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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
August 17, 1998
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MID-IOWA FINANCIAL CORP.
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(Exact name of registrant as specified in its Charter)
Delaware 0-20464 42-1389053
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification Number)
123 West 2nd Street, North, Newton, Iowa 50208
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code:(515)792-6236
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N/A
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(Former name or former address if changed since last report)<PAGE>
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ITEM 5. OTHER EVENTS
On August 17, 1998, the Registrant entered into an Agreement and
Plan of Reorganization (the "Agreement"), providing for the
acquisition of the Registrant by First Federal Savings Bank of
Siouxland ("First Federal"). The Agreement provides for the
conversion of each issued and outstanding share of the
Registrant's common stock into the right to receive $15.00 per
share in cash from First Federal. The acquisition is subject
to, among other conditions, the conversion of First Federal's
mutual holding company from mutual to stock form.
For information regarding the terms of the Agreement, including
the conditions which must be satisfied to complete the
acquisition, reference is made to the Agreement and to the press
release, dated August 17, 1998, which are attached hereto and
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS.
The following is a list of exhibits filed with this report.
Exhibit 2 -- Agreement and Plan of Reorganization, dated
August 17, 1998. (Schedules omitted. The
Registrant agrees to supplementally furnish
a copy of any omitted schedules to the
Commission upon request.)
Exhibit 20 -- Press release dated August 17, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
MID-IOWA FINANCIAL CORP.
DATE: August 17, 1998 By: /s/ Kevin D. Ulmer
--------------- ------------------------------
Kevin D. Ulmer
President, and Chief Executive
Officer
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
FIRST FEDERAL BANKSHARES, M.H.C.
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND
MID-IOWA FINANCIAL CORP.
AND
MID-IOWA SAVINGS BANK, FSB
Dated: August 17, 1998
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TABLE OF CONTENTS
Page No.
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . .2
THE REORGANIZATION. . . . . . . . . . . . . . . . . . . . .2
1.1. The Reorganization . . . . . . . . . . . . . . .2
1.2 Adoption and Execution and Delivery of
Documents providing for the Reorganization . . .3
1.3. Effective Time and Closing of the
Reorganization . . . . . . . . . . . . . . . . .3
1.4 Modification of Structure. . . . . . . . . . . .3
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . .4
EFFECT OF THE REORGANIZATION; CERTAIN ACTIONS IN
CONNECTION THEREWITH. . . . . . . . . . . . . . . . . . . .4
2.1. Effect of the Reorganization . . . . . . . . . .4
2.2. Effect on Common Stock of the Company and
First Federal. . . . . . . . . . . . . . . . . .4
2.3. First Federal to Make Cash Available . . . . . .5
2.4. Payment of Cash. . . . . . . . . . . . . . . . .5
2.5. Recapitalization or Stock Dividends. . . . . . .6
2.6. Company Stock Options. . . . . . . . . . . . . .6
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . .7
REPRESENTATIONS AND WARRANTIES OF MID-IOWA
AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . .7
3.1. Corporate Organization . . . . . . . . . . . . .7
3.2. Capitalization . . . . . . . . . . . . . . . . .8
3.3. Authorization . . . . . . . . . . . . . . . . . .9
3.4. No Violation . . . . . . . . . . . . . . . . . .9
3.5. Reports and Consolidated Financial Statements. .10
3.6. Consents and Approvals . . . . . . . . . . . . .11
3.7. Absence of Certain Changes . . . . . . . . . . .11
3.8. Employee and Employee Benefits Matters . . . . .12
3.9. Litigation . . . . . . . . . . . . . . . . . . .14
3.10. Tax Matters. . . . . . . . . . . . . . . . . . .14
3.11. Information in the Company Proxy Statement . . .15
3.12. Environmental Matters. . . . . . . . . . . . . .16
3.13. Insurance. . . . . . . . . . . . . . . . . . . .17
3.14. Compliance with Laws and Orders. . . . . . . . .18
3.15. Governmental Regulation. . . . . . . . . . . . .18
3.16. Contracts and Commitments. . . . . . . . . . . .18
3.17. Agreements with Directors, Officers and
Stockholders. . . . . . . . . . . . . . . . . .19
3.18. Accuracy of Information. . . . . . . . . . . . .19
3.19. Allowances for Losses and Real Estate Owned. . .19
3.20. Title to Assets; Leases. . . . . . . . . . . . .20
3.21. Business of Mid-Iowa . . . . . . . . . . . . . .20
3.22. Tax Matters. . . . . . . . . . . . . . . . . . .21
3.23. Certain Information. . . . . . . . . . . . . . .21
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ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . .21
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL . . . . . .21
4.1. Corporate Organization . . . . . . . . . . . . .21
4.2. Authorization. . . . . . . . . . . . . . . . . .21
4.3. No Violation . . . . . . . . . . . . . . . . . .22
4.4. Consents and Approvals . . . . . . . . . . . . .22
4.5. Information Supplied for Inclusion in the
Company Proxy Statement . . . . . . . . . . . .22
4.6. Accuracy of Information. . . . . . . . . . . . .22
4.7. Regulatory Approvals and No Adverse Change . . .22
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . .23
COVENANTS OF FIRST FEDERAL. . . . . . . . . . . . . . . . .23
5.1. Affirmative Covenants. . . . . . . . . . . . . .23
5.2. Negative Covenants . . . . . . . . . . . . . . .23
5.3. Breaches . . . . . . . . . . . . . . . . . . . .23
5.4. Filing of Applications . . . . . . . . . . . . .23
5.5. Supplement to First Federal Disclosure
Schedule. . . . . . . . . . . . . . . . . . . .24
5.6. Expenses . . . . . . . . . . . . . . . . . . . .24
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . .24
COVENANTS OF THE COMPANY AND MID-IOWA . . . . . . . . . . .24
6.1. Affirmative Covenants. . . . . . . . . . . . . .24
6.2. Negative Covenants . . . . . . . . . . . . . . .25
6.3. Report to First Federal. . . . . . . . . . . . .28
6.4. Breaches . . . . . . . . . . . . . . . . . . . .28
6.5. Supplement to Disclosure Schedule. . . . . . . .28
6.6. Consents and Approvals . . . . . . . . . . . . .28
6.7. Expenses . . . . . . . . . . . . . . . . . . . .28
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . .29
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . .29
7.1. Company Shareholders' Meeting. . . . . . . . . .29
7.2. Proxy Statement for Company Shareholders'
Meeting . . . . . . . . . . . . . . . . . . . .29
7.3. Cooperation; Regulatory Approvals. . . . . . . .29
7.4. Reports. . . . . . . . . . . . . . . . . . . . .30
7.5. Brokers or Finders.. . . . . . . . . . . . . . .30
7.6. Additional Agreements; Reasonable Efforts. . . .30
7.7. Release of Information.. . . . . . . . . . . . .30
7.8. Advisory Directors.. . . . . . . . . . . . . . .31
7.9. Access to Properties and Records;
Confidentiality . . . . . . . . . . . . . . . .31
7.10. Certain Policies . . . . . . . . . . . . . . . .32
7.11. Employee Benefit Plans; Employment
Arrangements. . . . . . . . . . . . . . . . . .32
7.12. D&O Indemnification and Insurance. . . . . . . .33
7.13. Conversion And Offering. . . . . . . . . . . . .34<PAGE>
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ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . .35
CONDITIONS TO THE OBLIGATIONS OF FIRST FEDERAL. . . . . . .35
8.1. No Material Adverse Change . . . . . . . . . . .35
8.2. Representations and Warranties . . . . . . . . .35
8.3. Performance and Compliance . . . . . . . . . . .35
8.4. No Proceeding or Litigation. . . . . . . . . . .35
8.5. Consents Under Agreements. . . . . . . . . . . .36
8.6. No Amendments to Resolutions.. . . . . . . . . .36
8.7. Certificate of Mid-Iowa Officers.. . . . . . . .36
8.8. Corporate Proceedings. . . . . . . . . . . . . .36
8.9. Legal Opinion. . . . . . . . . . . . . . . . . .36
8.10. Closing Book Value . . . . . . . . . . . . . . .36
8.11. Conversion . . . . . . . . . . . . . . . . . . .36
8.12. Non-Competition Agreements . . . . . . . . . . .37
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . .37
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND MID-IOWA .37
9.1. Representations and Warranties . . . . . . . . .37
9.2. Performance and Compliance . . . . . . . . . . .37
9.3 Corporate Proceedings. . . . . . . . . . . . . .37
9.4. Certificate of First Federal Officers. . . . . .37
9.5. Legal Opinion. . . . . . . . . . . . . . . . . .37
9.6. Opinion of Financial Advisor . . . . . . . . . .37
ARTICLE X. . . . . . . . . . . . . . . . . . . . . . . . . . .38
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES. . . . . . . .38
10.1. Governmental Approvals . . . . . . . . . . . . .38
10.2. No Injunctions or Restraints . . . . . . . . . .38
10.3. Stockholder Approval . . . . . . . . . . . . . .38
10.4. Corporate Proceedings. . . . . . . . . . . . . .38
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . .39
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . .39
11.1. Reasons for Termination. . . . . . . . . . . . .39
11.2. Effect of Termination. . . . . . . . . . . . . .41
ARTICLE XII. . . . . . . . . . . . . . . . . . . . . . . . . .41
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . .41
12.1. Nonsurvival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . .41
12.2. Expenses and Termination Fee . . . . . . . . . .41
12.3. Waivers; Amendments. . . . . . . . . . . . . . .42
12.4. Assignment; Parties in Interest. . . . . . . . .42
12.5. Entire Agreement . . . . . . . . . . . . . . . .42
12.6. Captions and Counterparts. . . . . . . . . . . .43
12.7. Certain Definitions. . . . . . . . . . . . . . .43
12.8. Enforcement of this Agreement. . . . . . . . . .43
12.9. Governing Law. . . . . . . . . . . . . . . . . .44
12.10. Notices. . . . . . . . . . . . . . . . . . . . .44
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SCHEDULES
Schedule 2.6
Schedule 3.1(a)
Schedule 3.2(c)
Schedule 3.2(d)
Schedule 3.4
Schedule 3.5
Schedule 3.6
Schedule 3.7
Schedule 3.8(a)
Schedule 3.8(b)
Schedule 3.8(c)
Schedule 3.8(e)
Schedule 3.9
Schedule 3.10
Schedule 3.12(f)
Schedule 3.13
Schedule 3.14
Schedule 3.15
Schedule 3.16
Schedule 3.17
Schedule 3.20(b)
Schedule 3.21(b)
Schedule 6.2(b)
Schedule 7.5
Schedule 7.11(c)
Schedule 7.11(f)
Schedule 7.12
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AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization, dated as of
August 17, 1998 (the "Agreement"), is entered into by and among
First Federal Bankshares, M.H.C. ("Bancorp"), First Federal
Savings Bank of Siouxland ("First Federal"), Mid-Iowa Financial
Corp. (the "Company") and Mid-Iowa Savings Bank, FSB
("Mid-Iowa").
R E C I T A L S:
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WHEREAS, First Federal is a federally-chartered stock
savings bank headquartered in Sioux City, Iowa, 53.8% of the
issued and outstanding capital stock of which is owned by
Bancorp, a federally-chartered mutual holding company;
WHEREAS, the Company is a company organized under the laws
of the State of Delaware, is registered with the Office of
Thrift Supervision as a unitary savings and loan holding
company, and owns 100% of the issued and outstanding common
stock of Mid-Iowa;
WHEREAS, Mid-Iowa is a federally-chartered savings bank
headquartered in Newton, Iowa;
WHEREAS, the parties desire to provide for First Federal's
acquisition of Mid-Iowa pursuant to the transactions set forth
in this Agreement on or after the Effective Time (as defined in
Section 1.3 hereof);
WHEREAS, in connection with the Reorganization, as defined
herein, the outstanding capital stock of the Company will be
converted into the right to receive cash;
WHEREAS, it is intended that First Federal and Mid-Iowa
will be merged such that First Federal will be the surviving
bank and that the resulting savings institution will expand its
market area and achieve certain economies of scale and
efficiencies as a result of the Reorganization, as defined
herein;
WHEREAS, in connection with the Reorganization, it is
intended that Bancorp will convert from a mutual holding company
to a stock holding company (the "Conversion") and conduct an
offering of shares of its common stock in a subscription and
community offering, and in an exchange offering to the existing
public shareholders of First Federal (the "Offering").
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties, and agreements
herein contained, and in order to set forth the conditions upon
which the foregoing Reorganization, as defined herein, will be
carried out, the parties, intending to be legally bound, hereby
agree as follows:
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ARTICLE I.
THE REORGANIZATION
1.1. THE REORGANIZATION. Subject to the terms and
conditions of this Agreement, and in accordance with the
provisions of Section 18(c) of the Federal Deposit Insurance Act
(12 U.S.C. 1828(c)), as amended (the "Bank Merger Act"), the
Home Owners' Loan Act (the "HOLA"), and the rules and
regulations promulgated thereunder including 12 C.F.R. 563.22
and 574.3(a) (the "Thrift Regulations"), at the Effective Time,
the parties hereby agree that the following corporate
transactions (collectively referred to herein as the
"Reorganization") shall occur substantially concurrently in the
order set forth below in accordance with applicable laws and
regulations and the provisions of this Agreement:
(a) Pursuant to the Agreement of Merger, attached hereto
as Exhibit A, among First Federal, the Company, and a
to-be-formed Delaware corporation which is to be wholly owned by
First Federal, such to-be-formed corporation shall be merged
with and into the Company (the "Company Merger") and, in
connection therewith, and subject to the rights of dissenting
stockholders which have been asserted and duly perfected in
accordance with the provisions of Section 262 of the Delaware
General Corporation Law, each share of common stock, $.01 par
value per share, of the Company ("Company Common Stock") and
each option to purchase such stock granted pursuant to the
Company's stock option plans, as identified herein, outstanding
immediately prior to the effective time of the Company Merger
shall be canceled in exchange for the right to receive the cash
payments specified in such Agreement of Merger, with the result
that the Company will become a wholly owned subsidiary of First
Federal.
(b) Pursuant to the Plan of Complete Liquidation and
Dissolution (the "Plan"), attached hereto as Exhibit B, the
Company shall be liquidated into First Federal, immediately
following consummation of the transactions referred to in
Section 1.1(a) hereof, with the result that First Federal will
acquire all of the assets and liabilities of the Company and the
Company shall cease to exist.
(c) Pursuant to the Agreement of Merger, attached hereto
as Exhibit C, between Mid-Iowa and First Federal, Mid-Iowa shall
merge with and into First Federal (the "Bank Merger")
immediately following consummation of the transactions referred
to in Section 1.1(b) hereof, with the result that First Federal
will acquire all of the assets and liabilities of Mid-Iowa and
Mid-Iowa shall cease to exist.
(d) Upon the consummation of the Reorganization, the
separate existence of the Company and Mid-Iowa shall cease, and
First Federal shall continue as the surviving institution in the
Bank Merger.
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1.2 ADOPTION AND EXECUTION AND DELIVERY OF DOCUMENTS
PROVIDING FOR THE REORGANIZATION. Promptly following the
formation of the to-be-formed corporation referred to in Section
1.1(a) hereof, the Company shall execute and deliver the
Agreement of Merger included as Exhibit A hereto and First
Federal and such to-be-formed corporation shall execute and
deliver such Agreement of Merger, as applicable. Promptly upon
consummation of the transactions contemplated in Section 1.1(a)
hereof, First Federal shall adopt the Plan included as Exhibit B
hereto in its capacity as sole stockholder of the Company.
Promptly upon consummation of the transactions contemplated by
Sections 1.1(a) and (b) hereof, First Federal and Mid-Iowa shall
execute and deliver the Agreement of Merger included as Exhibit
C hereto and First Federal shall adopt such agreement in its
capacity as the sole stockholder of Mid-Iowa.
1.3. EFFECTIVE TIME AND CLOSING OF THE REORGANIZATION.
As soon as practicable after each of the conditions set forth in
Articles VIII, IX and X hereof have been satisfied or waived,
First Federal and Mid-Iowa will file, or cause to be filed,
articles of combination with the Office of Thrift Supervision
(the "OTS"), which articles of combination shall be in the form
required by and executed in accordance with the Thrift
Regulations. The Bank Merger shall become effective at the time
the articles of combination for such merger are endorsed by the
OTS pursuant to Section 552.13(k) of the Thrift Regulations (the
"Effective Time"). If (a) this Agreement and the transactions
contemplated hereby have been duly approved as required by the
stockholders of the Company, and (b) all relevant conditions of
this Agreement have been satisfied or waived and all applicable
waiting periods have expired, the closing (the "Closing") shall
take place within thirty (30) business days thereafter, on such
date as First Federal and Mid-Iowa shall agree, at the executive
offices of First Federal or at such other time and at such other
location mutually acceptable to First Federal and Mid-Iowa. At
the Closing, the parties hereto will exchange certificates,
letters and other documents as required hereby and will cause
the filing described in this Section 1.3 with respect to the
Bank Merger to be made. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.4 MODIFICATION OF STRUCTURE. Notwithstanding any
provision of this Agreement to the contrary, First Federal may
elect, subject to the filing of all necessary applications and
the receipt of all required regulatory approvals, to modify the
structure of the transactions contemplated hereby so long as (i)
there are no material adverse federal income tax consequences to
the stockholders of the Company as a result of such
modification, (ii) the consideration to be paid to holders of
Company Common Stock under this Agreement is not thereby changed
in kind or reduced in amount because of such modification, and
(iii) such modification will not be likely to materially delay
or jeopardize receipt of any required regulatory approvals
required hereunder, or otherwise impede the consummation of the
transactions contemplated hereby.
3<PAGE>
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ARTICLE II.
EFFECT OF THE REORGANIZATION; CERTAIN ACTIONS IN CONNECTION
THEREWITH
2.1. EFFECT OF THE REORGANIZATION.
(a) First Federal, as the surviving institution in
the Bank Merger, shall possess all of the properties and rights
and be subject to all of the liabilities and obligations of
Mid-Iowa, all as more fully described in the Merger Agreement
and the Thrift Regulations. The name of First Federal, as the
surviving institution in the Bank Merger, will be "First Federal
Savings Bank of Siouxland" or such other name as determined by
the Board of Directors of First Federal, subject to any required
regulatory approval.
(b) At the Effective Time, each share of capital
stock of the Company issued and outstanding immediately prior
thereto (except shares as to which the holders have perfected
dissenters' rights in accordance with Section 262 of the
Delaware General Corporation Law) shall, by virtue of the
Reorganization, be canceled. No new shares of the capital stock
or other securities or obligations of First Federal shall be
issued or be deemed issued with respect to or in exchange for
such canceled shares, and such canceled shares of capital stock
shall not be converted into any shares or other securities or
obligations of First Federal.
(c) The Charter and Bylaws of First Federal, as in
effect immediately prior to the Effective Time, shall be the
Charter and Bylaws of First Federal, as the surviving
institution of the Bank Merger.
(d) Except as otherwise contemplated hereby, the
directors and officers of First Federal immediately prior to the
Effective Time shall be the directors and officers of First
Federal, as the surviving institution of the Bank Merger, and
shall continue in office until their successors are duly elected
or otherwise duly selected.
(e) All deposit accounts of Mid-Iowa existing
immediately prior to the Bank Merger shall, upon consummation of
the Bank Merger, remain insured by the Federal Deposit Insurance
Corporation ("FDIC") to the fullest extent permitted by law and
regulation.
2.2. EFFECT ON COMMON STOCK OF THE COMPANY AND FIRST
FEDERAL.
(a) As of the Effective Time, by virtue of the
Reorganization and without any action except as specified herein
on the part of the holders of shares of common stock, $.01 par
value, of the Company, each issued and outstanding share of
Company Common Stock (except with respect to the rights of
dissenting shareholders of the Company) shall be converted into
the right to receive $15.00 in cash (the "Purchase Price"), and
all outstanding certificates representing Company Common Stock
shall thereafter represent solely the right to receive the
Purchase Price. Any holders of dissenting shares
4<PAGE>
<PAGE>
shall be entitled to payment for such shares only to the extent
permitted by and in accordance with the provisions of Section
262 of the Delaware General Corporation Law, with funds provided
by First Federal. The Company shall give First Federal prompt
notice of any written demand for the payment of the fair value
of any shares of Company Common Stock, withdrawals of such
demands, and any other instruments served pursuant to the
Delaware General Corporation Law and received by the Company.
The Company shall give First Federal the opportunity to
participate in all negotiations and proceedings with respect to
such demands, and shall not voluntarily make any payment with
respect to any demands for payment of fair value or settle or
offer to settle any such demands. All shares of Company Common
Stock which are held in the treasury of the Company or Mid-Iowa
or by any direct or indirect wholly-owned subsidiary of the
Company and any shares of Company Common Stock owned by First
Federal or any direct or indirect wholly-owned subsidiary or
parent of First Federal shall be canceled and no consideration
shall be paid or delivered in exchange therefor. At the
Effective Time, the stock transfer books of the Company shall be
closed and no transfer of Company Common Stock by any holder
thereof shall thereafter be made or recognized.
(b) In the event the Closing has not occurred by April
15, 1999, then the aggregate Purchase Price payable under
Section 2.2(a) shall be increased by $3,700 per day for each day
from April 16, 1999 to the date immediately preceding the
Closing (the "Purchase Price Adjustment"). The per share
Purchase Price shall be increased by an amount equal to the
Purchase Price adjustment divided by the number of shares of
Company Common Stock outstanding immediately prior to the
Effective Time, rounded to the nearest $.01.
2.3. FIRST FEDERAL TO MAKE CASH AVAILABLE. At the
Effective Time, First Federal shall make available to the
Exchange Agent (as defined in Section 2.4(a) hereof) hereof, the
aggregate amount of cash payable pursuant to Section 2.2
hereof.
2.4. PAYMENT OF CASH.
(a) At least twenty (20) days before the Effective
Time, First Federal shall designate an exchange agent (the
"Exchange Agent") in connection with the Reorganization. As
soon as practicable after the Effective Time, but in no event
later than ten (10) days thereafter, the Exchange Agent shall
send a notice and form of letter of transmittal to each holder
of record of Company Common Stock at the Effective Time advising
such stockholder of the effectiveness of the Reorganization and
the procedures for surrendering to the Exchange Agent
outstanding certificates formerly evidencing shares of Company
Common Stock. Each holder of shares of Company Common Stock who
thereafter delivers his or her certificate or certificates
representing such shares to the Exchange Agent shall be mailed a
check for an amount, without interest, equal to the number of
shares represented by the certificate or certificates so
surrendered to the Exchange Agent multiplied by the Purchase
Price. Upon surrender, each certificate evidencing Company
Common Stock shall be canceled. Until so surrendered, each
outstanding certificate which prior to the Effective Time
evidenced shares of Company Common Stock will be deemed for all
purposes (except as otherwise provided in Section 2.2 hereof) to
evidence the right to receive cash, without interest, equal to
number of shares represented by the certificate or certificates
multiplied by the Purchase Price. After the
5<PAGE>
<PAGE>
Effective Time, there shall be no further registration of
transfers on the records of the Company of shares of Company
Common Stock and, if a certificate evidencing such shares is
presented for transfer, it shall be canceled in exchange for a
check (except as otherwise provided in Section 2.2 hereof) in
the appropriate amount as calculated above. Notwithstanding any
provision of this Agreement, neither the Exchange Agent nor any
person, firm or entity shall be liable or obligated to any
former holder of any share of Company Common Stock (or to anyone
claiming through any such former holder) with respect to amounts
to which any such holder would have been entitled as a
consequence of the Reorganization, if such amounts have been
paid, or are payable, to any public official pursuant to any
abandoned property, escheat or similar laws.
(b) If delivery of all or any part of the cash to be
paid in connection with the Reorganization is to be paid to a
person other than the person in whose name the certificate
surrendered in exchange therefor is registered, it shall be a
condition to such delivery that the certificate surrendered in
exchange shall be properly endorsed and otherwise in proper form
for transfer and that the person requesting such a delivery pay
to the Exchange Agent any transfer or other taxes required by
reason of such delivery in any name other than that of the
registered holder of the certificate surrendered or establish to
the satisfaction of the Exchange Agent that such tax has been
paid or is not payable.
(c) In the event any certificate for Company Common
Stock shall have been lost, stolen or destroyed, the Exchange
Agent shall deliver (except as otherwise provided in Section 2.2
hereof) in exchange for such lost, stolen or destroyed
certificate, upon the making of an affidavit of that fact by the
holder thereof, the cash to be paid in the Reorganization as
provided for herein; provided, however, that First Federal may,
in its sole discretion and as a condition precedent to the
delivery thereof, require the owner of such lost, stolen or
destroyed certificate to deliver a bond in such reasonable sum
as First Federal may direct as indemnity against any claim that
may be made against First Federal, the Company, the Exchange
Agent or any other party with respect to the certificate alleged
to have been lost, stolen or destroyed.
2.5. RECAPITALIZATION OR STOCK DIVIDENDS. If between
the date of this Agreement and the Effective Time, a share of
Company Common Stock shall be changed into a different number of
shares of Company Common Stock or a different class of shares by
reason of reclassification, recapitalization, split-up, exchange
of shares or readjustment, or if a stock dividend shall be
declared with a record date within such period, then the
Purchase Price shall be appropriately and proportionately
adjusted.
2.6. COMPANY STOCK OPTIONS. Effective as of the
Effective Time, the Company shall terminate its 1992 and 1997
Stock Option Plans (the "Company Option Plans") and each of the
200,296 outstanding options (individually, an "Option") granted
under the Company Option Plan shall be converted to the right to
receive the amount by which the Purchase Price exceeds the
exercise price per share of Company Common Stock under such
Option. The amount received by each option holder will be
reduced by any applicable taxes that First Federal is required
to withhold. The Company shall use its best efforts to receive,
by no later than the Effective Time, a cancellation agreement
from each holder (the "Cancellation Agreements") acknowledging
such cancellation and termination of the Option
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as of the Effective Time. In consideration of the foregoing,
First Federal or the Company shall make such cash payment to the
holder of each Option at the later of: (i) the receipt from
such holder of a Cancellation Agreement, or (ii) the Effective
Time. The number of shares of Company Common Stock which are
issuable upon exercise of Options and the holders thereof as of
the date hereof are set forth in Schedule 2.6 of the Company
Disclosure Schedules which are attached hereto and incorporated
herein (the "Company Disclosure Schedule"). The terms of each
Option shall, in accordance with its terms, be subject to
further adjustment as appropriate to reflect any stock split,
stock dividend, recapitalization or other similar transaction
with respect to Company Common Stock subsequent to the date
hereof.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF MID-IOWA AND THE COMPANY
Mid-Iowa and the Company hereby represent and warrant
to First Federal as follows:
3.1. CORPORATE ORGANIZATION.
(a) The Company is duly organized, validly existing and in
good standing under the laws of the State of Delaware. The
Company has the full corporate power and authority to own or
lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the
operations, assets, or financial condition of the Company and
its subsidiaries taken as a whole. The Company is duly
registered with the OTS under the HOLA as a unitary savings and
loan holding company. Other than as set forth in Company
Disclosure Schedule 3.1(a) and shares of capital stock in
Mid-Iowa and its subsidiaries, as identified below
(collectively, the "Company Subsidiaries") the Company does not
own or control or have the right to acquire, directly or
indirectly, an equity interest in any corporation, company,
association, partnership, joint venture or other entity.
(b) Mid-Iowa is a stock savings bank organized, validly
existing and in good standing under the laws of the United
States, has the full corporate power and authority to own or
lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or
qualified to do business and is in good standing in each
jurisdiction in which the nature of the business conducted by it
or the character or location of the properties and assets owned
or leased by it makes such licensing or qualification necessary,
except where the failure to be so licensed, qualified or in good
standing would not have a material adverse effect on the
operations, assets, or financial condition of the Company and
the Company Subsidiaries taken as a whole. All eligible
accounts of depositors in Mid-Iowa are insured by the Savings
Association Insurance Fund ("SAIF") administered by the FDIC
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to the fullest extent permitted by law. Mid-Iowa is a member of
the Federal Home Loan Bank of Des Moines.
(c) The Company has heretofore delivered to First Federal
true and complete copies of the certificate of incorporation,
charter, organization certificate or other chartering instrument
and bylaws of the Company, Mid-Iowa, and each Company Subsidiary
in effect on the date hereof. The minute books of the Company
and each Company Subsidiary contain accurate minutes of all
meetings and accurate consents in lieu of meetings of the board
of directors (and any committee thereof) and of the
stockholder(s) of the Company and each Company Subsidiary
recorded therein, and as of the Effective Time such minute books
will contain accurate minutes of all such meetings and such
consents in lieu of meetings respectively held or executed prior
thereto. These minute books accurately reflect all transactions
referred to in such minutes and consents in lieu of meetings and
disclose all material corporate actions of the stockholder(s)
and boards of directors of the Company and the Company
Subsidiaries and all committees thereof. Except as reflected in
such minute books, there are no minutes of meetings or consents
in lieu of meetings of the boards of directors (or any committee
thereof) or of the stockholder(s) of the Company or any Company
Subsidiary.
3.2. CAPITALIZATION.
(a) The authorized capital stock of the Company consists
of 2,000,000 shares of Company Common Stock, par value $.01 per
share and 500,000 shares of preferred stock, par value $.01 per
share. As of the date of this Agreement, there were issued and
outstanding 1,734,548 shares of Company Common Stock and no
shares of preferred stock. On such date, there were no shares of
Company Common Stock held by the Company as treasury stock. All
of such issued and outstanding shares of Company Common Stock
are validly issued, fully paid and nonassessable and not issued
in violation of any preemptive rights. As of the date hereof, no
shares of serial preferred stock were issued and outstanding.
Except pursuant to its stock option plans, the Company does not
have any arrangements or commitments obligating it to issue or
sell or otherwise dispose of, or to purchase or redeem, shares
of its capital stock or any securities convertible into or
having the right to purchase shares of its capital stock. There
are no agreements, understandings or commitments relating to the
right of the Company to vote or to dispose of shares of the
capital stock or other ownership interests of any subsidiary of
the Company.
(b) All of the outstanding shares of capital stock or
other ownership interests of each Company Subsidiary have been
duly authorized and validly issued, are fully paid and
nonassessable and are owned, directly or indirectly, by the
Company or Mid-Iowa, as the case may be, free and clear of any
liens, encumbrances, charges, restrictions or rights of third
parties of any kind whatsoever. Mid-Iowa does not have any
arrangements or commitments obligating it to issue or sell or
otherwise dispose of, or to purchase or redeem, shares of its
capital stock or any securities convertible into or having the
right to purchase shares of its capital stock. There are no
agreements, understandings or commitments relating to the right
or obligation of Mid-Iowa to issue, to vote or to dispose of
shares of its capital stock or the shares of capital stock of
any Company Subsidiary.
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(c) Schedule 3.2(c) of the Company Disclosure Schedule
sets forth a complete and accurate list of all options to
purchase Company Common Stock that have been granted and which
remain unexercised, including the dates of grant, exercise
prices, dates of vesting, dates of termination and shares
subject to option for each grant.
(d) To the best of the Company's knowledge, no person or
group (as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934 (the "Exchange Act"), other than
as set forth at Schedule 3.2(d) of the Company Disclosure
Schedule, is the beneficial owner of more than 5% of the
outstanding Company Common Stock.
3.3. AUTHORIZATION.
(a) The Company has full corporate power and authority to
execute and deliver this Agreement and the Agreement of Merger
included as Exhibit A hereto and, subject to the consents and
approvals of federal and state regulatory authorities referred
to in Section 3.6 hereof and the approval of the stockholders of
the Company, to consummate the Company Merger and to carry out
its obligations hereunder and thereunder. The execution and
delivery of this Agreement and the Agreement of Merger included
as Exhibit A hereto and the consummation of the Reorganization
by the Company have been duly authorized by the board of
directors of the Company and, except for the approval of the
stockholders of the Company, no other corporate proceedings on
the part of the Company are necessary to consummate the
transactions so contemplated. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a
valid and legally binding obligation of the Company enforceable
in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and
except that the availability of equitable remedies (including,
without limitation, specific performance) is within the
discretion of the appropriate court.
(b) Promptly following formation of the to-be-formed
corporation referred to in Section 1.1(a) hereof, the Agreement
of Merger included as Exhibit A hereto will be duly and validly
executed by the Company and, upon such execution and delivery
and the execution and delivery thereof by the other parties
thereto, will constitute a valid and legally binding obligation
of the Company enforceable in accordance with its terms, except
as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except that the availability of
equitable remedies (including, without limitation, specific
performance) is within the discretion of the appropriate court.
3.4. NO VIOLATION. None of the execution and delivery
of this Agreement and the agreements included as Exhibits A and
B hereto by the Company and Mid-Iowa, as applicable, nor the
consummation by the Company and Mid-Iowa of the transactions
contemplated hereby and thereby and the Plan in accordance with
their respective terms, as applicable, nor compliance by the
Company or Mid-Iowa with any of their respective terms, as
applicable, will (i) violate any provision of the Company's or
Mid-Iowa's certificate of incorporation, charter or other
chartering instrument or bylaws, (ii) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction
2<PAGE>
<PAGE>
applicable to the Company, Mid-Iowa, or any Company Subsidiary
or any of their properties or assets, or (iii) except as set
forth at Schedule 3.4, violate, conflict with, result in a
breach of any provisions of, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default), under, result in the termination or cancellation of,
accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other
encumbrance upon any of the respective properties or assets of
the Company, Mid-Iowa, or any Company Subsidiary under the
terms, conditions or provisions of any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company, Mid-Iowa, or any
Company Subsidiary is a party, or by which they or any of their
respective properties or assets may be bound or affected,
except, with respect to clause (iii) above, such as individually
or in the aggregate will not have a material adverse effect on
the operations, assets, or financial condition of the Company
and the Company Subsidiaries taken as a whole and which will not
prevent or delay the consummation of the transactions
contemplated by this Agreement.
3.5. REPORTS AND CONSOLIDATED FINANCIAL STATEMENTS.
(a) The Company and Mid-Iowa have previously furnished First
Federal with true and complete copies of (a) all annual reports,
quarterly reports, proxy statements, financial statements, or
any other documents or material provided by the Company to its
stockholders since January 1, 1994, (b) all call reports and
other reports filed by Mid-Iowa with the OTS since January 1,
1994, and (c) the audited financial statements of the Company
for the fiscal years ended September 30, 1995, 1996 and 1997.
As of their respective dates, such reports and statements did
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim
financial statements of the Company, including any financial
statements included in such reports or otherwise delivered to
First Federal (collectively referred to herein as the "Company
Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes
thereto) and fairly present the financial position of the
Company or Mid-Iowa, as the case may be, as of the dates thereof
and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the
unaudited interim financial statements, to normal year-end audit
adjustments, any other adjustments described therein, and the
absence of certain footnotes. Except as set forth in Schedule
3.5 to the Company Disclosure Schedule, since September 30, 1997
neither the Company or Mid-Iowa, or any Company Subsidiary, has
suffered a Material Adverse Effect (as that term is defined in
Section 12.7 hereof) and the Company is not aware of any event
or circumstance, or series of events and circumstances, which is
reasonably likely to result in a Material Adverse Effect to the
Company or Mid-Iowa. The books and records of the Company and
Mid-Iowa have been, and are being, maintained in accordance with
applicable legal and accounting requirements and reflect only
actual transactions. Except and to the extent reflected,
disclosed or provided for in the Company Financial Statements,
neither the Company, nor Mid-Iowa nor any Company Subsidiary
had, as of the date of the Company Financial Statements, any
liabilities, whether absolute, accrued, contingent or otherwise,
material to the business, operations, assets or financial
condition of the Company.
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(b) Mid-Iowa has filed all reports, together with any
amendments required to be made with respect thereto, that were
required to be filed since January 1, 1994 to the date of this
Agreement with (i) the OTS; (ii) the FDIC; and (iii) any state
banking commission or other banking authority, and has paid all
fees and assessments due and payable in connection therewith.
3.6. CONSENTS AND APPROVALS. Other than as set forth
in Schedule 3.6 to the Company Disclosure Schedule and other
than the receipt of approvals required by the HOLA, the Bank
Merger Act, the Thrift Regulations, and applicable federal
securities and state laws, and the approval of the holders of
Company Common Stock as described in Section 7.1 hereof, no
filing or registration with, no notice to and no permit,
authorization, consent or approval of any third party or any
public or governmental body or authority is necessary for the
consummation by the Company or Mid-Iowa of the transactions
contemplated by this Agreement, except where the failure to make
such filing or obtain such permit, authorization, consent or
approval will not in the aggregate have a Material Adverse
Effect. The Company knows of no reason (including those
relating to fair lending laws or other laws relating to
discrimination, including, without limitation, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act and the Home Mortgage Disclosure Act, and
anti-trust or consumer disclosure laws and regulations) why the
regulatory approvals should not be obtained, and is aware of no
reason to believe that such approvals would include any term,
condition or requirement that, individually or in the aggregate,
would have a Material Adverse Effect on the results, business,
operations, assets, or financial condition of the Company.
3.7. ABSENCE OF CERTAIN CHANGES. Since September 30,
1997, and except as otherwise permitted by this Agreement,
neither the Company, Mid-Iowa or any Company Subsidiary has,
except as set forth in Schedule 3.7 to the Company Disclosure
Schedule, (a) issued or sold any corporate debt securities; (b)
granted any option for the purchase of its capital stock; (c)
declared or set aside or paid any dividend or other distribution
in respect of its capital stock; (d) incurred any material
obligation or liability (absolute or contingent), except
obligations or liabilities incurred in the ordinary course of
business consistent with past practices; (e) mortgaged, pledged
or subjected to lien or encumbrance (other than statutory liens
for taxes not yet delinquent and landlord liens) any of its
material assets or properties except pledges to secure
government or other deposits and in connection with repurchase
or reverse repurchase agreements; (f) discharged or satisfied
any material lien or encumbrance or paid any obligation or
liability (absolute or contingent), other than current
liabilities included in the Company's consolidated balance sheet
as of September 30, 1997, and current liabilities incurred since
the date thereof in the ordinary course of business consistent
with past practices; (g) sold, exchanged or otherwise disposed
of any of its material capital assets other than in the ordinary
course of business consistent with past practices; (h) made any
wage or salary increase or entered into or modified any
employment contract with any officer or salaried employee or
instituted any employee welfare, bonus, stock option, profit
sharing, retirement or similar plan or arrangement, whether tax-
qualified or non tax-qualified (other than salary increases
reflected in the salary schedule set forth at Schedule 3.7); (i)
suffered any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting its business,
property or assets or waived any rights of value that are
material in the aggregate, considering its business taken as a
whole; (j) except in the ordinary course of business consistent
with past practices, entered, or agreed to enter, into any
agreement or
11<PAGE>
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arrangement granting any preferential right to purchase any of
its assets, properties or rights or requiring the consent of any
party to the transfer or assignment of any such assets,
properties or rights; (k) entered into any material transaction
outside the ordinary course of its business consistent with past
practices, except as expressly contemplated by this Agreement;
or (1) except in the ordinary course of business consistent with
past practices or as reflected in the Company Financial
Statements, sold or otherwise disposed of any of its material
investment securities.
3.8. EMPLOYEE AND EMPLOYEE BENEFITS MATTERS. (a)
Schedule 3.8(a) to the Company Disclosure Schedule lists (i)
each pension, profit sharing, stock bonus, thrift, savings,
employee stock ownership or other plan, program or arrangement,
which constitutes an "employee pension plan" within the meaning
of Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), which is maintained by the
Company, Mid-Iowa or any Company Subsidiary or to which the
Company, Mid-Iowa or any Company Subsidiary contributes or is
maintained for the benefit of any current or former employee,
officer, director, consultant or agent; (ii) each plan, program
or arrangement for the provision of medical, surgical, or
hospital care or benefits, benefits in the event of sickness,
accident, disability, death, unemployment, severance, vacation,
apprenticeship, day care, scholarship, prepaid legal services or
other benefits which constitute an "employee welfare benefit
plan" within the meaning of Section 3(1) of ERISA, which is
maintained by the Company, Mid-Iowa or any Company Subsidiary or
to which the Company or any Company Subsidiary contributes for
the benefit of any current or former employee, officer,
director, consultant or agent or dependent of any such person;
and (iii) every other retirement or deferred compensation plan,
bonus or incentive compensation plan or arrangement, stock
option plan, stock purchase plan, stock bonus plan or stock
grant plan, severance or vacation pay arrangement, or other
fringe benefit plan, program or arrangement through which the
Company, Mid-Iowa or any Company Subsidiary provides benefits
for or on behalf of any current or former employee, officer,
director, consultant or agent. The plans, programs or
arrangements described in this Section 3.8 or listed in Schedule
3.8(a) of the Company Disclosure Schedule are hereinafter
referred to as the "Mid-Iowa Benefit Plans." Mid-Iowa has
delivered or made available to First Federal a true and correct
copy of (a) each Mid-Iowa Benefit Plan, including amendments
thereto, (b) the most recent annual report (Form 5500) filed
with the Internal Revenue Service ("IRS") with respect to each
Mid-Iowa Benefit Plan, if applicable, (c) each trust agreement
and group annuity contract, if any, relating to such Mid-Iowa
Benefit Plan, (d) the most recent actuarial report or valuation
relating to a Mid-Iowa Benefit Plan subject to Title IV of ERISA
and (e) all rulings and determination letters and any open
requests for rulings or letters that pertain to any Mid-Iowa
Benefit Plan.
(b) All of the Mid-Iowa Benefit Plans that are
subject to ERISA and the Internal Revenue Code (the "Code") are
in compliance with all applicable requirements of ERISA and the
Code and all other applicable federal and state laws, including,
without limitation, the reporting and disclosure requirements of
Part I of Title I of ERISA. Each of the Mid-Iowa Benefit Plans
that is intended to be a pension, profit sharing, stock bonus,
thrift, savings or employee stock ownership plan that is
qualified under Section 401(a) of the Code satisfies the
applicable requirements of such provision and there exist no
circumstances that would adversely affect the qualified status
of any such plan under that section, except with respect to any
required retroactive amendment for which the remedial
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amendment period has not yet expired. Except as set forth in
Schedule 3.8(b) to the Company Disclosure Schedule, there is no
pending or, to the best knowledge of Mid-Iowa, threatened
litigation, claim, action, governmental proceeding or
investigation against or relating to any Mid-Iowa Benefit Plan
which could give rise to any material liability, and there is no
reasonable basis for any material litigation, claims, actions or
proceedings against any such Mid-Iowa Benefit Plan, and there
are not any facts that could give rise to any material liability
in the event of such litigation, claim, action, investigation,
or proceeding. No Mid-Iowa Benefit Plan (or Mid-Iowa Benefit
Plan fiduciary) has engaged in a non-exempt "Prohibited
Transaction" (as defined in Section 406 of ERISA and Section
4975(c) of the Code) since the date on which said sections
became applicable to such plan. There have been no acts or
omissions by the Company, Mid-Iowa or any Company Subsidiary
that have given rise to any fines, penalties, taxes or related
charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code, or that may give rise to any material
fines, penalties, taxes or related damages under such laws for
which the Company, Mid-Iowa or any Company Subsidiary may be
liable. No liability under Title IV of ERISA has been incurred
by the Company, Mid-Iowa, any Company Subsidiary, any former
Affiliate (as such term is defined in Section 12.7 hereof) of
the Company, Mid-Iowa or the Mid-Iowa Benefit Plans since the
effective date of ERISA that has not been satisfied in full, and
no condition exists that presents a material risk of incurring a
liability under such Title, other than liability for premiums
due the Pension Benefit Guaranty Corporation ("PBGC"), which
payments have been made or will be made when due. With respect
to each of the Mid-Iowa Benefit Plans which is subject to Title
IV of ERISA, the present value of accrued benefits under such
plan or plans, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by
such plan's actuary with respect to such plan, did not, as of
its latest valuation date, exceed the then current value of the
assets of such plan allocable to such accrued benefits and
Mid-Iowa is not aware of any facts or circumstances that would
materially change the funded status of any such ERISA plan.
None of the Mid-Iowa Benefit Plans is a "multiemployer pension
plan" as such term is defined in section 3(37) of ERISA. None
of the Company, Mid-Iowa or any Company Subsidiary has
participated in or agreed to participate in a multiemployer plan
as defined in Section 3(37) of ERISA. Except as listed on
Schedule 3.8(b) to the Company Disclosure Schedule, no employee
of the Company, Mid-Iowa or any Company Subsidiary will be
entitled to any additional benefits or any acceleration of the
time of payment or vesting of any benefits under any Mid-Iowa
Benefit Plan as a result of the transactions contemplated by
this Agreement. Other than current or contingent liabilities
previously disclosed on Schedule 3.8(b) to the Company
Disclosure Schedule, neither the Company, Mid-Iowa or any
Company Subsidiary or any Mid-Iowa Benefit Plan will have any
material current or contingent liability with respect to any
plan. The funding under each Mid-Iowa Benefit Plan which is an
"employee welfare benefit plan" as defined in Section 3(1) of
ERISA does not exceed the limitations under Section 419A(b) or
419A(c) of the Code. All group health plans of the Company,
Mid-Iowa and any Company Subsidiary, including any plans of
current and former Affiliates of the Company, Mid-Iowa or any
Company Subsidiary that must be taken into account under Section
4980B of the Code or Section 601 of ERISA or the requirements of
any similar state law regarding insurance continuation, have
been operated in material compliance with the group health plan
continuation coverage requirements of Section 4980B of the Code
and Section 601 of ERISA to the extent such requirements are
applicable. All payments due from any Mid-Iowa Benefit Plan (or
from the Company, Mid-Iowa or any Company Subsidiary with
respect to any Mid-Iowa Benefit Plan) have been made, and all
amounts properly
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accrued to date as liabilities of the Company, Mid-Iowa or any
Company Subsidiary that have not yet been paid have been
properly recorded on the books of the Company, Mid-Iowa or any
Company Subsidiary.
(c) Except in all cases as set forth on Schedule
3.8(c), none of Company, Mid-Iowa or any Company Subsidiary is a
party to any employment contract, management or consulting
agreement not terminable at the option of Company, Mid-Iowa or
said Company Subsidiary without liability.
(d) No amounts payable under the Mid-Iowa Benefit
Plans, or any employment, severance or termination agreement
between or among the Company, Mid-Iowa, any Company Subsidiary
and any employee, officer or shareholder will fail to be
deductible for federal income tax purposes by virtue of section
280G of the Code. No compensation payable by the Company,
Mid-Iowa or any Company Subsidiary to any of their employees
under any existing contract, plan or other employment
arrangement (including by reason of the transactions
contemplated hereby) will be subject to disallowance under
section 162(m) of the Code.
(e) Schedule 3.8(e) identifies each corporate owned
life insurance policy, including any key man insurance policy
and policy insuring the life of any director or employee of the
Company, Mid-Iowa, or any Company Subsidiary, and indicates for
each such policy, the face amount of coverage, cash surrender
value, if any, and annual premiums.
3.9. LITIGATION. Except as set forth in Schedule 3.9
to the Company Disclosure Schedule, no claims have been asserted
and no relief has been sought against the Company, Mid-Iowa or
any Company Subsidiary in any pending litigation or governmental
proceedings or otherwise that would be reasonably expected to
result in damages or other relief which would have a Material
Adverse Effect on the Company and Mid-Iowa, taken as a whole.
To the best knowledge of the Company and Mid-Iowa, there are no
circumstances, conditions, events or arrangements, contractual
or otherwise, which may hereafter give rise to any proceedings,
claims, actions or government investigations involving the
Company, Mid-Iowa or any Company Subsidiary that would
reasonably be expected to result in damages or other relief that
would have a Material Adverse Effect, nor, to the knowledge of
the Company and Mid-Iowa, are any such proceedings, claims,
actions or government investigations threatened. Except as set
forth in Schedule 3.9 to the Company Disclosure Schedule,
neither the Company, Mid-Iowa or any Company Subsidiary is a
party to any order, judgment or decree that would reasonably be
expected to have a Material Adverse Effect on the Company and
Mid-Iowa, taken as a whole, and neither the Company, Mid-Iowa or
any Company Subsidiary (a) is the subject of any cease and
desist order, or other formal or informal enforcement action by
any regulatory authority or (b) has made any commitment to or
entered into any agreement with any regulatory authority that
restricts or adversely affects its operations or financial
condition.
3.10. TAX MATTERS. The Company, Mid-Iowa and the
Company Subsidiaries have timely filed (inclusive of applicable
extension periods) with the appropriate governmental agencies
all
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material federal, state and local income, employment, franchise,
excise, sales, use, real and personal property and other tax
returns and reports (including information returns and reports)
that are required to be filed, and neither the Company, Mid-Iowa
or any Company Subsidiary is materially delinquent in the
payment of any taxes shown on such returns or reports or on any
assessments for any such taxes received by the Company, Mid-Iowa
or any Company Subsidiary. There are included in the Company
Financial Statements adequate reserves for the payment of all
accrued but unpaid federal, state and local taxes of the
Company, Mid-Iowa and each Company Subsidiary, including
interest and penalties, whether or not disputed for such fiscal
years as reflected therein and all fiscal years prior thereto.
Neither the Company, Mid-Iowa or any Company Subsidiary has
executed or filed with the Internal Revenue Service ("IRS") or
any state tax authority any agreement extending the period for
assessment and collection of any federal or state tax, nor is
the Company, Mid-Iowa or any Company Subsidiary a party to any
action or proceeding by any governmental authority for
assessment or collection of taxes, except tax liens or levies
against customers of any Company Subsidiary. There is no
outstanding material assessment or claim for collection of taxes
against the Company, Mid-Iowa or any Company Subsidiary. Except
as set forth in Schedule 3.10 to the Company Disclosure
Schedule, the federal income tax returns of the Company,
Mid-Iowa and each Company Subsidiary have been examined by the
IRS (or are closed to examination due to the expiration of the
applicable statute of limitations) and no deficiencies were
asserted as a result of such examinations that have not been
resolved and paid in full or for which adequate reserves or
accruals established in accordance with generally accepted
accounting principles have been taken with respect thereto.
Neither the Company, Mid-Iowa or any Company
Subsidiary has, during the past five (5) years, except as
disclosed in Schedule 3.10 to the Company Disclosure Schedule,
received any notice of deficiency, proposed deficiency or
assessment from the IRS or any other governmental agency, with
respect to any federal, state, county or local taxes. No
federal or state tax return of the Company, Mid-Iowa or any
Company Subsidiary is currently the subject of any audit by the
IRS or any other governmental agency. During the past five (5)
years, no material deficiencies have been asserted in connection
with the federal and state income tax returns of each of the
Company, Mid-Iowa and the Company Subsidiaries and the Company
has no reason to believe that any material deficiency would be
asserted relating thereto. Except as disclosed in Schedule 3.10
to the Company Disclosure Schedule, neither the Company,
Mid-Iowa or any Company Subsidiary is a party to any agreement
providing for allocation or sharing of taxes. Neither the
Company, Mid-Iowa or any Company Subsidiary has ever been a
member of an "affiliated group of corporations" (within the
meaning of Section 1504(a) of the Code) filing consolidated
returns, other than the affiliated group of which the Company is
or was the common parent.
3.11. INFORMATION IN THE COMPANY PROXY STATEMENT.
The Company represents and warrants that the Company Proxy
Statement (as defined in Section 7.2 hereof) will not, either at
the time it is mailed to the stockholders of the Company in
connection with the Company Shareholders' Meeting (as defined in
Section 7.1 hereof) or at the time of the Company Shareholders'
Meeting, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; provided,
however, that none of the representations and warranties in this
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Section 3.11 shall apply to statements in or omissions from the
Company Proxy Statement made in reliance upon and in conformity
with information about or furnished by Bancorp or First Federal
for use in the Company Proxy Statement.
3.12. ENVIRONMENTAL MATTERS. For purposes of this
Section 3.12, the following terms shall have the indicated
meaning:
"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree,
injunction or agreement with any governmental entity relating to
(1) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, surface soil,
subsurface soil, plant and animal life or any other natural
resource), and/or (2) the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling,
production, release or disposal of Materials of Environmental
Concern. The term Environmental Law includes without limitation
(1) the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. Section 9601, et seq; the
Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901, et seq; the Clean Air Act, as amended, 42 U.S.C.
Section 7401, et seq; the Federal Water Pollution Control Act,
as amended, 33 U.S.C. Section 1251, et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 9601, et
seq; the Emergency Planning and Community Right to Know Act, 42
U.S.C. Section 11001, et seq; the Safe Drinking Water Act, 42
U.S.C. Section 300f, et seq; and all comparable state and local
laws, and (2) any common law (including without limitation
common law that may impose strict liability) that may impose
liability or obligations for injuries or damages due to, or
threatened as a result of, the presence of or exposure to any
Materials of Environmental Concern.
"Environmental Claim" means any written notice from any
governmental authority or third party alleging potential
liability (including, without limitation, potential liability
for investigatory costs, cleanup costs, governmental response
costs, natural resources damages, property damages, personal
injuries or penalties) arising out of, based on, or resulting
from the presence, or release into the environment, of any
Materials of Environmental Concern.
"Materials of Environmental Concern" means pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum
products and any other materials regulated under Environmental
Laws.
"Loan Portfolio Properties and Other Properties Owned"
means those properties owned, leased or operated by the Company,
Mid-Iowa or any Company Subsidiary, including those properties
serving as collateral for any loans made and retained by
Mid-Iowa or any Company Subsidiary or for which Mid-Iowa or any
Company Subsidiary serves in a trust relationship for the loans
retained in portfolio.
(a) To the knowledge of the Company and Mid-Iowa and
each Company Subsidiary, the Company, Mid-Iowa and each Company
Subsidiary is in compliance with all Environmental Laws, except
for any violations of any Environmental Law which would not,
singly or in the aggregate, have a material adverse effect on
the operations, assets, or financial condition of the Company
and the
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Company Subsidiaries taken as a whole. Neither the Company,
Mid-Iowa or any Company Subsidiary has received any
communication alleging that the Company, Mid-Iowa or any Company
Subsidiary is not in such compliance and, to the knowledge of
the Company and Mid-Iowa, there are no present circumstances
that would prevent or interfere with the continuation of such
compliance.
(b) To the knowledge of the Company and Mid-Iowa and
each Company Subsidiary, neither the Company, Mid-Iowa or any
Company Subsidiary has been or is in violation of or liable
under any Environmental Law, except any such violations or
liabilities that would not singly or in the aggregate have a
material adverse effect on the business, operations, assets or
financial condition of the Company and the Company Subsidiaries
taken as a whole.
(c) To the knowledge of the Company, Mid-Iowa and
each Company Subsidiary, none of the Loan Portfolio Properties
and Other Properties Owned by them has been or is in violation
of or liable under any Environmental Law, except any such
violations or liabilities that singly or in the aggregate would
not have a material adverse effect on the business, operations,
assets or financial condition of the Company and the Company
Subsidiaries taken as a whole.
(d) To the knowledge of the Company, Mid-Iowa and
each Company Subsidiary, there are no actions, suits, demands,
notices, claims, investigations or proceedings pending or
threatened relating to the liability of the Loan Portfolio
Properties and Other Properties Owned under any Environmental
Law, including without limitation any notices, demand letters or
requests for information from any federal or state environmental
agency relating to any such liabilities under or violations of
Environmental Law, except such which would not have or result in
a material adverse effect on the business, operations, assets or
financial condition of the Company and the Company Subsidiaries
taken as a whole.
(e) To the knowledge of the Company, Mid-Iowa and
each Company Subsidiary, there are no past or present actions,
activities, circumstances, conditions, events or incidents that
could reasonably form the basis of any Environmental Claim or
other claim or action or governmental investigation that could
result in the imposition of any liability arising under any
Environmental Law against the Company, Mid-Iowa or any Company
Subsidiary or against any person or entity whose liability for
any Environmental Claim the Company, Mid-Iowa or any Company
Subsidiary has or may have retained or assumed either
contractually or by operation of law, except such which would
not have a material adverse effect on the operations, assets, or
financial condition of the Company and the Company Subsidiaries
taken as a whole.
(f) The Company has set forth on Schedule 3.12(f) any
environmental studies conducted by it, Mid-Iowa or any Company
Subsidiary during the past five years with respect to any
properties owned by it as of the date hereof.
3.13. INSURANCE. Mid-Iowa or the Company has
delivered to First Federal as part of Schedule 3.13 to the
Company Disclosure Schedule true, accurate and complete copies
of all insurance policies and fidelity bonds of the Company,
Mid-Iowa and the Company Subsidiaries. Each such
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policy is in full force and effect, with all premiums due
thereon on or prior to the Closing Date having been paid as and
when due. The Company, Mid-Iowa and the Company Subsidiaries
have not been notified that their fidelity or insurance coverage
will not be renewed by their carrier(s) on substantially the
same terms as their existing coverage. All such policies (i)
are sufficient for compliance by the Company, Mid-Iowa and each
Company Subsidiary with all requirements of law and all
agreements to which the Company, Mid-Iowa or any Company
Subsidiary is a party, and (ii) will not, due to action or
inaction by the Company or Mid-Iowa, terminate or lapse prior to
the Effective Time without similar policies being obtained that
would continue until the Effective Time.
3.14. COMPLIANCE WITH LAWS AND ORDERS. Except as set
forth in Schedule 3.14 to the Company Disclosure Schedule,
neither the Company, Mid-Iowa or any Company Subsidiary has
received notice of any violation or alleged material violation
of, or, to the knowledge of the Company or Mid-Iowa, is subject
to any liability (whether accrued, absolute, contingent, direct
or indirect) for past or continuing material violations of, any
law, statute or regulation. Neither the Company, Mid-Iowa or
any Company Subsidiary is in default under, and no event has
occurred that, with the lapse of time or the giving of notice by
a third party or both, could result in a default under the terms
of any judgment, decree, order, writ, rule or regulation of any
governmental authority or court, whether federal, state or local
and whether at law or in equity, where the failure to be in full
compliance would reasonably be expected to result alone or in
the aggregate in damages, which would be reasonably likely to
have a Material Adverse Effect.
3.15. GOVERNMENTAL REGULATION. Each of the Company,
Mid-Iowa and the Company Subsidiaries holds all material
licenses, certificates, permits, franchises and rights from all
appropriate federal, state and other public authorities
necessary for the conduct of its business; and, between the date
hereof and the Closing Date, the Company and Mid-Iowa will, and
the Company will cause each Company Subsidiary to maintain all
such licenses, certificates, permits, franchises and rights in
effect. Except as set forth in Schedule 3.15 to the Company
Disclosure Schedule, neither the Company, Mid-Iowa or any
Company Subsidiary is a party or subject to any agreements,
directives, orders or similar arrangements between or involving
the Company, Mid-Iowa or any Company Subsidiary and any federal
savings institution regulatory authority.
3.16. CONTRACTS AND COMMITMENTS. Except as set forth
in Schedule 3.16 to the Company Disclosure Schedule, neither the
Company, Mid-Iowa or any Company Subsidiary is a party to or
bound by any (a) material lease or license with respect to any
property, real or personal; (b) material contract or commitment
for capital expenditures; (c) material contract or commitment
for total expenses for the purchase of materials, supplies or
for the performance of services by third parties for a period of
more than 60 days from the date of this Agreement; (d) material
contract or option for the purchase or sale of any real or
personal property other than in the ordinary course of business;
(e) agreement, arrangement or understanding relating to the
employment, election, retention in office or severance of any
present or former director or officer of the Company, Mid-Iowa
or any Company Subsidiary; or (f) interest-rate swaps, caps,
floors, and option agreements, or other similar interest rate
risk management agreements. To their knowledge, the Company,
Mid-Iowa and the Company Subsidiaries have performed in all
material respects all obligations required to be performed by
them
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to date and are not in default under, and no event has occurred
which, with the lapse of time or action by a third party or
both, could result in a default resulting in material damages or
other material default under any outstanding mortgage, lease,
contract, commitment or agreement to which the Company, Mid-Iowa
or any Company Subsidiary is a party or by which the Company,
Mid-Iowa or any Company Subsidiary is bound or under any
provision of their respective charters or bylaws. Each such
outstanding material mortgage, lease, contract, commitment or
agreement is a valid and legally binding obligation of the
Company, Mid-Iowa or the Company Subsidiary subject to (x) all
applicable bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors rights generally or
the rights of creditors of savings institutions the accounts of
which are insured by the FDIC, and (y) the application of
equitable principles if equitable remedies are sought.
3.17. AGREEMENTS WITH DIRECTORS, OFFICERS AND
STOCKHOLDERS. Except as set forth in Schedule 3.17 to the
Company Disclosure Schedule, no director, executive officer, or
beneficial owner of five percent (5.0%) or more of the
outstanding capital stock of the Company or any associate of any
such person (hereinafter sometimes referred to as a "Company
Principal") (a) is or has during the period subsequent to
September 30, 1997, been a party (other than as a depositor) to
any transaction with the Company or Mid-Iowa, whether as a
borrower or otherwise, that (i) was made other than in the
ordinary course of business, (ii) was made on other than
substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable
transactions with other persons, or (iii) involves more than
the normal risk of collectability or presents other unfavorable
features; or (b) is a party to any material loan or loan
commitment, whether written or oral. Except as disclosed in
Schedule 3.17 to the Company Disclosure Schedule, no director,
executive officer (or any associate of such person) and, to the
knowledge of the Company, no beneficial owner of five percent
(5.0%) or more of the outstanding capital stock of the Company
or any associate of such person holds any position with or owns
more than five percent (5.0%) of the outstanding shares of any
class of voting stock of any depository organization, or holding
company therefor, other than the Company. For the purposes of
this Section 3.17, the term "depository organization" means a
commercial bank (including a private bank), a savings bank, a
trust company, a savings and loan association, a homestead
association, a cooperative bank, an industrial bank, a credit
union, or a depository holding company.
3.18. ACCURACY OF INFORMATION. The statements made
by the Company and Mid-Iowa in this Agreement and in any other
written documents executed and/or delivered by or on behalf of
the Company or Mid-Iowa pursuant to the terms of this Agreement
are true and correct in all material respects. The statements
contained in such other documents specifically referred to in
this Agreement will be deemed to constitute representations and
warranties of the Company and Mid-Iowa under this Agreement to
the same extent as if set forth herein in full.
3.19. ALLOWANCES FOR LOSSES AND REAL ESTATE OWNED.
Each of the allowance for loan losses, and the reserve for
losses on Real Estate Owned reflected on the consolidated
balance sheets included in the Company's Financial Statements
referred to in Section 3.5 hereof is, or will be in the case of
subsequently delivered Company Financial Statements, as the case
may be, adequate in all material respects as of their respective
dates under the requirements of generally accepted accounting
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principles to provide for reasonably anticipated losses on
outstanding loans net of recoveries and foreclosed real estate,
respectively.
3.20. TITLE TO ASSETS; LEASES
(a) Except for (i) liens and encumbrances
specifically disclosed in any of the Company Financial
Statements referred to in Section 3.5 hereof, (ii) landlords' or
statutory liens or other liens incurred in the ordinary course
of business and not securing indebtedness for borrowed money and
not yet delinquent, and (iii) liens and encumbrances which are
not material in amount and do not materially impair the value of
any property subject thereto or the use of such property for the
purposes for which it is presently used or intended to be used,
the Company, Mid-Iowa and each Company Subsidiary has good and
marketable title, free and clear of all security interests,
encumbrances, trust agreements, liens or other adverse claims,
to all its assets and property, real and personal, reflected in
the Company Financial Statements referred to in Section 3.5
hereof or acquired thereafter, which includes all property and
assets used by the Company, Mid-Iowa and each Company Subsidiary
that are material to the conduct of their respective businesses,
except for assets and property disposed of in the ordinary
course of business after September 30, 1997.
(b) The Company, Mid-Iowa and each Company Subsidiary
as lessee has the right under valid and existing leases to
occupy, use, and possess all property leased by it in all
material respects as presently occupied, used, and possessed by
the Company, Mid-Iowa or any Company Subsidiary and such leases
will not terminate or lapse prior to the Effective Time or be
affected in any material respect by consummation of the
transactions contemplated hereby. Schedule 3.20(b) contains an
accurate listing of each lease pursuant to which the Company,
Mid-Iowa or any Company Subsidiary acts as lessor or lessee,
including the expiration date and the terms of any renewal
options which relate to the same, as well as a listing of each
material real property owned by the Company, Mid-Iowa or any
Company Subsidiary and used in the conduct of its respective
business.
(c) All material real and personal property owned by
the Company, Mid-Iowa or any Company Subsidiary or presently
used by any of them are in an adequate condition (ordinary wear
and tear excepted) and are in all material respects sufficient
to carry on the business of the Company, Mid-Iowa and each
Company Subsidiary in the manner conducted currently by them.
3.21. BUSINESS OF MID-IOWA. Since September 30,
1997, Mid-Iowa has conducted its business in the ordinary
course. For purposes of the foregoing, Mid-Iowa has not, since
September 30, 1997, controlled expenses through the (i)
elimination of employee benefits; (ii) deferral of routine
maintenance of real property or leased premises; (iii)
elimination of reserves where the liability related to such
reserve has remained; (iv) reduction of capital improvements
from previous levels; (v) failure to depreciate capital assets
in accordance with past practice or to eliminate capital assets
no longer used in Mid-Iowa's business; (vi) capitalization of
loan production expenses other than in accordance with SFAS No.
91, or (vii) extraordinary reduction or deferral of ordinary or
necessary expenses.
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3.22. TAX MATTERS. Neither the Company or any
Company Subsidiary has taken or agreed to take any action or has
any knowledge of any fact or circumstance that would (i) prevent
the transactions contemplated hereby from qualifying as a
reorganization within the meaning of Section 368 of the Code, or
(ii) materially impede or delay receipt of any approval from any
regulatory authority or the consummation of the transactions
contemplated by this Agreement.
3.23. CERTAIN INFORMATION. None of the information
relating to the Company, Mid-Iowa or any Company Subsidiary
supplied or to be supplied for inclusion or incorporation by
reference in the Prospectus to be prepared by Bancorp and First
Federal as described in Section 7.13 hereof, will, at the time
the Prospectus is mailed to subscribers (and at the time the
related Registration Statement on Form S-1 or, other applicable
form, and any amendment thereto becomes effective under the
Securities Act) up to and including the date of the closing of
the offering, contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF FIRST FEDERAL
First Federal hereby represents and warrants to the
Company and Mid-Iowa as follows:
4.1. CORPORATE ORGANIZATION. First Federal is a stock
savings bank duly organized, validly existing and in good
standing under the laws of the United States. As of the date
hereof, Bancorp is a mutual holding company duly organized,
validly existing and in good standing under the laws of the
United States. Upon consummation of the Conversion, Bancorp
will become a stock holding company, duly organized, validly
existing and in good standing under the laws of the state of its
incorporation. All eligible accounts issued by First Federal
are insured by the FDIC to the maximum extent permitted under
applicable law. Each of First Federal and Bancorp has all
requisite corporate power and authority to own, operate and
lease its properties as presently owned, operated and leased and
to engage in the activities and business now being conducted by
it.
4.2. AUTHORIZATION. The Board of Directors of First
Federal has approved this Agreement and the transactions
contemplated hereby and has authorized the execution, delivery
and performance by First Federal of this Agreement. No
corporate proceeding on the part of First Federal is necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby, and First Federal has full corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby subject to the consents and
approvals of federal and state regulatory authorities referred
to in Section 4.4 hereof and the approval of the Conversion by
the members of Bancorp and the stockholders of First Federal.
This Agreement has been duly and validly executed and delivered
by First Federal and constitutes the valid and binding
obligation of First Federal, enforceable against it in
accordance with its terms, subject to (a) all applicable
bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and
(b) the application of equitable principles if equitable
remedies are sought.
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4.3. NO VIOLATION. Neither the execution and delivery
of this Agreement or, subject to the receipt of the consents and
approvals contemplated by Section 4.4 hereof and the member and
shareholder approvals contemplated hereby, the consummation of
the transactions contemplated herein will, (a) conflict with,
result in the breach of, constitute a violation of, constitute a
default under or accelerate the performance of the terms of any
government regulation, judgment, order or decree of any court or
other governmental agency to which First Federal or Bancorp may
be subject, or any contract, agreement or instrument to which
First Federal or Bancorp is a party or by which First Federal or
Bancorp are bound or committed, or the Charter or Bylaws of
First Federal or Bancorp, or any law, or any rule or regulation
of any governmental agency or authority, or (b) constitute an
event that with the lapse of time or action by a third party
could result in a default under any of the foregoing, or (c)
result in the creation of any lien, charge or encumbrance upon
any of the assets or properties of First Federal or Bancorp.
4.4. CONSENTS AND APPROVALS. Other than the receipt
of approvals required by the HOLA, the Thrift Regulations, and
the Bank Merger Act, in connection with the Reorganization, and
other than the approvals required to accomplish the Conversion
and the Offering from the OTS, the Securities and Exchange
Commission and state securities authorities, no filing or
registration with, no notice to and no permit, authorization,
consent or approval of any public or governmental body or
authority is necessary for the consummation by First Federal of
the transactions contemplated by this Agreement. First Federal
knows of no reason (including those relating to fair lending
laws or other laws relating to discrimination, including,
without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act, and anti-trust or consumer disclosure
laws and regulations) why the regulatory approvals should not be
obtained in a reasonably timely manner.
4.5. INFORMATION SUPPLIED FOR INCLUSION IN THE COMPANY
PROXY STATEMENT. Any information regarding First Federal,
Bancorp or any subsidiary of First Federal supplied by First
Federal or Bancorp to the Company specifically for inclusion in
the Company Proxy Statement (as defined in Section 7.2 hereof)
will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements
therein, in light of the circumstances in which they were made,
not misleading.
4.6. ACCURACY OF INFORMATION. The statements made by
First Federal and with respect to Bancorp in this Agreement and
in any other written documents executed and/or delivered by or
on behalf of Bancorp and First Federal pursuant to the terms of
this Agreement are true and correct in all material respects.
The statements contained in such other documents specifically
referred to in this Agreement will be deemed to constitute
representations and warranties of First Federal under this
Agreement to the same extent as if set forth herein in full.
4.7. REGULATORY APPROVALS AND NO ADVERSE CHANGE.
First Federal is aware of no reason that it cannot obtain any of
the approvals of regulatory authorities necessary to consummate
the Merger or the Conversion and First Federal has received no
advice or information from any regulatory authority indicating
that such approvals will be denied or are doubtful. There has
not been any adverse
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change in the business or financial condition, operations,
properties or capitalization of First Federal since the end of
its most recently completed fiscal year that is reasonably
likely to have a material adverse effect upon its ability to
consummate the transactions contemplated by this Agreement and
as of the date of this Agreement, no event, occurrence or
development of any nature is existing or, to the knowledge of
First Federal, threatened, which would reasonably be expected to
have such an effect on First Federal's ability to consummate
such transactions.
ARTICLE V.
COVENANTS OF FIRST FEDERAL
First Federal hereby agree that from the date of this
Agreement until the Effective Time:
5.1. AFFIRMATIVE COVENANTS. As soon as reasonably
practicable, First Federal shall furnish Mid-Iowa with copies of
all of First Federal's periodic reports on Forms 10-K, 10-Q and
8-K, all proxy statements and all call reports filed with the
OTS, or provided to the stockholders of First Federal,
subsequent to the date hereof.
5.2. NEGATIVE COVENANTS. Except as specifically
contemplated by this Agreement, First Federal shall not do, or
agree or commit to do, without the prior written consent of
Mid-Iowa any of the following:
(a) take action which would or is reasonably likely
to (i) adversely affect the ability of either First Federal or
the Company and Mid-Iowa to obtain any necessary approvals of
governmental authorities required for the transactions
contemplated hereby; (ii) adversely affect First Federal's
ability to perform its covenants and agreements under this
Agreement; or (iii) result in any of the conditions to the
Reorganization set forth in Articles IX and X not being
satisfied; or
(b) agree in writing or otherwise to do any of the
foregoing.
5.3. BREACHES. First Federal shall, in the event it
becomes aware of the impending or threatened occurrence of any
event or condition which would cause or constitute a material
breach (or would have caused or constituted a breach had such
event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to
herein, give prompt written notice thereof to the Company and
use its best efforts to prevent or promptly remedy the same.
5.4. FILING OF APPLICATIONS. First Federal shall use
its best efforts promptly to and, in any event, no later than
December 31, 1998, shall, prepare, submit, publish and file (a)
an application to the OTS pursuant to 12 C.F.R. Part 574; and
(b) any other applications, notices or statements required to
be filed in connection with the transactions contemplated
hereby.
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5.5. SUPPLEMENT TO FIRST FEDERAL DISCLOSURE SCHEDULE.
First Federal will promptly supplement or amend the First
Federal Disclosure Schedule with respect to any matter hereafter
arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described
in the First Federal Disclosure Schedule. No supplement or
amendment to the First Federal Disclosure Schedule will have any
effect for the purpose of determining satisfaction of the
condition set forth in Section 9.1 hereof as to the accuracy of
representations made as of the date of this Agreement.
5.6. EXPENSES. First Federal hereby agrees that if
this Agreement or the transactions contemplated hereby are
terminated pursuant to Sections 11.1 (c)(iii) or 11.1 (c)(iv) as
a result of a willful breach by First Federal, First Federal
shall promptly (and in any event within ten (10) business days
after such termination) pay all reasonable Expenses of Mid-Iowa
in an amount not to exceed $250,000. For purposes of this
Section 5.6, the "Expenses of Mid-Iowa" shall include all
reasonable out-of-pocket expenses of Mid-Iowa (including all
fees and expenses of counsel, accountants, financial advisors,
experts and consultants to Mid-Iowa and its Affiliates) incurred
by it or on its behalf in connection with the consummation of
the transactions contemplated by this Agreement.
ARTICLE VI.
COVENANTS OF THE COMPANY AND MID-IOWA
The Company and Mid-Iowa hereby agree that from the
date of this Agreement until the Effective Time:
6.1. AFFIRMATIVE COVENANTS. Unless the prior written
consent of First Federal shall have been obtained (which shall
not be unreasonably withheld) and except as otherwise
contemplated herein, the Company and Mid-Iowa will:
(a) operate their business in the ordinary course in
accordance with past business practices;
(b) use their best efforts to (i) preserve intact
their business organization and assets, maintain their rights
and franchises, retain the services of their officers and key
employees (except that they shall have the right to terminate
the employment of any officer or key employee in accordance with
established employment procedures) and (ii) maintain their
relationships with customers:
(c) maintain their corporate existence in good
standing and file all required Mid-Iowa Reports (as defined in
such Section 12.7(c) hereof);
(d) use their best efforts to maintain and keep their
properties in as good repair and condition as at present, except
for ordinary wear and tear;
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(e) use their best efforts to keep in full force and
effect insurance and bonds comparable in amount and scope of
coverage to that now maintained by them and, in the event that
Mid-Iowa is unable to keep such insurance and bonds in full
force and effect, to provide prompt notice of such failure to
First Federal;
(f) perform all obligations required to be performed
by them under all material contracts, leases, and documents
relating to or materially affecting their assets, properties,
and business;
(g) use their best efforts to comply with and perform
in all material respects all obligations and duties imposed upon
them by all applicable laws and regulations; and
(h) as soon as reasonably practicable, furnish First
Federal copies of all of Mid-Iowa's reports and documents
provided to Company stockholders or filed with the OTS
subsequent to the date hereof.
6.2. NEGATIVE COVENANTS. Except as specifically
contemplated by this Agreement, from the date hereof until the
Effective Time, neither the Company nor Mid-Iowa shall, or shall
any Company Subsidiary be permitted to, without the prior
written consent of First Federal (which shall not be
unreasonably withheld), do any of the following:
(a) incur any material liabilities or material
obligations, whether directly or by way of guaranty, including
any obligation for borrowed money whether or not evidenced by a
note, bond, debenture or similar instrument or enter into or
extend any material agreement or lease, except in the ordinary
course of business consistent with past business practices or in
connection with the transactions contemplated and permitted by
this Agreement;
(b) (i) Except as set forth on Schedule 6.2(b) of the
Company Disclosure Schedule, grant any bonus or increase in
compensation to its directors or grant any bonus or any increase
in compensation to its officers and employees, (ii) effect any
change in retirement benefits to any class of employees or
officers (unless any such change shall be required by applicable
law) that would increase its retirement benefit liabilities,
(iii) adopt, enter into, amend or modify any Mid-Iowa Benefit
Plan except as required by law, (iv) enter into or amend any
employment, severance or similar agreements or arrangements with
any directors or officers (exclusive of renewals in the ordinary
course of business), (v) make any additional awards under any
Mid-Iowa stock bonus plan or Mid-Iowa stock option plan, or (vi)
except as set forth at Schedule 6.2(b) make any additional
contributions to any Mid-Iowa Benefit Plans;
(c) declare or pay any dividend on, or make any other
distribution in respect of, its outstanding shares of capital
stock, except for regular, quarterly cash dividends, paid on
normal dividend payment dates, in an amount no greater than the
dividend rate as of the date hereof.
(d) (i) redeem, purchase or otherwise acquire any
shares of its capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital
stock, or any
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options, warrants, conversion or other rights to acquire any
shares of its capital stock or any such securities or
obligations; (ii) merge with or into any other corporation,
savings institution or bank, permit any other corporation,
savings institution or bank to merge into it or consolidate with
any other corporation or bank, or effect any reorganization or
recapitalization; (iii) purchase or otherwise acquire any
assets, or shares of any class of stock, of any corporation,
savings institution, bank or other business; (iv) liquidate,
sell, dispose of, or encumber any assets or acquire any assets,
other than in the ordinary course of its business consistent
with past practices; or (v) split, combine or reclassify any of
its capital stock or issue or authorize or propose the issuance
of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;
(e) except pursuant to the exercise of outstanding
stock options, issue, deliver, award, grant or sell, or
authorize or propose the issuance, delivery, award, grant or
sale of, any shares of its capital stock of any class (including
shares held in treasury), any debt instrument having a right to
vote or any securities convertible into, or any rights, warrants
or options to acquire, any such shares, voting debt or
convertible securities;
(f) initiate, solicit or encourage, or take any other
action to facilitate, any inquiries or the making of any
proposal which constitutes a Superior Proposal (as defined in
Section 7.1 hereof), take any action in furtherance of such
inquiries or to obtain a Superior Proposal, or negotiate with
any person in, or agree to or endorse any Superior Proposal, or
authorize or permit any of its officers, directors or employees
or any investment banker, financial advisor, accountant or other
representative retained by it or any Company Subsidiary to take
any such action, except with respect to negotiations regarding,
and the endorsement of a Superior Proposal, as legally required
by the fiduciary duties of the Company's Board of Directors
under applicable law and as advised by counsel to the Company's
Board of Directors, and the Company shall promptly notify First
Federal orally and in writing of all of the relevant details
relating to all inquiries and proposals which it may receive
relating to any of such matters;
(g) propose or adopt any amendments to its charter or
by-laws, except such amendments as may be required to consummate
the transactions contemplated by this Agreement;
(h) enter into an agreement in principle with respect
to any acquisition of a material amount of assets or securities
or any release or relinquishment of any material contract rights
not in the ordinary course of business;
(i) except in its fiduciary capacity, purchase any
shares of capital stock of First Federal;
(j) subject to the provisions of Section 7.1 hereof
(and provisions of this Agreement related thereto) regarding a
Superior Proposal, willfully take action which would or is
reasonably likely to (i) adversely affect the ability of either
of First Federal, the Company or Mid-Iowa to obtain any
necessary approvals of governmental authorities required for the
transactions contemplated hereby; (ii) adversely affect
Mid-Iowa's or the Company's ability to perform its covenants and
agreements under
26<PAGE>
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this Agreement; or (iii) result in any of the conditions to the
Reorganization set forth in Articles VIII and X not being
satisfied;
(k) change in any material respect the lending,
investment, deposit, asset and liability management and other
material policies concerning the business of Mid-Iowa or the
Company, unless required by law or regulation or, with respect
to lending or depository activities;
(l) file any applications or make any contract with
respect to branching by Mid-Iowa (whether de novo or by
purchase, sale or relocation);
(m) form any new subsidiary or cause or permit a
material change in the activities presently conducted by any
Company Subsidiary or make additional material investments in
subsidiaries or enter into or invest in any partnership, joint
venture or other business enterprise;
(n) purchase any derivative securities including CMO
or REMIC products;
(o) purchase any equity securities other than Federal
Home Loan Bank Stock;
(p) discharge or satisfy any lien or encumbrance or
pay any material obligation or liability (absolute or
contingent) other than at scheduled maturity or in the ordinary
course of business;
(q) sell or otherwise dispose of any loan,
mortgage-backed security or investment security except in the
ordinary course of business consistent with past practices and
policies;
(r) modify or restructure the terms of any loan
except in the ordinary course of business consistent with
prudent banking practices and policies;
(s) make any capital expenditures in excess of
$25,000 individually or $50,000 in the aggregate, other than
pursuant to binding commitments existing on the date hereof and
other than expenditures necessary to maintain existing assets in
good repair;
(t) change its method of accounting in effect prior
to the Effective Time, except as required by changes in laws or
regulations or generally accepted accounting principles
concurred in by its and the Company's independent certified
public accountants, or change any of its methods of reporting
income and deductions for federal income tax purposes from those
employed in the preparation of its federal income tax returns
for the Company's last full taxable year, except as required by
changes in laws or regulations;
(u) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or
entity; or
(v) make, renew, increase, extend or purchase any
loan secured by commercial real estate or multifamily real
estate, any land acquisition or development loan, any commercial
business
27<PAGE>
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loan, or any residential loan in an amount in excess of
$300,000, except to the extent that Mid-Iowa is contractually
obligated to do so as of the date hereof;
(w) fail to keep in full force and effect its
insurance and bonds as now carried;
(x) fail to notify First Federal promptly of its
receipt of any letter, notice or other communication, whether
written or oral, from any regulatory authority advising that it
is contemplating issuing, requiring or requesting any agreement,
memoranda, understanding or similar undertaking, or order,
directive, or extraordinary supervisory letter;
(y) agree in writing or otherwise to do any of the
foregoing.
6.3. REPORT TO FIRST FEDERAL. The Company and
Mid-Iowa will use its best efforts to keep First Federal fully
informed concerning all developments of which it becomes aware
that may have a material effect upon the business, any
properties or condition (either financial or otherwise) of the
Company (other than developments affecting financial
institutions generally).
6.4. BREACHES. The Company and Mid-Iowa shall, in the
event they become aware of the impending or threatened
occurrence of any event or condition which would cause or
constitute a material breach (or would have caused or
constituted a breach had such event occurred or been known prior
to the date hereof) of any of their representations or
agreements contained or referred to herein, give prompt written
notice thereof to First Federal and use their best efforts to
prevent or promptly remedy the same.
6.5. SUPPLEMENT TO DISCLOSURE SCHEDULE. The Company
will promptly supplement or amend the Company Disclosure
Schedule with respect to any matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have
been required to be set forth or described in the Company
Disclosure Schedule. No supplement or amendment to the Company
Disclosure Schedule will have any effect for the purpose of
determining satisfaction of the condition set forth in Section
8.2 hereof as to the accuracy of representations made as of the
date of this Agreement.
6.6. CONSENTS AND APPROVALS. The Company and Mid-Iowa
shall use their best efforts to assist First Federal in
obtaining the consents and approvals referenced in Section 8.5
hereof.
6.7. EXPENSES. Mid-Iowa hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated
pursuant to Sections 11.1 (b)(iii) or 11.1 (b)(iv) as a result
of a willful breach by Mid-Iowa or the Company, Mid-Iowa shall
promptly (and in any event within ten (10) business days after
such termination) pay all reasonable Expenses of First Federal
in an amount not to exceed $250,000. For purposes of this
Section 6.7, the "Expenses of First Federal" shall include all
reasonable out-of-pocket expenses of First Federal (including
all fees and expenses of counsel, accountants, financial
advisors, experts and consultants to First Federal and its
Affiliates) incurred by it or on its behalf in connection with
the consummation of the transactions contemplated by this
Agreement.
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ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. COMPANY SHAREHOLDERS' MEETING. The Company
shall, as soon as is reasonably practicable, call and hold a
meeting of its stockholders (the "Company Shareholders'
Meeting") to submit for stockholder approval this Agreement.
Subject to receipt of a fairness opinion from Prairie Capital
Services, Inc. updated as of a date within five days of mailing
of the Company Proxy Statement, the Board of Directors of the
Company will recommend that holders of Company Common Stock vote
in favor of and approve this Agreement at the Company
Shareholders' Meeting; provided, however, that nothing contained
in this Section 7.1 shall prohibit the Board of Directors of the
Company from failing to recommend approval of the transactions
contemplated hereby, if necessary to comply with its fiduciary
duties as determined in consultation with legal counsel in the
context of a Superior Proposal (as hereinafter defined). For
purposes of this Agreement, "Superior Proposal" means a bona
fide proposal to acquire the entire equity interest in the
Company or Mid-Iowa or substantially all of the assets of the
Company or Mid-Iowa, which is expressly conditioned upon the
termination of this Agreement and is made by a third party on
terms which a majority of the Board of Directors of the Company
determines pursuant to the exercise of its fiduciary duty after
consultation with legal counsel, to be more favorable (from a
financial point of view) to the holders of Company Common Stock
than the Reorganization and for which financing is either then
committed or not a condition precedent to the consummation
thereof.
7.2. PROXY STATEMENT FOR COMPANY SHAREHOLDERS'
MEETING. For the purposes of holding the Company Shareholders'
Meeting, the Company shall prepare a proxy statement satisfying
all requirements under applicable securities laws (said proxy
statement, together with any and all amendments or supplements
thereto, being herein referred to as the "Company Proxy
Statement"). First Federal shall review and comment on the
Company Proxy Statement prior to its distribution to the
Company's stockholders.
7.3. COOPERATION; REGULATORY APPROVALS. The parties
shall cooperate, and shall cause each of their affiliates and
subsidiaries to cooperate, in the preparation and submission by
them, as promptly as reasonably practicable, of such
applications, petitions, and other documents and materials as
any of them may reasonably deem necessary or desirable to the
OTS, the FDIC, the Department of Justice, other regulatory
authorities, and any other persons for the purpose of obtaining
any approvals or consents necessary to consummate the
transactions contemplated by this Agreement. Each party will
have the right to review and comment on such applications,
petitions and other documents and materials and shall furnish to
the other copies thereof promptly after filing or submission
thereof. At the date hereof, none of the parties is aware of
any reason that the regulatory approvals required to be obtained
by it would not be obtained. The obligation to take action as
provided in this Section 7.3 shall not be construed as including
an obligation to accept any terms of or conditions to a consent,
authorization, order or approval of, or any exemption by, any
party that are unduly burdensome as reasonably determined by the
Boards of Directors of First Federal or Mid-Iowa.
29<PAGE>
<PAGE>
In the event of a restraining order or injunction which prevents
the Closing by reason of the operation of Section 10.2 hereof,
each of the parties hereto shall use its respective best efforts
to cause such order or injunction to be lifted and the Closing
to be consummated as soon as reasonably practicable.
7.4. REPORTS. Prior to the Effective Time, the
Company and Mid-Iowa shall prepare and file as and when required
all Mid-Iowa Reports. Mid-Iowa shall prepare such Mid-Iowa
Reports so that (a) they comply in all material respects with
all of the statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they are
filed and do not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading,
and (b) with respect to any Mid-Iowa Reports containing Company
Financial Statements, the financial information (i) is prepared
in accordance with generally accepted accounting principles and
practices as utilized in the Company Financial Statements
applied on a consistent basis, (ii) presents fairly the
consolidated financial condition of Mid-Iowa at the dates, and
the consolidated results of operations and cash flows for the
periods, stated therein and (iii) in the case of interim fiscal
periods, reflects all adjustments, consisting only of normal
recurring items, subject to year-end audit adjustments. All
Mid-Iowa Reports shall be provided to First Federal promptly
following the filing of such reports with the respective
regulatory authority.
7.5. BROKERS OR FINDERS. Except as set forth on
Schedule 7.5, each of First Federal, the Company and Mid-Iowa
represents that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this
Agreement.
7.6. ADDITIONAL AGREEMENTS; REASONABLE EFFORTS.
Subject to the terms and conditions of this Agreement, each of
the parties hereto agrees to use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done,
all things necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the
transactions contemplated by this Agreement, subject to the
appropriate vote of the stockholders of the Company described in
Section 7.1 hereof, including cooperating fully with the other
party. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of
this Agreement or to vest First Federal with full title to all
properties, assets, rights, approvals, immunities and franchises
of the Company, Mid-Iowa or the Company Subsidiaries, the proper
officers and directors of each party to this Agreement shall
take all such necessary action.
7.7. RELEASE OF INFORMATION. The Company, Mid-Iowa
and First Federal agree that prior to making any public
announcement with respect to the transactions contemplated by
this Agreement, each party will consult with the other and will
use its best efforts either to agree upon the text of the
proposed joint announcement to be made by both parties or to
obtain the other's approval (which approval shall not be
unreasonably withheld) of the text of an announcement to be made
solely on behalf of such party. In the event that the parties
do not ultimately agree on the text of any proposed public
announcement, no such disclosure shall be made unless the party
seeking to make an
30<PAGE>
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announcement is advised by counsel that its failure to do so
would be reasonably likely to constitute a violation of law.
7.8. ADVISORY DIRECTORS. Messrs. David E. Sandeen,
John E. Carl and Carney D. Loucks, each a current director of
the Company, shall be entitled to serve on the Central Iowa
Advisory Board to the Board of Directors of First Federal (the
other members of which shall be the current members of the
Grinnell Advisory Board), for a period of one year following the
Effective Time, subject to reappointment at the sole discretion
of First Federal and such Advisory Board members shall meet
monthly during the first year following the Effective Time.
Thereafter, to the extent such Advisory Board is continued, such
Advisory Board members will meet as frequently as requested by
the Board of Directors of First Federal, but no less frequently
than quarterly. Such Advisory Board members shall receive an
annual fee of at least $2,000 plus $200 per meeting attended.
7.9. ACCESS TO PROPERTIES AND RECORDS;
CONFIDENTIALITY. (a) Each of the Company, Mid-Iowa and each
Company Subsidiary shall permit First Federal and its
representatives, including financial advisors, reasonable access
to its properties, and shall disclose and make available to them
all books, papers and records relating to the assets, stock
ownership, properties, operations, obligations and liabilities
of the Company, Mid-Iowa and each Company Subsidiary, including,
but not limited to, all books of account (including the general
ledger), tax records, minute books of meetings of boards of
directors (and any committees thereof) (except portions thereof
relating to this Agreement, the Reorganization and matters
relating thereto, including competing transactions) and
stockholders, organizational documents, bylaws, material
contracts and agreements, filings with any regulatory authority,
accountants' work papers, litigation files (other than attorney
work product or materials protected by any attorney-client
privilege), plans affecting employees, and any other business
activities or prospects in which the Company or Mid-Iowa may
have a reasonable interest. The Company and Mid-Iowa and each
Company Subsidiary shall make their respective officers,
employees and agents and authorized representatives (including
counsel and independent public accountants) available to confer
with First Federal and its representatives.
(b) All information furnished previously in
connection with the transactions contemplated by this Agreement
or pursuant hereto shall be treated as the sole property of the
party furnishing the information until consummation of the
transactions contemplated hereby and, if such transactions shall
not occur, the party receiving the information shall, upon
request, return to the party which furnished such information
all documents or other materials containing, reflecting or
referring to such information, shall use its best efforts to
keep confidential all such information, and shall not directly
or indirectly use such information for any competitive or other
commercial purposes. The obligation to keep such information
confidential shall continue for one year from the date the
proposed transactions are abandoned but shall not apply to (i)
any information which (x) the party receiving the information
can establish by convincing evidence was already in its
possession prior to the disclosure thereof by the party
furnishing the information; (y) was then generally known to the
public; or (z) became known to the public through no fault of
the party receiving the information; or (ii) disclosures
pursuant to a legal requirement or in accordance with an order
of a court of competent jurisdiction,
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provided that the party which is the subject of any such legal
requirement or order shall use its best efforts to give the
other party at least ten business days prior notice thereof.
7.10. CERTAIN POLICIES. At the request of First
Federal, the Company shall, prior to the Effective Time, (i)
establish and take such reserves and accruals as First Federal
shall reasonably request to conform, on a mutually satisfactory
basis, the Company's loan, real estate, accrual and reserve
policies to First Federal's policies and (ii) establish and take
such accruals, reserves and charges in order to implement such
policies in respect of severance costs, write-off or write-down
of various assets and other appropriate accounting adjustments,
and to recognize for financial accounting purposes such expenses
incurred in connection with the Reorganization, provided,
however, that Mid-Iowa shall not be obligated to take any such
action pursuant to this Section 7.10 unless and until (x) First
Federal specifies its request in a writing delivered to the
Company, and acknowledges that all conditions to the obligations
of First Federal to consummate the Reorganization set forth in
Articles VIII and X have been waived (if available) or satisfied
and (y) the Company and Mid-Iowa acknowledge that the conditions
to its obligation to consummate the Reorganization set forth in
Articles IX and X have been waived (if available) or satisfied.
The Company and Mid-Iowa shall not be required to take any such
action that is not consistent with generally accepted accounting
principles or any requirement applicable to either of them by
any bank regulatory agency. The representations, warranties and
covenants of the Company and Mid-Iowa contained in this
Agreement shall not be deemed to be untrue or breached in any
respect for any purpose as a consequence of any action
undertaken on account of this Section 7.10 and shall not
constitute grounds for termination of this Agreement by First
Federal.
7.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT
ARRANGEMENTS.
(a) To the extent practicable, First Federal will
give consideration to the retention after the Closing Date of
employees of Mid-Iowa in their current or comparable positions
within First Federal as the surviving institution, subject to
the provisions in this Section 7.11 and provided that this
Agreement shall not, except as otherwise provided herein,
provide any contractual right to such employees of such
employment. Employees of Mid-Iowa who continue employment with
First Federal on or after the Effective Time (all such persons
are referred to herein as "Continuing Employees") shall be
eligible to participate in such employee benefit plans as may be
in effect generally for employees of First Federal from time to
time (the "First Federal Plans"), if such Continuing Employee
shall be eligible or selected for participation therein. Except
as specifically set forth in this Section 7.11 and as otherwise
prohibited by law, Continuing Employees shall be entitled to
participate on the same basis as similarly situated employees of
First Federal, except that Continuing Employees shall be
entitled to full credit for each year of prior service (in which
1,000 hours of service are performed) with Mid-Iowa for purposes
of determining eligibility for participation and vesting, but
not for benefit accruals, in the First Federal Plans, subject to
applicable break in service rules. Notwithstanding the
foregoing, First Federal may determine to continue any of the
Mid-Iowa Benefit Plans for Continuing Employees in lieu of
offering participation in one or more First Federal Plans
providing similar benefits (e.g., medical and hospitalization
benefits or 401(k) or defined contribution plan benefits) to
terminate any of the Mid-Iowa Benefit Plans or to merge any
such benefit plans with similar First Federal Plans, provided,
however, Mid-Iowa shall have the right on or before the
Effective Time (i) to terminate both its Defined
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Contribution Plan and Trust and its 401(k) Profit Sharing Plan
and Trust (together, the "Plans and Trusts") as of any date
before the Effective Time, (ii) to apply to the Internal Revenue
Service for a determination letter on the tax-qualified status
of the Plans and Trusts on termination and on any amendments
made to them in connection with the termination (provided that
any amendments so made, other than amendments required by law,
shall first be approved by First Federal), and (iii) to
distribute the assets of the Plans and Trusts only after receipt
of the aforementioned determination letter. Notwithstanding
anything in this Section 7.11(a) to the contrary, participation
by Continuing Employees in employee benefit plans of First
Federal with respect to which eligibility and participation is
at the discretion of the employer, such as non-qualified
deferred compensation plans, stock option plans, stock bonus
plans, restricted stock plans, and other such similar plans,
(but not including employee benefit plans generally available to
all full-time employees of First Federal) shall be discretionary
with First Federal. The Company, Mid-Iowa and any Company
Subsidiary agrees to cooperate with First Federal in
implementing any decision made by First Federal with respect to
employee benefit plans and to provide First Federal on or before
the Effective Time a schedule of service credit for prospective
Continuing Employees.
(b) With respect to Continuing Employees and
dependents covered under the Iowa Bankers' Group Health Plan
maintained by Mid-Iowa, which plan is concurrently maintained by
First Federal, there shall be no waiting period or preexisting
condition exclusions applicable to such persons, amounts
previously paid by such persons towards satisfaction of the
required deductible will count towards satisfaction of the
deductible under the plan maintained by First Federal and the
benefits previously received by such persons will count toward
the maximum benefit coverages provided by First Federal.
(c) Following the Effective Time, First Federal shall
honor in accordance with their terms the employment, severance
and other compensation contracts set forth on Schedule
7.11(c) between the Company, any of the Company Subsidiaries,
and any current or former director, officer or employee thereof,
and all provisions for vested benefits or other vested amounts
earned or accrued through the Effective Time under the Company
employee benefit plans. Notwithstanding the foregoing, First
Federal or the Company shall be obligated at the Effective Time
to make payments with respect to the separation from employment
in connection with a change of control of the Company under
employment and severance contracts between the Company and its
subsidiaries and Kevin Ulmer and Gary Hill in the respective
amounts of $390,350 and $270,758, subject to the limitations set
forth in Section 3.8(d) hereof.
7.12. D&O INDEMNIFICATION AND INSURANCE. For a
period of four (4) years following the Effective Time, First
Federal shall indemnify the employees, agents, directors or
officers of the Company and Mid-Iowa to the extent they are
indemnified under the Company's Certificate of Incorporation and
Bylaws in the form in effect at the date of this Agreement or
arising by operation of law. First Federal shall use its best
efforts to cause the directors and officers listed in Schedule
7.12 of the Company Disclosure Schedule to be covered under
individual directors' and officers' liability insurance
policies, which coverage is available in the form of tail
coverage under the Company's existing directors' and officers'
liability policy for the duration of any applicable statute of
limitations.
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7.13. CONVERSION AND OFFERING. Commencing promptly
after the date of this Agreement, Bancorp and First Federal will
take all reasonable steps necessary to effect the Conversion and
Offering and Bancorp and First Federal shall use their best
efforts to satisfy the conditions to closing set forth in
Section 8.11. Without limiting the generality of the foregoing,
Bancorp shall cause the following to be done:
(a) Bancorp shall duly call, give notice of, convene
and hold a special meeting of its Board of Directors as soon as
practicable for the purpose of approving the Conversion and
Offering.
(b) Bancorp and First Federal will use all reasonable
efforts to prepare and file all required regulatory applications
required in connection with the Conversion and Offering,
including, without limitation, filing applications with the OTS.
(c) Bancorp shall prepare as promptly as practicable,
and the Company shall co-operate in the preparation of, a
prospectus (the "Prospectus") meeting all requirements of
applicable federal and state securities and banking laws and
regulations. Bancorp shall incorporate such Prospectus into a
Registration Statement on Form S-1, or other applicable form,
("Form S-1") satisfying all applicable requirements of the
Securities Act of 1933, and the rules and regulations
thereunder. Bancorp shall file the Form S-1 (or other
applicable form) with the SEC, and shall use its reasonable best
efforts to have the Form S-1 declared effective under the
Securities Act of 1933 as promptly as practicable after such
filing.
(d) The Company shall provide Bancorp with any
information concerning it that Bancorp may reasonably request in
connection with the Prospectus, and the Company shall promptly
notify Bancorp if at any time it becomes aware that the
Prospectus or the Form S-1 contains any untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were
made, not misleading. In such event, the Company and Bancorp
shall cooperate in the preparation of a supplement or amendment
to such Prospectus, which corrects such misstatement or
omission, and shall cause an amended Form S-1 to be filed with
the SEC (if applicable). The Company shall provide to Bancorp a
"comfort" letter from the independent certified public
accountants for the Company, dated as of the date of the
Prospectus and updated as of the date of consummation of the
Offering, with respect to certain financial information
regarding the Company, each in form and substance which is
customary in transactions such as the Offering, and shall cause
its counsel to deliver to the placement agent for the Offering
such opinions as Bancorp may reasonably request.
(e) Bancorp shall give the Company and its counsel
the opportunity to review the Prospectus prior to its being
filed with the OTS and the SEC, and shall give the Company and
its counsel the opportunity to review all amendments and
supplements to the Prospectus and all responses to requests for
additional information and replies to comments prior to their
being filed with, or sent to, the OTS, and the SEC. Each of
Bancorp and the Company agrees to use all reasonable efforts,
after consultation with the other party hereto, to respond
promptly to all such comments of and requests by the OTS, and
the SEC and to cause the Prospectus and all required amendments
and supplements thereto to be mailed to the qualified depositors
and other qualified subsidiaries of First Federal at the
earliest practicable time.
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ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF FIRST FEDERAL
The obligations of First Federal under this Agreement
to cause the transactions contemplated herein to be consummated
shall be subject to the satisfaction or written waiver by First
Federal of the following conditions:
8.1. NO MATERIAL ADVERSE CHANGE. Except as disclosed
in Schedule 3.5 to the Company Disclosure Schedule and except
for general changes in generally accepted accounting principles,
changes in economic, financial or market conditions, changes in
market interest rates, payments due under any employment
agreements or benefit plans and the transactions contemplated
hereby, costs and expenses relating to this Agreement (including
those resulting from actions or inactions pursuant to the
covenants of the Company and Mid-Iowa under this Agreement) and
the transactions contemplated hereby, there shall not have been
any material adverse change in the financial condition, results
of operations or business of the Company, Mid-Iowa, and the
Company's Subsidiaries, taken as a whole, from September 30,
1997 to the Closing Date.
8.2. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties by the Company and Mid-Iowa
contained in this Agreement shall be true and correct in all
material respects (or where any statement in a representation or
warranty expressly contains a standard of materiality, such
statement shall be true and correct in all respects taking into
consideration the standard of materiality contained therein) at,
or as of, the date of this Agreement and (except to the extent
such representation speaks as of an earlier date) and as of any
date subsequent, until and including the Closing Date (except as
otherwise contemplated or permitted by this Agreement) as though
such representations and warranties were made on and as of said
date. Any information provided by the Company and Mid-Iowa
pursuant to Section 6.5 hereof as a supplement to the Company
Disclosure Schedule shall be true and correct in all material
respects as of the date such information is supplied to First
Federal.
8.3. PERFORMANCE AND COMPLIANCE. The Company and
Mid-Iowa shall have performed or complied in all material
respects with all covenants and agreements required by this
Agreement to be performed and satisfied by it on or prior to the
Closing Date.
8.4. NO PROCEEDING OR LITIGATION. On the Closing
Date, no suit, action or proceeding shall be pending or overtly
threatened, and no liability or claim shall have been asserted
against the Company, Mid-Iowa or any Company Subsidiary
involving any of the assets, properties, business or operations
of the Company, Mid-Iowa or any Company Subsidiary that would
reasonably be expected to have a Material Adverse Effect.
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8.5. CONSENTS UNDER AGREEMENTS. First Federal shall
have received the consent or approval of each person or entity
whose consent or approval shall be required in order to permit
consummation of the Reorganization and the Conversion under any
loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument to which the Company, Mid-Iowa or
any Company Subsidiary is a party or to which its respective
property is subject, except those for which failure to obtain
such consents and approvals would not, individually or in the
aggregate, have a Material Adverse Effect on First Federal,
whether prior to (if applicable) or following the consummation
of the transactions contemplated hereby.
8.6. No Amendments to Resolutions. Neither the Board
of Directors of the Company or Mid-Iowa nor any committee
thereof shall have amended, modified, rescinded or repealed the
resolutions adopted by such Board of Directors with respect to
this Agreement or shall have adopted any other resolutions in
connection with this Agreement and the transactions contemplated
hereby which are inconsistent with such resolutions, except
resolutions adopted consistent with the express rights of
Mid-Iowa under this Agreement.
8.7. CERTIFICATE OF MID-IOWA OFFICERS. The Company
shall have furnished First Federal a certificate, signed by its
Chief Executive Officer and its Chief Financial Officer, dated
the Closing Date, to the effect, based on his knowledge, that
the conditions described in Sections 8.1 through 8.6, and
Section 8.8, of this Agreement have been fully satisfied.
8.8. CORPORATE PROCEEDINGS. All action required to be
taken by, or on the part of the Company and Mid-Iowa to
authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
by this Agreement shall have been duly and validly taken by the
Company and Mid-Iowa.
8.9. LEGAL OPINION. First Federal shall have received
an opinion, dated the Closing Date, from legal counsel to
Mid-Iowa, in the form specified on Exhibit E.
8.10. CLOSING BOOK VALUE. Immediately prior to the
Closing, the total stockholders' equity account determined in
accordance with generally accepted accounting principles on a
basis consistent with the Company Financial Statements, of the
Company shall not be less than $13.5 million, as reasonably
determined by First Federal's independent public accountant, in
consultation with the Company's independent public accountant;
provided, however, that for purposes of calculating total
stockholders' equity, the Company's expense associated with the
severance payments due under the employment agreements between
Mid-Iowa and Kevin D. Ulmer and Gary Hill dated as of October
19, 1992, will not be counted.
8.11. CONVERSION. Bancorp and First Federal shall
have consummated the Conversion and the Offering.
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8.12. NON-COMPETITION AGREEMENT. First Federal shall
have received a duly executed non-competition agreement, in
substantially the form heretofore agreed to between First
Federal and the Company, from Kevin D. Ulmer.
ARTICLE IX.
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND MID-IOWA
The obligations of the Company and Mid-Iowa under this
Agreement to cause the transactions contemplated herein to be
consummated shall be subject to the satisfaction or written
wavier by the Company or Mid-Iowa of the following conditions:
9.1. REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of First Federal contained in
this Agreement shall be true and correct in all material
respects (or where any statement in a representation or warranty
expressly contains a standard of materiality, such statement
shall be true and correct in all respects taking into
consideration the standard of materiality contained therein) at,
or as of, the date of this Agreement and (except to the extent
such representation speaks as of an earlier date) and as of any
date subsequent, until and including the Closing Date (except as
otherwise contemplated or permitted by this Agreement) as though
such representations were made on and as of said date. Any
information provided by First Federal pursuant to Section 5.5
hereof as a supplement to the First Federal Disclosure Schedule
shall be true and correct in all material respects as of the
date such information is supplied to the Company or Mid-Iowa.
9.2. PERFORMANCE AND COMPLIANCE. First Federal shall
have performed or complied in all material respects with all
covenants and agreements required by this Agreement to be
performed and satisfied by it on or prior to the Closing Date.
9.3 CORPORATE PROCEEDINGS. All action required to be
taken by, or on the part of Bancorp and First Federal to
authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
by this Agreement shall have been duly and validly taken by
Bancorp and First Federal.
9.4. CERTIFICATE OF FIRST FEDERAL OFFICERS. First
Federal shall have furnished to Mid-Iowa a certificate, signed
by its Chief Executive Officer and its Chief Financial Officer
and dated the Closing Date, to the effect, based on their best
knowledge, that the conditions described in Sections 9.1, 9.2
and 9.3 of this Agreement have been satisfied.
9.5. LEGAL OPINION. Mid-Iowa shall have received an
opinion, dated as of the Closing Date, from Luse Lehman Gorman
Pomerenk & Schick, P.C., counsel for First Federal, in the form
specified on Exhibit F.
9.6. OPINION OF FINANCIAL ADVISOR. The Company shall
have received on or before the date on which the Company Proxy
Statement or other similar document is to be mailed to holders
37<PAGE>
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of Company Common Stock the written opinion of its investment or
financial advisor to the effect that the merger consideration
payable to the Company's stockholders pursuant to the
Reorganization is fair from a financial point of view to the
stockholders of the Company.
ARTICLE X.
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
In addition to the provisions of Articles VIII and IX
hereof, the obligations of First Federal, the Company and
Mid-Iowa to cause the transactions contemplated herein to be
consummated, shall be subject to the satisfaction or written
waiver by both First Federal and the Company of the following
conditions:
10.1. GOVERNMENTAL APPROVALS. The parties hereto
shall have received all necessary approvals of the transactions
contemplated by this Agreement from governmental agencies and
authorities, including, without limitation, those of the OTS and
the FDIC, and each of such approvals shall remain in full force
and effect and all statutory waiting periods in connection
therewith shall have expired at the Closing Date and such
approvals and the transactions contemplated thereby shall not
have been contested by any federal or state governmental
authority nor by any other third party by formal proceeding.
Provided, however, that no approval or consent referred to in
this Section 10.1 shall be deemed to have been received by First
Federal if it shall include any non-standard term, condition or
requirement that, individually or in the aggregate (i) would
have a Material Adverse Effect on the business, results of
operations, assets, or financial condition of First Federal on a
consolidated basis, or (ii) would reduce the economic or
business benefits of the transactions contemplated by this
Agreement to First Federal in so significant a manner that First
Federal, in its reasonable judgment, would not have entered into
this Agreement.
10.2. NO INJUNCTIONS OR RESTRAINTS. No suit, action
or proceeding shall be pending or overtly threatened before any
court or other governmental agency by the federal or any state
government in which it is sought to restrain or prohibit the
consummation of the Reorganization and no temporary restraining
order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Reorganization
shall be in effect.
10.3. STOCKHOLDER APPROVAL. This Agreement shall
have been duly approved by the requisite affirmative vote of the
stockholders of the Company as contemplated by Section 7.1
hereof.
10.4. CORPORATE PROCEEDINGS. The obligations of the
parties to this Agreement required to be performed at or prior
to the Closing Date shall have been duly performed and complied
with in all material respects. All action required to be taken
by, or on the part of, the parties to this Agreement to
authorize the execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated
hereby, shall have been duly and validly taken by the parties
hereto.
38<PAGE>
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ARTICLE XI.
TERMINATION
11.1. REASONS FOR TERMINATION. This Agreement may be
terminated and the Reorganization abandoned at any time before
the Closing Date, whether before or after the approval or
adoption of this Agreement by the stockholders of the Company:
(a) By mutual written consent of the Board of
Directors of First Federal and the Board of Directors of the
Company;
(b) By written notice from First Federal to the
Company if:
(i) any condition set forth in Article VIII of
this Agreement shall have become impossible to substantially
satisfy at any time or has not been substantially satisfied or
waived in writing; or
(ii) any condition set forth in Article X of this
Agreement shall have become impossible to substantially satisfy
at any time or has not been substantially satisfied or waived in
writing, provided, however, First Federal shall not have the
right to terminate this Agreement pursuant to this Section
11.1(b)(ii) if any condition imposed by Section 10.1 hereof was
not met due to the failure of First Federal to perform or
observe the covenants and agreements set forth in this
Agreement; or
(iii) any warranty or representation as set forth
in Article III hereof made by the Company or Mid-Iowa shall be
discovered to be or to have become untrue or incorrect in any
material respect, or where any statement in a representation or
warranty expressly includes a standard of materiality, such
statement shall be discovered to be or to have become untrue or
incorrect in any respect taking into consideration the standard
of materiality contained therein, in either case where any such
breach has not been cured within thirty (30) days following
receipt by the Company or Mid-Iowa of notice of such discovery;
or
(iv) The Company or Mid-Iowa shall have breached
one or more provisions of this Agreement in any material respect
considering all such breaches in the aggregate, where such
breach has not been cured within thirty (30) days following
receipt by the Company or Mid-Iowa of notice of such breach; or
(v) The Board of Directors of Bancorp and First
Federal shall have determined in their sole discretion,
exercised in good faith, that the Conversion has become
inadvisable
39<PAGE>
<PAGE>
or impractical by reason of (A) the issuance of any order,
decree or letter of a regulatory authority containing conditions
or requirements reasonably deemed objectionable to Bancorp of
First Federal or (B) unfavorable market conditions. In the
event of termination of this Agreement pursuant to this Section
11.1(b)(v), then the Company shall be reimbursed pursuant to and
in accordance with the provisions of Section 12.2(c) hereof.
(c) By written notice from the Company to First
Federal, if
(i) any condition set forth in Article IX of
this Agreement shall have become impossible to substantially
satisfy at any time or has not been substantially satisfied or
waived in writing; or
(ii) any condition set forth in Article X of this
Agreement shall have become impossible to substantially satisfy
at any time or has not been substantially satisfied or waived in
writing; provided, however, the Company shall not have the right
to terminate this Agreement pursuant to this Section 11.1(c)(ii)
if any condition imposed by Section 10.1 hereof was not met due
to the failure of the Company or Mid-Iowa to perform or observe
the covenants and agreements set forth in this Agreement; or
(iii) any warranty or representation as set forth
in Article IV hereof made by First Federal shall be discovered
to be or to have become untrue or incorrect in any material
respect, or where any statement in a representation or warranty
expressly includes a standard of materiality, such statement
shall be discovered to be or to have become untrue or incorrect
in any respect taking into consideration the standard of
materiality contained therein, in either case where any such
breach has not been cured within thirty (30) days following
receipt by First Federal of notice of such discovery; or
(iv) First Federal shall have breached one or
more provisions of this Agreement in any material respect
considering all such breaches in the aggregate, where such
breach has not been cured within thirty (30) days following
receipt by First Federal of notice of such breach.
(d) By the Board of Directors of First Federal if the
Board of Directors of the Company shall not recommend, or shall
withdraw or modify in a manner adverse to First Federal, its
recommendation to the holders of Company Common Stock to approve
this Agreement.
(e) By the Board of Directors of First Federal or the
Company at any time after the Company Shareholders' Meeting as
contemplated in Section 7.1 if the stockholders of the Company
have not approved this Agreement by the requisite affirmative
vote.
(f) By the Board of Directors of First Federal or the
Company if the Reorganization has not been consummated on or
before August 31, 1999.
40<PAGE>
<PAGE>
11.2. EFFECT OF TERMINATION. In the event of
termination of this Agreement by either the Company or First
Federal as provided in Section 11.1 hereof, this Agreement shall
forthwith become void, and there shall be no liability or
obligation on the part of First Federal or the Company or their
respective officers or directors except with respect to Sections
6.7, 7.9 and 12.2 hereof.
ARTICLE XII.
MISCELLANEOUS
12.1. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. None of the representations, warranties, covenants
and agreements in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time,
except for the covenants and agreements which by their terms are
contemplated to be performed after the Effective Time.
12.2. EXPENSES AND TERMINATION FEE. (a) Except as
otherwise provided herein, all expenses incurred by First
Federal and the Company in connection with or related to the
authorization, preparation and execution of this Agreement, the
solicitation of stockholder approvals and all other matters
related to the closing of the transactions contemplated thereby,
including, without limitation of the generality of the
foregoing, all fees and expenses of agents, financial advisors,
representatives, counsel and accountants employed by either such
party or its Affiliates, shall be borne solely and entirely by
the party that has incurred the same.
(b) Mid-Iowa also hereby agrees to pay First Federal, and
First Federal shall be entitled to payment of, a fee (the "Fee")
of $1.4 million, upon the occurrence of any of the following
events on or before the earlier of the date this Agreement is
terminated or August 31, 1999:
(i) if the Board of Directors of the Company
recommends a Superior Proposal and thereafter (A) the Company
Shareholders' Meeting shall not have been held or shall have
been postponed, delayed or enjoined prior to termination of this
Agreement or (B) the Company's shareholders do not approve this
Agreement;
(ii) if the Board of Directors of the Company
withdraws or modifies its recommendation of approval of this
Agreement, and thereafter (A) the Company Shareholders' Meeting
shall not have been held or shall have been postponed, delayed
or enjoined prior to termination of this Agreement or (B) the
Company's shareholders do not approve this Agreement;
(iii) if the Company's shareholders do not approve
this Agreement after a Superior Proposal is made and within
twelve (12) months thereafter the Company enters into a
definitive agreement to be merged into or acquired by another
entity (provided, however, that Mid-Iowa shall pay all Expenses
of First Federal, as defined in Section 6.7. hereof, in an
amount not to exceed $250,000, within five business days
following rejection of this Agreement by Company shareholders);
41<PAGE>
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(iv) if the Company or Mid-Iowa enters into an
agreement to be acquired by any other party; or
(v) if the Company both (1) fails to receive the
opinion of its financial advisor that the Merger is fair to the
Company's shareholders from a financial point of view, and such
failure occurs after a Superior Proposal is made, and (2) the
Reorganization is not consummated.
With the exception of the payment under subparagraph
(iii) above, which shall be paid within five business days
following the Company's execution of a definitive agreement of
merger or acquisition (except that the Expenses of First Federal
shall be paid as provided in (iii) above), such payment shall be
made to First Federal in immediately available funds within five
business days after the occurrence of an event set forth above.
(c) First Federal agrees to reimburse the Company for
all of the reasonable Expenses of Mid-Iowa, as defined in
Section 5.6 hereof, in an amount not to exceed $250,000,
incurred by the Company and Mid-Iowa in connection with the
transactions contemplated hereby in the event First Federal
terminates this Agreement pursuant to Section 11.1(b)(v).
12.3. WAIVERS; AMENDMENTS. At any time prior to the
Closing Date, either First Federal, by action taken by its Board
of Directors, or any committee or officers thereunto authorized,
or the Company or Mid-Iowa, by action taken by its Board of
Directors, or any committee or officers thereunto authorized,
may waive the performance of any of the obligations of the other
or waive compliance by the other with any of the covenants or
conditions contained in this Agreement or agree to the amendment
or modification of this Agreement by an agreement in writing
executed in the same manner as this Agreement; provided,
however, that after the favorable vote by the stockholders of
the Company pursuant to Section 7.1 of this Agreement any such
action shall be taken only if, in the opinion of the Company's
Board of Directors, such waiver, amendment or modification will
not have a material adverse effect on the benefits intended
under this Agreement for the shareholders of the Company and
will not require resolicitation of any proxies from such
shareholders.
12.4. ASSIGNMENT; PARTIES IN INTEREST. This
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors and
assigns, but shall not be assigned by the parties hereto, by
operation of law or otherwise, without the prior written consent
of the other parties. Except with respect to the payment of
benefits pursuant to Section 7.12 and the obligation of First
Federal contained in Section 7.8, nothing in this Agreement,
express or implied, is intended to confer upon any third party
any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
12.5. ENTIRE AGREEMENT. This Agreement supersedes
any other agreement, whether written or oral, that may have been
made or entered into by the Company, Mid-Iowa or First Federal
or by any officer or officers of such parties relating to the
acquisition of the business or the capital stock of the Company
or Mid-Iowa by First Federal, except for the Confidentiality
Agreement dated July 3, 1998, which shall remain in full force
and affect. This Agreement and such Confidentiality Agreement
42<PAGE>
<PAGE>
constitute the entire agreement by the respective parties, and
there are no agreements or commitments except as set forth
herein and therein.
12.6. CAPTIONS AND COUNTERPARTS. The captions in
this Agreement are for convenience only and shall not be
considered a part of or affect the construction or
interpretation of any provision of this Agreement. This
Agreement may be executed in several counterparts, each of which
shall constitute one and the same instrument.
12.7. CERTAIN DEFINITIONS. For purposes of this
Agreement, the term:
(a) "Affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, another person;
(b) "Material Adverse Effect" shall mean a material
adverse effect on the operations, assets, or financial condition
of the parties to this Agreement other than the effects of any
such change attributable to or resulting from any change in law,
regulation or generally accepted accounting principles or
regulatory accounting principles and other than the effects of
any change attributable to or resulting from changes in economic
conditions applicable to depository institutions generally or in
general levels of interest rates.
(c) "Mid-Iowa Reports" shall mean all reports,
registrations and statements, together with any amendments
required to be made with respect thereto, that were and are
required by applicable law to be filed with the OTS, the FDIC,
and any other applicable state securities or bank regulatory
authorities by either Mid-Iowa or the Company; and
(d) "to the knowledge of First Federal" or "to the
best knowledge of First Federal" shall mean the actual knowledge
of any member of the Board of Directors or of any senior officer
of First Federal.
(e) "to the knowledge of the Company or Mid-Iowa" or
"to the best knowledge of the Company or Mid-Iowa" shall mean
the actual knowledge of any member of the Board of Directors or
of any senior officer of the Company or Mid-Iowa.
12.8. ENFORCEMENT OF THIS AGREEMENT. The parties
hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties hereto will
be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
43<PAGE>
<PAGE>
12.9. GOVERNING LAW. This Agreement shall be
construed and interpreted in accordance with the laws of the
State of Iowa, except to the effect that Federal Law applies,
without regard to the conflicts of laws rules.
12.10. NOTICES. All notices given hereunder shall be
in writing and shall be hand delivered, sent by facsimile
transmission or sent by a nationally recognized overnight
delivery service, addressed as follows:
(a) If to First Federal to:
First Federal Savings Bank of Siouxland
329 Pierce Street
Sioux City, Iowa 51102
Attention: Barry E. Backhaus, President
and Chief Executive Officer
With A Copy To:
Luse Lehman Gorman Pomerenk & Schick
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
Attention: Robert B. Pomerenk, Esq.
(b) If to Mid-Iowa to:
Mid-Iowa Financial Corp.
123 West Second Street North
Newton, Iowa 50208
Attention: Kevin D. Ulmer, President and
Chief Executive Officer
with a copy to:
Housley Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, D.C. 20036
Attention: Gary R. Bronstein, Esq.
Any notice provided hereunder shall be effective upon
receipt thereof.
44<PAGE>
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first above
written.
ATTEST: FIRST FEDERAL BANKSHARES, M.H.C.
By:/s/Suzette Hoevet By:/s/Barry E. Backhaus
----------------- --------------------
Suzette Hoevet Barry E. Backhaus, President
ATTEST: FIRST FEDERAL SAVINGS BANK OF SIOUXLAND
By:/s/Suzette Hoevet By:/s/Barry E. Backhaus
----------------- --------------------
Suzette Hoevet Barry E. Backhaus, President
ATTEST: MID-IOWA SAVINGS BANK, FSB
By:/s/Gary R. Hill By:/s/Kevin D. Ulmer
--------------- -----------------
Gary R. Hill Kevin D. Ulmer, President
ATTEST: MID-IOWA FINANCIAL CORP.
By:/s/Gary R. Hill By:/s/Kevin D. Ulmer
--------------- -----------------
Gary R. Hill Kevin D. Ulmer, President
