SHARES in exchange for WHFC
SHARES; and
(g) The REGISTRATION STATEMENT (including any
post-effective amendment thereto) shall have been
declared effective by the SEC, and no proceeding
shall be pending or, to the knowledge of CAMCO or
WHFC, threatened by the SEC to suspend the
effectiveness of the REGISTRATION STATEMENT.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF CAMCO. In addition
to the conditions contained in Section 7.01 of this AGREEMENT, the obligations
of CAMCO to effect the MERGER shall also be subject to the fulfillment of each
of the following conditions unless fulfillment is waived by CAMCO in writing:
(a) The representations and warranties of WHFC and the
BANK contained in Article Three of this AGREEMENT
shall be true in all material respects at and as of
the date hereof and at and as of the day of the
CLOSING as if made at and as of such time, except
where such representation or warranty is made as of a
specific date;
(b) WHFC and the BANK shall have duly performed and
complied in all material respects with all
agreements, covenants and conditions required by this
AGREEMENT to be performed or complied with by WHFC
and the BANK before or on the day of the CLOSING;
(c) There shall not have been a material adverse change
in the financial condition, assets, liabilities,
obligations, properties, business or prospects of
WHFC or the BANK after the date of this AGREEMENT,
except changes resulting from action taken by WHFC or
the BANK pursuant to Section 5.03 of this AGREEMENT,
changes resulting from or attributable to expenses
incurred in connection with the transactions
contemplated by this AGREEMENT and changes resulting
from or attributable to (i) changes in laws and
regulations particularly affecting financial
institutions and their holding companies; (ii)
changes in GAAP or regulatory accounting principles
generally applicable to financial institutions and
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their holding companies; and (iii) changes in
economic conditions applicable to depository
institutions generally or in general levels of
interest rates.
(d) WHFC and the BANK shall each have delivered to CAMCO
a certificate dated the day of the CLOSING and signed
by the President and the chief financial officer of
each of WHFC and the BANK to the effect set forth in
subsections (a), (b) and (c) of this Section 7.02;
(e) The contracts, amendments, agreements, consents and
actions required by Section 6.05(b), (c) and (d),
Section 6.07(e) and Section 6.08 shall have occurred
to the reasonable satisfaction of CAMCO;
(f) There shall not be any action or proceeding commenced
by or before any court or governmental agency or
authority in the United States, that challenges or
seeks to prevent the consummation of the MERGER or
seeks to impose material limitations on the ability
of CAMCO to exercise full rights of ownership of the
assets or business of WHFC and the BANK;
(g) There shall not have been proposed, nor shall there
be in effect, any federal or state law, rule,
regulation, order or statement of policy that, in the
reasonable judgment of CAMCO, would: (i) prevent or
materially delay the consummation of the MERGER or
materially interfere with the reasonable operation of
the business of WHFC or the BANK (ii) materially
adversely affect the ability of CAMCO to enjoy the
economic or other benefits of the MERGER or (iii)
impose any material adverse condition, limitation or
requirement on CAMCO in connection with the MERGER;
(h) WHFC and the BANK shall not have incurred any damage,
destruction or similar loss, not covered by
insurance, materially affecting its businesses or
properties;
(i) The shareholders' equity of WHFC on the day of the
CLOSING and as calculated in accordance with GAAP
shall not be less than $22,778,105, without giving
effect to (i) reserves, accruals and charges taken or
established by WHFC or the BANK at the request of
CAMCO in accordance with Section 5.03 of this
AGREEMENT, (ii) expenses incurred in connection with
the transactions contemplated by this AGREEMENT; and
(iii) realized or unrealized losses on securities
classified as available for sale in the WHFC AUDITED
STATEMENTS;
(j) WHFC and the BANK shall have complied with Section
5.03 hereof to the reasonable satisfaction of CAMCO;
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(k) CAMCO shall have received the affiliate letters
required by Section 6.04 of this AGREEMENT or WHFC
shall have used its reasonable best efforts to have
obtained same;
(l) Section 6.19(a), 6.19(b)and 6.19(c) shall have been
complied with to the reasonable satisfaction of
CAMCO; and
(m) WHFC shall have obtained a determination letter from
the IRS satisfactory to CAMCO that the ESOP is
qualified upon its termination and that the PER SHARE
MERGER CONSIDERATION received by the ESOP pursuant to
this AGREEMENT and the MERGER (including, if
necessary, the proceeds of the sale of CAMCO SHARES)
together with all other assets of the ESOP may be
immediately allocated to the participants' accounts
as of the date of termination of the ESOP and the
amendments to the ESOP required by Section 6.06(c)
have been approved by the IRS, and are effective.
SECTION 7.03. CONDITIONS TO OBLIGATIONS OF WHFC AND THE BANK.
In addition to the conditions contained in Section 7.01 of this AGREEMENT, the
obligations of WHFC and the BANK to effect the MERGER shall also be subject to
the fulfillment of each of the following conditions:
(a) The representations and warranties of CAMCO contained
in Article Four of this AGREEMENT shall be true in
all material respects at and as of the date hereof
and at and as of the date of the CLOSING as if made
at and as of such time;
(b) CAMCO shall have duly performed and complied in all
material respects with all agreements, covenants and
conditions required by this AGREEMENT to be performed
or complied with by it before or at the CLOSING;
(c) There shall not have been a material adverse change
in the financial condition, assets, liabilities,
obligations, properties, business or prospects of
CAMCO after the date of this AGREEMENT;
(d) CAMCO shall have delivered to WHFC a certificate
dated the day of the CLOSING and signed by the
President and the Chief Financial Officer of CAMCO to
the effect set forth in subsections (a), (b) and (c)
of this Section 7.03;
(e) The CAMCO SHARES to be issued to holders of WHFC
SHARES shall have been approved for listing on
NASDAQ, subject to official notice of issuance;
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(f) WHFC shall have received a written opinion of WEBB,
dated as of within three (3) days of the JOINT PROXY
STATEMENT, to the effect that the PER SHARE MERGER
CONSIDERATION to be received by the holders of WHFC
SHARES is fair from a financial point of view; and
(g) WHFC shall have received reasonable evidence that the
cash needed for the fractional shares and the cash
portion of the aggregate PER SHARE MERGER
CONSIDERATION is available. Such evidence includes a
confirmation by a bank of an available line of credit
for CAMCO's use in the appropriate amount.
ARTICLE EIGHT
TERMINATION
SECTION 8.01. TERMINATION. This AGREEMENT may be terminated at
any time prior to the date of the CLOSING, whether before or after approval by
the shareholders of CAMCO and WHFC:
(a) By mutual consent of the Boards of Directors of WHFC
and CAMCO; or
(b) By the Board of Directors of WHFC or CAMCO if:
(i) The MERGER shall not have been consummated
on or before June 30, 2000; or
(ii) Any event occurs which, in the reasonable
opinion of either Board, would preclude
satisfaction of any of the conditions set
forth in Section 7.01 of this AGREEMENT; or
(c) By the Board of Directors of CAMCO if any event
occurs which, in the reasonable opinion of such
Board, would preclude compliance with any of the
conditions set forth in Section 7.02 of this
AGREEMENT; or
(d) By the Board of Directors of WHFC if any event occurs
which, in the reasonable opinion of such Board, would
preclude compliance with any of the conditions set
forth in Section 7.03 of this AGREEMENT.
SECTION 8.02. WRITTEN NOTICE OF TERMINATION. In order to
terminate this AGREEMENT pursuant to Section 8.01(a), (b), (c) and (d), the
party so acting shall give written notice of such termination to the other
party. This AGREEMENT shall terminate on the date such notice is given.
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SECTION 8.03. EFFECT OF TERMINATION. In the event of the
termination of this AGREEMENT, the provisions of this AGREEMENT shall become
void and have no effect; provided, however, that (a) the provisions set forth in
Sections 5.02, 6.10, 6.11 and 6.12 of this AGREEMENT and the WHFC STOCK OPTION
AGREEMENT shall survive such termination and shall remain in full force and
effect and (b) a termination of this AGREEMENT shall not affect the liability of
any party for an uncured breach of any term or condition of this AGREEMENT.
SECTION 8.04. AMENDMENT. This AGREEMENT may be amended at any
time before or after approval of this AGREEMENT by the shareholders of WHFC and
CAMCO, but after such approval no amendment shall be made which materially and
adversely affects the rights of such shareholders without the further approval
of such shareholders. This AGREEMENT may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
SECTION 8.05. WAIVER. Any term or provision of this AGREEMENT
(other than the requirement for shareholder approval) may be waived in writing
at any time by the party which is, or whose shareholders are, entitled to the
benefits thereof.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If addressed to CAMCO:
Larry A. Caldwell
President, Chief Executive Officer and Chairman of the Board
Camco Financial Corporation
814 Wheeling Avenue
Cambridge, Ohio 43725
with a copy to:
Roger A. Yurchuck
or
Terri Reyering Abare
Vorys, Sater, Seymour and Pease LLP
221 East Fourth Street
Atrium Two, Suite 2100
Cincinnati, Ohio 45202
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If addressed to WHFC or the BANK:
Michael P. Brennan
President and Chief Executive Officer
Westwood Homestead Financial Corporation
3002 Harrison Avenue
Cincinnati, Ohio 45211
with a copy to:
Gary R. Bronstein
Housley Kantarian & Bronstein, P.C.
1220 19th Street, N.W., Suite 700
Washington, D.C. 20036
SECTION 9.02. ENTIRE AGREEMENT. This AGREEMENT (including the
exhibits, documents and instruments referred to herein or therein) (a)
constitutes the entire agreement of the parties and supersedes all other prior
agreements and understandings, including the Confidentiality Agreement of June
28, 1999, both written and oral, among the parties, or any of them, with respect
to the subject matter hereof; (b) is not intended to and shall not confer any
rights or remedies hereunder upon any person other than CAMCO, WHFC and the
BANK; (c) shall not be assigned by operation of law or otherwise; and (d) shall
be governed in all respects, including validity, interpretation and effect, by
the laws of the State of Delaware, except to the extent that Indiana, Ohio or
federal law may be applicable.
SECTION 9.03. EXECUTION IN COUNTERPARTS. This AGREEMENT may be
executed in two or more counterparts which together shall constitute a single
AGREEMENT.
SECTION 9.04. HEADINGS. The headings of articles and sections
herein are for convenience of reference only, do not constitute a part of this
AGREEMENT and shall not be deemed to limit or affect any of the provisions
hereof.
SECTION 9.05. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty shall survive the EFFECTIVE TIME.
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IN WITNESS WHEREOF, CAMCO, WHFC and the BANK have caused this
AGREEMENT to be signed by their respective duly authorized officers on the date
first above written.
ATTEST: CAMCO FINANCIAL CORPORATION
/s/ Anthony J. Popp By: /s/ Larry A. Caldwell
- ------------------------------ ------------------------------------------
Anthony J. Popp Larry A. Caldwell
Secretary President, Chief Executive Officer and
Chairman of the Board
ATTEST: WESTWOOD HOMESTEAD FINANCIAL
CORPORATION
/s/ Mary Ann Jacobs By: /s/ Michael P. Brennan
- ------------------------------ ------------------------------------------
Mary Ann Jacobs Michael P. Brennan
Secretary President and Chief Executive Officer
ATTEST: WESTWOOD HOMESTEAD SAVINGS BANK
/s/ Mary Ann Jacobs By: /s/ Michael P. Brennan
- ------------------------------ ------------------------------------------
Mary Ann Jacobs Michael P. Brennan
Secretary President and Chief Executive Officer
ACKNOWLEDGMENT
STATE OF OHIO )
) SS:
COUNTY OF GUERNSEY )
BE IT REMEMBERED that on this 6th day of August, 1999,
personally came before me, a Notary Public in and for the State and County
aforesaid, Larry A. Caldwell, President of Camco Financial Corporation, and duly
executed the Agreement of Merger and Plan of Reorganization before me and
acknowledged the same to be his act and deed and the act and deed of said
corporation and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
6th day of August, 1999.
/s/ Robert S. Moorehead, Jr., Attorney-at-Law
---------------------------------------------
Notary Public
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STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
BE IT REMEMBERED that on this 6th day of August, 1999,
personally came before me, a Notary Public in and for the State and County
aforesaid, Michael P. Brennan, President of Westwood Homestead Financial
Corporation, and duly executed the Agreement of Merger and Plan of
Reorganization before me and acknowledged the same to be his act and deed and
the act and deed of said corporation and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
6th day of August, 1999.
/s/ RUTH H. WEBBER
----------------------------------------------
Notary Public
STATE OF OHIO )
) SS:
COUNTY OF HAMILTON )
BE IT REMEMBERED that on this 6th day of August, 1999,
personally came before me, a Notary Public in and for the State and County
aforesaid, Michael P. Brennan, President of Westwood Homestead Savings Bank, and
duly executed the Agreement of Merger and Plan of Reorganization before me and
acknowledged the same to be his act and deed and the act and deed of said
corporation and that the facts therein are true.
IN WITNESS WHEREOF, I have hereunto set my hand and seal this
6th day of August, 1999.
/s/ Ruth H. Webber
----------------------------------------------
Notary Public
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Exhibits A and B intentionally omitted.
<PAGE> 105
Annex B
August 6, 1999
Board of Directors
Westwood Homestead Financial Corporation
3002 Harrison Avenue
Cincinnati, OH 45211
Dear Board Members:
You have requested our opinion as an independent investment banking firm
regarding the fairness, from a financial point of view, to the stockholders of
Westwood Homestead Financial Corp. ("WEHO" or the "Company"), of the
consideration to be received by such stockholders in the strategic alliance (the
"Strategic Alliance") between the Company and CAMCO Financial Corporation
("CAMCO"). We have not been requested to opine as to, and our opinion does not
in any manner address, the Company's underlying business decision to proceed
with or effect the Strategic Alliance.
Pursuant to the Agreement and Plan of Reorganization, dated August 6, 1999, by
and among the Company and CAMCO (the "Agreement"), at the effective time of the
Strategic Alliance, CAMCO will acquire all of the Company's issued and
outstanding shares of common stock. The holders of the Company's common stock
will receive in exchange for each share of Company common stock, $5.20 in cash
and 0.60583 shares of CAMCO common stock. The complete terms of the proposed
transaction are described in the Agreement, and this summary is qualified in its
entirety by reference thereto.
Charles Webb & Company, a Division of Keefe, Bruyette & Woods, Inc., as part of
its investment banking business, is regularly engaged in the evaluation of
businesses and securities in connection with Strategic Alliances and
acquisitions, negotiated underwritings, and distributions of listed and unlisted
securities. We are familiar with the market for common stocks of publicly traded
banks, savings institutions and bank and savings institution holding companies.
In connection with this opinion we reviewed certain financial and other business
data supplied to us by the Company including (i) the Agreement and Plan of
Reorganization by and among CAMCO, WEHO and The Westwood Homestead Savings Bank
(ii) Annual Reports, Proxy Statements and Form 10-Ks for the years ended
December 31, 1996, 1997, and 1998, (iii) Form 10-Q for the quarter ended March
31,1999, and other information we deemed relevant. We discussed with senior
management and the boards of directors of the Company and its wholly owned
subsidiary, The Westwood Homestead Savings Bank, the current position and
prospective outlook for the Company. We considered historical quotations and the
prices of recorded transactions in the Company's common stock since its initial
public offering. We reviewed financial and stock market data of other savings
institutions, particularly in the midwestern region of the United States, and
the
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Board of Directors
Westwood Homestead Financial Corporation
August 6, 1999
Page 2
financial and structural terms of several other recent transactions involving
strategic alliances of savings institutions with comparable financial profiles.
For CAMCO, we reviewed the audited financial statements, 10-K's, and Proxy
Statements for the years ended December 31, 1998, 1997, and 1996, 10-Q for the
quarter ended March 31, 1999 and certain other information deemed relevant. We
also discussed with senior management of CAMCO, the current position and
prospective outlook for CAMCO.
For purposes of this opinion we have relied, without independent verification,
on the accuracy and completeness of the material furnished to us by the Company
and CAMCO and the material otherwise made available to us, including information
from published sources, and we have not made any independent effort to verify
such data. With respect to the financial information, including forecasts and
asset valuations we received from the Company, we assumed (with your consent)
that they had been reasonably prepared reflecting the best currently available
estimates and judgment of the Company's management. In addition, we have not
made or obtained any independent appraisals or evaluations of the assets or
liabilities, and potential and/or contingent liabilities of the Company or
CAMCO. We have further relied on the assurances of management of the Company and
CAMCO that they are not aware of any facts that would make such information
inaccurate or misleading. We express no opinion on matters of a legal,
regulatory, tax or accounting nature or the ability of the Strategic Alliance,
as set forth in the Agreement, to be consummated.
In rendering our opinion, we have assumed that in the course of obtaining the
necessary approvals for the Strategic Alliance, no restrictions or conditions
will be imposed that would have a material adverse effect on the contemplated
benefits of the Strategic Alliance to the Company or the ability to consummate
the Strategic Alliance. Our opinion is based on the market, economic and other
relevant considerations as they exist and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial
advisor to the Company in connection with the Strategic Alliance and will
receive a fee for such services. In addition, the Company has agreed to
indemnify us for certain liabilities arising out of our engagement by the
Company in connection with the Strategic Alliance.
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Board of Directors
Westwood Homestead Financial Corporation
August 6, 1999
Page 3
Based upon and subject to the foregoing, as outlined in the foregoing paragraphs
and based on such other matters as we considered relevant, it is our opinion
that as of the date hereof, the consideration to be received by the stockholders
of the Company in the Strategic Alliance is fair, from a financial point of
view, to the stockholders of the Company.
This opinion may not, however, be summarized, excerpted from or otherwise
publicly referred to without our prior written consent, although this opinion
may be included in its entirety in the proxy statement of the Company used to
solicit stockholder approval of the Strategic Alliance. It is understood that
this letter is directed to the Board of Directors of the Company in its
consideration of the Agreement, and is not intended to be and does not
constitute a recommendation to any stockholder as to how such stockholder should
vote with respect to the Strategic Alliance.
Very truly yours,
/s/ Charles Webb & Company
Charles Webb & Company,
a Division of Keefe, Bruyette, & Woods, Inc.
<PAGE> 108
Annex C
August 6, 1999
Board of Directors
Camco Financial Corporation
814 Wheeling Avenue
Cambridge, OH 43725
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of Camco Financial Corporation (the "Company") common stock
(the "Company Common Stock"), par value $1.00, of the consideration to be paid
by the Company to the holders of Westwood Homestead Financial Corporation
("Westwood" or the "Seller") common stock (the "Seller Common Stock"), par value
$0.01 per share, pursuant to the Agreement of Merger and Plan of Reorganization
(the "Agreement") by and between the Company and Seller. At the Effective Time
and as a result of the Merger, as defined in the Agreement, each share of Seller
Common Stock held by Westwood's shareholders shall be cancelled and extinguished
and in substitution and exchange therefor, the holders thereof shall be entitled
to receive from the Company $5.20 and .611 shares of Company Common Stock
(subject to specified adjustments and other conditions provided for in the
Agreement).
Tucker Anthony Cleary Gull ("Tucker Cleary") as part of its investment banking
business is regularly engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, private placements and valuations for corporate and other
purposes. In the ordinary course of our business, we may actively trade the
securities of the Company for our own account and for the accounts of customers
and, accordingly, may at any time hold a long or short position in such
securities.
In arriving at our opinion, we have among other things:
(i) Reviewed the draft Agreement of Merger and Plan of Reorganization dated
August 5, 1999;
(ii) Reviewed certain historical financial and other information concerning
the Company for the five fiscal years ended December 31, 1998 and for
the quarter ended March 31, 1999;
(iii) Reviewed certain historical financial and other information concerning
Seller for the five fiscal years ended December 31, 1998 and for the
quarter ended March 31, 1999;
(iv) Held discussions with the senior management of the Company and Seller
with respect to their past and current financial performance, financial
condition and future prospects;
(v) Reviewed certain internal financial data, projections and other
information of the Company and Westwood, including financial
projections approved by management;
(vi) Analyzed certain publicly available information of other financial
institutions that we deemed comparable or otherwise relevant to our
inquiry, and compared the Company and Westwood from a financial point
of view with certain of these institutions;
<PAGE> 109
August 6, 1999
Page 2 of 2
(vii) Compared the consideration to be paid by the Company pursuant to the
Agreement with the consideration paid in other acquisitions of
financial institutions that we deemed comparable or otherwise relevant
to our inquiry;
(viii) Reviewed publicly available earnings estimates, historical trading
activity and ownership data of the Company's common stock and
considered the prospects for dividends and price movement; and
(ix) Considered such other financial studies, analyses and investigations
and reviewed such other information as we deemed appropriate to enable
us to render our opinion. In our review, we have also taken into
account an assessment of general economic, market and financial
conditions and certain industry trends and related matters.
In our review and analysis and in arriving at our opinion we have assumed and
relied upon the accuracy and completeness of all the financial information
publicly available or provided to us by the Company and Westwood and have not
attempted to verify any of such information. We have assumed that (i) the
financial projections of the Company and Westwood provided to us with respect to
the results of operations likely to be achieved by each company have been
prepared on a basis reflecting the best currently available estimates and
judgments of the Company's and Westwood's management and advisors as to future
financial performance and results and (ii) that such forecasts and estimates
will be realized in the amounts and in the time periods currently estimated. We
have also assumed, without independent verification, that the current and
projected aggregate reserves for possible loan losses for the Company and
Westwood are adequate to cover such losses. We did not make or obtain any
independent evaluations or appraisals of any assets or liabilities of the
Company, Westwood or any of their respective subsidiaries nor did we verify any
of the Company's or Westwood's books or records or review any individual loan
credit files.
Our opinion is necessarily based upon market, economic and other conditions as
they exist and can be evaluated as of the date of this letter.
This opinion is being furnished for the use and benefit of the Board of
Directors of the Company and is not a recommendation to shareholders. The
Company and Tucker Cleary have agreed that they do not believe any person other
than the Board has the legal right to rely on the opinion and, absent any
controlling precedent, would resist any assertion otherwise.
Based upon and subject to the foregoing, it is our opinion that as of the date
hereof the consideration to be paid by the Company pursuant to the Agreement is
fair to the Company's stockholders from a financial point of view.
Very truly yours,
Tucker Cleary
<PAGE> 110
PART II
Item 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(A) DELAWARE GENERAL CORPORATION LAW
Section 145 of the Delaware General Corporation Law, which governs
indemnification by a corporation of officers, directors and agents, provides as
follows:
(a) A corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party, to any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(b) A corporation shall have the power to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is or was serving at the
request of the corporation as a director, trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust, or other enterprise,
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person shall
be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee, or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made, with
respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors, even
though less than a quorum, or (3) if there are no directors, or if such
directors so direct, by independent legal counsel in a written opinion or (4) by
the stockholders.
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(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit, or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit, or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by former directors and officers or other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
or on behalf of any person who is or was a director, officer, employee, or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against such
person and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability under the provisions of this
section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had the power
to indemnify its directors, officers, and employees or agents, so that any
person who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, shall stand in the same position under
this section with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this Section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction
to hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees). (As amended by Ch. 186, Laws of 1967, Ch. 421, Laws of 1970, Ch. 437,
Laws of 1974, Ch. 25, Laws of 1981, Ch. 112, Laws of 1983, Ch. 289, Laws of
1986, Ch. 376, Laws of 1990, Ch. 261, Laws of 1994, Ch. 120. Laws of 1997.)
(B) BY-LAWS OF CAMCO
The By-laws of Camco contain the following provisions with respect to
the indemnification of directors and officers:
SECTION 7.01. MANDATORY INDEMNIFICATION. The corporation shall
indemnify any officer or director of the corporation, and any officer (other
than an assistant officer) or a director (i) of a subsidiary of the corporation
or (ii) of a subsidiary of any such subsidiary, who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without the limitation, any action threatened or instituted by or in
the right of the corporation), by reason of the fact that he is or was a
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director, officer, employee or agent of the corporation or a subsidiary of the
corporation, or is or was serving at the request of the corporation as a
director, trustee, officer, employee or agent of another corporation (domestic
or foreign, nonprofit or for profit), partnership, joint venture, trust or other
enterprise, against expenses (including, without limitation, attorneys' fees,
filing fees, court reporters' fees and transcript costs), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, he had no
reasonable cause to believe his conduct was unlawful. A person claiming
indemnification under this Section 7.01 shall be presumed, in respect of any act
or omission giving rise to such claim for indemnification, to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal matter, to have
had no reasonable cause to believe his conduct was unlawful, and the termination
of any action, suit or proceeding by judgment, order, settlement or conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself, rebut
such presumption.
SECTION 7.02. COURT-APPROVED INDEMNIFICATION. Anything contained in the
by-laws or elsewhere to the contrary notwithstanding:
(A) the corporation shall not indemnify any officer or director of the
corporation who was a party to any completed action or suit instituted by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation (domestic or
foreign, nonprofit or for profit), partnership, joint venture, trust or other
enterprise, in respect of any claim, issue or matter asserted in such action or
suit as to which he shall have been adjudged to be liable for gross negligence
or misconduct (other than negligence) in the performance of his duty to the
corporation unless and only to the extent that the Court of Common Pleas of
Franklin County, Ohio or the court in which such action or suit was brought
shall determine upon application that, despite such adjudication of liability,
and in view of all the circumstances of the case, he is fairly and reasonably
entitled to such indemnity as such Court of Common Pleas of Franklin County,
Ohio or such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid indemnification
as is determined by a court to be proper as contemplated by this Section 7.02.
SECTION 7.03. INDEMNIFICATION FOR EXPENSES. Anything contained in the
by-laws or elsewhere to the contrary notwithstanding, to the extent that an
officer or director of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in Section
7.01, or in any defense of any claim, issue or matter therein, he shall be
promptly indemnified by the corporation against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs) actually and reasonably incurred by him in connection therewith.
SECTION 7.04. DETERMINATION REQUIRED. Any indemnification required
under Section 7.01 and not precluded under Section 7.02 shall be made by the
corporation only upon a determination that such indemnification of the officer
or director is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 7.01. Such determination may be made
only (A) by a majority vote of a quorum consisting of directors of the
corporation who were not and are not parties to, any such action, suit or
proceeding, or (B) if such a quorum is not obtainable or if a majority of a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (C) by the stockholders, or (D) by the Court of Common Pleas
of Franklin County, Ohio or (if the corporation is a party thereto) the court in
which such action, suit or proceeding was brought, if any; any such
determination may be made by a court under division (D) of this Section 7.04 at
any time [including, without limitation, any time before, during or after the
time when any such determination may be requested of, be under consideration by
or have been denied or disregarded by the disinterested directors under division
(A) or by independent legal counsel under division (B) or by the stockholders
under division (C) of this Section 7.04]; and no failure for any reason to make
any such determination, and no decision for any reason to deny any such
determination, by the disinterested directors under division (A) or by
independent legal counsel under division (B) or by stockholders under division
(C) of this Section 7.04 shall be evidence in rebuttal of the presumption
recited in Section 7.01.
SECTION 7.05. ADVANCES FOR EXPENSES. Expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and transcript
costs) incurred in defending any action, suit or proceeding referred to in
Section 7.01 shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only if such officer
or director shall first agree, in writing, to repay all amounts so paid in
respect of any claim, issue or other matter asserted in such action, suit or
proceeding in defense of which he shall not have been successful on the merits
or otherwise:
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(A) if it shall ultimately be determined as provided in Section 7.04
that he is not entitled to be indemnified by the corporation as provided under
Section 7.01; or
(B) if, in respect of any claim, issue or other matter asserted by or
in the right of the corporation in such action or suit, he shall have been
adjudged to be liable for gross negligence or misconduct (other than negligence)
in the performance of his duty to the corporation, unless and only to the extent
that the Court of Common Pleas of Franklin County, Ohio or the court in which
such action or suit was brought shall determine upon application that, despite
such adjudication of liability, and in view of all the circumstances, he is
fairly and reasonably entitled to all or part of such indemnification.
SECTION 7.06. ARTICLE SEVEN NOT EXCLUSIVE. The indemnification provided
by this Article Seven shall not be exclusive of any other rights to which any
person seeking indemnification may be entitled under the certificate of
incorporation or any by-law agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
SECTION 7.07. INSURANCE. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, trustee, officer, employee, or agent of another corporation
(domestic or foreign, nonprofit or for profit), partnership, joint venture,
trust or other enterprise, against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the obligation or the power to
indemnify him against such liability under the provisions of this Article Seven.
SECTION 7.08. CERTAIN DEFINITIONS. For purposes of this Article Seven,
and as examples and not by way of limitation:
(A) a person claiming indemnification under this Article Seven shall be
deemed to have been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 7.01, or in defense of any
claim, issue or other matter therein, if such action, suit or proceeding shall
be terminated as to such person, with or without prejudice, without the entry of
a judgment or order against him, without a conviction of him, without the
imposition of a fine upon him and without his payment or agreement to pay any
amount in settlement thereof (whether or not any such termination is based upon
a judicial or other determination of the lack of merit of the claims made
against him or otherwise results in a vindication of him); and
(B) references to an "other enterprise" shall include employee benefit
plans; references to a "fine" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving at
the request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and references to a
"subsidiary of the corporation" shall include another corporation if securities
representing at least a majority of the voting power of such other corporation
are owned by the corporation; and a person who acted in good faith and in a
manner he reasonably believed to be in the best interests of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" within the meaning
of that term as used in this Article Seven.
SECTION 7.09. VENUE. Any action, suit or proceeding to determine a
claim for indemnification under this Article Seven may be maintained by the
person claiming such indemnification, or by the corporation, in the Court of
Common Pleas of Franklin County, Ohio. The corporation and (by claiming such
indemnification) each such person consent to the exercise of jurisdiction over
its or his person by the Court of Common Pleas of Franklin County, Ohio in any
such action, suit or proceeding.
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Item 21. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
(a) EXHIBITS
EXHIBIT NO. DESCRIPTION
2(a) Agreement of Merger and Plan of Reorganization dated August 6,
1999, by and among Camco Financial, Westwood Homestead
Financial Corporation and Westwood Homestead Savings. Bank.
2(b) Stock Option Agreement dated August __, 1999, between Camco
Financial (as grantee) and Westwood Homestead Financial (as
issuer)
3(a) Third Restated Certificate of Incorporation of Camco
Financial, as amended.
3(b) Proposed Amendment to the Certificate of Incorporation of
Camco Financial.
3(c) 1987 Amended and Restated By-laws of Camco Financial.
4 Articles Fourth, Sixth, Eighth, Ninth, Tenth, Eleventh,
Thirteenth, Fourteenth and Fifteenth of the Certificate of
Incorporation of Camco Financial and all Sections of Article
Two, Section 3.03 of Article Three, and Section 8.01 of
Article Eight of the By-laws of Camco Financial, defining the
rights of Camco Financial stockholders.
5 Opinion of Vorys, Sater, Seymour and Pease regarding the
legality of the shares of Camco Financial being registered.
8 Opinion of Vorys, Sater, Seymour and Pease regarding the tax
consequences of the Merger.
10(a) Employment Agreement between Camco Financial and Larry A.
Caldwell.
10(b) Employment Agreement between Camco Financial and Anthony J.
Popp.
10(c) Employment Agreement between Marietta Savings and Anthony J.
Popp.
10(d) Form of Employment Agreement between Westwood Homestead
Savings Bank and Michael P. Brennan.
20(a) Notice of Special Meeting for Camco Financial.
20(b) Notice of Special Meeting for Westwood Homestead Financial
Corporation.
21 Subsidiaries of Camco Financial.
23(a) Consent of KMPG LLP.
23(b) Consent of Grant Thornton LLP.
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EXHIBIT NO. DESCRIPTION
23(c) Consent of Vorys, Sater, Seymour and Pease LLP.
23(d) Consent of Tucker Anthony Cleary Gull.
23(e) Consent of Charles Webb & Company, a division of Keefe,
Bruyette & Woods, Inc.
99(a) Form of Proxy for Camco Financial.
99(b) Form of Proxy for Westwood Homestead Financial.
(b) FINANCIAL STATEMENT SCHEDULES
All schedules for which provision is made in the applicable
accounting regulations of the Commission are not required under related
instructions or are inapplicable and, therefore, have been omitted.
ITEM 22. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or
sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
section 10(a)(3) of the Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
(b) That, for the purpose of determining any
liability under the Act, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
2. The undersigned registrant hereby undertakes as follows:
that prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is part of this registration statement, by any
person or party who is deemed to be an underwriter within the meaning of Rule
145(c), the issuer undertakes that such reoffering prospectus will
II-6
<PAGE> 116
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
3. The registrant undertakes that every prospectus (i) that is
filed pursuant to paragraph 2 immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
4. Insofar as indemnification for liabilities arising under
the Act, as amended may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-7
<PAGE> 117
SIGNATURES
----------
Pursuant to the requirements of the Securities Act, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cambridge, State of Ohio,
on September 30, 1999.
CAMCO FINANCIAL CORPORATION
By: /s/ Larry A. Caldwell
------------------------------------
Larry A. Caldwell, President, Chief
Executive Officer and a Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on September 30, 1999.
Signature
- ---------
/s/ Anthony J. Popp /s/ Robert C. Dix
- --------------------------------------------- ----------------------------
Anthony J. Popp, Director Robert C. Dix, Jr., Director
/s/ Samuel W. Speck /s/ Paul D. Leake
- --------------------------------------------- ----------------------------
Samuel W. Speck, Director Paul D. Leake, Director
/s/ Jeffrey T. Tucker /s/ Eric G. Spann
- --------------------------------------------- ----------------------------
Jeffrey T. Tucker, Director Eric. G. Spann, Director
/s/ James R. Hanawalt /s/ Kenneth R. Elshoff
- --------------------------------------------- ----------------------------
James R. Hanawalt, Director Kenneth R. Elshoff, Director
/s/ Gary E. Crane
- ---------------------------------------------
Gary E. Crane, Chief Financial
Officer and Treasurer
II-8
<PAGE> 118
CAMCO FINANCIAL CORPORATION
Registration Statement on Form S-4
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C> <C>
2(a) Agreement of Merger and Plan of Reorganization Included as Annex A to the
dated August 6, 1999, by and among Camco Prospectus and Joint Proxy Statement
Financial, Westwood Homestead Financial and
Westwood Homestead Savings Bank.
2(b) Stock Option Agreement dated August 7, 1999,
between Camco Financial (as grantee) and
Westwood Homestead Financial (as issuer)
3(a) Third Restated Certificate of Incorporation of Incorporated by reference to the Annual
Camco, as amended. Report on Form 10-K for the fiscal year
ended December 31, 1998, filed with the
Securities and Exchange Commission on
March 31, 1999 (the "1998 Form 10-K"),
Exhibit 3(i)
3(b) Proposed Amendment to the Certificate of
Incorporation of Camco
3(c) 1987 Amended and Restated By-laws of Camco Incorporated by reference to the Annual
Report on Form 10-KSB for the fiscal year
ended December 31, 1995, filed with the
Securities and Exchange Commission on
April 1, 1996 (the "1995 Form 10-KSB"),
Exhibit 3 (iii)
4 Articles Fourth, Sixth, Eighth, Ninth, Tenth, Included in Exhibits 3(a), 3(b) and 3(c))
Eleventh, Thirteenth, Fourteenth and Fifteenth of
the Certificate of Incorporation of Camco and all
Sections of Article Two, Section 3.03 of Article
Three, all Sections of Article Four, all Sections of
Article Six and Section 8.01 of Article Eight of
the By-laws of Camco, defining the rights of
Camco stockholders
5 Opinion of Vorys, Sater, Seymour and Pease
regarding the legality of the shares of Camco
8 Opinion of Vorys, Sater, Seymour and Pease
regarding the tax consequences of the Merger
10(a) Employment Agreement between Camco and Larry A. Incorporated by reference to the 1995 Form
Caldwell 10-K, Exhibit 10(ii)-1
</TABLE>
<PAGE> 119
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C> <C>
10(b) Employment Agreement between Camco and Incorporated by reference to the Annual
Anthony J. Popp Report on Form 10-KSB for the fiscal year
ended December 31, 1993, filed with the
SEC on March 31, 1994 (the "1993 form
10-KSB")
10(c) Employment Agreement between Marietta Incorporated by reference to the 1993
Savings and Anthony J. Popp Form 10-KSB, Exhibit 10(ii)-2
10(d) Form of employment agreement between Michael To be filed by amendment
P. Brennan and The Westwood Homestead
Savings Bank
20(a) Notice of Special Meeting of Camco
20(b) Notice of Special Meeting of Westwood
Homestead Financial
21 Subsidiaries of Camco Incorporated by reference to the
1998 10-K, Exhibit 21
23(a) Consent of KMPG LLP
23(b) Consent of Grant Thornton LLP
23(c) Consent of Vorys, Sater, Seymour and Pease LLP Included in Exhibit 5
23(d) Consent of Tucker Anthony Cleary Gull
23(e) Consent of Charles, Webb & Company, a
division of Keefe, Bruyette & Woods, Inc.
99(a) Form of Proxy for Camco Financial
</TABLE>
<PAGE> 120
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C> <C>
99(b) Form of Proxy for Westwood
Homestead Financial
</TABLE>
<PAGE> 1
Exhibit 2(b)
STOCK OPTION AGREEMENT
----------------------
Stock Option Agreement, dated as of August 7, 1999, between Camco
Financial Corporation, a Delaware corporation ("Grantee"), and Westwood
Homestead Financial Corporation, an Indiana corporation ("Issuer").
W I T N E S S E T H:
WHEREAS, Grantee and Issuer have entered into an Agreement of Merger
and Plan of Reorganization of even date herewith (the "Merger Agreement"),
providing for, among other things, the merger of Issuer with and into Grantee
(the "Merger");
WHEREAS, as a condition and an inducement to Grantee to enter into the
Merger Agreement, Issuer has agreed to grant Grantee the Option (as hereinafter
defined); and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein and in the Merger Agreement, the
parties hereto agree as follows:
1. (a) Subject to the terms and conditions set forth herein, Issuer
hereby grants to Grantee an irrevocable option (the "Option") to purchase,
subject to the terms hereof, up to an aggregate of 431,595 fully paid and
nonassessable shares (the "Option Shares") of common stock, par value $0.01 per
share, of Issuer (the "Common Stock") at a price per share equal to $10.50 (the
"Option Price"); provided, however, that in no event shall the number of shares
for which this Option is exercisable exceed 19.9% of the issued and outstanding
shares of Common Stock without giving effect to any shares subject to or issued
pursuant to the Option. The number of shares of Common Stock that may be
received upon the exercise of the Option and the Option Price are subject to
adjustment as herein set forth.
(b) In the event that any additional shares of Common Stock are
issued or otherwise become outstanding after the date of this Agreement (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 5(a) hereof), including, without limitation, pursuant to stock option or
other employee plans or as a result of the exercise of conversion rights, the
number of shares of Common Stock subject to the Option shall be increased so
that, after such event, such number equals 19.9% of the number of shares of
Common Stock then issued and outstanding without giving effect to any shares
subject to or issued pursuant to the Option. Nothing contained in this Section
l(b) or elsewhere in this Agreement shall be deemed to authorize Issuer to issue
shares in breach of any provision of the Merger Agreement.
2. (a) Subject to the terms and conditions set forth herein, the Holder
(as hereinafter defined) may exercise the Option, in whole or part, and from
time to time, if, but only if, both an Initial Triggering Event (as hereinafter
defined) and a Subsequent Triggering Event (as hereinafter defined) shall have
occurred prior to the occurrence of an Exercise Termination Event (as
hereinafter defined), provided that the Holder shall have sent the written
notice of the first exercise (as provided in paragraph (e) of this Section 2)
within 60 days following the first Subsequent Triggering Event to occur (or such
later period as provided in Section 10). Each of
<PAGE> 2
the following shall be an Exercise Termination Event: (i) the Effective Time (as
defined in the Merger Agreement); (ii) termination of the Merger Agreement in
accordance with the provisions thereof if such termination occurs prior to the
occurrence of an Initial Triggering Event, except a termination by Grantee
pursuant to Section 8.01(c) of the Merger Agreement (unless the breach by Issuer
giving rise to such right of termination was non-volitional); or (iii) the
passage of 12 months after termination of the Merger Agreement if such
termination follows the occurrence of an Initial Triggering Event or is a
termination by Grantee pursuant to Section 8.01(c) of the Merger Agreement
(unless the breach by Issuer giving rise to such right of termination is
non-volitional), provided that if an Initial Triggering Event continues or
occurs beyond such termination and prior to the passage of such 12-month-period,
the Exercise Termination Event shall be 12 months from the expiration of the
Last Triggering Event but in no event more than 18 months after such
termination. The term "Last Triggering Event" shall mean the last "Initial
Triggering Event" to expire, and the term "Holder" shall mean the holder or
holders of the Option pursuant to this Agreement. Notwithstanding anything to
the contrary contained herein, the Option may not be exercised at any time when
(i) Grantee shall be in material breach of any of its covenants or agreements
contained in the Merger Agreement such that Issuer shall be entitled to
terminate the Merger Agreement pursuant to Section 8.01(d) thereof as a result
of such a material breach and (ii) no preliminary or permanent injunction or
other order against the delivery of shares covered by the Option issued by any
court of competent jurisdiction shall be in effect.
(b) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) Issuer or any Subsidiary of Issuer (an "Issuer
Subsidiary"), without having received Grantee's prior written consent, shall
have entered into an agreement to engage in an Acquisition Transaction (as
hereinafter defined) with any person (the term "person" for purposes of this
Agreement having the meaning assigned thereto in Sections 3(a)(9) and 13(d)(3)
of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
rules and regulations thereunder), other than Grantee or any Subsidiary of
Grantee (a "Grantee Subsidiary") or the Board of Directors of Issuer (the
"Issuer Board") shall have recommended that the shareholders of Issuer approve
or accept any Acquisition Transaction with any person other than Grantee or a
Grantee Subsidiary. For purposes of this Agreement, (a) "Acquisition
Transaction" shall mean (w) a merger or consolidation, or any similar
transaction, involving Issuer or any Issuer Subsidiary (other than mergers,
consolidations or similar transactions (i) involving solely Issuer and/or one or
more wholly-owned Subsidiaries of Issuer, provided any such transaction is not
entered into in violation of the terms of the Merger Agreement, or (ii) in which
the shareholders of Issuer immediately prior to the completion of such
transaction own at least 50% of the Common Stock of Issuer (or the resulting or
surviving entity in such transaction) immediately after completion of such
transaction, provided any such transaction is not entered into in violation of
the terms of the Merger Agreement), (x) a purchase, lease or other acquisition
of all or any substantial part of the assets or deposits of Issuer or any Issuer
Subsidiary, (y) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of Issuer or any Issuer Subsidiary or (z) any
substantially similar transaction; and (b) "Subsidiary" shall have the meaning
set forth in Rule 12b-2 under the 1934 Act;
-2-
<PAGE> 3
(ii) Any person, other than Grantee or a Grantee
Subsidiary, shall have acquired beneficial ownership or the right to acquire
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the 1934 Act, and the rules and
regulations thereunder);
(iii) The Issuer Board, without having received
Grantee's prior written consent, shall have withdrawn or modified, or publicly
announced its interest to withdraw or modify in any manner adverse in any
respect to Grantee, its recommendation that the stockholders of Issuer approve
the transactions contemplated by the Merger Agreement in anticipation of
engaging in an Acquisition Transaction, or Issuer or any Issuer Subsidiary shall
have authorized, recommended or proposed, or publicly announced its intention to
authorize, recommend or propose, an agreement to engage in an Acquisition
Transaction with any person other than Grantee or a Grantee Subsidiary;
(iv) Any person other than Grantee or a Grantee
Subsidiary shall have filed with the Securities and Exchange Commission ("SEC")
a registration statement or tender offer materials with respect to a potential
exchange or tender offer that would constitute an Acquisition Transaction (or
filed a preliminary proxy statement with the SEC with respect to a potential
vote by its stockholders to approve the issuance of shares to be offered in such
an exchange offer);
(v) After a bona fide written proposal is made by any
person, other than Grantee or a Grantee Subsidiary, to Issuer or its
stockholders to engage in an Acquisition Transaction, Issuer shall have breached
any covenant or obligation contained in the Merger Agreement and such breach (x)
would entitle Grantee to terminate the Merger Agreement (whether immediately or
after the giving of notice or passage of time or both) and (y) shall not have
been cured prior to the Notice Date (as defined below); or
(vi) Any person other than Grantee or a Grantee
Subsidiary shall have filed an application or notice with the Federal Reserve
Board (the "FRB") or other federal or state bank regulatory or antitrust
authority, which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(c) The term "Subsequent Triggering Event" shall mean any of
the following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Grantee or
any Grantee Subsidiary) of beneficial ownership of 25% or more of the then
outstanding Common Stock; or
(ii) The occurrence of the Initial Triggering Event
described in clause (i) of subsection (b) of this Section 2, except that the
percentage referred to in clause (y) of the second sentence thereof shall be
25%.
-3-
<PAGE> 4
(d) Issuer shall notify Grantee promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event") of which it has notice, it being understood
that the giving of such notice by Issuer shall not be a condition to the right
of the Holder to exercise the Option.
(e) In the event the Holder is entitled to and wishes to
exercise the Option (or any portion thereof), it shall send to Issuer a written
notice (the date of which being herein referred to as the "Notice Date")
specifying (i) the total number of shares of Common Stock it will purchase
pursuant to such exercise and (ii) a place and date not earlier than three
business days nor later than 45 business days from the Notice Date for the
closing of such purchase (the "Closing"); provided that if prior notification to
or approval of the FRB or any other regulatory or antitrust agency is required
in connection with such purchase, the Holder shall promptly file the required
notice or application for approval, shall promptly notify Issuer of such filing
and shall expeditiously process the same and the period of time that otherwise
would run pursuant to this sentence shall run instead from the date on which any
required notification periods have expired or been terminated or such approvals
have been obtained and any requisite waiting period or periods shall have
passed. Any exercise of the Option shall be deemed to occur on the Notice Date
relating thereto. The term "business day" for purposes of this Agreement means
any day, excluding Saturdays, Sundays and any other day that is a legal holiday
in the State of Ohio or a day on which banking institutions in the State of Ohio
are authorized by law or executive order to close.
(f) At a Closing, the Holder shall (i) pay to Issuer the
aggregate purchase price for the shares of Common Stock purchased pursuant to
the exercise of the Option in immediately available funds by wire transfer to a
bank account designated by Issuer, and (ii) present and surrender this Agreement
to Issuer at its principal executive offices, provided that the failure or
refusal of the Issuer to designate such a bank account or accept surrender of
this Agreement shall not preclude the Holder from exercising the Option.
(g) At a Closing, simultaneously with the delivery of
immediately available funds as provided in subsection (f) of this Section 2,
Issuer shall deliver to the Holder a certificate or certificates representing
the number of shares of Common Stock purchased by the Holder and, if the Option
should be exercised in part only, a new Option evidencing the rights of the
Holder thereof to purchase the balance of the shares purchasable hereunder, and
the Holder shall deliver to Issuer a copy of this Agreement and a letter
agreeing that the Holder will not offer to sell or otherwise dispose of such
shares in violation of applicable law or the provisions of this Agreement.
(h) Certificates for Common Stock delivered at a Closing
hereunder may be endorsed (in the sole discretion of Issuer) with a restrictive
legend that shall read substantially as follows:
"The transfer of the shares represented by this certificate is subject
to certain provisions of an agreement between the registered holder hereof and
Issuer and to resale restrictions arising under the Securities Act of 1933, as
amended. A copy of such agreement is on file at the
-4-
<PAGE> 5
principal office of Issuer and will be provided to the holder hereof without
charge upon receipt by Issuer of a written request therefor."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933, as amended (the "1933 Act"), in the above legend
shall be removed by delivery of substitute certificate(s) without such reference
if the Holder shall have delivered to Issuer a copy of a letter from the staff
of the SEC, or an opinion of counsel, in form and substance reasonably
satisfactory to Issuer, to the effect that such legend is not required for
purposes of the 1933 Act; (ii) the reference to the provisions of this Agreement
in the above legend shall be removed by delivery of substitute certificate(s)
without such reference if the shares have been sold or transferred in compliance
with the provisions of this Agreement and under circumstances that do not
require the retention of such reference in the reasonable written opinion of
counsel to the Holder; and (iii) the legend shall be removed in its entirety if
the conditions in the preceding clauses (i) and (ii) are both satisfied. In
addition, such certificates shall bear any other legend as may be required by
law.
(i) Upon the giving by the Holder to Issuer of the
written notice of exercise of the Option provided for under paragraph (e) of
this Section 2, the tender of the applicable purchase price in immediately
available funds and the tender of a copy of this Agreement to Issuer, the Holder
shall be deemed, subject to the receipt of any necessary regulatory approvals,
to be the holder of record of the shares of Common Stock issuable upon such
exercise, notwithstanding that the stock transfer books of Issuer shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the Holder. Issuer shall pay all expenses, and any
and all United States federal, state and local taxes and other charges that may
be payable in connection with the preparation, issue and delivery of stock
certificates under this Section 2 in the name of the Holder or its assignee,
transferee or designee.
3. Issuer agrees: (i) that it shall at all times maintain, free from
preemptive rights, sufficient authorized but unissued or treasury shares of
Common Stock so that the Option may be exercised without additional
authorization of Common Stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Common Stock; (ii)
that it will not, by amendment of its Articles of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by any
other voluntary act, avoid or seek to avoid the observance or performance of any
of the covenants, stipulations or conditions to be observed or performed
hereunder by Issuer; (iii) promptly to take all action as may from time to time
be required (including without limitation (x) complying with all applicable
premerger notification, reporting and waiting period requirements specified in
15 U.S.C. Section 18a and regulations promulgated thereunder and (y) in the
event, under the Federal Reserve Act, the Home Owners Loan Act ("HOLA"), or the
Change in Bank Control Act of 1978, as amended, or any state or other federal
banking law, prior approval of or notice to the FRB, the FDIC, the OTS or to any
state or other federal regulatory authority is necessary before the Option may
be exercised, cooperating fully with the Holder in connection with the
preparation of such applications or notices and providing such information to
the FRB or the OTS or such state or other federal regulatory authority as they
may require) in order to permit the Holder to exercise the Option and
-5-
<PAGE> 6
Issuer duly and effectively to issue shares of Common Stock pursuant hereto; and
(iv) promptly to take all action provided herein to protect the rights of the
Holder against dilution.
4. This Agreement and the Option granted hereby are exchangeable,
without expense, at the option of the Holder, upon presentation and surrender of
this Agreement at the principal office of Issuer, for other Agreements providing
for Options of different denominations entitling the holder thereof to purchase
on the same terms and subject to the same conditions as are set forth herein in
the aggregate the same number of shares of Common Stock purchasable hereunder.
The terms "Agreement" and "Option" as used herein include any Stock Option
Agreements and related Options for which this Agreement (and the Option granted
hereby) may be exchanged. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new Agreement of like
tenor and date. Any such new Agreement executed and delivered shall constitute
an additional contractual obligation on the part of Issuer, subject to the
aforementioned indemnification, if applicable, whether or not the Agreement so
lost, stolen, destroyed or mutilated shall at any time be enforceable by anyone.
5. In addition to the adjustment in the number of shares of Common
Stock that are purchasable upon exercise of the Option pursuant to Section 1 of
this Agreement, the number of Option Shares purchasable upon the exercise of the
Option and the Option Price shall be subject to adjustment from time to time as
provided in this Section 5.
(a) In the event of any change in, or distributions in respect
of, the Common Stock by reason of stock dividend, split-up, merger,
recapitalization, combination, subdivision, conversion, exchange of shares,
distribution on or in respect of the Common Stock or similar transaction, the
type and number of Option Shares shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
Grantee shall receive upon exercise of the Option the number and class of Option
Shares that Grantee would have held immediately after such event if the Option
had been exercised immediately prior to such event, or the record date therefor,
as applicable.
(b) Whenever the number of Option Shares is adjusted as
provided in this Section 5, the Option Price shall be adjusted by multiplying
the Option Price by a fraction, the numerator of which shall be equal to the
number of Option Shares purchasable prior to the adjustment and the denominator
of which shall be equal to the number of Option Shares purchasable after the
adjustment.
6. Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, Issuer shall, at the request of Grantee
delivered within four months (or such later period as provided in Section 10)
following such Subsequent Triggering Event (whether on its own behalf or on
behalf of any subsequent holder of this Option (or part thereof) or any of the
Option Shares issued pursuant hereto), promptly prepare, file and keep current,
with respect to the Option and the Option Shares, a registration statement under
the 1933 Act and qualify such Option and Option Shares for resale or other
disposition under applicable state securities laws, in each case in accordance
with any plan of disposition requested by Grantee.
-6-
<PAGE> 7
Issuer will use all reasonable efforts to cause such registration statement
promptly to become effective and then to remain effective for such period not in
excess of 180 days from the day such registration statement first becomes
effective or such shorter time as may be reasonably necessary to effect such
sales or other dispositions. Grantee shall have the right to demand two such
registrations. The Issuer shall bear the costs of such registrations (including,
but not limited to, Issuer's attorneys' fees, printing costs and filing fees,
except for underwriting discounts or commissions, brokers' fees and the fees and
disbursements of Grantee's counsel related thereto). The foregoing
notwithstanding, if, at the time of any request by Grantee for registration of
the Option or Option Shares as provided above, Issuer is in registration with
respect to an underwritten public offering by Issuer of shares of Common Stock,
and if in the good faith judgment of the managing underwriter or managing
underwriters, or, if none, the sole underwriter or underwriters, of such
offering, the inclusion of the Option and/or Option Shares would interfere with
the successful marketing of the shares of Common Stock offered by Issuer, the
number of shares represented by the Option and/or the number of Option Shares
otherwise to be covered in the registration statement contemplated hereby may be
reduced; provided, however, that after any such required reduction the number of
shares represented by the Option and/or the number of Option Shares to be
included in such offering for the account of the Holder shall constitute at
least 25% of the total number of shares to be sold by the Holder and Issuer in
the aggregate; and provided further, however, that if such reduction occurs,
then Issuer shall file a registration statement for the balance as promptly as
practicable thereafter as to which no reduction pursuant to this Section 6 shall
be permitted or occur. Each such Holder shall provide all information reasonably
requested by Issuer for inclusion in any such registration statement to be filed
hereunder. If requested by any such Holder in connection with such registration,
Issuer shall become a party to any underwriting agreement relating to the sale
of such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in secondary offering underwriting agreements for Issuer. Upon
receiving any request under this Section 6 from any Holder, Issuer agrees to
send a copy thereof to any other person known to Issuer to be entitled to
registration rights under this Section 6, in each case by promptly mailing the
same, postage prepaid, to the address of record of the persons entitled to
receive such copies. Notwithstanding anything to the contrary contained herein,
in no event shall the number of registrations that Issuer is obligated to effect
be increased by reason of the fact that there shall be more than one Holder as a
result of any assignment or division of this Agreement.
7. (a) Upon the occurrence of a Subsequent Triggering Event that occurs
prior to an Exercise Termination Event, (i) at the request of any Holder
delivered within 90 days following such occurrence (or such later period as
provided in Section 10), Issuer (or any successor thereto) shall repurchase the
Option from the Holder at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Option Price, multiplied by the number of shares for which the Option may then
be exercised, and (ii) at the request of the owner of Option Shares from time to
time (the "Owner"), delivered within 60 days following such occurrence (or such
later period as provided in Section 10), Issuer (or any successor thereto) shall
repurchase such number of the Option Shares from the Owner as the Owner shall
designate at a price (the "Option Share Repurchase Price") equal to the greater
of (A) the Market/Offer Price and (B) the average exercise price per share paid
by the Owner for the Option Shares so designated. The term "Market/Offer Price"
-7-
<PAGE> 8
shall mean the highest of (i) the price per share of Common Stock at which a
tender offer or exchange offer therefor has been made, (ii) the price per share
of Common Stock to be paid by any person, other than Grantee or a Grantee
Subsidiary, pursuant to an agreement with Issuer, (iii) the highest sale price
for shares of Common Stock within the six-month period immediately preceding the
date of such required repurchase of the Option or Option Shares, as the case may
be, or (iv) in the event of a sale of all or any substantial part of Issuer's
assets or deposits, the sum of the price paid in such sale for such assets or
deposits and the current market value of the remaining assets of Issuer as
determined by a nationally-recognized investment banking firm selected by a
majority in interest of the Holders or the Owners, as the case may be, and
reasonably acceptable to Issuer, divided by the number of shares of Common Stock
of Issuer outstanding at the time of such sale. In determining the Market/Offer
Price, the value of consideration other than cash shall be determined by a
nationally-recognized investment banking firm selected by the Holder or Owner,
as the case may be, and reasonably acceptable to Issuer.
(b) Each Holder and Owner, as the case may be, may exercise
its right to require Issuer to repurchase the Option and any Option Shares
pursuant to this Section 7 by surrendering for such purpose to Issuer, at its
principal office, a copy of this Agreement or certificates for Option Shares, as
applicable, accompanied by a written notice or notices stating that such Holder
or Owner, as the case may be, elects to require Issuer to repurchase this Option
and/or Option Shares in accordance with the provisions of this Section 7. As
promptly as practicable, and in any event within five business days after the
surrender of the Option and/or certificates representing Option Shares and the
receipt of such notice or notices relating thereto, Issuer shall deliver or
cause to be delivered to the Holder the Option Repurchase Price and/or to the
Owner the Option Share Repurchase Price therefor or the portion thereof that
Issuer is not then prohibited under applicable law and regulation from so
delivering.
(c) To the extent that Issuer is prohibited under applicable
law or regulation, or as a consequence of administrative policy, or as a result
of a written agreement or other binding obligation with a governmental or
regulatory body or agency, from repurchasing the Option and/or the Option Shares
in full, Issuer shall immediately so notify each Holder and/or each Owner and
thereafter deliver or cause to be delivered, from time to time, to such Holder
and/or such Owner, as appropriate, the portion of the Option Repurchase Price
and the Option Share Repurchase Price, respectively, that it is no longer
prohibited from delivering, within five business days after the date on which
Issuer is no longer so prohibited; provided, however, that if Issuer at any time
after delivery of a notice of repurchase pursuant to paragraph (b) of this
Section 7 is prohibited under applicable law or regulation, or as a consequence
of administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from delivering to
the Holder and/or the Owner, as appropriate, the Option Repurchase Price and the
Option Share Repurchase Price, respectively, in part or in full (and Issuer
hereby undertakes to use all reasonable efforts to obtain all required
regulatory and legal approvals and to file any required notices as promptly as
practicable in order to accomplish such repurchase), such Holder or Owner may
revoke its notice of repurchase of the Option and/or the Option Shares either in
whole or to the extent of the prohibition, whereupon, in the latter case, Issuer
shall promptly (i) deliver to the Holder and/or the Owner, as appropriate, that
portion of the Option Repurchase Price and/or the Option Share Repurchase Price
that Issuer is not prohibited from delivering with respect to Options or Option
Shares as to which the Holder
-8-
<PAGE> 9
or the Owner, as the case may be, has not revoked its repurchase demand; and
(ii) deliver, as appropriate, either (A) to the Holder, a new Agreement
evidencing the right of the Holder to purchase that number of shares of Common
Stock obtained by multiplying the number of shares of Common Stock for which the
surrendered Agreement was exercisable at the time of delivery of the notice of
repurchase by a fraction, the numerator of which is the Option Repurchase Price
less the portion thereof theretofore delivered to the Holder and the denominator
of which is the Option Repurchase Price, and/or (B) to such Owner, a certificate
for the Option Shares it is then so prohibited from repurchasing.
8. (a) In the event that prior to an Exercise Termination Event, Issuer
shall enter into an agreement (i) to consolidate with or merge into any person,
other than Grantee or a Grantee Subsidiary, or engage in a plan of exchange with
any person, other than Grantee or a Grantee Subsidiary, and in either case,
Issuer shall not be the continuing or surviving corporation of such
consolidation or merger or the acquiror in such plan of exchange, (ii) to permit
any person, other than Grantee or a Grantee Subsidiary, to merge into Issuer or
be acquired by Issuer in a plan of exchange and Issuer shall be the continuing
or surviving or acquiring corporation, but, in connection with such merger or
plan of exchange, the then outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other person or cash or
any other property or the then outstanding shares of Common Stock shall after
such merger or plan of exchange represent less than 50% of the outstanding
shares and share equivalents of the merged or acquiring company, or (iii) to
sell or otherwise transfer all or a substantial part of its or any Issuer
Subsidiary's assets or deposits to any person, other than Grantee or a Grantee
Subsidiary, then, and in each such case, the agreement governing such
transaction shall make proper provision so that the Option shall, upon the
consummation of any such transaction and upon the terms and conditions set forth
herein, be converted into, or exchanged for, an option (the "Substitute
Option"), at the election of any Holder, of either (x) the Acquiring Corporation
(as hereinafter defined) or (y) any person that controls the Acquiring
Corporation.
(b) The following terms have the meanings indicated:
(i) "Acquiring Corporation" shall mean (i) the continuing or
surviving person of a consolidation or merger with Issuer (if other than
Issuer), (ii) the acquiring person in a plan of exchange in which Issuer is
acquired, (iii) Issuer in a merger or plan of exchange in which Issuer is the
continuing or surviving or acquiring person, and (iv) the transferee of all or a
substantial part of Issuer's assets or deposits (or the assets or deposits of an
Issuer Subsidiary).
(ii) "Substitute Common Stock" shall mean the common stock
issued by the issuer of the Substitute Option upon exercise of the Substitute
Option.
(iii) "Assigned Value" shall mean the Market/Offer Price, as
defined in Section 7.
(iv) "Average Price" shall mean the average closing price of a
share of the Substitute Common Stock for the one year immediately preceding the
consolidation, merger, share exchange or sale in question, but in no event
higher than the closing price of the shares of Substitute Common Stock on the
day preceding such consolidation, merger, share exchange or
-9-
<PAGE> 10
sale; provided that if Issuer is the issuer of the Substitute Option, the
Average Price shall be computed with respect to a share of common stock issued
by the person merging into Issuer or by any company which controls or is
controlled by such person, as the Holder may elect.
(c) The Substitute Option shall have the same terms as the
Option, provided that if the terms of the Substitute Option cannot, for legal
reasons, be the same as the Option, such terms shall, to the extent legally
permissible, be as similar as possible to, and in no event less advantageous to
the Holder than, the terms of the Option. The issuer of the Substitute Option
also shall enter into an agreement with the then Holder or Holders of the
Substitute Option in substantially the same form as this Agreement (after giving
effect for such purpose to the provisions of Section 9), which agreement shall
be applicable to the Substitute Option.
(d) The Substitute Option shall be exercisable for such number
of shares of Substitute Common Stock as is equal to the Assigned Value
multiplied by the number of shares of Common Stock for which the Option was
exercisable immediately prior to the event described in the first sentence of
Section 8(a), divided by the Average Price. The exercise price of the Substitute
Option per share of Substitute Common Stock shall then be equal to the Option
Price multiplied by a fraction, the numerator of which shall be the number of
shares of Common Stock for which the Option was exercisable immediately prior to
the event described in the first sentence of Section 8(a) and the denominator of
which shall be the number of shares of Substitute Common Stock for which the
Substitute Option is exercisable.
(e) In no event, pursuant to any of the foregoing paragraphs,
shall the Substitute Option be exercisable for more than 19.9% of the shares of
Substitute Common Stock outstanding prior to exercise of the Substitute Option.
In the event that the Substitute Option would be exercisable for more than 19.9%
of the shares of Substitute Common Stock outstanding prior to exercise but for
this paragraph (e), the issuer of the Substitute Option (the "Substitute Option
Issuer") shall make a cash payment to Holder equal to the excess of (i) the
value of the Substitute Option without giving effect to the limitation in this
paragraph (e) over (ii) the value of the Substitute Option after giving effect
to the limitation in this paragraph (e). This difference in value shall be
determined by a nationally- recognized investment banking firm selected by a
majority in interest of the Holders and reasonably acceptable to the Acquiring
Corporation.
(f) Issuer shall not enter into any transaction described in
paragraph (a) of this Section 8 unless the Acquiring Corporation and any person
that controls the Acquiring Corporation assume in writing all the obligations of
Issuer hereunder.
9. (a) At the request of the holder of the Substitute Option (the
"Substitute Option Holder"), the issuer of the Substitute Option Issuer shall
repurchase the Substitute Option from the Substitute Option Holder at a price
(the "Substitute Option Repurchase Price") equal to the amount by which (i) the
Highest Closing Price (as hereinafter defined) exceeds (ii) the exercise price
of the Substitute Option, multiplied by the number of shares of Substitute
Common Stock for which the Substitute Option may then be exercised, and at the
request of each owner (the "Substitute Share Owner") of shares of Substitute
Common Stock (the "Substitute Shares"), the Substitute Option Issuer shall
repurchase the Substitute Shares at a price (the
-10-
<PAGE> 11
"Substitute Share Repurchase Price") equal to the greater of (A) the Highest
Closing Price and (B) the average exercise price per share paid by the
Substitute Share Owner for the Substitute Shares so designated, multiplied by
the number of Substitute Shares so designated. The term "Highest Closing Price"
shall mean the highest closing price for shares of Substitute Common Stock
within the six-month period immediately preceding the date the Substitute Option
Holder gives notice of the required repurchase of the Substitute Option or the
Substitute Share Owner gives notice of the required repurchase of the Substitute
Shares, as applicable.
(b) Each Substitute Option Holder and Substitute Share Owner,
as the case may be, may exercise its respective right to require the Substitute
Option Issuer to repurchase the Substitute Option and the Substitute Shares
pursuant to this Section 9 by surrendering for such purpose to the Substitute
Option Issuer, at its principal office, the agreement for such Substitute Option
(or, in the absence of such an agreement, a copy of this Agreement) and/or
certificates for Substitute Shares accompanied by a written notice or notices
stating that the Substitute Option Holder or the Substitute Share Owner, as the
case may be, elects to require the Substitute Option Issuer to repurchase the
Substitute Option and/or the Substitute Shares in accordance with the provisions
of this Section 9. As promptly as practicable, and in any event within five
business days after the surrender of the Substitute Option and/or certificates
representing Substitute Shares and the receipt of such notice or notices
relating thereto, the Substitute Option Issuer shall deliver or cause to be
delivered to the Substitute Option Holder the Substitute Option Repurchase Price
and/or to the Substitute Share Owner the Substitute Share Repurchase Price
therefor, or the portion(s) thereof which the Substitute Option Issuer is not
then prohibited under applicable law and regulation from so delivering.
(c) To the extent that the Substitute Option Issuer is
prohibited under applicable law or regulation, or as a consequence of
administrative policy, or as a result of a written agreement or other binding
obligation with a governmental or regulatory body or agency, from repurchasing
the Substitute Option and/or the Substitute Shares in part or in full, the
Substitute Option Issuer following a request for repurchase pursuant to this
Section 9 shall immediately so notify the Substitute Option Holder and/or the
Substitute Share Owner and thereafter deliver or cause to be delivered, from
time to time, to the Substitute Option Holder and/or the Substitute Share Owner,
as appropriate, the portion of the Substitute Option Repurchase Price and/or the
Substitute Share Repurchase Price, respectively, which it is no longer
prohibited from delivering, within five business days after the date on which
the Substitute Option Issuer is no longer so prohibited; provided, however, that
if the Substitute Option Issuer is at any time after delivery of a notice of
repurchase pursuant to subsection (b) of this Section 9 prohibited under
applicable law or regulation, or as a consequence of administrative policy, or
as a result of a written agreement or other binding obligation with a
governmental or regulatory body or agency, from delivering to the Substitute
Option Holder and/or the Substitute Share Owner, as appropriate, the Substitute
Option Repurchase Price and the Substitute Share Repurchase Price, respectively,
in full (and the Substitute Option Issuer shall use all reasonable efforts to
obtain all required regulatory and legal approvals as promptly as practicable in
order to accomplish such repurchase), the Substitute Option Holder and/or
Substitute Share Owner may revoke its notice of repurchase of the Substitute
Option or the Substitute Shares either in whole or to the extent of the
prohibition, whereupon, in the latter case, the Substitute Option Issuer shall
promptly (i) deliver to the Substitute Option Holder or
-11-
<PAGE> 12
Substitute Share Owner, as appropriate, that portion of the Substitute Option
Repurchase Price or the Substitute Share Repurchase Price that the Substitute
Option Issuer is not prohibited from delivering; and (ii) deliver, as
appropriate, either (A) to the Substitute Option Holder, a new Substitute Option
evidencing the right of the Substitute Option Holder to purchase that number of
shares of the Substitute Common Stock obtained by multiplying the number of
shares of the Substitute Common Stock for which the surrendered Substitute
Option was exercisable at the time of delivery of the notice of repurchase by a
fraction, the numerator of which is the Substitute Option Repurchase Price less
the portion thereof theretofore delivered to the Substitute Option Holder and
the denominator of which is the Substitute Option Repurchase Price, and/or (B)
to the Substitute Share Owner, a certificate for the Substitute Option Shares it
is then so prohibited from repurchasing.
10. The periods for exercise of certain rights under Sections 2, 6, 7
and 12 shall be extended: (i) to the extent necessary to obtain all regulatory
approvals for the exercise of such rights (for so long as the Holder, Owner,
Substitute Option Holder or Substitute Share Owner, as the case may be, is using
its reasonable best efforts to obtain such regulatory approvals), and for the
expiration of all statutory waiting periods; (ii) during the pendency of any
temporary restraining order, injunction or other legal bar to exercise of such
rights; and (iii) to the extent necessary to avoid liability under Section 16(b)
of the 1934 Act by reason of such exercise.
11. (a) Issuer hereby represents and warrants to Grantee as follows:
(i) Issuer has full corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Issuer Board and no other corporate proceedings on the part of Issuer are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and delivered by
Issuer.
(ii) Issuer has taken all necessary corporate action to
authorize and reserve and to permit it to issue, and at all times from the date
hereof through the termination of this Agreement in accordance with its terms
will have reserved for issuance upon the exercise of the Option, that number of
shares of Common Stock equal to the maximum number of shares of Common Stock at
any time and from time to time issuable hereunder, and all such shares, upon
issuance pursuant thereto, will be duly authorized, validly issued, fully paid,
nonassessable, and will be delivered free and clear of all claims, liens,
encumbrances and security interests and not subject to any preemptive rights.
(b) Grantee hereby represents and warrants to Issuer that:
(i) Grantee has full corporate power and authority to execute
and deliver this Agreement and, subject to any approvals or consents referred to
herein, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Grantee. This Agreement has been duly executed and delivered by Grantee.
-12-
<PAGE> 13
(ii) The Option is not being, and any shares of Common Stock or
other securities acquired by Grantee upon exercise of the Option will not be,
acquired with a view to the public distribution thereof and will not be
transferred or otherwise disposed of except in a transaction registered or
exempt from registration under the Securities Act.
12. Neither of the parties hereto may assign any of its rights or
obligations under this Agreement or the Option created hereunder to any other
person, without the express written consent of the other party, except that in
the event a Subsequent Triggering Event shall have occurred prior to an Exercise
Termination Event, Grantee, subject to the express provisions hereof, may assign
in whole or in part its rights and obligations hereunder within four months
following such Subsequent Triggering Event; provided, however, that until the
date 15 days following the date on which the FRB approves an application by
Grantee under the Bank Holding Company Act or the OTS approves an application by
Grantee under the HOLA to acquire the shares of Common Stock subject to the
Option, Grantee may not assign its rights under the Option except in (i) a
widely dispersed public distribution, (ii) a private placement in which no one
party acquires the right to purchase in excess of 2% of the voting shares of
Issuer, (iii) an assignment to a single party (e.g., a broker or investment
banker) for the sole purpose of conducting a widely dispersed public
distribution on Grantee's behalf or (iv) any other manner approved by the FRB or
the OTS.
13. Each of Grantee and Issuer will use all reasonable efforts to make
all filings with, and to obtain consents of, all third parties and governmental
authorities necessary to the consummation of the transactions contemplated by
this Agreement, including, without limitation, applying to the FRB under the
Bank Holding Company Act or the OTS under the HOLA for approval to acquire the
shares issuable hereunder and applying for listing or quotation of such shares
on any exchange or quotation system on which the Common Stock is then listed or
quoted.
14. The parties hereto acknowledge that damages would be an inadequate
remedy for a breach of this Agreement by either party hereto and that the
obligations of the parties hereto shall be enforceable by either party hereto
through injunctive or other equitable relief.
15. If any term, provision, covenant or restriction contained in this
Agreement is held by a court or a federal or state regulatory agency of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions and covenants and restrictions contained in this Agreement
shall remain in full force and effect, and shall in no way be affected, impaired
or invalidated. If for any reason such court or regulatory agency determines
that the Holder is not permitted to acquire, or Issuer or Substitute Option
Issuer, as the case may be, is not permitted to repurchase pursuant to Section 7
or Section 9, as the case may be, the full number of shares of Common Stock
provided in Section l(a) hereof (as adjusted pursuant to Section l(b) or Section
5 hereof), it is the express intention of Issuer (which shall be binding on the
Substitute Option Issuer) to allow the Holder to acquire or to require Issuer or
Substitute Option Issuer, as the case may be, to repurchase such lesser number
of shares as may be permissible, without any amendment or modification hereof.
-13-
<PAGE> 14
16. All notices, requests, claims, demands and other communications
hereunder shall be deemed to have been duly given when delivered in person, by
fax, telecopy or by registered or certified mail (postage prepaid, return
receipt requested) at the respective addresses of the parties set forth in the
Merger Agreement.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of Indiana, without regard to the conflict of law
principles thereof.
18. This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
and the same agreement.
19. Except as otherwise expressly provided herein, each of the parties
hereto shall bear and pay all costs and expenses incurred by it or on its behalf
in connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
20. Except as otherwise expressly provided herein or in the Merger
Agreement, this Agreement contains the entire agreement between the parties with
respect to the transactions contemplated hereunder and supersedes all prior
arrangements or understandings with respect thereof, written or oral. The terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement, except as expressly provided herein.
21. The transactions provided for in this Agreement are in addition to
and supplemental of the provisions of the Merger Agreement.
22. Capitalized terms used in this Agreement and not defined herein
shall have the meanings assigned thereto in the Merger Agreement.
-14-
<PAGE> 15
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
date first above written.
WESTWOOD HOMESTEAD FINANCIAL
CORPORATION
Attest:
/s/ Mary Ann Jacobs By: /s/ Michael P. Brennan
- -------------------------- ---------------------------------------------
Name: Mary Ann Jacobs Name: Michael P. Brennan
Title: Secretary Title: President and Chief Executive Officer
CAMCO FINANCIAL CORPORATION
Attest:
/s/ Anthony J. Popp By: /s/ Larry A. Caldwell
- -------------------------- ---------------------------------------------
Name: Anthony J. Popp Name: Larry A. Caldwell
Title: Secretary Title: President, Chief Executive Officer and
Chairman of the Board
-15-
<PAGE> 1
Exhibit 3(b)
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF
CAMCO FINANCIAL CORPORATION
The board of directors of Camco Financial recommends that the stockholders
approve the following amendment to Article FOURTH of the Camco Financial
certificate of incorporation to read as follows:
FOURTH: The total number of shares of stock which the corporation shall
have the authority to issue is Fifteen Million (15,000,000), of which stock
Fourteen Million Nine Hundred Thousand (14,900,000) shares shall be common
shares of the par value One Dollar ($1.00) each, amounting in the aggregate
to Fourteen Million Nine Hundred Thousand Dollars ($14,900,000), and One
Hundred Thousand (100,000) shares shall be preferred shares of the par
value One Dollar ($1.00) each, amounting in the aggregate to One Hundred
Thousand Dollars ($100,000). There is hereby granted to the Board of
Directors of the corporation the authority to fix by resolution or
resolutions any and all powers, designation, preferences and relative
participating, optional, optional or other rights, or the qualifications,
limitations or restrictions thereof, of shares of the preferred stock, or
of any series of the preferred stock, of the corporation that are permitted
by the General Corporation Law of Delaware to be fixed by the Board of
Directors, and such grant of authority shall include the power to specify
the number of shares to any series of the preferred stock of the
corporation.
<PAGE> 1
Exhibit 5
(513)723-4000
September 30, 1999
Board of Directors
Camco Financial Corporation
814 Wheeling Avenue
Cambridge, Ohio 43725
Gentlemen:
We are familiar with the proceedings taken and proposed to be taken by
Camco Financial Corporation ("Camco") in connection with the issuance and sale
by Camco of up to 1,365,554 shares of its common stock, $1.00 par value (the
"Shares"), in connection with Camco's acquisition of Westwood Homestead
Financial Corporation ("Westwood Homestead").
We have collaborated in the preparation of the Registration Statement
on Form S-4 (the "Registration Statement") filed by Camco with the Securities
and Exchange Commission for registration of the Shares under the Securities Act
of 1933, as amended. In connection therewith, we have examined, among other
things, such records and documents as we have deemed necessary in order to
express the opinions hereinafter set forth.
Based upon the foregoing, we are of the opinion that Camco is a duly
organized and legally existing corporation under the laws of the State of
Delaware. Assuming compliance with applicable federal and state securities laws,
we are also of the opinion that the Shares to be issued and sold by Camco in
exchange for the outstanding shares of common stock of Westwood Homestead, will
be validly issued and outstanding, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm in the Prospectus and
Joint Proxy Statement under the heading "Legal Opinion" included therein.
Very truly yours,
/s/ VORYS, SATER, SEYMOUR AND PEASE LLP
-----------------------------------
Vorys, Sater, Seymour and Pease LLP
<PAGE> 1
Exhibit 8
Board of Directors Board of Directors
Camco Financial Corporation Westwood Homestead Financial Corp.
814 Wheeling Avenue 3002 Harrison Avenue
Cambridge, Ohio 43725 Cincinnati, Ohio 45211
Dear Directors:
We have reviewed the Agreement of Merger and Plan of Reorganization
(the "Agreement") dated August 6, 1999, by and among Camco Financial
Corporation, a Delaware corporation ("Camco"), Westwood Homestead Financial
Corporation, an Indiana corporation ("WHFC"), and The Westwood Homestead Savings
Bank, a savings bank organized under Chapter 1161 of the laws of the State of
Ohio, which is a wholly-owned subsidiary of WHFC ("Bank"), with a view to
rendering our opinion on the federal income tax consequences of the proposed
merger of WHFC with and into Camco.
THE MERGER
----------
The transaction contemplated by the Agreement is a merger (the
"Merger") under the laws of the State of Delaware and the State of Indiana, and
applicable federal laws and regulations of WHFC with and into Camco. Camco will
be the surviving corporation, and the separate existence of WHFC will cease.
At the Effective Time of the Merger, each of the outstanding shares of
WHFC common stock (the "WHFC Shares") will be canceled and extinguished in
consideration and exchange for $5.20 in cash and 0.611 share of Camco common
stock (the "Camco Shares"), subject to adjustment to reflect any stock split,
stock dividend or distributions in, or combinations or subdivisions of, Camco
Shares, between August 6, 1999, and the Effective Time as defined in the
Agreement.
<PAGE> 2
Board of Directors
Page 2
No fractional shares will be issued, and cash will be paid in lieu of
fractional shares based on the average of the bid and asked price quotes of the
Camco Shares as reported on the NASDAQ National Market System by a mutually
agreed upon authoritative source on the last day of trading of Camco Shares
prior to the date of Closing.
Shareholders of WHFC are not entitled to the appraisal rights described
in Section 23-1-44-8 of the Indiana Business Corporation Law.
In connection with the Merger, management of Camco or WHFC have made
the following representations:
1. The fair market value of the Camco Shares and cash
consideration to be received by each WHFC stockholder
will be approximately equal to the fair market value
of the WHFC Shares surrendered by each such
stockholder pursuant to the Merger.
2. There is no plan or intention by the WHFC
stockholders who own one percent (1%) or more of WHFC
Shares, and, to the best of the knowledge of WHFC's
management, there is no plan or intention on the part
of the remaining WHFC stockholders, to sell,
exchange, or otherwise dispose of a number of Camco
Shares received in the Merger which would reduce the
WHFC's stockholders' ownership of Camco Shares to a
number of shares having a value, as of the date of
the Merger, of less than fifty percent (50%) of the
value of all of the formerly outstanding stock of
WHFC as of the same date. [For purposes of this
representation, WHFC Shares exchanged for cash or
other property or exchanged for cash in lieu of
fractional Camco Shares, will be treated as
outstanding WHFC Shares on the date of the Merger.
Moreover, WHFC Shares and Camco Shares held by the
WHFC stockholders and otherwise sold, redeemed, or
disposed of prior or subsequent to the Merger will be
considered in making this representation.]
3. The liabilities of WHFC assumed by Camco and the
liabilities to which the transferred assets of
WHFC are subject were incurred by WHFC in the
ordinary course of its business.
4. Camco has no plan or intention to reacquire any of
Camco Shares issued in the Merger.
<PAGE> 3
Board of Directors
Page 3
5. Camco has no plan or intention to sell or otherwise
dispose of any of the assets of WHFC acquired in the
Merger, except for dispositions made in the ordinary
course of business or transfers described in Section
368(a)(2)(C) of the Internal Revenue Code of 1986, as
amended (the "Code").
6. Following the Merger, Camco will continue the
historic business of WHFC or use a significant
portion of WHFC's business assets in a business.
7. WHFC, WHFC's stockholders, and Camco will pay their
respective expenses, if any, incurred in connection
with the Merger.
8. There is no intercorporate indebtedness existing
between Camco and WHFC that was issued, acquired, or
will be settled, at a discount.
9. No two parties to the Merger are "investment
companies" as defined in Section 368(a)(2)(F)(iii)
and (iv) of the Code.
10. WHFC is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of
Section 368(a)(3)(A) of the Code.
11. The fair market value of the assets of WHFC
transferred to Camco will equal or exceed the sum of
the liabilities assumed by Camco, plus the amount of
liabilities, if any, to which the transferred assets
are subject.
12. The payment of cash in lieu of fractional Camco
Shares is solely for the purpose of avoiding the
expense and inconvenience to Camco of issuing
fractional shares and does not represent separately
bargained-for consideration. The total cash
consideration that will be paid in the Merger to WHFC
stockholders instead of issuing fractional Camco
Shares will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to
the stockholders in exchange for their WHFC Shares.
The fractional share interests of each stockholder
will be aggregated, and no WHFC stockholder will
receive cash in an amount equal to or greater than
the value of one (1) full Camco Share.
<PAGE> 4
Board of Directors
Page 4
DISCUSSION
----------
Section 368(a)(1)(A) of the Code defines a reorganization to include a
statutory merger. Since the Merger will be a statutory merger under the laws of
the State of Delaware and the State of Indiana, this statutory requirement is
satisfied.
In addition, certain non-statutory requirements have been imposed by
the courts and by the Internal Revenue Service in determining whether
reorganizations are in compliance with Section 368 of the Code. These include
requirements that there be a business purpose for the reorganization, that there
be a continuity of the business enterprise of the acquired corporation, and that
the shareholders of all corporate parties to the reorganization emerge with some
continuing proprietary interest in the entity resulting from the reorganization.
Section 3.02 of Revenue Procedure 77-37, 1977-2 C.B. 568, provided that the
continuity of interest requirement is satisfied "if there is a continuing
interest through stock ownership in the acquiring or transferee corporation . .
. on the part of the former shareholders of the acquired or transferor
corporation which is equal in value, as of the effective date of the
reorganization, to at least fifty percent (50%) of the value of all of the
formerly outstanding stock of the acquired or transferor corporation as of the
same date."
Pursuant to the representations that have been made, it is our opinion
that the non-statutory requirements of business purpose and continuity of
business enterprise are satisfied. Furthermore, assuming that the value of Camco
Shares to be received by WHFC stockholders in the Merger exceeds the amount of
cash boot and cash paid for fractional shares, the continuity of interest
requirement will be satisfied in that WHFC stockholders will receive Camco
Shares equal in value to the WHFC Shares exchanged therefor, which will ensure
that WHFC stockholders will have a continuing interest through stock ownership
in Camco which is equal in value to at least fifty percent (50%) of the value of
all the formerly outstanding WHFC Shares as of the effective date of the Merger.
Even though the Merger will be a "tax-free" reorganization, WHFC
stockholders will receive tax free only Camco Shares in accordance with Section
354 of the Code. Section 356(a)(1) of the Code provides that if a stockholder of
the acquired corporation in a reorganization receives "boot" as well as
nonrecognition property, his or her gain, if any, is to be recognized, but in an
amount not in excess of the boot. Since WHFC stockholders will receive cash boot
for each WHFC Share in addition to receiving Camco Shares, their gain, if any,
must be recognized, but not in excess of the cash received. Section 356(c),
however, precludes a WHFC stockholder from recognizing any loss which may be
realized on the exchange of WHFC Shares for both Camco Shares and cash.
Section 356 also determines whether any gain realized will be taxed as
an ordinary dividend or as capital gain. Section 356(a)(2) provides that, if the
exchange has the "effect of the distribution of a dividend," the taxpayer's
recognized gain must be so treated to the
1
<PAGE> 5
Board of Directors
Page 5
extent of his ratable share of earnings and profits. Such dividend will qualify
for the dividends-received deduction generally allowed to corporations, subject
to certain limitations under the Code. In determining whether the receipt of
boot has the effect of the distribution of a dividend, the courts and the
Internal Revenue Service agree that the principles developed in interpreting the
redemption provisions of Section 302 of the Code are applicable to cases under
Section 356. WRIGHT V. U.S., 482 F.2d 800 (8th Cir. 1973); SHIMBERG V. U.S., 577
F.2d 283 (5th Cir. 1978); Rev. Rul. 74-515, 1974-2 C.B. 118; Rev. Rul. 74-516,
1974-2 C.B. 121. Furthermore, the precise formula for the application of a
Section 302(b)-type analysis to acquisitive reorganizations was prescribed by
the United States Supreme Court in COMMISSIONER V. CLARK, 489 U.S. 726, 109
S.Ct. 1455 (1989). In CLARK, the Court treated a tax-free exchange of stock
accompanied by cash boot as though the stockholder of the acquired corporation
had received only stock of the acquiring corporation, part of which stock was
immediately redeemed by the acquiring corporation for cash. The IRS reflected
this conclusion in Rev. Rul. 93-61, 1993-2 C.B. 188. This ordering almost always
will produce a disproportionate redemption under Section 302(b)(2) or at least a
meaningful reduction under Section 302(b)(1) and, therefore, result in a capital
gain treatment.
In general, in order for a holder of WHFC Shares to qualify for
substantially disproportionate redemption treatment under Section 302(b)(2), the
following conditions must be satisfied immediately after the Merger: such
stockholder owns less than fifty percent (50%) of the total combined voting
power of all classes of stock entitled to vote, and such stockholder's
percentage ownership of the total number of Camco Shares outstanding after the
Merger is less than eighty percent (80%) of the percentage of ownership that he
or she would have had of the total number of Camco Shares that would have been
outstanding after the Merger if all WHFC stockholders (including such
stockholders) had received solely Camco Shares with no cash boot.
This determination must take into account WHFC Shares or Camco Shares
actually owned by a WHFC stockholder or constructively owned by such stockholder
under the constructive ownership rules of Section 318 of the Code. Under Section
318, a stockholder is considered to own shares that are directly or indirectly
owned by certain members of his or her family or by certain trusts, partnerships
or corporations in which he or she has an ownership or beneficial interest. He
or she is also considered to own any shares with respect to which he or she
holds options. The constructive ownership rules are important in determining
whether the tests contained in Section 302 are met. In certain cases, a holder
of WHFC Shares may be deemed to own constructively Camco Shares held by persons
who do not own WHFC Shares and do not participate in the Merger.
<PAGE> 6
Board of Directors
Page 6
OPINIONS
--------
Therefore, based on the description of the Merger in the Agreement, the
representations set forth above upon which we have relied, and the foregoing
legal authorities, it is our opinion that:
1. The Merger will constitute a reorganization under Section
368(a)(1)(A) of the Code. Camco and WHFC will each be a
party to the reorganization.
2. No gain or loss will be recognized to WHFC upon the
transfer of its assets to Camco in exchange for Camco's
Shares, cash boot, and the assumption by Camco of
liabilities of WHFC.
3. No gain or loss will be recognized to Camco on the receipt
of the assets of WHFC in exchange for Camco Shares and
cash.
4. The basis of the assets of WHFC in the hands of Camco will
be the same as the basis of such assets in the hands of
WHFC immediately prior to the Merger.
5. The holding period of the assets of WHFC to be received by
Camco will include the period during which the assets were
held by WHFC.
6. The gain, if any, to be realized by a WHFC stockholder who
receives Camco Shares and cash in exchange for his or her
WHFC Shares will be recognized, but not in excess of the
amount of cash received. If the exchange has the effect of
the distribution of a dividend (determined with the
application of Section 318), then the amount of gain
recognized that is not in excess of such stockholder's
ratable share of undistributed earnings and profits will
be treated as a dividend. The determination of whether the
exchange has the effect of a distribution of a dividend
will be made on a stockholder-by-stockholder basis in
accordance with the principles set forth in COMMISSIONER
V. CLARK, 49 U.S. 726 (1989) and Rev. Rul. 93-61, 1993-2
C.B. 188. No loss will be recognized pursuant to Section
356(c).
7. The basis of the Camco Shares (including any fractional
share interest) to be received by a WHFC stockholder will
be the same as the basis of the WHFC Shares surrendered in
exchange therefor, decreased by the amount of cash
received, and increased by the amount of gain which was
recognized on the exchange. The holding period of Camco
Shares (including any fractional share interest) to be
received by such WHFC
2
<PAGE> 7
Board of Directors
Page 7
stockholder will be the same as the holding period of the
WHFC Shares surrendered in exchange therefor.
8. Payment of cash to a WHFC stockholder in lieu of
fractional Camco Shares will be treated as if such shares
were distributed as part of the exchange and then redeemed
by Camco. The payment received by a WHFC stockholder will
be treated as having been received as a distribution in
full payment and exchange for the shares redeemed as
provided in Section 302(a) of the Code.
OVERALL EVALUATION
------------------
Based upon, and subject to, the foregoing, it is our opinion that the
Merger should result in the federal income tax consequences described above.
This opinion is not binding on the Internal Revenue Service and no
ruling has been, or will be, requested from the Internal Revenue Service as to
any federal income tax consequence described above. Although this opinion is
based upon our best interpretation of current provisions of the Code and the
Treasury Department regulations promulgated thereunder, as well as existing
court decisions and administrative rulings and procedures, and sets forth the
conclusions we believe would be reached by a court if the issues were properly
briefed and presented to it, no assurance can be provided that a court in fact
would agree with our interpretation. Further, no assurance can be provided that
the applicable law will not change in a manner that will adversely affect these
consequences, and any such adverse change could be retroactive.
No opinion is expressed as to any federal income tax consequence
other than as specifically set forth herein, and no opinion is expressed with
respect to the amount or timing of any federal income tax deduction or credit or
with respect to any tax issue arising under state, local, or foreign tax
provisions. Further, any change in the facts as set forth herein or in the
Agreement or the representations could affect this opinion, perhaps in an
adverse manner.
Very truly yours,
Vorys, Sater, Seymour and Pease LLP
<PAGE> 1
Exhibit 20(a)
CAMCO FINANCIAL CORPORATION
814 WHEELING AVENUE
CAMBRIDGE, OHIO 43725
(614) 432-5641
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
Notice is hereby given that a Special Meeting of Stockholders of Camco
Financial Corporation, a Delaware corporation ("Camco Financial"), will be held
at _________________, on ________, 1999, at __:00 a.m., Eastern Time (the
"Special Meeting"), for the following purposes, each of which is described in
the accompanying Prospectus and Joint Proxy Statement:
1. To consider and vote upon a proposed amendment to Section
Fourth of the Certificate of Incorporation of Camco Financial
to increase the authorized number of shares of stock from
9,000,000 to 15,000,000 of which 14,900,000 shares shall be
common stock, $1.00 par value per share, and 100,000 shares
shall be preferred stock, $1.00 par value per share, as set
forth in the accompanying Prospectus and Joint Proxy
Statement;
2. To consider and vote upon the adoption of the Agreement of
Merger and Plan of Reorganization dated August 6, 1999, by and
among Camco Financial, Westwood Homestead Financial
Corporation and The Westwood Homestead Savings Bank, providing
for the merger of Westwood Homestead Financial Corporation
with and into Camco Financial; and
3. To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Only shareholders of Camco Financial at the close of business
on ________, 1999, will be entitled to receive notice of and to vote at the
Special Meeting and at any adjournments thereof. Whether or not you expect to
attend the Special Meeting, we urge you to consider the accompanying Proxy
Statement carefully and to SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY SO
THAT YOUR SHARES MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND THE PRESENCE OF
A QUORUM MAY BE ASSURED. The giving of a Proxy does not affect your right to
vote in person in the event you attend the Meeting.
By Order of the Board of Directors
Larry A. Caldwell
President and Chief Executive Officer
Cambridge, Ohio
________, 1999
<PAGE> 1
Exhibit 20(b)
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
3002 HARRISON AVENUE
CINCINNATI, OHIO 45211-5789
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held on ______________
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders (the
"Meeting") of Westwood Homestead Financial Corporation (the "Company"), will
beheld at _________________________ at ________ on __________________. A Proxy
Card and a Prospectus/Joint Proxy Statement for the Meeting are enclosed. The
Meeting is for the purpose of considering and acting upon the adoption of the
Agreement and Plan of Reorganization dated August 6, 1999, by and among Camco
Financial Corporation, The Westwood Homestead Savings Bank and the Company (the
"Agreement") and the transaction of such other matters as may properly come
before the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to come
before the Meeting.
Any action may be taken on the foregoing proposal at the Meeting on the
date specified above or on any date or dates to which, by original or later
adjournment, the Meeting may be adjourned. Stockholders of record at the close
of business on _______________ are the stockholders entitled to notice of and to
vote at the Meeting and any adjournments thereof.
You are requested to fill in and sign the enclosed form of proxy which
is solicited by the Board of Directors and to mail it promptly in the enclosed
envelope. The proxy will not be used if you attend and vote at the Meeting in
person.
BY ORDER OF THE BOARD OF DIRECTORS
MARY ANN JACOBS. SECRETARY
Cincinnati, Ohio
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY THE EXPENSE OF
FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. PLEASE ACT PROMPTLY.
<PAGE> 1
Exhibit 23(a)
Consent of KPMG LLP
The Board of Directors
Westwood Homestead Financial Corporation:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading of "Experts" in the prospectus.
/s/ KPMG LLP
Louisville, Kentucky
September 30, 1999
<PAGE> 1
Exhibit 23(b)
ACCOUNTANT'S CONSENT
We have issued our report dated February 25, 1999, accompanying the
consolidated financial statements of Camco Financial Corporation for the year
ended December 31, 1998 which are incorporated by reference in the Corporation's
Form S-4 to be filed with the Securities and Exchange Commission on or about
October 1, 1999. We hereby consent to the incorporation by reference of said
report in the Prospectus/Joint Proxy Statement.
Grant Thornton LLP
Cincinnati, Ohio
September 30, 1999
<PAGE> 1
Exhibit 23(d)
CONSENT OF TUCKER ANTHONY CLEARY GULL
September 29, 1999
We consent to the inclusion in this Registration Statement on Form S-4 of Camco
Financial Corporation of our opinion set forth as Annex C to the Joint Proxy
Statement/Prospectus, which is part of the Registration Statement, and to the
reference to our firm and summarization of our opinion in the Joint Proxy
Statement/Prospectus under the caption "Opinion of Tucker Anthony Cleary Gull."
Tucker Anthony Cleary Gull
/s/ Stephen Clinton
- -------------------
Stephen Clinton
Principal
<PAGE> 1
Exhibit 23(e)
CHARLES WEBB & COMPANY
A DIVISION OF
KEEFE, BRUYETTE & WOODS, INC.
CONSENT OF CHARLES WEBB & COMPANY,
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
September 30, 1999
We consent to the inclusion in this Registration Statement on Form S-4 of Camco
Financial Corporation of our opinion set forth as Annex B to the
Prospectus/Joint Proxy Statement, which is part of the Registration Statement,
and to the reference to our firm and summarization of our opinion in the
Prospectus/Joint Proxy Statement under the caption "Opinion of Charles Webb &
Company."
CHARLES WEBB & COMPANY,
A DIVISION OF KEEFE, BRUYETTE & WOODS, INC.
Investment Bankers and Financial Advisors
211 Bradenton o Dublin, Ohio 43017-3541 o 614-766-8400 o Fax: 614-766-8406
<PAGE> 1
Exhibit 99(a)
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CAMCO FINANCIAL CORPORATION
CAMCO FINANCIAL CORPORATION SPECIAL MEETING OF STOCKHOLDERS
_______, 1999
The undersigned stockholder of Camco Financial Corporation ("Camco
Financial") hereby constitutes and appoints __________ and ____________, or
either one of them, as the proxy or proxies of the undersigned with full power
of substitution and resubstitution, to vote at the Special Meeting of
Stockholders of Camco Financial to be held at _____________________, on
____________, 1999, at __:00 _.m. Eastern Daylight Time (the "Special Meeting"),
all of the shares of Camco common stock which the undersigned is entitled to
vote at the Special Meeting, or at any adjournment thereof, on each of the
following proposals, all of which are described in the accompanying Prospectus
and Joint Proxy Statement:
1. The adoption of the amendment to the Certificate of Incorporation to
increase the authorized number of shares of stock to _________:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The adoption of the Agreement of Merger and Plan of Reorganization
dated August 6, 1999, by and among Camco Financial, Westwood Homestead
Financial Corporation and The Westwood Homestead Savings Bank:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other business as may properly come
before the Special Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the proposals listed above.
UNLESS THIS PROXY IS REVOKED, THE SHARES OF COMMON STOCK REPRESENTED BY THIS
PROXY WILL BE VOTED AS DIRECTED. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSALS
STATED ABOVE.
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
<PAGE> 2
At the present time, the Board of Directors knows of no other business to be
presented at the Special Meeting.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Special Meeting of Stockholders of Camco Financial
and of the accompanying Prospectus and Joint Proxy Statement is hereby
acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
- ---------------------------- ------------------------------
Signature Signature
- ---------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.
<PAGE> 1
Exhibit 99(b)
REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
WESTWOOD HOMESTAED FINANCIAL CORPORATION
WESTWOOD HOMESTEAD FINANCIAL CORPORATION
SPECIAL MEETING OF STOCKHOLDERS
_______, 1999
The undersigned stockholder of Westwood Homestead Financial Corporation
("WHFC") hereby appoints __________, ____________ and ____________, or any one
of them, as the proxy or proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Special Meeting of Stockholders
of WHFC to be held at _____________________, on ____________, 1999, at __:00
_.m. Eastern Time (the "Special Meeting"), all of the shares of WHFC common
stock which the undersigned is entitled to vote at the Special Meeting, or at
any adjournment thereof, on the following proposal, which is described in the
accompanying Prospectus and Joint Proxy Statement:
The adoption of the Agreement of Merger and Plan of Reorganization
dated August 6, 1999, by and among Camco Financial Corporation,
Westwood Homestead Financial Corporation and The Westwood Homestead
Savings Bank:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The Board of Directors recommends a vote "FOR" the proposal listed above.
UNLESS THIS PROXY IS REVOKED, THE SHARES OF COMMON STOCK REPRESENTED BY THIS
PROXY WILL BE VOTED AS DIRECTED. WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE PROPOSAL
STATED ABOVE. IF ANY OTHER BUSINESS IS PRESENTED AT THE SPECIAL MEETING, THIS
PROXY WILL BE VOTED BY THOSE NAMED IN ACCORDANCE WITH THE DETERMINATION OF THE
WHFC BOARD OF DIRECTORS.
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
<PAGE> 2
At the present time, the Board of Directors knows of no other business to be
presented at the Special Meeting.
All Proxies previously given by the undersigned are hereby revoked.
Receipt of the Notice of the Special Meeting of Stockholders of WHFC and of the
accompanying Prospectus and Joint Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
- ---------------------------- ------------------------------
Signature Signature
- ---------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE U.S.A.
