As filed with the Securities and Exchange Commission on August 9, 1996
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
Registration Statement Under the Securities Act of 1933
FIRST MIDWEST FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 42-1406262
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
James S. Haahr, President
First Midwest Financial, Inc.
Fifth at Erie
Storm Lake, Iowa 50588
(712) 732-4117
(Name, address, including zip code,
and telephone number, including area
code, of agent for service)
Fifth at Erie
Storm Lake, Iowa 50588
(712) 732-4117
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)
WITH COPIES OF NOTICES TO:
JEFFREY M. WERTHAN, P.C.
CHRISTOPHER R. KELLY, P.C.
MICHAEL S. SADOW, ESQUIRE
Silver, Freedman & Taff, L.L.P.
(A Limited Liability Partnership
Including Professional Corporations)
Suite 700, East Tower
1100 New York Avenue, N.W.
Washington, D.C. 20005-3934
Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.
<PAGE>
If the securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are being
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
[ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of each class of securities Amount to be offering price per aggregate offering Amount of
to be registered registered share(1) price(1) registration fee(1)
---------------- ---------- -------- -------- -------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 190,000 shares $21.75 $4,132,500 $1,425
</TABLE>
(1) Calculated in accordance with Rule 457(c) based on the average of the high
and low sales prices of the Common Stock, as reported on The Nasdaq National
Market on August 6, 1996, solely for the purpose of calculating the amount
of the registration fee. The Company is registering the Shares (as defined
in the Prospectus) in anticipation of demands for registration by the
Selling Stockholders pursuant to the Shareholder Agreement, dated May 20,
1996 by and among the Company and the Selling Stockholders. The Company will
not receive any of the proceeds from the sale of the Shares by the Selling
Stockholders. The Company will bear all of the costs of registering the
Shares under the Securities Act of 1933, which will amount to approximately
$16,000.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS
190,000 SHARES
FIRST MIDWEST FINANCIAL, INC.
COMMON STOCK
($.01 par value per share)
The 190,000 shares (the "Shares") of common stock, $.01 par value per
share ("Common Stock"), of First Midwest Financial, Inc., a Delaware corporation
("First Midwest" or the "Company"), may be offered for sale from time to time by
and for the account of certain stockholders of the Company (the "Selling
Stockholders"). See "Selling Stockholders." The Selling Stockholders acquired
the Shares in connection with the merger (the "Merger") of Central West
Bancorporation, an Iowa corporation ("CWB"), with and into the Company pursuant
to the Agreement and Plan of Merger and Reorganization, dated May 20, 1996, by
and between the Company and CWB (the "Merger Agreement"). The Company is
registering the Shares in anticipation of demands for registration by the
Selling Stockholders pursuant to the Shareholder Agreement, dated May 20, 1996,
by and among the Company and the Selling Stockholders (the "Stockholder
Agreement"). The Company will not receive any of the proceeds from the sale of
the Shares by Selling Stockholders, but has agreed to bear all the expenses of
registration of the Shares. See "Plan of Distribution."
The Common Stock is traded on the Nasdaq Stock Market under the symbol
"CASH." On September __, 1996, the last reported sale price of Common Stock on
the Nasdaq Stock Market was $_________ per share.
The Selling Stockholders, or their transferees, from time to time may
offer and sell the Shares directly or through agents or broker-dealers on terms
to be determined at the time of sale. See "Plan of Distribution" for information
concerning commissions or discounts with respect to offers and sales of Shares.
The Selling Stockholders and any agents or broker-dealers that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act of 1933,
as amended (the "Securities Act"), and, in such event, any commissions received
by them and any profit on the resale of the Shares may be deemed to be
underwriting commissions or discounts under the Securities Act.
THE SECURITIES OFFERED HEREBY INVOLVE CERTAIN RISKS.
SEE "RISK FACTORS" ON PAGE 2 HEREIN.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION (THE "SEC"), THE OFFICE OF THRIFT SUPERVISION
(THE "OTS"), ANY STATE SECURITIES COMMISSION, OR ANY OTHER
GOVERNMENTAL AGENCY, NOR HAS THE SEC, THE OTS, ANY
STATE SECURITIES COMMISSION OR ANY OTHER AGENCY
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER ____, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Regional Offices located at 7 World Trade Center, Suite 1300, New York, New
York, 10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained upon written
request addressed to the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding the Company's electronic filings with
the Commission. The address of the Commission's Web site is
"http://www.sec.gov".
The Company has filed with the Commission a registration statement on
Form S-3 (together with any amendments, the "Registration Statement") under the
Securities Act, covering the shares of Common Stock being offered by this
Prospectus. This Prospectus, which is part of the Registration Statement, does
not contain all of the information and undertakings set forth in the
Registration Statement and reference is made to such Registration Statement,
including exhibits, which may be inspected and obtained in the manner and at the
locations specified above, for further information with respect to the Company
and the Common Stock. Statements contained in this Prospectus concerning the
provisions of any document are not necessarily complete and, in each instance,
reference is made to the copy of such document filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission are incorporated by reference into this Prospectus:
(i) The Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1995;
(ii) the Company's definitive Proxy Statement dated December 13,
1995 for its Annual Meeting of Stockholders held on January
23, 1996;
(iii) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by
the annual report referred to in (i) above; and
(iv) The description of Common Stock in the Company's registration
statement on Form 8-A filed with the Commission (File No.
0-22140) on July 23, 1993, and all amendments or reports filed
for the purpose of updating such description.
In addition, all documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering made pursuant to the
Registration Statement shall be deemed to be incorporated by reference into and
<PAGE>
to be a part of this Prospectus from the date of filing of such documents. Any
statement contained in a document so incorporated by reference shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent that
a statement contained in this Prospectus, or in any other subsequently filed
document which is also incorporated by reference, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed to
constitute a part of this Prospectus except as so modified or superseded.
This Prospectus incorporates documents by reference with respect to the
Company that are not presented herein or delivered herewith. Copies of these
documents (not including exhibits to such documents unless such exhibits are
specifically incorporated by reference in such document or herein) are available
without charge, upon written or oral request to the Company, to any person to
whom this Prospectus is delivered: Fifth at Erie, P.O. Box 1307, Storm Lake,
Iowa 50588, Attention: Kristi L. Frey; (712) 732-4117.
RISK FACTORS
Before investing in shares of the Common Stock offered hereby,
prospective investors should consider carefully the matters presented below.
REGULATORY OVERSIGHT
The Company currently has two wholly-owned subsidiaries, First Federal
Savings Bank of the Midwest, a federally-chartered thrift institution ("First
Federal") and Security State Bank, an Iowa-chartered commercial bank ("Security"
and when referred to with First Federal, the "Banks"). First Federal is subject
to extensive regulation, supervision and examination by the OTS, as its
chartering authority and primary federal regulator, and by the Federal Deposit
Insurance Corporation (the "FDIC"), which insures its deposits up to applicable
limits. First Federal is a member of the Federal Home Loan Bank System and is
subject to certain limited regulation by the Board of Governors of the Federal
Reserve System (the "FRB"). Such regulation and supervision governs the
activities in which an institution can engage and the manner in which such
activities are conducted, and is intended primarily for the protection of the
insurance fund and depositors. Security is subject to extensive regulation,
supervision and examination by the Iowa Superintendent of Banking (the "ISB")
and the FRB, which are its state and primary federal regulators, respectively.
It is also subject to regulation by the FDIC, which insures its deposits up to
applicable limits. As with First Federal, such regulation and supervision
governs the activities in which it can engage and the manner in which such
activities are conducted and is intended primarily for the protection of the
insurance fund and depositors.
The Company is regulated as both a thrift holding company by the OTS
and as a bank holding company by the FRB. As a thrift holding company, the
Company must file reports with the OTS and is subject to regular examination by
the OTS. Bank holding companies are subject to comprehensive regulation by the
FRB under the Bank Holding Company Act of 1956 (the "BHCA") and the regulations
of the FRB. As a bank holding company, the Company must also file reports with
the FRB and such additional information as the FRB may require, and is subject
to regular inspections by the FRB. The FRB also has extensive enforcement
authority over bank holding companies, including, among other things, the
ability to assess civil money penalties, to issue cease and desist or removal
orders and to require that a holding company divest subsidiaries (including its
bank subsidiaries). In general, enforcement actions may be initiated for
violations of law and regulations and unsafe or unsound practices. Similar
authority exists for the OTS as the regulator of thrift holding companies.
Although a thrift holding company's activities are generally unlimited, due to
<PAGE>
the dual nature of its holding company status, the Company is subject to the
more restrictive activity limitations imposed under the BHCA and in general may
engage in only those activities that the FRB has determined to be closely
related to banking.
Regulatory authorities have been granted extensive discretion in
connection with their supervisory and enforcement activities which are intended
to strengthen the financial condition of the banking industry, including the
imposition of restrictions on the operation of an institution, the
classification of assets by the institution and the adequacy of an institution's
allowance for loan losses. Any change in such regulation and oversight, whether
by the OTS, the FDIC, the FRB or the Congress could have a material impact on
the Company, First Federal or Security and their respective operations.
INTEREST RATE RISK
The profitability of the Banks, like that of most financial
institutions, is dependent to a large extent upon their net interest income,
which is the difference between their interest income on interest-earning
assets, such as loans and investments, and their interest expense on
interest-bearing liabilities, such as deposits. Increases in market rates of
interest generally adversely affect the net interest income of most financial
institutions. The Banks are subject to interest rate risk ("IRR") to the extent
that their interest-bearing liabilities with short and intermediate-term
maturities reprice more rapidly, or on a different basis, than their
interest-earning assets. Management of the Banks believe it is important to
manage the relationship between IRR and the effect on the Banks' net portfolio
value ("NPV"). This approach calculates the difference between the present value
of expected cash flows from assets and the present value of expected cash flows
from liabilities, as well as cash flows from off-balance sheet contracts.
Management of the Banks' assets and liabilities is done within the context of
the marketplace, but also within limits established by the Banks' Boards of
Directors on the amount of change in NPV which is acceptable given certain
interest rate changes.
OTS regulations use a net market value methodology to measure the IRR
exposure of thrift institutions. Under OTS regulations, an institution's
"normal" level of IRR in the event of an assumed change in interest rates is a
decrease in the institution's NPV in an amount not exceeding 2% of the present
value of its assets. Thrift institutions with greater than "normal" interest
rate exposure must take a deduction from their total capital available to meet
their risk-based capital requirement. The amount of the deduction is one-half of
the difference between (a) the institution's actual calculated exposure to a 200
basis point interest rate increase or decrease (whichever results in the greater
pro forma decrease in NPV) and (b) its "normal" level of exposure which is
defined as 2% of the present value of its assets. The rule will not become
effective until the OTS evaluates the process by which savings associations may
appeal an IRR deduction determination. It is uncertain as to when this
evaluation may be completed. Any savings association with less than $300 million
in assets and a total capital ratio in excess of 12% is exempt from this
requirement unless the OTS determines otherwise. Nevertheless, utilizing this
measurement concept, at June 30, 1996, First Federal's IRR was considered
"normal" under the OTS regulations and no additional risk-based capital was
required.
The FRB, together with the FDIC and the Office of the Comptroller of
the Currency, have adopted a joint policy statement on the management of IRR for
their respective regulated banks. Such policy statement provides guidance to
banks in the management of IRR. The management of IRR is a factor to be
<PAGE>
considered by the agencies in assessing the capital adequacy of a bank and the
agencies may require their regulated institutions to hold additional capital to
account for IRR. Unlike the OTS rule, however, the banking agencies have not
adopted an explicit supervisory model, such as the NPV model, for assessing IRR
due to the diversity and complexity of a bank's balance sheet which generally is
not concentrated in mortgage related assets. Management believes that Security's
IRR profile at June 30, 1996 should not result in the need to hold additional
capital.
COMPETITIVE DISADVANTAGE CAUSED BY THE CURRENT DISPARITY BEWEEN BIF AND SAIF
DEPOSIT INSURANCE PREMIUMS
Federal law requires that the FDIC maintain reserves of at least 1.25%
of insured deposits at both the Savings Association Insurance Fund (the "SAIF"),
which insures First Federal's deposits, and the Bank Insurance Fund ("BIF"),
which insures Security's deposits, up to applicable limits. The reserves are
funded through the payment of insurance premiums by the insured institution
members of each fund. The BIF reached this level during 1995 enabling the FDIC
to reduce BIF insurance premiums to a range of .04% to .27% of deposits for the
second half of 1996 (as compared to the previous range of 0.23% to 0.31% of
deposits for both BIF and SAIF-insured institutions). Effective in January 1996,
the FDIC again revised the premium schedule for BIF-insured banks to provide for
a range of 0% to 0.23% of deposits with an annual statutory minimum payment of
$2,000. The revised premium schedule became effective in January 1996. The FDIC
action does not affect the premium rates currently applicable to SAIF members,
such as First Federal, which continue to range from 0.23% to 0.31% of deposits
depending on the institution's capital level and other factors. As a result, BIF
members generally pay lower premiums than SAIF members. While the magnitude of
the competitive advantage of BIF-insured institutions and its impact on First
Federal's results of operations cannot be determined at this time, the decrease
in BIF premiums could place First Federal and other SAIF members at a material
competitive disadvantage. First Federal currently qualifies for the minimum SAIF
premium level of 0.23% of deposits.
PROPOSED SPECIAL ASSESSMENT ON SAIF-INSURED DEPOSITS
Proposed federal legislation provides for a one-time assessment (in an
amount sufficient for the SAIF to achieve the 1.25% reserve ratio), currently
estimated at 0.80% to 0.90%, to be imposed on all SAIF-insured deposits,
including those held by commercial banks, and for a portion of BIF deposit
insurance premiums to be used to pay the Financing Corporation ("FICO") bond
interest. If a requirement were implemented as of March 31, 1995 (as currently
proposed) for First Federal to pay a one-time assessment equal to 0.90% of SAIF
assessable deposits, the amount of such assessment would have been approximately
$1.6 million, or $950,000 after related taxes. The final form of any such
legislation has been subject of continuing negotiation and cannot be assured. If
the legislation is enacted during the current Congressional session, however, it
is anticipated the assessment would be payable in 1996. Accordingly, this
special assessment would significantly increase noninterest expense and
adversely affect First Federal's results of operations. Conversely, depending on
First Federal's capital level and supervisory rating, and assuming, although
there can be no assurance, that the insurance premium levels for BIF and SAIF
members are again equalized, deposit insurance premiums could decrease
significantly to the minimum assessment for future periods.
As part of the legislation, Congress is considering requiring all
federal thrift institutions, such as First Federal, to either convert to a
national bank or a state-chartered depository institution by January 1, 1998.
The OTS also would be abolished and its functions transferred among the other
<PAGE>
federal banking regulators. Certain aspects of the legislation remain to be
resolved and therefore no assurance can be given as to whether or in what form
the legislation will be enacted or its effect on the Company and First Federal.
Congress has passed a bill, which is expected to be signed by the President in
September 1996, which will require the recapture of a portion of the First
Federal's tax bad debt reserve, which is approximately $900,000 as of June 30,
1996. The recapture would occur over a six-year period and would begin with
First Federal's fiscal year ending September 30, 1997.
TAKEOVER DEFENSIVE PROVISIONS
Holding Company and Banks Governing Instruments. Certain provisions of
the Company's Certificate of Incorporation and Bylaws assist the Company in
maintaining its status as an independent publicly owned corporation. These
provisions provide for, among other things, limiting voting rights of beneficial
owners of more than 10% of the Common Stock, staggered terms for directors,
noncumulative voting for directors, limits on the calling of special meetings, a
fair price/supermajority vote requirement for certain business combinations and
certain notice requirements (although the fair price/supermajority vote
requirement is reduced to a majority vote if the Board of Directors votes in
favor of a business combination). The 10% vote limitation would not affect the
ability of an individual to solicit revocable proxies and to vote the shares
represented by such proxies. In addition, provisions in First Federal's Charter
that have an anti-takeover effect could also be applicable to changes in control
of the Company as the sole shareholder of First Federal. First Federal's Charter
includes a provision applicable for five years which prohibits acquisitions and
offers to acquire, directly or indirectly, the beneficial ownership of more than
10% of First Federal's securities. Any person violating this restriction, which
expires in September 1998, may not vote First Federal's securities in excess of
10%. Any or all of these provisions may serve to entrench current management and
to discourage potential proxy contests and other takeover attempts, particularly
those which have not been negotiated with the Board of Directors.
Regulatory and Statutory Provisions. Federal law requires OTS approval
prior to the acquisition of "control" (as defined in OTS regulations) of an
insured institution, including a holding company thereof. In the event that
holders of revocable proxies for more than 25% of the shares of Common Stock
acting as a group or in concert with other proxy holders seek, among other
things, to elect one-third or more of the Company's Board of Directors, to cause
the Company's stockholders to approve the acquisition or corporate
reorganization of the Company or to exert a continuing influence on a material
aspect of the business operations of the Company, such actions could be deemed
to be a change of control, subject to OTS approval. Similar regulations of the
FRB apply to the Company due to its status as a bank holding company. A Delaware
statute also limits the circumstances under which a Delaware corporation may
engage in any business combinations (as defined by the statute) with an
interested stockholder (i.e., any person or entity that owns 15% or more of the
voting stock).
Employment Agreements and Other Benefit Plans - Voting Control of
Directors and Executive Officers. The employment agreements between First
Federal and its executive officers and certain provisions of the Company's 1993
Stock Option and Incentive Plan provide for benefits and cash payments in the
event of a change in control of the Company or First Federal. The Company's
Management Recognition Plan provides for accelerated vesting of restricted stock
<PAGE>
awards in the event of a change in control. These provisions may increase the
cost of, and thereby discourage, takeover attempts of the Company or First
Federal.
COMPETITION
The Company experiences strong competition in its local market area in
both originating loans and attracting deposits. This competition arises
principally from commercial banks, as well as savings association, mortgage
bankers, credit unions, insurance companies and brokerage houses. Such
competition may limit the Company's growth in the future.
THE COMPANY
First Midwest was organized in 1993 to act as the holding company for
First Federal upon completion of First Federal's conversion from the mutual to
the stock form of organization (the "Conversion"). On September 20, 1993, the
Company acquired all of the shares of First Federal in connection with the
completion of the Conversion.
First Federal, headquartered in Storm Lake, Iowa, was originally
chartered in 1954 as an Iowa-chartered savings and loan association. During
1957, First Federal converted to a federal mutual charter and in September 1993,
in connection with the Conversion, amended its charter to become a federal stock
savings bank. Its deposits are insured up to the applicable limits by the FDIC.
First Federal currently serves Buena Vista, Calhoun, Ida, Pocahontas, Polk and
Sac counties in Iowa and Brookings County in South Dakota. First Federal
conducts its business through its main office and branch office in Storm Lake,
Iowa, six other locations in its primary market area in Iowa, and two offices in
Brookings, South Dakota. At June 30, 1996, the Company had total assets of
$342.1 million, deposits of $203.9 million, and shareholders' equity of $39.0
million.
On September ____, 1996, the Company completed the acquisition of CWB,
the holding company for Security, resulting in Security becoming a stand-alone
first tier subsidiary of the Company. Upon consummation of the Merger, each CWB
stockholder became entitled to receive ____________, for an aggregate Merger
consideration of approximately $____ million. As of June 30, 1996, CWB had total
consolidated assets of $30.0 million, deposits of $26.4 million and
stockholders' equity of $2.5 million. Security currently conducts its business
through its three full service offices in Casey, Menlo and Stuart, Iowa. For
further financial information relating to CWB and Security, see "Unaudited Pro
Forma Combined Financial Information" and "Unaudited Historical Financial
Information of Central West Bancorporation" contained herein.
First Federal and Security are community-oriented financial
institutions offering a variety of financial services to meet the needs of the
communities it serves. The principal business of First Federal historically has
consisted of attracting retail deposits from the general public and investing
those funds primarily in one- to four-family residential mortgage loans and, to
a lesser extent, commercial and multi-family real estate, agricultural operating
and real estate, construction, consumer and commercial business loans primarily
in First Federal's market area. Recently, First Federal's lending activities
have expanded to include an increased emphasis on originations and purchases of
commercial and multi-family real estate loans. The principal business of
Security has been and continues to be attracting retail deposits from the
general public and investing those funds in agricultural real estate and
operating loans and, to a lesser extent, one- to four-family residential,
<PAGE>
commercial business and consumer loans. The Company and the Banks also purchase
mortgage-backed securities and invest in U.S. Government and agency obligations
and other permissible investments.
The Company's revenues are derived primarily from interest on mortgage
loans, mortgage-backed securities, investments, consumer loans, agricultural
operating loans, commercial business loans, income from service charges and loan
originations, loan servicing fee income, and income from the sale of mutual
funds, insurance products, annuities and brokerage services through its service
corporation subsidiaries.
The executive offices of First Midwest are located at Fifth at Erie,
Storm Lake, Iowa 50588. Its telephone number at that address is (712) 732-4117.
For additional information concerning the Company and First Federal,
see "Incorporation of Certain Documents by Reference."
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. All of the proceeds from the sale of the Shares will be received by the
Selling Stockholders.
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholders are former CWB shareholders. The Shares were
acquired by the Selling Stockholders in connection with the Merger. The
following table sets forth the names of, and the number of shares of Common
Stock to be owned upon consummation of the Merger by, each Selling Stockholder.
Since the Selling Stockholders may sell all, some or none of their Shares, no
estimate can be made of the aggregate number of Shares that are to be offered
hereby or that will be owned by each Selling Stockholder upon completion of the
offering to which this Prospectus relates.
The Shares offered by this Prospectus may be offered from time to time
by the Selling Stockholders named below:
<TABLE>
<CAPTION>
SHARES OF
SELLING STOCKHOLDER COMMON STOCK POSITIONS WITH CWB AND SECURITY
- ------------------------- ------------ -------------------------------
<S> <C> <C>
Casey Cable Company 18,107 *
Harl Oil Company, Inc. 7,052 **
William M. Wilson 8,791 Chairman of the Board of CWB and
Director of Security
Jack Ellis 8,793 Director of CWB
Robert E. Feilmeyer 7,052 Director of CWB
Earl M. Kading 18,326 Director of CWB
Eugene A. Kading 9,491 Director of CWB
Norman B. Kading Funnel Trust 17,584 ***
E. Charlene Kalbach 19,762 Director of CWB and Security
Marvin J. Larsen 7,052 Director and Vice President of CWB
Wayne F. O'Brien 8,642 Director of CWB
Darrell D. Ocheltree 7,052 Director of CWB and Security
Donald E. Peers 17,584 Director of CWB
Colleen G. Ruppert 18,323 Director of CWB
Harold J. Scholl 7,052 Director of CWB and Chairman of
the Board of Security
Claude F. Havick 9,337 Director, Treasurer and Secretary of
CWB; Director, President and Chief
Executive Officer of Security
</TABLE>
* Keith Caltrider, a Director of CWB, is the President of Casey Cable
Company.
** James A. Harl, a Director of CWB and Vice Chairman of the Board of
Directors of Security, is the President and owner of Harl Oil Company.
*** Norman B. Kading, a Director of CWB, is the income beneficiary of the
Norman B. Kading Funeral Trust.
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders have advised the Company that the Shares may
be sold from time to time by the Selling Stockholders, or their transferees, on
the Nasdaq Stock Market or any national securities exchange or automated
interdealer quotation system on which shares of Common Stock are then listed, or
through negotiated transactions or otherwise. The Shares will not be sold in an
underwritten public offering. The Shares will be sold at prices and on terms
then prevailing, at prices related to the then-current market price, or at
negotiated prices. The Selling Stockholders may effect sales of the Shares
directly or by or through agents, brokers or dealers and the Shares may be sold
by one or more of the following methods: (i) ordinary brokerage transactions,
(ii) purchases by a broker-dealer as principal and resale by such broker-dealer
for its own account pursuant to this Prospectus, and (iii) in "block" sales. In
effecting sales, broker-dealers engaged by any Selling Stockholder and/or the
purchasers of the Shares may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions, concessions or discounts from the
Selling Stockholder and/or the purchasers of the Shares in amounts to be
negotiated prior to the sale. Sales will be made only through broker-dealers
registered as such in a subject jurisdiction or in transactions exempt from such
registration.
The Company is required under the Stockholder Agreement to comply with
the requirements of Rule 144(c) under the Securities Act regarding the
availability of current public information about the Company.
In offering the Shares covered by this Prospectus, the Selling
Stockholders and any brokers, dealers or agents who participate in a sale of the
Shares by the Selling Stockholders may be considered "underwriters" within the
meaning of Section 2(11) of the Securities Act, and the compensation of any
broker/dealers may be deemed to be underwriting discounts and commissions.
As required by the Stockholders Agreement, the Company has filed the
Registration Statement, of which this Prospectus forms a part, with respect to
the sale of the Shares. First Midwest has agreed to use all reasonable efforts
to keep the Registration Statement effective for a period commencing on the
effective date of the Registration Statement and terminating 24 months
thereafter.
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Stockholders. The Company will bear all of the costs of
registering the Shares under the Securities Act.
EXPERTS
The consolidated financial statements and the related notes to
financial statements incorporated in this Prospectus by reference from First
Midwest's Annual Report on Form 10-KSB for the year ended September 30, 1995,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given their authority as
experts in accounting and auditing.
LEGAL MATTERS
The validity of the Common Stock offered in this Prospectus will be
passed upon for the Company by Silver, Freedman & Taff, L.L.P. (a limited
liability partnership including professional corporations), Washington, D.C.
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The unaudited pro forma combined financial statements are intended for
informational purposes and are not necessarily indicative of the future
financial position or future results of operations of the combined company, or
of the financial position or the results of operations of the combined company
that would have actually occurred had the acquisition been in effect as of the
date or for the periods presented. The unaudited pro forma combined financial
statements and the accompanying notes should be read in conjunction with and are
qualified in their entirety by (i) the consolidated financial statements,
including the accompanying notes, of First Midwest, which are contained in First
Midwest's 1995 Annual Report to Stockholders and its Quarterly Reports on Form
10-QSB, which reports are incorporated by reference herein and (ii) the
consolidated unaudited financial statements of CWB, which are contained
elsewhere herein. See "Unaudited Historical Financial Information of Central
West Bancorporation."
<PAGE>
First Midwest Financial, Inc.
Pro Forma Consolidated Statement of Condition
As of June 30, 1996
<TABLE>
<CAPTION>
Pro Forma
First First First First
Midwest Federal Services Brookings Pro Forma Midwest
Financial, Savings Bank Financial Service Security Consolidating Entries Financial,
Inc. Ltd Corp State Bank Debits Credits Inc.
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash & Bank Accounts 1,138,552 6,841,480 393,779 332,883 655,480 (1) 743,475 8,618,699
Daily Funds 0 8,403,384 0 0 450,000 8,853,384
Investment Securities 1,548,005 46,767,219 0 0 10,169,009 58,484,233
Mortgage Backed Securities 0 37,815,732 0 0 0 37,815,732
Loans Receivable, net 3,467,200 220,261,161 0 0 17,127,227 (1) 967,200 239,888,388
Accrued Interest 64,037 3,515,504 0 0 497,627 4,077,167
Real Estate Owned 0 112,773 0 0 0 112,773
Investment in Subsidiary 37,681,877 781,527 0 0 0 (1) 38,463,404 0
Property and Equipment 113,256 2,690,677 1,785 73 956,442 3,762,233
Goodwill 0 2,578,788 0 0 2,765,459 5,344,247
Other Assets 204,711 5,804,984 4,054 96,912 50,980 (1) 22,463 6,139,177
--------- ----------- ------- ------- ---------- -----------
Total Assets 44,217,638 335,573,230 399,617 429,868 32,672,224 373,096,035
========== =========== ======= ======= ========== ===========
Deposits 0 204,657,241 0 0 26,437,616 (1) 743,475 230,351,382
FHLB Advances 0 93,290,539 0 0 0 93,290,539
Retail Repurchase Agreements 0 1,979,918 0 0 0 1,979,918
Other Borrowings - ESOP 0 967,200 0 0 0 (1) 967,200 0
Accrued Interest Payable 18,931 752,469 0 0 128,412 899,812
Accrued Income Taxes (22,314) 440,479 (466) 11,661 46,400 475,761
Other Liabilities 966,888 1,719,669 2,649 34,114 388,046 (1) 22,463 3,088,903
--------- ----------- ------- ------- ---------- -----------
Total Liabilities 963,506 303,807,515 2,182 45,776 27,000,474 330,086,314
--------- ----------- ------- ------- ---------- -----------
Common Stock 21,636 20,135 25,000 40,000 300,000 (1) 385,135 21,636
Add'l Paid in Capital 23,585,964 27,237,369 0 0 5,371,750 (1) 32,609,119 23,585,964
Retained Earnings 23,773,343 5,564,324 372,435 344,092 0 (1) 6,280,851 23,773,343
Unrealized Gain on AFS
Securities 16,669 (244,412) 0 0 0 (227,743)
Less: Treasury Stock at Cost (3,331,780) 0 0 0 0 (3,331,780)
Less: Obligation under ESOP (811,700) (811,700) 0 0 0 (1) 811,700 (811,700)
--------- ----------- ------- ------- ---------- -----------
Total Equity 43,254,132 31,765,715 397,435 384,092 5,671,750 43,009,720
--------- ----------- ------- ------- ---------- -----------
Total Liabilities & Equity 44,217,638 335,573,230 399,617 429,868 32,672,224 41,008,242 41,008,242 373,096,035
========== =========== ======= ======= ========== ========== ========== ===========
</TABLE>
(1) To record pro forma consolidating entrie.
<PAGE>
First Midwest Financial, Inc.
(Holding Company Only)
Pro Forma Statement of Condition
As of June 30, 1996
<TABLE>
<CAPTION>
Pro Forma
Pro Forma First Midwest
First Midwest Central West Adjustments Financial,
Financial, Inc. Bancorporation Debits Credits Inc.
---------- --------- ------ ------- ----------
<S> <C> <C> <C> <C> <C>
Cash & Bank Accounts 931,571 9,023 (1) 2,000,000 (2)(3) 1,802,042 1,138,552
Daily Funds 0 0 0
Investment Securities 1,548,005 0 1,548,005
Mortgage Backed Securities 0 0 0
Loans Receivable, net 3,467,200 0 3,467,200
Accrued Interest 64,037 0 64,037
Real Estate Owned 0 0 0
Investment in Subsidiary 34,010,127 2,906,291 (2) 2,765,459 (1) 2,000,000 37,681,877
Property and Equipment 15,106 98,150 113,256
Goodwill 0 0 0
Other Assets 180,711 24,000 204,711
---------- --------- ----------
Total Assets 40,216,757 3,037,464 44,217,638
========== ========= ==========
Deposits 0 0 0
FHLB Advances 0 0 0
Retail Repurchase Agreements 0 0 0
Other Borrowings 0 475,000 (3) 475,000 0
Accrued Interest Payable 0 18,931 18,931
Accrued Income Taxes (22,314) 0 (22,314)
Other Liabilities 966,066 822 966,888
---------- --------- ----------
Total Liabilities 943,753 494,753 963,506
---------- --------- ----------
Common Stock 19,905 727,500 (2) 727,500 (2) 1,731 21,636
Add'l Paid in Capital 19,606,567 9,000 (2) 9,000 (2) 3,979,397 23,585,964
Retained Earnings 23,773,343 1,806,211 (2) 1,806,211 23,773,343
Unrealized Gain on AFS Securities 16,669 0 16,669
Less: Treasury Stock at Cost (3,331,780) 0 (3,331,780)
Less: Obligation under ESOP (811,700) 0 (811,700)
---------- --------- ----------
Total Equity 39,273,004 2,542,711 43,254,132
---------- --------- ----------
Total Liabilities & Equity 40,216,757 3,037,464 7,783,170 7,783,170 44,217,638
========== ========= ========= ========= ==========
</TABLE>
<PAGE>
(1) To record proposed dividend from First Federal Savings Bank of the Midwest.
Debit Credit
----- ------
Cash & Bank Accounts 2,000,000
Investment in Subsidiary 2,000,000
(2) To record purchase of Central West Bancorporation.
Debit Credit
----- ------
Common Stock - CWB 727,500
Additional Paid-in Capital - CWB 9,000
Retained Earnings 1,806,211
Investment in Subsidary (push-down of
goodwill) 2,765,459
Cash & Bank Accounts 1,327,042
Common Stock - FMFI 1,731
Additional Paid-in Capital - FMFI 3,979,397
(Based on estimated total purchase price of $5,308,170, 25% in cash and
75% in stock valued at $23.00 per share)
(3) To record repayment of debt.
Debit Credit
----- ------
Other Borrowings 475,000
Cash & Bank Accounts 475,000
<PAGE>
First Federal Savings Bank of the Midwest
Pro Forma Statement of Condition
As of June 30, 1996
<TABLE>
<CAPTION>
Pro Forma Pro Forma
First Federal Adjustments First Federal
Savings Bank Debits Credits Savings Bank
------------ ------ ------- -------------
<S> <C> <C> <C> <C>
Cash & Bank Accounts 6,841,480 6,841,480
Daily Funds 10,403,384 (1) 2,000,000 8,403,384
Investment Securities 46,767,219 46,767,219
Mortgage Backed Securities 37,815,732 37,815,732
Loans Receivable, net 220,261,161 220,261,161
Accrued Interest 3,515,504 3,515,504
Real Estate Owned 112,773 112,773
Investment in Subsidiary 781,527 781,527
Property and Equipment 2,690,677 2,690,677
Goodwill 2,578,788 2,578,788
Other Assets 5,804,984 5,804,984
----------- -----------
Total Assets 337,573,230 335,573,230
=========== ===========
Deposits 204,657,241 204,657,241
FHLB Advances 93,290,539 93,290,539
Retail Repurchase Agreements 1,979,918 1,979,918
Other Borrowings - ESOP 967,200 967,200
Accrued Interest Payable 752,469 752,469
Accrued Income Taxes 440,479 440,479
Other Liabilities 1,719,669 1,719,669
----------- -----------
Total Liabilities 303,807,515 303,807,515
----------- -----------
Common Stock 20,135 20,135
Add'l Paid in Capital 27,237,369 27,237,369
Retained Earnings 7,564,324 (1) 2,000,000 5,564,324
Unrealized Gain on AFS Securities (244,412) (244,412)
Less: Treasury Stock at Cost 0 0
Less: Obligation under ESOP (811,700) (811,700)
----------- -----------
Total Equity 33,765,715 31,765,715
----------- -----------
Total Liabilities & Equity 337,573,230 2,000,000 2,000,000 335,573,230
=========== ========= ========= ===========
</TABLE>
(1) To record proposed dividend to First Midwest Financial, Inc.
Debit Credit
Retained Earnings 2,000,000
Daily Funds 2,000,000
<PAGE>
Security State Bank
Pro Forma Statement of Condition
As of June 30, 1996
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Security Adjustments Security
State Bank Debits Credits State Bank
---------- ------ ------- ----------
<S> <C> <C> <C> <C>
Cash & Bank Accounts 655,480 655,480
Daily Funds 450,000 450,000
Investment Securities 10,169,009 10,169,009
Mortgage Backed Securities 0 0
Loans Receivable, net 17,127,227 17,127,227
Accrued Interest 497,627 497,627
Real Estate Owned 0 0
Investment in Subsidiary 0 0
Property and Equipment 956,442 956,442
Goodwill 0 (1) 2,765,459 2,765,459
Other Assets 50,980 50,980
---------- ----------
Total Assets 29,906,765 32,672,224
========== ==========
Deposits 26,437,616 26,437,616
FHLB Advances 0 0
Retail Repurchase Agreements 0 0
Other Borrowings 0 0
Accrued Interest Payable 128,412 128,412
Accrued Income Taxes 46,400 46,400
Other Liabilities 388,046 388,046
---------- ----------
Total Liabilities 27,000,474 27,000,474
---------- ----------
Common Stock 300,000 300,000
Add'l Paid in Capital 1,050,000 (1)(2) 4,321,750 5,371,750
Retained Earnings 1,556,291 (2) 1,556,291 0
Unrealized Gain on AFS Securities 0 0
Less: Treasury Stock at Cost 0 0
Less: Obligation under ESOP 0 0
---------- ----------
Total Equity 2,906,291 5,671,750
---------- ----------
Total Liabilities & Equity 29,906,765 4,321,750 4,321,750 32,672,224
========== ========= ========= ==========
</TABLE>
(1) To record push-down of goodwill from First Midwest Financial, Inc.
Debit Credit
----- ------
Goodwill 2,765,459
Additional Paid-in Capital 2,765,459
(Goodwill estimated to be total purchase price less net equity of Central
West Bancorporation)
(2) To record transfer of retained earnings to additional paid-in capital in
conjunction with purchase.
Debit Credit
----- ------
Retained Earnings 1,556,291
Additional Paid-in Capital 1,556,291
<PAGE>
First Midwest Financial, Inc.
Pro Forma Statement of Income
Giving Effect to Acquisition of Central West Bancorporation
For the Nine Months Ended June 30, 1996
<TABLE>
<CAPTION>
Pro Forma
First Midwest First Midwest
Financial, Central West Pro Forma Financial,
Inc. Bancorporation Adjustments Inc.
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Interest on loans 13,639,540 1,183,957 14,823,497
Interest on investments 3,953,154 489,101 (1)(2) (56,061) 4,386,194
Other interest income 231,951 0 231,951
---------- --------- ----------
Total interest income 17,824,645 1,673,058 19,441,642
Interest on deposits 7,179,840 869,255 8,049,095
Interest on borrowings 2,922,944 35,663 2,958,607
---------- --------- ----------
Total interest expense 10,102,784 904,918 11,007,702
Interest income before
provision for loss on loans 7,721,861 768,141 8,433,941
Provision for loss on loans 90,000 13,250 103,250
---------- --------- ----------
Net interest income 7,631,861 754,891 8,330,691
Non-interest income:
Loan fees and service charges 629,521 158,306 787,827
Gain/(loss) on sale of assets 56,366 (6,870) 49,496
Other non-interest income 363,089 36,219 399,308
---------- --------- ----------
Total non-interest income 1,048,976 187,655 1,236,631
Non-interest expense:
Compensation and benefits 2,810,482 326,072 3,136,554
Amortization of goodwill 107,536 0 (3) 138,273 245,809
Other non-interest expense 1,749,479 375,478 2,124,957
-------- -------- --------
Total non-interest expense 4,667,497 701,550 5,507,320
---------- --------- ----------
Income before income tax 4,013,340 240,996 4,060,002
Income tax expense/(benefit) 1,617,507 71,409 (4) (21,303) 1,667,613
-------- -------- -------- --------
Net income 2,395,833 169,586 (173,031) 2,392,388
========= ======== ======= =========
Net income per weighted
average common share
outstanding (fully-diluted) $1.34 $1.22
========== =========
Weighted average common
shares outstanding 1,793,254 1,966,347
Shares issued in transaction 173,093
</TABLE>
<PAGE>
(1) To adjust for reduction in interest earnings on cash paid:
- Cash portion of purchase price x average federal funds rate during
period.
- ($1,327,042 x 5.50% x 9/12 = $54,740)
(2) To adjust for reduction in interest income on cash dividends paid on
additional outstanding shares:
- Weighted average cash dividends paid (3 quarters) x average federal
funds rate during period.
- ($24,017 x 5.50% = $1,321)
(3) To adjust for amortization of goodwill:
- Estimated goodwill amortized straight-line over 15 years.
- ($2,765,459 / 15 x 9/12 = $138,273)
(4) To adjust for tax effect of reduced interest income:
- Reduced interest income x effective tax rate.
- ($56,061 x 38% = $21,303)
<PAGE>
First Midwest Financial, Inc.
Pro Forma Statement of Income
Giving Effect to Acquisition of Central West Bancorporation
For the Fiscal Year Ended September 30, 1995
<TABLE>
<CAPTION>
Pro Forma
First Midwest First Midwest
Financial, Central West Pro Forma Financial,
Inc. Bancorporation Adjustments Inc.
---------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Interest on loans 13,768,064 1,424,846 15,192,910
Interest on investments 7,015,145 549,528 (1)(2) (75,313) 7,489,360
Other interest income 270,261 0 270,261
---------- --------- ----------
Total interest income 21,053,470 1,974,374 22,952,531
Interest on deposits 8,245,227 985,159 9,230,386
Interest on borrowings 3,403,497 54,143 3,457,640
---------- --------- ----------
Total interest expense 11,648,724 1,039,301 12,688,025
Interest income before
provision for loss on loans 9,404,746 935,073 10,264,506
Provision for loss on loans 250,000 43,500 293,500
---------- --------- ----------
Net interest income 9,154,746 891,573 9,971,006
Non-interest income:
Loan fees and service charges 712,345 165,552 877,897
Gain/(loss) on sale of assets 1,070,247 (5,133) 1,065,114
Other non-interest income 503,878 38,381 542,259
---------- --------- ----------
Total non-interest income 2,286,470 198,800 2,485,270
Non-interest expense:
Compensation and benefits 3,400,190 410,342 3,810,532
Amortization of goodwill 125,160 0 (3) 184,364 309,524
Other non-interest expense 2,050,827 455,838 2,506,665
---------- --------- ----------
Total non-interest expense 5,576,177 866,180 6,626,721
Income before income tax 5,865,039 224,193 5,829,555
Income tax expense/(benefit) 2,320,687 52,709 (4) (28,619) 2,344,777
--------- -------- -------- --------
Net income 3,544,352 171,485 (231,058) 3,484,779
========= ======== ======= =========
Net income per weighted
average common share
outstanding (fully-diluted) $1.99 $1.78
Weighted average common
shares outstanding 1,780,592 1,953,685
Shares issued in transaction 173,093
</TABLE>
<PAGE>
(1) To adjust for reduction in interest earnings on cash paid:
- Cash portion of purchase price x average federal funds rate during
period.
- ($1,327,042 x 5.59% = $74,182)
(2) To adjust for reduction in interest income on cash dividends paid on
additional outstanding shares:
- Weighted average cash dividends paid (3 quarters) x average federal
funds rate during period.
- ($19,473 x 5.81% = $1,131)
To adjust for amortization of goodwill:
- Estimated goodwill amortized straight-line over 15 years.
- ($2,765,459 / 15 = $184,364)
(4) To adjust for tax effect of reduced interest income:
- Reduced interest income x effective tax rate.
- ($75,313 x 38% = $28,619)
<PAGE>
UNAUDITED HISTORICAL FINANCIAL INFORMATION OF CENTRAL WEST BANCORPORATION
The following table sets forth, for the periods indicated, the
available financial information of CWB. The following financial data reflects,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary to a fair presentation of such data. Results
for the six months ended June 30, 1996 are not necessarily indicative of results
which may be expected for any other interim period or for the year as a whole.
Central West Bancorporation
Consolidated Statement of Condition
As of June 30, 1996
<TABLE>
<CAPTION>
Central West Security Consolidating Entries
Bancorporation State Bank Debits Credits Combined
-------------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
Cash & Bank Accounts 9,023 655,480 664,503
Daily Funds 0 450,000 450,000
Investment Securities 0 10,169,009 10,169,009
Mortgage Backed Securities 0 0 0
Loans Receivable, net 0 17,127,227 17,127,227
Accrued Interest 0 497,627 497,627
Real Estate Owned 0 0 0
Investment in Subsidiary 2,906,291 0 (1) 2,906,291 0
Property and Equipment 98,150 956,442 1,054,592
Goodwill 0 0 0
Other Assets 24,000 50,980 74,980
--------- ---------- ----------
Total Assets 3,037,464 29,906,765 30,037,938
========= ========== ==========
Deposits 0 26,437,616 26,437,616
FHLB Advances 0 0 0
Retail Repurchase Agreements 0 0 0
Other Borrowings 475,000 0 475,000
Accrued Interest Payable 18,931 128,412 147,343
Accrued Income Taxes 0 46,400 46,400
Other Liabilities 822 388,046 388,868
---------- ---------- ----------
Total Liabilities 494,753 27,000,474 27,495,227
------- ---------- ----------
Common Stock 727,500 300,000 (1) 300,000 727,500
Add'l Paid in Capital 9,000 1,050,000 (1) 1,050,000 9,000
Retained Earnings 1,806,211 1,556,291 (1) 1,556,291 1,806,211
Unrealized Gain on AFS Securities 0 0 0
Less: Treasury Stock at Cost 0 0 0
Less: Obligation under ESOP 0 0 0
--------- --------- ----------
Total Equity 2,542,711 2,906,291 2,542,711
--------- --------- ----------
Total Liabilities & Equity 3,037,464 29,906,765 2,906,291 2,906,291 30,037,938
========= ========== ========= ========= ==========
</TABLE>
(1) To record consolidating entries.
<PAGE>
Central West Bancorporation
Consolidated Statement of Condition
As of December 31, 1995
<TABLE>
<CAPTION>
Central West Security Consolidating Entries
Bancorporation State Bank Debits Credits Combined
-------------- ---------- ------ ------- --------
<S> <C> <C> <C> <C> <C>
Cash & Bank Accounts 163,383 1,141,847 1,305,230
Daily Funds 0 0 0
Investment Securities 0 10,826,633 10,826,633
Mortgage Backed Securities 0 0 0
Loans Receivable, net 0 16,782,806 16,782,806
Accrued Interest 0 574,900 574,900
Real Estate Owned 0 0 0
Investment in Subsidiary 2,741,833 0 (1) 2,741,833 0
Property and Equipment 118,828 985,000 1,103,828
Goodwill 0 0 0
Other Assets 6,863 18,605 25,468
--------- ---------- ----------
Total Assets 3,030,907 30,329,791 30,618,865
========= ========== ==========
Deposits 0 26,824,488 26,824,488
FHLB Advances 0 0 0
Retail Repurchase Agreements 0 0 0
Other Borrowings 475,000 0 475,000
Accrued Interest Payable 50,420 119,881 170,301
Accrued Income Taxes 0 0 0
Other Liabilities 95,900 604,589 700,489
------- ---------- ----------
Total Liabilities 621,320 27,548,958 28,170,278
------- ---------- ----------
Common Stock 727,500 300,000 (1) 300,000 727,500
Add'l Paid in Capital 9,000 1,050,000 (1) 1,050,000 9,000
Retained Earnings 1,673,087 1,391,833 (1) 1,391,833 1,673,087
Unrealized Gain on AFS Securities 0 39,000 39,000
Less: Treasury Stock at Cost 0 0 0
Less: Obligation under ESOP 0 0 0
--------- ---------- ----------
Total Equity 2,409,587 2,780,833 2,448,587
--------- ---------- ----------
Total Liabilities & Equity 3,030,907 30,329,791 2,741,833 2,741,833 30,618,865
========= ========== ========= ========= ==========
</TABLE>
(1) To record consolidating entries.
<PAGE>
Central West Bancorporation
Consolidated Statements of Income
For the Six months Ended June 30, 1996 and
the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
6/30/96 12/31/95 12/31/94
--------- --------- ---------
<S> <C> <C> <C>
Interest on loans 812,344 1,486,451 1,240,031
Interest on investments 344,155 579,785 458,755
Other interest income 0 0 0
--------- --------- ---------
Total interest income 1,156,499 2,066,236 1,698,786
Interest on deposits 601,200 1,072,220 723,974
Interest on borrowings 21,477 56,742 46,344
--------- --------- ---------
Total interest expense 622,677 1,128,962 770,318
Interest income before
provision for loss on loans 533,822 937,274 928,468
Provision for loss on loans 0 53,000 15,000
--------- --------- ---------
Net interest income 533,822 884,274 913,468
Non-interest income:
Loan and service fees 118,476 159,318 184,253
Gain/(loss) on sale of assets (6,236) (2,535) (12,926)
Other non-interest income 26,100 40,475 32,100
--------- --------- ---------
Total non-interest income 138,340 197,258 203,427
Non-interest expense:
Compensation and benefits 216,515 438,227 326,687
Amortization of goodwill 0 0 0
Other non-interest expense 258,023 469,819 413,893
--------- --------- ---------
Total non-interest expense 474,538 908,046 740,580
Income before income tax 197,624 173,486 376,315
Income tax expense/(benefit) 64,500 27,637 127,924
--------- --------- ---------
Net income 133,124 145,849 248,391
========= ========= =========
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE IN THE PROSPECTUS
The expenses relating to the registration of the shares of Common Stock
being offered hereby will be borne by First Midwest Financial, Inc. ("First
Midwest"). Such expenses are estimated as follows:
Item Amount
Securities and Exchange Commission $ 1,425
Registration Fee
Legal Fees and Expenses 12,000
Accounting Fees and Expenses 1,500
Miscellaneous Expenses 1,075
-------
Total $16,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Tenth of First Midwest's Certificate of Incorporation provides
for indemnification of directors and officers of First Midwest against any and
all liabilities, judgments, fines and reasonable settlements, costs, expenses
and attorneys' fees incurred in any actual, threatened or potential proceeding,
except to the extent that such indemnification is limited by Delaware law and
such law cannot be varied by contract or bylaw. Article Tenth also provides for
the authority to purchase insurance with respect thereto.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation's Board of Directors to grant indemnity under certain
circumstances to directors and officers, when made, or threatened to be made,
parties to certain proceedings by reason of such status with the corporation,
against judgments, fines, settlements and expenses, including attorneys' fees.
In addition, under certain circumstances such persons may be indemnified against
expenses actually and reasonably incurred in defense of a proceeding by or on
behalf of the corporation. Similarly, the corporation, under certain
circumstances, is authorized to indemnify directors and officers of other
corporations or enterprises who are serving as such at the request of the
corporation, when such persons are made, or threatened to be made, parties to
certain proceedings by reason of such status, against judgments, fines,
settlements and expenses, including attorneys' fees; and under certain
circumstances, such persons may be indemnified against expenses actually and
reasonably incurred in connection with the defense or settlement of a proceeding
by or in the right of such other corporation or enterprise. Indemnification is
permitted where such person (i) was acting in good faith; (ii) was acting in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation or other corporation or enterprise, as appropriate; (iii) with
respect to a criminal proceeding, has no reasonable cause to believe his conduct
was unlawful; and (iv) was not adjudged to be liable to the corporation or other
corporation or enterprise (unless the court where the proceeding was brought
determines that such person is fairly and reasonably entitled to indemnity).
Unless ordered by a court, indemnification may be made only following a
determination that such indemnification is permissible because the person being
indemnified has met the requisite standard of conduct. Such determination may be
made (i) by the Board of Directors of First Midwest by a majority vote of a
quorum consisting of directors not at the time parties to such proceeding; or
(ii) if such a quorum cannot be obtained or the quorum so directs, then by
independent legal counsel in a written opinion; or (iii) by the stockholders.
<PAGE>
Section 145 also permits expenses incurred by directors and officers in
defending a proceeding to be paid by the corporation in advance of the final
disposition of such proceedings upon the receipt of an undertaking by the
director or officer to repay such amount if it is ultimately determined that he
is not entitled to be indemnified by the corporation against such expenses.
First Midwest maintains directors and officers liability insurance.
ITEM 16. EXHIBITS
The following Exhibits are filed as part of this Registration
Statement.
2 Agreement and Plan of Merger and Reorganization, dated as of May 20,
1996, by and between First Midwest and Central West Bancorporation.
4.1 Certificate of Incorporation of First Midwest (previously filed as
Exhibit 3.1 to First Midwest's Registration Statement on Form S-1,
dated June 17, 1993 (No. 33-64654) and incorporated herein by
reference).
4.2 Bylaws of First Midwest (previously filed as Exhibit 3.2 to First
Midwest's Registration Statement on Form S-1, dated June 17, 1993 (No.
33-64654) and incorporated herein by reference).
5 Opinion of Silver, Freedman & Taff, L.L.P. as to legality of the
securities being registered
23.1 Consent of Silver, Freedman & Taff, L.L.P.
23.2 Consent of Deloitte & Touche LLP
24 Power of Attorney (set forth on signature page)
ITEM7. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Storm Lake,
State of Iowa, on August 9, 1996.
FIRST MIDWEST FINANCIAL, INC.
By: /s/ James S. Haahr
James S. Haahr, Chairman of the Board,
President and Chief Executive Officer
(Duly Authorized Representative)
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints James S. Haahr or Steven P. Myers, or
either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and re-substitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and all other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming said
attorneys-in-fact and agents or their substitutes or substitute may lawfully do
or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
/s/ James S. Haahr Date: August 9, 1996
- ------------------
James S. Haahr, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Steven P. Myers Date: August 9, 1996
- -------------------
Steven P. Myers , Vice Chairman of the Board
/s/E. Thurman Gaskill Date: August 9, 1996
- ---------------------
E. Thurman Gaskill
/s/ Rodney G. Muilenburg Date: August 9, 1996
- ------------------------
Rodney G. Muilenburg, Director
/s/ J. Tyler Haahr Date: August 9, 1996
- ------------------
J. Tyler Haahr, Director
/s/ E. Wayne Cooley Date: August 9, 1996
- ------------------------
E. Wayne Cooley, Director
/s/Donald J. Winchell Date: August 9, 1996
- ---------------------
Donald J. Winchell, Vice President and Chief Financial
Officer (Principal Financial and Accounting Officer)
/s/ Jeanne Partlow Date: August 9, 1996
- ------------------
Jeanne Partlow, Director
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed in connection with the Registration
Statement of First Midwest Financial, Inc. on Form S-3, pursuant to the
requirements of Item 601 of Regulation S-B:
Exhibit No. Exhibit
2 Agreement and Plan of Merger and Reorganization (the "Merger
Agreement"), dated as of May 20, 1996, by and between First Midwest
Financial, Inc. ("First Midwest") and Central West Bancorporation.
4.1 Certificate of Incorporation of First Midwest (previously filed as
Exhibit 3.1 to First Midwest's Registration Statement on Form S-1,
dated June 17, 1993, No. 33-64654 and incorporated herein by
reference).
4.2 Bylaws of First Midwest (previously filed as Exhibit 3.2 to First
Midwest's Registration Statement on Form S-1, dated June 17, 1993, No.
33-64654 and incorporated herein by reference).
5 Opinion of Silver, Freedman & Taff, L.L.P. as to legality of the
securities being registered.
23.1 Consent of Silver, Freedman & Taff, L.L.P.
23.2 Consent of Deloitte & Touche LLP.
24 Power of Attorney (set forth on signature page).
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
by and between
FIRST MIDWEST FINANCIAL, INC.
and
CENTRAL WEST BANCORPORATION
MAY 20, 1996
<PAGE>
TABLE OF CONTENTS
RECITALS
ARTICLE I
PLAN OF MERGER
1.1 Merger; Surviving Corporation
1.2 Effective Time of the Merger
1.3 Merger
1.4 Security State Bank Matters
1.5 Closing
1.6 Reservation of Right to Revise Transaction
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CWB
2.1 Organization and Authority
2.2 Subsidiaries
2.3 Capitalization
2.4 Authorization
2.5 CWB Financial Statements
2.6 CWB Reports
2.7 Properties and Leases
2.8 Taxes
2.9 Material Adverse Change
2.10 Commitments and Contracts
2.11 Litigation and Other Proceedings
2.12 Insurance
2.13 Compliance with Laws
2.14 Labor
2.15 Material Interests of Certain Persons
2.16 Allowance for Loan Losses; Adjustments
2.17 Employee Benefit Plans
2.18 Conduct to Date
2.19 Registration Statement; Regulatory Filings
2.20 Registration Obligations
2.21 Takeover Provisions Not Applicable
2.22 Regulatory, Tax and Accounting Matters
2.23 Brokers and Finders
2.24 Accuracy of Information
2.25 Community Reinvestment Act Compliance
2.26 Governmental Approvals and Other Conditions
2.27 Shareholder Agreement
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF FIRST MIDWEST
3.1 Organization and Authority
3.2 Capitalization of First Midwest
3.3 Authorization
3.4 First Midwest Statements
3.5 First Midwest Reports
3.6 Material Adverse Change
3.7 Applications
3.8 Brokers and FinderstionAct Compliance
<PAGE>
3.12 Compliance with Laws
3.13 Governmental Approvals and Other Conditions
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Businesses Prior to the Effective Time
4.2 Forbearances
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access and Information
5.2 Regulatory Matters
5.3 Current Information
5.4 Agreements of Affiliates
5.5 Expenses
5.6 Miscellaneous Agreements and Consents
5.7 Press Releases
5.8 Takeover Provisions
5.9 Third Parties
5.10 Assistance of Third Parties
5.11 Insurance Policy Claims
5.12 Updated Schedules
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger
6.2 Conditions to Obligations of CWB to Effect the Merger
6.3 Conditions to Obligations of First Midwest to Effect the Merger
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination
7.2 Effect of Termination
7.3 Amendment
7.4 Severability
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements
8.2 Notices
8.3 Miscellaneous
Exhibit A - Form of Shareholder Agreement
Exhibit B - Accounting Guidelines
Exhibit C - Legal Opinion of Silver, Freedman & Taff, L.L.P.
Exhibit D - Legal Opinion of Davis, Brown, Koehn, Shors and Roberts, P.C.
<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this
"Agreement"), dated May 20, 1996, is by and between FIRST MIDWEST FINANCIAL,
INC., a Delaware corporation ("First Midwest"), and CENTRAL WEST BANCORPORATION,
an Iowa corporation ("CWB").
A. First Midwest and CWB wish to provide for the terms and conditions
of the following described business combination in which CWB will be merged with
and into First Midwest (the "Merger"), resulting in Security State Bank
("Security State Bank"), a wholly owned first tier subsidiary of CWB, becoming a
stand-alone first tier subsidiary of First Midwest.
B. For federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)(1)(A) of
the Internal Revenue Code of 1986, as amended (the "Code") and this Agreement
shall constitute a plan of reorganization pursuant to Section 368 of the Code.
C. For accounting purposes, it is intended that the Merger shall be
accounted for as a purchase.
D. The parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe various conditions to the Merger.
E. The shareholders of CWB (the "CWB Shareholders") have approved this
Agreement and the Merger in accordance with the Iowa Act (as defined below).
Concurrently with the execution and delivery of this Agreement, and as a
condition and inducement to First Midwest's willingness to enter into this
Agreement, each of the shareholders of CWB has executed and delivered the
Shareholder Agreement in the form attached hereto as Exhibit A (the "Shareholder
Agreement").
Accordingly, and in consideration of the representations, warranties,
covenants, agreements and conditions herein contained, the parties hereto agree
as follows:
ARTICLE I
PLAN OF MERGER
This Article I and the provisions hereof shall constitute the Plan of
Merger between the parties under the Iowa Business Corporation Act (the "Iowa
Act") and the Delaware General Corporation Law (the "DGCL").
1.1 Merger; Surviving Corporation. Subject to the terms and conditions
of this Agreement, and pursuant to the provisions of the DGCL and the Iowa Act,
CWB shall be merged with and into First Midwest pursuant to the terms and
conditions set forth herein. Upon the consummation of the Merger, the separate
corporate existence of CWB shall cease and First Midwest shall continue as the
surviving corporation. The name of First Midwest, as the surviving corporation
of the Merger, shall remain "First Midwest Financial, Inc." From and after the
Effective Time, First Midwest, as the surviving corporation of the Merger, shall
possess all of the properties and rights and be subject to all of the
liabilities and obligations of First Midwest and CWB, all as more fully
described in the DGCL and the Iowa Act.
1.2 Effective Time of the Merger. As soon as practicable after each of
the conditions set forth in Article VI hereof have been satisfied or waived, the
parties will file, or cause to be filed, with the Secretary of the States of
Delaware and Iowa such certificate and articles of merger and other documents as
<PAGE>
they may deem necessary or appropriate for the Merger, which certificate and
articles of merger and other documents shall in each case be in the form
required by and executed in accordance with the applicable provisions of the
DGCL and the Iowa Act, respectively. The Merger shall become effective at the
time the certificate of merger for such merger is filed with the Secretary of
State of Delaware and the articles of merger are filed with the Secretary of
State of the State of Iowa (the "Effective Time").
1.3 Merger.
(a) Conversion of CWB Stock. At the Effective Time, each share
of common stock of CWB, $10.00 par value per share ("CWB Common
Stock"), issued and outstanding immediately prior thereto shall, by
virtue of the Merger and without any action on the part of the holder
thereof, be converted into the right to receive the Per Share Merger
Consideration as defined below. The Per Share Merger Consideration
shall be payable as described in this Section 1.3, upon tender of the
Certificates as provided for in Section 1.3(i) below after the
Effective Time, without interest from the Effective Time to the time of
payment. The Per Share Merger Consideration shall be payable to each
CWB Shareholder directly or to an agent authorized to receive payment
on behalf of such CWB Shareholder by a writing executed by such CWB
Shareholder reasonably satisfactory to First Midwest.
(b) Merger Consideration. The term "Merger Consideration"
shall mean an amount equal to the sum of (i) the product of 2.05
multiplied by the Bank Capital (as defined below), (ii) the Excess
Capital (as defined below), if any, and (iii) the Holding Company
Assets (as defined below), reduced by the Holding Company Liabilities
(as defined below).
The term "Maximum Merger Consideration" shall mean an amount
equal to the sum of (i) 25% of the Merger Consideration, plus (ii) (a)
the quotient of 75% of the Merger Consideration divided by $23.00,
multiplied by (b) the Maximum Average Price (as defined below).
The term "Minimum Merger Consideration" shall mean an amount
equal to the sum of (i) 25% of the Merger Consideration, plus (ii) (a)
the quotient of 75% of the Merger Consideration divided by $23.00,
multiplied by (b) the Minimum Average Price (as defined below).
The term "Maximum Average Price" shall mean $25.30.
The term "Minimum Average Price" shall mean $20.70.
The term "Bank Capital" shall mean an amount equal to 8% of
the lesser of (i) $30,750,000 or (ii) the average daily amount of the
assets of Security State Bank during the most recent full calendar
month prior to the Closing Date (as defined in Section 1.5 below).
<PAGE>
The term "Excess Capital shall mean an amount equal to (i) the
sum of the amounts of Security State Bank's capital stock, capital
surplus and retained earnings as of the end of the most recent full
calendar month prior to closing, Pre-Closing Earnings (as defined
below) and the tax-affected amount of Excess Reserves (as defined
below), if any, reduced by (ii) Required Additional Reserves (as
defined below), if any, and reduced further by (iii) Bank Capital.
The term "Excess Reserves" shall mean an amount equal to the
excess, if any, of the amount of Security State Bank's actual loan loss
reserves as of the end of the most recent full calendar month prior to
the Closing Date over Minimum Reserves.
The term "Minimum Reserves" shall mean an amount, determined
as of the end of the most recent full calendar month prior to the
Closing Date, equal to the sum of (i) $75,000, (ii) except with respect
to loans subject to Financial Accounting Standard No. 114 ("FAS 114"),
(a) 1% of the amount of Security State Bank's loan portfolio exclusive
of loans classified as substandard, doubtful and loss, (b) 15% of the
amount of Security State Bank's assets classified substandard, (c) 50%
of the amount of Security State Bank's assets classified doubtful, (d)
100% of the amount of Security State Bank's assets classified loss, and
(e) 2% of the amount of Security State Bank's assets listed on its
watch list; and (iii) with respect to Security State Bank's loans
subject to FAS 114, the amount of reserves required pursuant to FAS
114. All classifications of assets as substandard, doubtful and loss
shall be in accordance with the DOS Manual of Examination Policies of
the Federal Deposit Insurance Corporation ("FDIC") and assets shall be
included on Security State Bank's watch list consistent with its past
practice. Prior to the determination of Minimum Reserves, Security
State Bank shall obtain First Midwest's concurrence as to Security
State Bank's classification of assets as substandard, doubtful and
loss, as to the listing of assets on its watch list and as to loans
subject to FAS 114 and the amount of reserves required pursuant to FAS
114 with respect to such loans.
The term "Required Additional Reserves" shall mean an amount
equal to the excess, if any, of Minimum Reserves over the amount of
Security State Bank's actual loan loss reserves as of the end of the
most recent full calendar month prior to the Closing Date.
The term "Holding Company Assets" shall mean the amount of
CWB's assets, other than its investment in Security State Bank, as of
the day prior to the Closing Date.
The term "Holding Company Liabilities" shall mean the amount
of CWB's liabilities, including, without limitation, (i) interest at
the contractual rate through the day prior to the Closing Date with
respect to CWB's interest-bearing liabilities and (ii) the amount of
CWB's reasonable expenses relating to this Agreement and the
transactions contemplated thereby which are payable to third parties.
The term "Pre-Closing Earnings" shall mean:
(i) If the Closing Date occurs prior to January 1,
1997, the sum of Security State Bank's net after-tax earnings
for the period commencing on January 1, 1996 and concluding on
the last day of the most recent full calendar month prior to
the Closing Date plus the product of (a) Security State Bank's
<PAGE>
daily average net after-tax earnings for such period
multiplied by (b) the number of calendar days during the
period commencing on the first day of the month in which the
Closing Date occurs and concluding on the day prior to the
Closing Date.
(ii) If the Closing Date occurs after December 31,
1996 but prior to February 1, 1997, the product of (a)
Security State Bank's daily average net after-tax earnings for
the calendar year 1996 multiplied by (b) the number of days
during the period commencing on January 1, 1997 and concluding
on the day prior to the Closing Date.
(iii) If the Closing Date occurs on February 1, 1997
or later, the sum of Security State Bank's net after-tax
earnings for the full calendar month or months in 1997 prior
to the Closing Date plus the product of (a) Security State
Bank's daily average net after-tax earnings for the full
calendar month or months in 1997 prior to the Closing Date
multiplied by (b) the number of days during the period
commencing on the first day of the month in which the Closing
Date occurs and concluding on the day prior to the Closing
Date.
With respect to all terms defined in this Section 1.3(b),
amounts of capital stock, capital surplus, retained earnings, assets,
liabilities, net after-tax earnings and the tax-affected amount of
Excess Reserves shall be calculated in accordance with generally
accepted accounting principles ("GAAP"), except that, with respect to
Pre-Closing Earnings, notwithstanding the provisions of GAAP, (i) all
unused vacation and sick pay and accruals for customary annual bonuses
(pro-rated monthly) shall be expensed or otherwise deducted from income
in the calculation thereof; and (ii) the guidelines set forth in
Exhibit B shall be observed.
(c) Per Share Merger Consideration. The term "Per Share Merger
Consideration" shall mean:
(i) if the Average Pre-Closing Price (as defined
below) is less than or equal to the Maximum Average Price, and
greater than or equal to the Minimum Average Price, an amount
equal to the quotient of the Merger Consideration divided by
72,750;
(ii) if the Average Pre-Closing Price is greater than
the Maximum Average Price, an amount equal to the quotient of
the Maximum Merger Consideration divided by 72,750; or
(iii) if the Average Pre-Closing Price is less than
the Minimum Average Price, an amount equal to the quotient of
the Minimum Merger Consideration divided by 72,750.
The term "Average Pre-Closing Price" shall mean the mid-point
of the average closing bid price and the average closing ask price of a
share of the common stock of First Midwest, par value $.01 per share
(the "First Midwest Common Stock") on the NASDAQ National Market System
for the ten consecutive trading days ending on the date that is five
trading days prior to the Closing Date.
<PAGE>
Except as provided in Sections 1.3(d) and 1.3(e) below, the
Per Share Merger Consideration shall be payable to each CWB Shareholder
75% in shares of First Midwest Common Stock and 25% in cash.
(d) Maximum Number of Shares of First Midwest Common Stock.
Notwithstanding the provisions of Section 1.3(c) above, First Midwest
shall issue no more than 190,000 shares (the "Maximum Shares") of First
Midwest Common Stock. In the event that the foregoing sentence limits
the number of shares of First Midwest Common Stock to be issued in the
Merger, then the Per Share Merger Consideration shall be payable to
each CWB Shareholder as follows. Each CWB Shareholder shall receive (i)
a number of shares of First Midwest Common Stock equal to the product
of 190,000 (or the number of shares equal to the Maximum Shares if the
Maximum Shares are adjusted pursuant to Section 1.3(f) below)
multiplied by a fraction the numerator of which is the number of shares
set forth next to such CWB Shareholder's name on Appendix A of the
Shareholder Agreement and the denominator of which is 72,750, and (ii)
an amount of cash equal to the excess of the Per Share Merger
Consideration over the product of such number of shares multiplied by
the Average Pre-Closing Price; provided that in the event that the
market value of the shares of First Midwest Common Stock to be paid to
the CWB Shareholders would not exceed 50% of the market value at the
Effective Time of the shares of First Midwest Common Stock and cash
paid in the Merger, then (i) CWB agrees to waive the condition set
forth in Section 6.1(c) of this Agreement, and (ii) notwithstanding any
other provisions of this Agreement, CWB shall have the right to require
First Midwest to pay the Per Share Merger Consideration to all CWB
Shareholders entirely in cash.
(e) No Fractional Shares. Notwithstanding any other provision
of this Agreement, neither certificates nor scrip for fractional shares
of First Midwest Common Stock shall be issued in the Merger. Each
holder who otherwise would have been entitled to a fraction of a share
of First Midwest Common Stock shall receive in lieu thereof cash in an
amount determined by multiplying the fractional share interest to which
such holder would otherwise be entitled by (a) $23.00, if the Average
Pre-Closing Price is less than or equal to the Maximum Average Price
and greater than or equal to the Minimum Average Price, or (b) the
Average Pre-Closing Price, if the Average Pre-Closing Price is greater
than the Maximum Average Price or less than the Minimum Average Price.
No such holder shall be entitled to dividends, voting rights or any
other rights in respect of any fractional share interest.
(f) Adjustments for Stock Split, Etc. In the event that,
subsequent to the date of this Agreement but prior to the Effective
Time (as defined below), there occurs a reclassification,
recapitalization, stock dividend, stock split or reverse stock split
with respect to the outstanding shares of First Midwest Common Stock, a
conversion of the outstanding shares of First Midwest Common Stock into
any other securities, or the establishment of a date during such period
as the record date for determining holders of First Midwest Common
Stock with respect to any of the foregoing, then the Minimum Average
Price and the Maximum Average Price shall be adjusted accordingly, and
the Maximum Shares shall be adjusted to a number of shares (rounded to
the nearest whole number) which is 9.6% of the number of shares of
First Midwest Common Stock outstanding immediately after such event
occurs.
<PAGE>
(g) Rights of CWB Shareholders. At the Effective Time, the
holders of certificates representing shares of CWB Common Stock shall
cease to have any rights as shareholders of CWB, except such rights, if
any, as they may have pursuant to the Iowa Act. Except as provided
herein, until certificates representing shares of CWB Common Stock are
tendered for exchange, each such certificate shall, after the Effective
Time, represent for all purposes only the right to receive the number
of whole shares of First Midwest Common Stock and cash into which their
shares of CWB Common Stock shall have been converted by the Merger and
the right to receive the cash amount in lieu of any fraction of a share
of First Midwest Common Stock as provided above.
(h) Reservation of Shares. Prior to the Effective Time, the
Board of Directors of First Midwest shall reserve for issuance a
sufficient number of shares of First Midwest Common Stock for the
purpose of issuing its shares to CWB's shareholders in accordance
herewith.
(i) Exchange of CWB Common Stock
(i) As soon as reasonably practicable after the
Effective Time, holders of record of certificates formerly
representing shares of CWB Common Stock (the "Certificates")
shall tender such Certificates to First Midwest, appropriately
endorsed or accompanied by such instruments of transfer as
First Midwest may reasonably require.
(ii) After the Effective Time, each holder of a
Certificate that so tenders such Certificate to First Midwest
shall, upon acceptance thereof by First Midwest, be entitled
to the Per Share Merger Consideration payable in respect of
the shares represented thereby.
(iii) Until duly surrendered to First Midwest, each
outstanding Certificate shall be deemed to evidence the right
to receive the Per Share Merger Consideration in respect of
the shares represented thereby.
(iv) After the Effective Time, holders of
Certificates shall cease to have rights with respect to the
CWB Common Stock previously represented by such Certificates,
and their sole rights shall be to exchange such Certificates
for the Per Share Merger Consideration in respect of the
shares represented thereby. After the Effective Time, there
shall be no further transfer on the records of CWB of
Certificates, and if such Certificates are presented to CWB
for transfer, they shall be canceled against delivery of the
Per Share Merger Consideration in respect of the shares
represented thereby. First Midwest shall not be obligated to
deliver the Per Share Merger Consideration to any holder of
CWB Common Stock until such holder tenders the Certificates as
provided herein. No dividends declared will be remitted to any
person entitled to receive First Midwest Common Stock under
this Agreement until such person surrenders the Certificate
representing the right to receive such First Midwest Common
Stock, at which time such dividends shall be remitted to such
person, without interest and less any taxes that may have been
imposed thereon. Certificates tendered for exchange by any
person shall not be exchanged for certificates representing
<PAGE>
First Midwest Common Stock unless such person is a party to
the Shareholder Agreement. No party to this Agreement nor any
affiliate thereof shall be liable to any holder of CWB Common
Stock represented by any Certificate for any consideration
paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. First Midwest shall be
entitled to rely upon the stock transfer books of CWB to
establish the identity of those persons entitled to receive
the consideration specified in this Agreement, which books
shall be conclusive with respect thereto. In the event of a
dispute with respect to ownership of stock represented by any
Certificate, First Midwest shall be entitled to deposit any
consideration in respect thereof in escrow with an independent
third party and thereafter be relieved with respect to any
claims thereto.
(j) Certificate of Incorporation and Bylaws of the Surviving
Corporation. The Certificate of Incorporation and bylaws of First
Midwest, as in effect immediately prior to the Effective Time, shall be
the Certificate of Incorporation and bylaws of First Midwest, as the
surviving corporation of the Merger, until either is thereafter amended
in accordance with applicable law.
(k) Directors and Officers of the Surviving Corporation. The
directors and officers of First Midwest immediately prior to the
Effective Time shall be the directors and officers of First Midwest, as
the surviving corporation of the Merger, until their respective
successors shall be duly elected and qualified or otherwise duly
selected.
1.4 Security State Bank Matters. CWB shall cause the present directors
of Security State Bank, except its President, to resign as of the Effective Time
and First Midwest shall then elect as directors of Security State Bank the
persons who are serving as directors of its wholly owned subsidiary, First
Federal Savings Bank of the Midwest ("First Federal").
1.5 Closing. Subject to the provisions of Article VI hereof, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place on a day designated by First Midwest reasonably practicable after
satisfaction or waiver of all of the conditions to Closing, at such location as
is mutually agreed to by First Midwest and CWB. The date on which the Closing
actually occurs is herein referred to as the "Closing Date."
1.6 Reservation of Right to Revise Transaction. First Midwest shall
have the unilateral right to change the method of structuring the Merger, to the
extent permitted by applicable law and to the extent it deems such change to be
desirable; provided, however, that no such change shall (a) alter or change the
amount or kind of the Merger Consideration, (b) materially impede or delay the
consummation of the Merger or (c) adversely affect the tax treatment of CWB
shareholders as a result of receiving the Merger Consideration, First Midwest
may exercise this right of revision by giving written notice thereof in the
manner provided in Section 8.2 of this Agreement.
<PAGE>
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS OF CWB
CWB represents and warrants to and covenants with First Midwest as
follows:
2.1 Organization and Authority. CWB is a corporation duly organized,
validly existing and in good standing under the laws of the State of Iowa, is
duly qualified to do business and is in good standing in all jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified, except where the failure to be so qualified would not have a
material adverse effect on the financial condition, assets, deposit liabilities,
results of operations or business (collectively, the "Condition") of CWB and the
CWB Subsidiaries, taken as a whole, and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted. The term "Subsidiary" when used with respect to any party means any
entity (including without limitation any corporation, partnership, joint venture
or other organization, whether incorporated or unincorporated) which is or may
be consolidated with such party for financial reporting purposes. CWB is
registered as a bank holding company under the Bank Holding Company Act of 1956,
as amended ("BHCA"). True and complete copies of the Articles of Incorporation
and Bylaws of CWB and of the Articles of Incorporation and Bylaws of Security
State Bank, each as in effect on the date of this Agreement, together with all
amendments thereto, are set forth in Schedule 2.1 hereto.
2.2 Subsidiaries. Set forth in Schedule 2.2 is a complete and correct
list of all Subsidiaries of CWB (each a "CWB Subsidiary" and collectively the
"CWB Subsidiaries"). Other than the CWB Subsidiaries, there are no entities in
which CWB has a two percent or greater direct or indirect equity or ownership
interest. All outstanding Equity Securities (as defined in Section 2.3) of each
CWB Subsidiary are owned directly or indirectly by CWB. All of the outstanding
shares of capital stock of the CWB Subsidiaries are validly issued, fully paid
and nonassessable and are owned directly or indirectly by CWB free and clear of
any lien, claim, charge, option, encumbrance, agreement, mortgage, pledge,
security interest, restriction or rights of third parties (each a "Lien") with
respect thereto. Each of the CWB Subsidiaries is a corporation, state bank, or
other entity duly incorporated or organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation or organization,
and has the corporate power and authority to own or lease its properties and
assets and to carry on its business as it is now being conducted. Each of the
CWB Subsidiaries is duly qualified to do business in each jurisdiction where its
ownership or leasing of property or the conduct of its business requires it so
to be qualified, except where the failure to be so qualified, individually or in
the aggregate, would not have a material adverse effect on the Condition of CWB
and the CWB Subsidiaries, taken as a whole. Except as set forth on Schedule 2.2,
CWB does not own beneficially, directly or indirectly, any shares of any class
of Equity Securities or similar interests of any corporation, trust company,
bank, business trust, association or similar organization. Security State Bank
is a state bank chartered by the State of Iowa. The deposits of Security State
Bank are insured up to applicable limits by the Bank Insurance Fund ("BIF") of
the Federal Deposit Insurance Corporation (the "FDIC").
2.3 Capitalization.
(a) The authorized capital stock of CWB consists of 100,000
shares of CWB Common Stock, par value $10.00 per share of which, as of
the date hereof, 72,750 shares are issued and outstanding and 825
shares are held in the treasury of CWB. The issued and outstanding
<PAGE>
shares of CWB Common Stock comprise all of the outstanding Equity
Securities issued by CWB. "Equity Securities" of an issuer means
capital stock or other equity securities of such issuer, options,
warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible
into, shares of any capital stock or other equity securities of such
issuer, or contracts, commitments, understandings or arrangements by
which such issuer is or may become bound to issue additional shares of
its capital stock or other equity securities of such issuer, or
options, warrants, scrip or rights to purchase, acquire, subscribe to,
calls on or commitments for any shares of its capital stock or other
equity securities. All of the issued and outstanding shares of CWB
Common Stock are validly issued, fully paid and nonassessable, and have
not been issued in violation of any preemptive right of any shareholder
of CWB.
(b) The authorized capital stock of Security State Bank
consists of 30,000 shares of common stock, par value $20.00 per share,
of which 15,000 shares are issued and outstanding and held by CWB. Such
shares comprise all of the outstanding Equity Securities of Security
State Bank. All of the issued and outstanding shares of the common
stock of Security State Bank are validly issued, fully paid and
nonassessable, and have not been issued in violation of any preemptive
right of any shareholder of Security State Bank.
2.4 Authorization.
(a) CWB has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The only
shareholder vote required for CWB to approve this Agreement and the
Merger is the vote required under Iowa Code Section 490.1103. The
execution, delivery and performance of this Agreement by CWB and the
consummation by CWB of the transactions contemplated hereby have been
duly authorized by the Board of Directors of CWB and approved by the
shareholders of CWB. Subject to the receipt of such approvals of
Regulatory Authorities (as defined in Section 2.6) as may be required
by statute or regulation, this Agreement is a valid and binding
obligation of CWB enforceable against CWB in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other similar
laws of general applicability affecting creditors' rights and to
general equity principles.
(b) Neither the execution, delivery or performance by CWB of
this Agreement, nor the consummation by CWB of the transactions
contemplated hereby, nor compliance by CWB with any of the provisions
hereof, will (i) violate or conflict with any term, condition or
provision of the articles of incorporation and bylaws of CWB or any CWB
Subsidiary, (ii) violate, conflict with, or result in a breach of any
provisions of, or constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the
creation of any Lien upon any of the properties or assets of CWB or any
CWB Subsidiary under any of the terms, conditions or provisions of, any
note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument or obligation to which CWB or any CWB
Subsidiary is a party or by which it may be bound, or to which CWB or
any CWB Subsidiary or any of their properties or assets may be subject,
or (iii) subject to compliance with the statutes and regulations
<PAGE>
referred to in subsection (c) of this Section 2.4, to the best
knowledge of the senior officers and directors of CWB (the "Best
Knowledge of CWB"), violate any judgment, ruling, order, writ,
injunction, decree, statute, rule or regulation applicable to CWB or
any CWB Subsidiary or any of their respective properties or assets.
(c) Other than in connection or in compliance with the
provisions of the DGCL, the Iowa Act, or filings, consents, reviews,
authorizations, approvals or exemptions required under, the BHCA and
the Iowa Banking Act and regulations under such statutes, no notice to,
filing with, exemption or review by, or authorization, consent or
approval of, any public body or authority or third party is necessary
on the part of CWB or any CWB Subsidiary for the consummation of the
transactions contemplated by this Agreement.
2.5 CWB Financial Statements. Except as disclosed on Schedule 2.5, the
CWB Historical Balance Sheet, CWB Historical Income Statement, CWB Historical
Statement of Cash Flows, Security State Bank Historical Balance Sheet, Security
State Bank Historical Income Statement and Security State Bank Historical
Statement of Assets and Loan to Deposit Ratio, all as provided to First Midwest
in the CWB Bid Information Materials, dated February 13, 1996, the Annual Report
of Bank Holding Companies - FR Y-6 as of the close of business December 31, 1995
filed by CWB, and the Consolidated Reports of Condition and Income for a Bank
With Domestic Offices Only and Total Assets of Less than $100 Million - FFIEC
034 filed by Security State Bank, for the period ended March 31, 1996
(collectively, the "CWB Financial Statements"), have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
("GAAP"), present fairly the financial position of the entities indicated
therein at the dates indicated therein and are derived from the books and
records of CWB and the CWB Subsidiaries, which are complete and accurate in all
material respects and have been maintained since August 10, 1988 in accordance
with good business practices. Neither CWB nor any of the CWB Subsidiaries has
any material contingent liabilities that are not described in the CWB Financial
Statements.
2.6 CWB Reports. Since August 10, 1988, each of CWB and the CWB
Subsidiaries has filed all material reports, registrations and statements,
together with any required material amendments thereto, that it was required to
file with (i) the Superintendent of Banking of the State of Iowa (the
"Superintendent"), (ii) the Board of Governors of the Federal Reserve System
(the "FRB"), (iii) the FDIC, and (iv) any other federal, state, municipal, local
or foreign government, securities, banking, other governmental or regulatory
authority and the agencies and staffs thereof (the entities in the foregoing
clauses (i) through (iv) together with the Office of Thrift Supervision ("OTS")
being referred to herein collectively as the "Regulatory Authorities" and
individually as a "Regulatory Authority"). All such reports and statements filed
with any such Regulatory Authority are collectively referred to herein as the
"CWB Reports." As of its respective date, each CWB Report complied in all
material respects with all of the rules and regulations promulgated by the
applicable Regulatory Authority and did 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.
2.7 Properties and Leases. Except (i) as may be reflected in the CWB
Financial Statements, (ii) any Lien for current taxes not yet delinquent and
(iii) with respect to assets classified as other real estate owned, CWB and the
CWB Subsidiaries have good and marketable title free and clear of any material
Lien to all the real and personal property reflected in the CWB and Security
<PAGE>
State Bank Historical Balance Sheets (described above) as of December 31, 1995
and, in each case, all real and personal property acquired since such date,
except such real and personal property as has been disposed of since such date
for fair value in the ordinary course of business. All leases material to CWB or
any CWB Subsidiary, pursuant to which CWB or any CWB Subsidiary is a lessee or
lessor of real or personal property, are valid and effective in accordance with
their respective terms, and there is not, under any of such leases, any material
existing default by CWB or any CWB Subsidiary or any event which, with notice or
lapse of time or both, would constitute a material default by CWB or any CWB
Subsidiary. Except as disclosed on Schedule 2.7, all of CWB's and the CWB
Subsidiaries' buildings, structures and equipment in regular use have been well
maintained and are in good and serviceable condition, normal wear and tear
excepted. None of the buildings, structures and equipment of CWB or any CWB
Subsidiary violates or fails to comply with any applicable health, fire,
environmental, safety, zoning or building laws or ordinances or any restrictive
covenant pertaining thereto.
2.8 Taxes. Since August 10, 1988 (and to the Best Knowledge of CWB, at
all times prior thereto), CWB and each CWB Subsidiary have timely (including
extensions) filed all required tax returns and reports, and they will timely
(including extensions) file all tax returns and reports required to be filed at
or prior to the Closing Date ("CWB's Returns"). Each of CWB and the CWB
Subsidiaries has paid, or set up adequate reserves on the CWB Financial
Statements for the payment of, all taxes required to be paid or accrued in
respect of the periods covered by such returns and reports. Neither CWB nor any
CWB Subsidiary will have any material liability for any such taxes in excess of
the amounts so paid or reserves so established and no deficiencies for any tax,
assessment or governmental charge have been proposed, asserted or assessed
(tentatively or definitely) against CWB or any CWB Subsidiary which would not be
covered by existing reserves. Neither CWB nor any CWB Subsidiary is delinquent
in the payment of any tax, assessment or governmental charge, nor has it
requested any extension of time within which to file any tax returns or reports
which have not since been filed and no requests for waivers of the time to
assess any tax are pending. The federal income tax returns of CWB and the CWB
Subsidiaries have not been audited by the Internal Revenue Service (the "IRS")
since August 10, 1988. The state income tax returns of CWB and the CWB
Subsidiaries have not been audited during the past seven years. There is no
deficiency or refund litigation or matter in controversy with respect to CWB's
Returns. Neither CWB nor any CWB Subsidiary (i) has extended or waived any
statute of limitations on the assessment of any tax due; (ii) is a party to any
agreement providing for the allocation or sharing of taxes (other than the
allocation of federal income taxes as provided by regulation 1.1552-1(a)(1)
under the Code); (iii) is required to include in income any adjustment pursuant
to Section 481(a) of the Code, by reason of a voluntary change in accounting
method (nor to the Best Knowledge of CWB has the IRS proposed any such
adjustment or change of accounting method); or (iv) has filed a consent pursuant
to Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code
apply.
2.9 Material Adverse Change. Except as set forth on Schedule 2.9, since
April 30, 1996, there has been no material adverse change in the Condition of
CWB and the CWB Subsidiaries, taken as a whole, except as may have resulted or
may result from changes to laws and regulations, generally accepted accounting
principles or regulatory accounting principles or changes in economic conditions
applicable to depository institutions generally.
<PAGE>
2.10 Commitments and Contracts.
(a) Except as set forth in Schedule 2.10, neither CWB nor any
CWB Subsidiary is a party or subject to any of the following (whether
written or oral, express or implied):
(i) any agreement, arrangement or commitment (A) not
made in the ordinary course of business, (B) by virtue of
which the consent or approval of any third party (other than
Regulatory Authorities) is required for or in connection with
the execution, delivery and performance of this Agreement or
the consummation of the Merger or (C) pursuant to which CWB or
any of the CWB Subsidiaries is or may become obligated to
invest in or contribute capital to any CWB Subsidiary or any
other entity;
(ii) any agreement, indenture or other instrument not
disclosed in the CWB Financial Statements relating to the
borrowing of money by CWB or any CWB Subsidiary or the
guarantee by CWB or any CWB Subsidiary of any such obligation
(other than trade payables or instruments related to
transactions entered into in the ordinary course of business
by Security State Bank, such as deposits, Fed Funds
borrowings, FHLB advances and repurchase agreements);
(iii) any contract, agreement or understanding with
any labor union or collective bargaining organization;
(iv) any contract containing covenants which limit
the ability of CWB or any CWB Subsidiary to compete in any
line of business or with any person or containing any
restriction of the geographical area in which, or method by
which, CWB or any CWB Subsidiary may carry on its business
(other than as may be required by law or any applicable
Regulatory Authority);
(v) any off-balance sheet financial instruments,
including without limitation letters of credit, unfunded
commitments (other than unfunded commitments made in the
ordinary course of business and consistent with past practice)
and derivative financial instruments; or
(vi) any contract or agreement (A) that has a
remaining term as of the date hereof in excess of six months,
(B) is not terminable by CWB or any CWB Subsidiary on 30 or
fewer days' notice without penalty or premium and (C) involves
a monetary obligation on the part of CWB or any CWB Subsidiary
in excess of $10,000.00.
(b) Neither CWB nor any CWB Subsidiary is in violation of its
organizational documents or bylaws or in material default under any
agreement, commitment, arrangement, lease, insurance policy, or other
instrument, whether entered into in the ordinary course of business or
otherwise and whether written or oral, and there has not occurred any
event that, with the lapse of time or giving of notice or both, would
constitute such a material default.
<PAGE>
2.11 Litigation and Other Proceedings. Other than as set forth on
Schedule 2.11, there is no claim, action, suit, investigation or proceeding,
pending or, to the Best Knowledge of CWB, threatened against CWB or any CWB
Subsidiary, nor are any of them subject to any order, judgment or decree, except
for matters which do not involve a claim for damages for more than $10,000.00,
but not excepting any actions, suits or proceedings which request non-monetary
relief or purport or seek to enjoin or restrain the transactions contemplated by
this Agreement. Without limiting the generality of the foregoing, except as set
forth on Schedule 2.11 there are no actions, suits, protests or proceedings
pending or, to the Best Knowledge of CWB, threatened against CWB or any CWB
Subsidiary or any of their respective officers or directors by any shareholder
of CWB or any CWB Subsidiary (or by any former shareholder of CWB or any CWB
Subsidiary relating to or arising out of such person's status as a shareholder
or former shareholder) or involving claims under federal or state banking or
securities laws, the Community Reinvestment Act of 1977 (the "CRA") or the fair
lending laws.
2.12 Insurance. Set forth on Schedule 2.12 is a list of all insurance
policies (excluding policies maintained on one- to four-family residential
properties acquired through foreclosure or on properties in which neither CWB
nor any CWB Subsidiary have any interest other than as collateral for mortgage
loans held by Security State Bank) maintained by or for the benefit of CWB or
any of the CWB Subsidiaries or their respective directors, officers, employees
or agents. Neither CWB nor any of the CWB Subsidiaries has, during the past two
years, had an insurance policy canceled or been denied insurance coverage for
which any of such companies has applied. To the best knowledge of CWB, there is
no pending or potential claim, suit, action, investigation or proceeding
pursuant to which any director or officer of CWB or any of the CWB Subsidiaries
may be liable.
2.13 Compliance with Laws.
(a) CWB and each of the CWB Subsidiaries have all material
permits, licenses, authorizations, orders and approvals of, and have
made all material filings, applications and registrations with, all
Regulatory Authorities that are required in order to permit them to own
or lease their properties and assets and to carry on their business as
presently conducted; all such permits, licenses, authorizations, orders
and approvals are in full force and effect; and, to the Best Knowledge
of CWB, no suspension or cancellation of any of them is threatened and
all such filings, applications and registrations are current.
(b) (i) Each of CWB and the CWB Subsidiaries has complied with
all laws, regulations and orders (including without limitation
zoning ordinances, building codes, the Employee Retirement
Income Security Act of 1974 ("ERISA"), and securities, tax,
environmental, civil rights, and occupational health and
safety laws and regulations (and including without limitation,
in the case of Security State Bank, all statutes, rules,
regulations and policy statements pertaining to the conduct of
a banking, deposit-taking, lending or related business) and
governing instruments applicable to them and to the conduct of
their business, except such noncompliance as, individually and
in the aggregate, would not have a material adverse effect on
the Condition of CWB and the CWB Subsidiaries, taken as a
whole, and Security State Bank has not engaged in any
activities which would cause it to be subject to Division X of
Iowa Code Section 524, and
<PAGE>
(ii) neither CWB nor any CWB Subsidiary is in default
under, and no event has occurred which, with the lapse of time
or notice or both, could result in a default under, the terms
of any judgment, order, writ, decree, permit, or license of
any Regulatory Authority, other administrative agency or
court, whether federal, state, municipal, or local and whether
at law or in equity. Except that to the best knowledge of the
directors and officers and CWB and Security State Bank
(without investigation), Security State Bank's office
properties located in Casey and Menlo, Iowa, are not
contaminated by and do not contain any lead-based paint, radon
or asbestos, nor has any such substance been stored, disposed
of or placed on such property, nor used in the construction
thereof, and except as set forth in Schedule 2.13B, neither
CWB nor any CWB Subsidiary is subject to or reasonably likely
to incur any liability as a result of its past or present
ownership, operation, or use of any Property (as defined
below) of CWB or any CWB Subsidiary (whether directly or, to
the Best Knowledge of CWB, as a consequence of such Property
being collateral for any loan or investment made by CWB or any
CWB Subsidiary) (A) that is contaminated by or contains any
hazardous waste, toxic substance, or related materials,
including without limitation asbestos, PCBs, pesticides,
herbicides, and any other substance or waste that is hazardous
to human health or the environment (collectively, a "Toxic
Substance") or (B) on which any Toxic Substance has been
stored, disposed of, placed, or used in the construction
thereof; and which, in any such case or in the aggregate,
reasonably could be expected to have a material adverse effect
on the Condition of CWB and the CWB Subsidiaries, taken as a
whole. "Property" of a person shall include all property (real
or personal) owned, leased or controlled by such person,
including without limitation property under foreclosure,
property held by such person or any Subsidiary of such person
in its capacity as a trustee and property in which any venture
capital or similar unit of such person or any Subsidiary of
such person has an interest. No claim, action, suit, or
proceeding is pending against CWB or any CWB Subsidiary
relating to Property of CWB or any CWB Subsidiary before any
court, administrative agency or arbitration tribunal relating
to Toxic Substances, pollution, or the environment, and there
is no outstanding judgment, order, writ, injunction, decree,
or award against or affecting CWB or any CWB Subsidiary with
respect to the same. Except for statutory or regulatory
restrictions of general application or as set forth in
Schedule 2.13B, no Regulatory Authority has currently in
effect any restriction on the business of CWB or any CWB
Subsidiary.
(c) Since August 10, 1988, except as set forth in Schedule
2.13C, neither CWB nor any CWB Subsidiary has received any notification
or communication as to any matter which has not been resolved from any
Regulatory Authority (i) asserting that CWB or any CWB Subsidiary is
not in substantial compliance with any of the statutes, regulations or
ordinances that such Regulatory Authority enforces, (ii) threatening to
revoke any license, franchise, permit or governmental authorization
that is material to the Condition of CWB and the CWB Subsidiaries,
taken as a whole, including without limitation Security State Bank's
status as an insured depository institution under the Federal Deposit
<PAGE>
Insurance Act ("FDIA"), (iii) requiring or threatening to require CWB
or any of the CWB Subsidiaries, or indicating that CWB or any of the
CWB Subsidiaries may be required, to enter into any order, agreement or
memorandum of understanding or any other agreement restricting or
limiting or purporting to direct, restrict or limit in any manner the
operations of CWB or any of the CWB Subsidiaries, including without
limitation any restriction on the payment of dividends. Except as set
forth in Schedule 2.13B or C and specifically noted therein, no such
order, agreement, memorandum of understanding or other agreement or
directive is currently in effect.
(d) Neither CWB nor any CWB Subsidiary is required by Section
32 of the FDIA or under Iowa law to give prior notice to any federal
banking agency of the proposed addition of an individual to its board
of directors or the employment of an individual as a senior executive
officer.
2.14 Labor. No work stoppage involving CWB or any CWB Subsidiary is
pending or, to the Best Knowledge of CWB, threatened. Neither CWB nor any CWB
Subsidiary is involved in, or, to the Best Knowledge of CWB, threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which reasonably could be expected to have a material adverse effect
on the Condition of CWB and the CWB Subsidiaries, taken as a whole. No employees
of CWB or any CWB Subsidiary are represented by any labor union or any
collective bargaining organization.
2.15 Material Interests of Certain Persons.
(a) Except as set forth in Schedule 2.15A, to the Best
Knowledge of CWB, no officer or director of CWB or any CWB Subsidiary,
or any "associate," as such term is defined in Rule 14a-1 under the
Securities Exchange Act of 1934 (the "Exchange Act"), of any such
officer or director, has any material interest in any material contract
or property (real or personal, tangible or intangible), used in or
pertaining to the business of CWB or any CWB Subsidiary, which in the
case of CWB would be required to be disclosed by Item 404 of Regulation
S-B promulgated by the SEC if CWB were a reporting company or in the
case of any CWB Subsidiary would be required to be so disclosed if such
CWB Subsidiary had a class of securities registered under Section 12 of
the Exchange Act.
(b) Except as set forth in Schedule 2.15B, there are no loans
in excess of $10,000.00 from CWB or any CWB Subsidiary to any present
officer, director, employee or any associate or related interest of any
such person which was or would be required under any rule or regulation
to be approved by or reported to CWB's or any CWB Subsidiary's Board of
Directors ("Insider Loans"). All outstanding Insider Loans from CWB or
any CWB Subsidiary were approved by or reported to the appropriate
board of directors in accordance with applicable law and regulations.
2.16 Allowance for Loan Losses; Adjustments.
(a) The allowances for loan losses contained in the CWB
Financial Statements as of March 31, 1996 were established in
accordance with the past practices and experiences of CWB and the CWB
Subsidiaries, are in compliance with the requirements of GAAP and the
rules, regulations and policies of the FRB, the Superintendent and the
FDIC and are, in the opinion of management of CWB, adequate to provide
for possible losses on loans (including without limitation accrued
<PAGE>
interest receivable) and credit commitments (including without
limitation stand-by letters of credit) outstanding as of the date
thereof.
(b) CWB agrees that, at the request of First Midwest, it shall
make such adjustments, and shall cause Security State Bank to make such
adjustments, to the values of its or Security State Bank's assets and
liabilities, and take such reserves and accruals, as First Midwest may
reasonably request from time to time in order to cause such values,
reserves and accruals to conform to GAAP.
2.17 Employee Benefit Plans.
(a) Schedule 2.17A lists all pension, retirement, supplemental
retirement, stock option, restricted stock, stock purchase, stock
ownership, savings, stock appreciation right, profit sharing,
employment, incentive compensation, deferred compensation, consulting,
bonus, medical, disability, workers' compensation, vacation, group
insurance, severance and other material employee benefit, incentive and
welfare policies, contracts, plans and arrangements, and all trust or
loan agreements or arrangements related thereto, maintained, sponsored
or contributed to by CWB or any CWB Subsidiary in respect of any of the
present or former directors, officers, or other employees of and/or
consultants to CWB or any CWB Subsidiary (collectively, the "CWB
Employee Plans").
(b) All of the CWB Employee Plans have been maintained and
operated materially in accordance with their terms and with the
material requirements of all applicable statutes, orders, rules and
final regulations, including without limitation ERISA and the Code. All
contributions required to be made to the CWB Employee Plans have been
made.
(c) With respect to each of the CWB Employee Plans which is a
pension plan (as defined in Section 3(2) of ERISA) (the "Pension
Plans"): (i) each Pension Plan which is intended to be "qualified"
within the meaning of Section 401(a) of the Code is so qualified and,
to the extent a determination letter has been received from the IRS
with respect to any such Pension Plan, such determination letter may
still be relied upon, and each related trust is exempt from taxation
under Section 501(a) of the Code; (ii) the present value of all
benefits vested and all benefits accrued under each Pension Plan which
is subject to Title IV of ERISA, valued using the assumptions in the
most recent actuarial report, did not, in each case, as of the last
applicable annual valuation date, exceed the value of the assets of the
Pension Plan allocable to benefits on a plan termination basis; (iii)
there has been no "prohibited transaction," as such term is defined in
Section 4975 of the Code or Section 406 of ERISA, which could subject
any Pension Plan or associated trust, or CWB or any CWB Subsidiary, to
any material tax or penalty; (iv) no Pension Plan or any trust created
thereunder has been terminated, nor have there been any "reportable
events" with respect to any Pension Plan, as that term is defined in
Section 4043 of ERISA since January 1, 1986; and (v) no Pension Plan or
any trust created thereunder has incurred any "accumulated funding
deficiency," as such term is defined in Section 302 of ERISA (whether
or not waived). No Pension Plan is a "multiemployer plan" as that term
is defined in Section 3(37) of ERISA. With respect to each Pension Plan
that is described in Section 4063(a) of ERISA (a "Multiple Employer
Pension Plan"): (i) neither CWB nor any CWB Subsidiary would have any
<PAGE>
liability or obligation to post a bond under Section 4063 of ERISA if
CWB and all CWB Subsidiaries were to withdraw from such Multiple
Employer Pension Plan; and (ii) neither CWB nor any CWB Subsidiary
would have any liability under Section 4064 of ERISA if such Multiple
Employer Pension Plan were to terminate.
(d) Neither CWB nor any CWB Subsidiary has any liability for
any post-retirement health, medical or similar benefit of any kind
whatsoever except as required by statute.
(e) Neither CWB nor any CWB Subsidiary has any material
liability under ERISA or the Code as a result of its being a member of
a group described in Sections 414(b), (c), (m) or (o) of the Code.
(f) Neither CWB nor any CWB Subsidiary has any material
liability under the continuation of health care provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 or any
comparable state law.
(g) Neither the execution nor delivery of this Agreement, nor
the consummation of any of the transactions contemplated hereby, will
(i) result in any material payment (including without limitation
severance, unemployment compensation or golden parachute payment)
becoming due to any current or former director or employee of CWB or
any CWB Subsidiary from any of such entities, (ii) increase any benefit
otherwise payable under any of the CWB Employee Plans or (iii) result
in the acceleration of the time of payment of any such benefit. No
amounts paid or to become payable by CWB, the CWB Subsidiaries or their
successors interest to or with respect to any current or former
director or employee of CWB or any CWB Subsidiary will fail to be
deductible for federal income tax purposes by reason of Section 280G or
162(m) of the Code or otherwise.
2.18 Conduct to Date. From and after December 31, 1994 through the date
of this Agreement, except as set forth on Schedule 2.18: (i) CWB and the CWB
Subsidiaries have conducted their respective businesses in the ordinary and
usual course consistent with past practices; (ii) neither CWB nor any CWB
Subsidiary has issued, sold, granted, conferred or awarded any of its Equity
Securities or any corporate debt securities which would be classified under GAAP
as long term debt on the Balance Sheet of CWB; (iii) CWB has not effected any
stock split or adjusted, combined, reclassified or otherwise changed its
capitalization; (iv) CWB has not declared, set aside or paid any dividend or
other distribution in respect of its capital stock, or purchased, redeemed,
retired, repurchased, or exchanged, or otherwise acquired or disposed of,
directly or indirectly, any of its Equity Securities, whether pursuant to the
terms of such Equity Securities or otherwise, except for the 825 shares of CWB
Common Stock held in CWB's treasury; (v) neither CWB nor any CWB Subsidiary has
incurred any material obligation or liability (absolute or contingent), except
normal trade or business obligations or liabilities incurred in the ordinary
course of business, or subjected to Lien any of its assets or properties other
than in the ordinary course of business, (vi) neither CWB nor any CWB Subsidiary
has discharged or satisfied any material Lien or paid any material obligation or
liability (absolute or contingent), other than in the ordinary course of
business; (vii) neither CWB nor any CWB Subsidiary has sold, assigned,
transferred, leased, exchanged, or otherwise disposed of any of its properties
or assets other than for fair consideration (in the reasonable opinion of
management) and in the ordinary course of business; (viii) except as required by
law, neither CWB nor any CWB Subsidiary has (A) increased the rate of
compensation of, or paid any bonus to, any of its directors, officers, or other
<PAGE>
employees, except merit or promotion increases applicable to individual
employees and annual increases applicable to employees generally, all in
accordance with past practice, or (B) entered into any new, or amended or
supplemented any existing, employment, management, consulting, compensation,
severance, or other similar contract, (C) entered into, terminated, or
substantially modified any of the CWB Employee Plans or (D) agreed to do any of
the foregoing; (ix) neither CWB nor any CWB Subsidiary has suffered any material
damage, destruction, or loss, whether as the result of fire, explosion,
earthquake, accident, casualty, labor trouble, requisition, or taking of
property by any Regulatory Authority, flood, windstorm, embargo, riot, act of
God or the enemy, or other casualty or event, and whether or not covered by
insurance; (x) other than in the ordinary course of business consistent with
past practice, neither CWB nor any CWB Subsidiary has canceled or compromised
any debt; (xi) neither CWB nor any CWB Subsidiary has entered into any material
transaction, contract or commitment outside the ordinary course of its business
and (xii) neither CWB nor any CWB Subsidiary has made or guaranteed any loan to
any of the CWB Employee Plans.
2.19 Registration Statement; Regulatory Filings. None of the
information regarding CWB or any CWB Subsidiary supplied or to be supplied by
CWB for inclusion or included in (i) the registration statement to be filed with
the Securities and Exchange Commission ("SEC") by First Midwest for the purpose
of registering the shares of First Midwest Common Stock to be exchanged for
shares of CWB Common Stock pursuant to the provisions of the Shareholder
Agreement (the "Registration Statement") or (ii) any other documents to be filed
with any Regulatory Authority in connection with the transactions contemplated
hereby will, at the respective times such documents are filed with any
Regulatory Authority and, in the case of the Registration Statement, when
provided, and as of the Effective Time, be false or misleading with respect to
any material fact, or omit to state any material fact necessary in order to make
the statements therein not misleading. All documents which CWB or any CWB
Subsidiary is responsible for filing with any Regulatory Authority in connection
with the Merger will comply as to form in all material respects with the
provisions of applicable law.
2.20 Registration Obligations. Neither CWB nor any CWB Subsidiary is
under any obligation, contingent or otherwise, to register any of its securities
under the Securities Act or other federal or state securities laws or
regulations.
2.21 Takeover Provisions Not Applicable. This Agreement and the Merger
are not otherwise subject to any anti-takeover protection applicable to CWB or
any CWB Subsidiary. CWB and the CWB Subsidiaries are not subject to any
agreement, arrangement or legal requirement restricting the ownership or
acquisition of their securities or imposing any "fair price" or supermajority
director or shareholder vote requirements.
2.22 Regulatory, Tax and Accounting Matters. CWB has not taken or
agreed to take any action, nor does it have knowledge of any fact or
circumstance, that would (i) materially impede or delay the consummation of the
transactions contemplated by this Agreement or the ability of the parties to
obtain any approval of any Regulatory Authority required for the transactions
contemplated by this Agreement or to perform their covenants and agreements
under this Agreement or (ii) prevent the Merger from qualifying as a
reorganization within the meaning of Section 368(a)(1)(A) of the Code.
<PAGE>
2.23 Brokers and Finders. Neither CWB nor any CWB Subsidiary nor any of
their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any financial advisory fees, brokerage
fees, commissions or finder's fees in connection with this Agreement or the
transactions contemplated hereby.
2.24 Accuracy of Information. The statements of CWB contained in this
Agreement, the Schedules hereto and any other written document executed and
delivered by or on behalf of CWB pursuant to the terms of this Agreement are
true and correct in all material respects.
2.25 Community Reinvestment Act Compliance. Security State Bank is in
material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and, as of the date hereof, Security State
Bank has a CRA rating of satisfactory or better from the FDIC. To the Best
Knowledge of CWB, there is no fact or circumstance or set of facts or
circumstances which would cause the CRA rating of Security State Bank to fall
below satisfactory.
2.26 Governmental Approvals and Other Conditions. To the Best Knowledge
of CWB, there is no reason relating specifically to CWB or any of the CWB
Subsidiaries why (a) the approvals that are required to be obtained from
Regulatory Authorities having approval authority in connection with the
transactions contemplated hereby should not be granted, (b) such regulatory
approvals should be subject to a condition which would be unduly burdensome to
First Midwest or any of its Subsidiaries or would differ from conditions
customarily imposed by such Regulatory Authorities in orders approving
acquisitions of the type contemplated hereby or (c) any of the conditions
precedent as specified in Article VI hereof to the obligations of any of the
parties hereto to consummate the transactions contemplated hereby are unlikely
to be fulfilled within the applicable time period or periods required for
satisfaction of such condition or conditions.
2.27 Shareholder Agreement. Each shareholder of CWB has executed and
delivered the Shareholder Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF FIRST MIDWEST
First Midwest represents and warrants to and covenants with CWB as
follows:
3.1 Organization and Authority. First Midwest and each of its
Subsidiaries (each a "First Midwest Subsidiary" and collectively the "First
Midwest Subsidiaries") is a corporation, savings bank or other entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization, is duly qualified to do business and is in good
standing in all jurisdictions where its ownership or leasing of property or the
conduct of its business requires it to be so qualified, except where the failure
to be so qualified would not have a material adverse effect on the Condition of
First Midwest and the First Midwest Subsidiaries, taken as a whole, and has the
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted. First Midwest is registered as a
savings and loan holding company with the OTS. True and complete copies of the
Certificate of Incorporation and bylaws of First Midwest, as in effect on the
date of this Agreement, are set forth in Schedule 3.1.
3.2 Capitalization of First Midwest. The authorized capital stock of
First Midwest consists of (i) 5,200,000 shares of First Midwest Common Stock, of
which, as of March 31, 1996, 1,789,535 shares were issued and outstanding and
<PAGE>
(ii) 800,000 shares of preferred stock, issuable in series, of which none were
issued or outstanding on such date. As of March 31, 1996, First Midwest had
reserved 166,644 shares of First Midwest Common Stock for issuance upon the
exercise of options under the First Midwest stock option and incentive plans.
First Midwest and its Subsidiaries continually evaluate possible business
combinations and may prior to the Effective Time enter into one or more
agreements providing for, and may consummate, business combinations with other
bank or savings and loan holding companies or other companies (or acquisitions
of the assets thereof) for consideration that may include Equity Securities. In
addition, prior to the Effective Time, First Midwest and its Subsidiaries may,
depending on market conditions and other factors, otherwise determine to issue
equity, equity-linked or other securities for financing purposes.
Notwithstanding the foregoing, First Midwest will not take any action and does
not have knowledge of any fact or circumstance, that would (i) materially impede
or delay the consummation of the transactions contemplated by this Agreement or
the ability of First Midwest or CWB to obtain any approval of any Regulatory
Authority required for the transactions contemplated by this Agreement or to
perform its covenants and agreements under this Agreement or (ii) prevent the
Merger from qualifying as a reorganization within the meaning of Section
368(a)(1)(A) of the Code. Except as set forth above, there are no other Equity
Securities of First Midwest outstanding on March 31, 1996. All of the issued and
outstanding shares of First Midwest Common Stock are validly issued, fully paid,
and nonassessable, and have not been issued in violation of any preemptive right
of any shareholder of First Midwest. The First Midwest Common Stock to be issued
in the Merger will, upon issuance in accordance with Article I hereof, be duly
authorized, validly issued, fully paid and non-assessable, and will not be
issued in violation of any preemptive right of any shareholder of First Midwest.
3.3 Authorization.
(a) First Midwest has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement by First
Midwest and the consummation by First Midwest of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action of First Midwest. Subject to the receipt of such
approvals of the Regulatory Authorities as may be required by statute
or regulation, this Agreement is a valid and binding obligation of
First Midwest enforceable against it in accordance with its terms,
subject as to enforcement to bankruptcy, insolvency and other similar
laws of general applicability affecting creditors' rights and to
general equity principles.
(b) Neither the execution, delivery or performance by First
Midwest of this Agreement, nor the consummation by First Midwest of the
transactions contemplated hereby, nor compliance by First Midwest with
any of the provisions hereof, will (i) violate or conflict with any
term, condition or provision of the certificate of incorporation,
charter or bylaws of First Midwest or any First Midwest Subsidiary,
(ii) violate, conflict with or result in a breach of any provisions of,
or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in
a right of termination or acceleration of, or result in the creation of
any Lien upon any of the material properties or assets of First Midwest
or any First Midwest Subsidiary under any of the terms, conditions or
provisions of, any material note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other material instrument or
obligation to which First Midwest or any First Midwest Subsidiary is a
<PAGE>
party or by which it may be bound, or to which First Midwest or any
First Midwest Subsidiary or any of their material property or assets
may be subject, or (ii) subject to compliance with the statutes and
regulations referred to in subsection (c) of this Section 3.3, to the
best knowledge of the senior officers and directors of First Midwest
(the "Best Knowledge of First Midwest"), violate any judgment, ruling,
order, writ, injunction, decree, statute, rule or regulation applicable
to First Midwest or any of the First Midwest Subsidiaries or any of
their respective material properties or assets.
(c) Other than in connection with or in compliance with the
provisions of the DGCL, the Iowa Act, the Iowa Banking Act, consents,
reviews, authorizations, approvals or exemptions required under the
BHCA, the FDIA, the Home Owners' Loan Act and regulations under such
statutes, or any required approvals of any Regulatory Authority, no
notice to, filing with, exemption or review by, or authorization,
consent or approval of, any public body or authority or third party is
necessary on the part of First Midwest for the consummation by it of
the transactions contemplated by this Agreement.
3.4 First Midwest Statements. The consolidated balance sheets of First
Midwest and the First Midwest Subsidiaries as of September 30, 1995 and 1994 and
related consolidated statements of income, cash flows and changes in
shareholders' equity for each of the three years in the three-year period ended
September 30, 1995, together with the notes thereto, audited by Deloitte &
Touche LLP and included in First Midwest's Annual Report on Form 10-K for the
year ended September 30, 1995 as filed with the SEC (collectively, the "First
Midwest Statements"), have been prepared in accordance with GAAP, present fairly
the consolidated financial position of First Midwest and the First Midwest
Subsidiaries at such dates, and the consolidated results of operations, cash
flows and changes in shareholders' equity of First Midwest and the First Midwest
Subsidiaries for the periods stated therein and are derived from the books and
records of First Midwest and the First Midwest Subsidiaries, which are complete
and accurate in all material respects and have been maintained in accordance
with good business practices. Neither First Midwest nor any of the First Midwest
Subsidiaries has any material contingent liabilities that are not described in
the First Midwest Statements.
3.5 First Midwest Reports. Since December 31, 1993, each of First
Midwest and the First Midwest Subsidiaries has filed all material reports,
registrations and statements, together with any required material amendments
thereto, that it was required to file with any Regulatory Authority. All such
reports and statements filed with any such Regulatory Authority are collectively
referred to herein as the "First Midwest Reports." As of its respective date,
each First Midwest Report complied in all material respects with all of the
applicable rules and regulations promulgated by the applicable Regulatory
Authority and, in the case of First Midwest Reports filed pursuant to the
Securities Act or the Exchange Act, did 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.
3.6 Material Adverse Change. Since September 30, 1995, there has been
no material adverse change in the Condition of First Midwest and the First
Midwest Subsidiaries, taken as a whole, except as may have resulted or may
result from changes to laws and regulations, GAAP or regulatory accounting
principles or changes in economic conditions applicable to depository
institutions generally.
<PAGE>
3.7 Applications. None of the information regarding First Midwest or
any of the First Midwest Subsidiaries included in any documents to be filed with
any Regulatory Authority in connection with the transactions contemplated hereby
will, at the respective times when such documents are filed with any Regulatory
Authority be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading. All documents which First Midwest or any of the First Midwest
Subsidiaries is responsible for filing with any Regulatory Authority in
connection with the Merger will comply as to form in all material respects with
the provisions of applicable law.
3.8 Brokers and Finders. Neither First Midwest nor any of the First
Midwest Subsidiaries nor any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions or finder's fees, and no
broker or finder has acted directly or indirectly for First Midwest or any of
the First Midwest Subsidiaries, in connection with this Agreement or the
transactions contemplated hereby.
3.9 Accuracy of Information. The statements of First Midwest contained
in this Agreement, the Schedules hereto and in any other written document
executed and delivered by or on behalf of First Midwest pursuant to the terms of
this Agreement are true and correct in all material respects.
3.10 Community Reinvestment Act Compliance. First Federal, a First
Midwest Subsidiary, is in material compliance with the applicable provisions of
the CRA and the regulations promulgated thereunder and currently has a CRA
rating of satisfactory or better from the OTS. To the Best Knowledge of First
Midwest, there is no fact or circumstance or set of facts or circumstances which
would cause the CRA rating of First Federal to fall below satisfactory.
3.11 Litigation and Other Proceedings. Except as to matters set forth
in the First Midwest Financial Statements, there is no claim, action, suit,
investigation or proceeding, pending or, to the Best Knowledge of First Midwest,
threatened against First Midwest or any First Midwest Subsidiary, nor are they
subject to any order, judgment or decree, except for matters which, in the
aggregate, will not have, or reasonably could not be expected to have, a
material adverse effect on the Condition of First Midwest and the First Midwest
Subsidiaries, taken as whole, but not excepting any actions, suits or
proceedings which purport or seek to enjoin or restrain the transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, except as to matters set forth in the First Midwest Reports, there
are no actions, suits, or proceedings pending or, to the Best Knowledge of First
Midwest, threatened against First Midwest or any First Midwest Subsidiary or any
of their respective officers or directors by any shareholder of First Midwest or
any First Midwest Subsidiary (or by any former shareholder of First Midwest or
any First Midwest Subsidiary relating to or arising out of such person's status
as a shareholder or former shareholder) or involving claims under the Securities
Act, the Exchange Act, the CRA or the fair lending laws. Except with respect to
matters which reasonably could not be expected to have a material adverse effect
on the Condition of First Midwest and the First Midwest Subsidiaries, taken as a
whole, since September 30, 1995, neither First Midwest nor any First Midwest
Subsidiary has received any notification or communication which has not been
resolved from any Regulatory Authority (i) asserting that First Midwest or any
First Midwest Subsidiary is not in substantial compliance with any of the
statutes, regulations or ordinances that such Regulatory Authority enforces,
(ii) threatening to revoke any license, franchise, permit or governmental
authorization, including without limitation the status of First Federal as an
<PAGE>
insured depository institution under the FDIA or (iii) requiring or threatening
to require First Midwest or any of the First Midwest Subsidiaries, or indicating
that First Midwest or any of the First Midwest Subsidiaries may be required, to
enter into a cease and desist order, agreement or memorandum of understanding or
any other agreement restricting or limiting or purporting to direct, restrict or
limit in any manner the operations of First Midwest or any of the First Midwest
Subsidiaries, including without limitation any restriction on the payment of
dividends, and no such cease and desist order, agreement or memorandum or
understanding or other agreement is currently in effect.
3.12 Compliance with Laws. First Midwest and each of the First Midwest
Subsidiaries have all material permits, licenses, authorizations, orders and
approvals of, and have made all material filings, applications and registrations
with, all Regulatory Authorities that are required in order to permit them to
own or lease their properties and assets and to carry on their business as
presently conducted, except where the failure to have all such permits,
licenses, authorizations, orders and approvals or to have made all such filings
would not have a material adverse effect on the Condition of First Midwest and
the First Midwest Subsidiaries, taken as a whole; all such permits, licenses,
authorizations, orders and approvals are in full force and effect and, to the
Best Knowledge of First Midwest, no suspension or cancellation of any of them is
threatened and all such filings, applications and registrations are current.
3.13 Governmental Approvals and Other Conditions. To the Best Knowledge
of First Midwest, there is no reason relating specifically to First Midwest or
any of the First Midwest Subsidiaries why (a) the approvals that are required to
be obtained from Regulatory Authorities having approval authority in connection
with the transactions contemplated hereby should not be granted, (b) such
regulatory approvals should be subject to a condition which would be unduly
burdensome to First Midwest or any First Midwest Subsidiary or would differ from
conditions customarily imposed by such Regulatory Authorities in orders
approving acquisitions of the type contemplated hereby or (c) any of the
conditions precedent as specified in Article VI hereof to the obligations of any
of the parties hereto to consummate the transactions contemplated hereby are
unlikely to be fulfilled within the applicable time period or periods required
for satisfaction of such condition or conditions.
ARTICLE IV
CONDUCT OF BUSINESSES PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Businesses Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, CWB shall, and it
shall cause each of the CWB Subsidiaries to, conduct its business only in the
ordinary and usual course consistent with past practices and shall, and shall
cause each such Subsidiary to, use its best efforts to maintain and preserve its
business organization, employees and advantageous business relationships and
retain the services of its officers and key employees.
4.2 Forbearances. Except as expressly provided herein, during the
period from the date of this Agreement to the Effective Time, without the prior
written consent of First Midwest, CWB shall not and shall not permit any of the
CWB Subsidiaries to:
(a) declare, set aside or pay any dividends or other
distributions, directly or indirectly, in respect of its capital stock,
except for any dividends to enable CWB to pay expenses relating to this
Agreement and the transactions contemplated hereby;
<PAGE>
(b) enter into or amend any employment, severance or similar
agreement or arrangement with any director or officer or employee, or
modify any of the CWB Employee Plans or security acquisition loans
relating thereto (or prepay in whole or in part any such loans) or
grant any salary or wage increase or materially increase any employee
benefit (including incentive or bonus payments), except normal
individual bonuses and increases in compensation to employees, in each
case and in the aggregate consistent with past practice or to the
extent required by law;
(c) negotiate, authorize, recommend, propose or announce an
intention to authorize, so recommend or propose, or enter into any
discussion or an agreement in principle with respect to, any merger,
consolidation or business combination (other than the Merger), any
acquisition of a material amount of assets or securities, any
disposition of a material amount of assets or securities or any release
or relinquishment of any material contract rights;
(d) except as may be required to facilitate the consummation
of the transactions contemplated herein, propose or adopt any
amendments to its articles of incorporation or bylaws;
(e) issue, sell, grant, confer or award any of its Equity
Securities or effect any stock split or adjust, combine, reclassify or
otherwise change its capitalization as it exists on the date of this
Agreement;
(f) purchase, redeem, retire, repurchase, or exchange, or
otherwise acquire or dispose of, directly or indirectly, any of its
Equity Securities, whether pursuant to the terms of such Equity
Securities or otherwise;
(g) (i) change its underwriting policies relating to lending
activities, (ii) change its deposit-taking policies, (iii) create any
new lending or deposit products, or (iv) engage in a new line of
business;
(h) take any action that would (A) materially impede or delay
the consummation of the transactions contemplated by this Agreement or
the ability of First Midwest or CWB to obtain any approval of any
Regulatory Authority required for the transactions contemplated by this
Agreement or to perform its covenants and agreements under this
Agreement or (B) prevent the Merger from qualifying as a reorganization
within the meaning of Section 368(a)(1)(A) of the Code;
(i) other than in the ordinary course of business consistent
with past practice, incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise as an accommodation become responsible
or liable for the obligations of any other individual, corporation or
other entity; or
(j) agree in writing or otherwise to take any of the foregoing
actions or engage in any activity, enter into any transaction or take
or omit to take any other act which would make any of the
representations and warranties in Article II of this Agreement untrue
or incorrect in any material respect if made anew after engaging in
such activity, entering into such transaction, or taking or omitting
such other act.
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Access and Information. First Midwest and the First Midwest
Subsidiaries, on the one hand, and CWB and the CWB Subsidiaries, on the other
hand, shall each afford to each other, and to the other's accountants, counsel
and other representatives, reasonable access during normal business hours,
during the period prior to the Effective Time, to all their respective
properties, books, contracts, commitments and records and, during such period,
each shall furnish promptly to the other all information concerning its
business, properties and personnel as such other party may reasonably request.
Except as may be required by law, each party hereto shall, and shall cause its
advisors and representatives to, (A) hold confidential all information obtained
in connection with any transaction contemplated hereby with respect to the other
party which is not otherwise public knowledge, (B) return all documents
(including copies thereof) obtained hereunder from the other party to such other
party and (C) use its best efforts to cause all information obtained pursuant to
this Agreement or in connection with the negotiation of this Agreement to be
treated as confidential and not use, or knowingly permit others to use, any such
information unless such information becomes generally available to the public.
5.2 Regulatory Matters. CWB and First Midwest shall cooperate and use
their respective best efforts to promptly prepare all documentation, to effect
all filings and to obtain all permits, consents, approvals and authorizations of
Regulatory Authorities necessary to consummate the transactions contemplated by
this Agreement and, as and if directed by First Midwest, to consummate such
other mergers, consolidations or asset transfers or other transactions by and
among the First Midwest Subsidiaries and the CWB Subsidiaries concurrently with
or following the Effective Time, provided that such actions do not materially
impede or delay the consummation of the transactions contemplated by this
Agreement.
5.3 Current Information. During the period from the date of this
Agreement to the Effective Time, each party shall promptly furnish the other
with copies of all monthly and other interim financial statements as the same
become available and shall cause one or more of its designated representatives
to confer on a regular and frequent basis with representatives of the other
party. Each party shall promptly notify the other party of any material change
in its business or operations, of any fact, omission or condition which makes
untrue or misleading or shows to have been untrue or misleading the information
supplied by it for inclusion in the Registration Statement and of any
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the institution or the threat
of material litigation involving such party or any of its Subsidiaries and shall
keep the other party fully informed of such events.
5.4 Agreements of Affiliates. In the event that prior to the Effective
Time, any person or persons who have not executed the Shareholder Agreement
becomes an "affiliate" of CWB for purposes of Rule 145 of the Securities Act,
CWB shall promptly identify such person to First Midwest and shall use its best
efforts to cause each additional person who is identified as an "affiliate" to
execute a written agreement as soon as practicable, in form and substance
reasonably satisfactory to First Midwest, providing that from the date of such
agreement each such person will agree not to sell, pledge, transfer or otherwise
dispose of any shares of stock of CWB held by such person or any shares of First
Midwest Common Stock to be received by such person in the Merger except in
compliance with the applicable provisions of the Securities Act and other
applicable laws and regulations
<PAGE>
5.5 Expenses. Each party hereto shall bear its own expenses incident to
preparing, entering into and carrying out this Agreement and to consummating the
Merger, except that if this Agreement is terminated pursuant to Section
7.1(b)(ii), then First Midwest shall pay to CWB in cash the aggregate amount of
its documented expenses for legal and accounting services provided by third
parties in connection with this Agreement and the transactions contemplated
hereby, provided that such amount shall not exceed $50,000.00.
5.6 Miscellaneous Agreements and Consents. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its
respective best efforts to take, or cause to be taken, all actions, 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 as expeditiously as possible, including without
limitation using its respective best efforts to lift or rescind any injunction
or restraining order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby. Each party shall, and shall
cause each of its respective Subsidiaries to, use its best efforts to obtain
consents of Regulatory Authorities necessary or, in the reasonable opinion of
First Midwest, desirable for the consummation of the transactions contemplated
by this Agreement.
5.7 Press Releases. The initial press release concerning this Agreement
shall be as previously agreed upon by First Midwest and CWB. Except as CWB deems
necessary to comply with applicable law after consultation with its counsel, CWB
shall not issue any press release or written statement for general public
circulation relating to this Agreement or any transactions contemplated hereby
without the prior written consent of First Midwest, which consent shall not be
unreasonably withheld or delayed.
5.8 Takeover Provisions. CWB has taken or will take all steps necessary
to render the transactions contemplated by this Agreement permissible under any
applicable Iowa takeover or similar law and under any takeover or similar
provision in the organizational documents or bylaws of CWB or any CWB Subsidiary
restricting the ownership, acquisition or voting of securities or imposing any
"fair price" or supermajority director or shareholder vote requirements.
5.9 Third Parties. CWB and each CWB Subsidiary, as applicable, shall
(i) immediately terminate all negotiations or discussions with parties other
than First Midwest concerning any transaction by which CWB or any of the CWB
Subsidiaries would be acquired by or merged into any other person or any portion
of their assets or liabilities would be purchased or assumed by any person other
than First Midwest except in the ordinary course of business and consistent with
Article IV hereof and (ii) enforce the terms of all confidentiality agreements
with such other parties.
5.10 Assistance of Third Parties. CWB and its Subsidiaries shall
cooperate with, and use all reasonable efforts to assist, First Midwest in (i)
gaining access to all of CWB's and CWB Subsidiaries' third-party vendors, and
the landlords of each property leased by them, promptly after the date of this
Agreement, and (ii) obtaining the cooperation of such third-parties in a smooth
transition in accordance with First Midwest's timetable at or after the
Effective Time. CWB and the CWB Subsidiaries shall also, at First Midwest's
reasonable request, give notice of termination of third-party contracts to be
effective at or after the Effective Time, and take such reasonable additional
action as may be necessary or reasonably appropriate to ensure that such
contracts are terminated at the date requested.
<PAGE>
5.11 Insurance Policy Claims. CWB shall inform First Midwest no later
than the Effective Time of any material unfiled, insurance claims of CWB or any
CWB Subsidiary which it has knowledge and for which it believes coverage exists.
5.12 Updated Schedules. If, subsequent to the date of this Agreement
and prior to the Effective Time, any events occur which renders untrue any
representation or warranty of CWB or First Midwest made at the date of this
Agreement or renders incomplete or inaccurate any Schedule or Schedules
delivered upon execution of this Agreement or Updated Schedules (as defined
below) delivered later (a "Trigger Event"), CWB or First Midwest, as the case
may be, shall promptly deliver to the other a supplemental writing (an "Updated
Schedule") which shall contain a detailed description of any and all such
matters. An Updated Schedule shall be delivered by within four business days
after CWB or First Midwest learns of the Trigger Event but in no event later
than before the Closing. The submission of an Updated Schedule and the matters
therein contained shall not constitute a default or breach by CWB or First
Midwest of any of its respective representations and warranties under this
Agreement, provided that this Section 5.12 is not intended to permit CWB or
First Midwest to alter or amend its representations and warranties as made
herein (including the Schedules) as of the date of this Agreement, and any
Updated Schedule shall not cure the inaccuracy thereof as of the date of this
Agreement for any purpose under this Agreement.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Effective Time of the following
conditions:
(a) All requisite approvals of this Agreement and the
transactions contemplated hereby shall have been received from the
Regulatory Authorities having approval authority with respect to the
Merger and all applicable waiting periods shall have expired.
(b) Neither First Midwest nor CWB shall be subject to any
order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
(c) A tax opinion addressed to both First Midwest and CWB by
counsel to First Midwest shall have been obtained with respect to the
Merger, based on customary reliance and subject to customary
qualifications, to the effect that for federal income tax purposes, the
Merger will qualify as a "reorganization" under Section 368(a)(i)(A) of
the Code.
6.2 Conditions to Obligations of CWB to Effect the Merger. The
obligations of CWB to effect the Merger shall be subject to the fulfillment or
waiver at or prior to the Effective Time of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of First Midwest set forth in Article III of this Agreement
shall be true and correct as of the date of this Agreement and in all
material respects as of the Effective Time (as though made on and as of
the Effective Time), except (i) to the extent such representations and
warranties are by their express provisions made as of a specified date
and (ii) for the effect of transactions contemplated by this
<PAGE>
Agreement), and CWB shall have received a certificate of the president
and chief executive officer of First Midwest to that effect, dated the
Closing Date.
(b) Performance of Obligations. First Midwest shall have
performed in all material respects all obligations required to be
performed by it under this Agreement prior to the Effective Time, and
CWB shall have received a certificate of the president and chief
executive officer of First Midwest to that effect, dated the Closing
Date.
(c) Opinion of Counsel. CWB shall have received an opinion of
Silver, Freedman & Taff, L.L.P., counsel to First Midwest, dated the
Closing Date, substantially in the form attached as Exhibit C, provided
that, in the event that First Midwest exercises its right under Section
1.6 of this Agreement, the form and substance of such form of legal
opinion shall be appropriately modified, subject to the reasonable
satisfaction of CWB's counsel as listed in Section 8.2 of this
Agreement.
6.3 Conditions to Obligations of First Midwest to Effect the Merger.
The obligations of First Midwest to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the following
additional conditions:
(a) Representations and Warranties. The representations and
warranties of CWB set forth in Article II of this Agreement shall be
true and correct as of the date of this Agreement and, except as
updated pursuant to Section 5.1, as of the Effective Time (as though
made on and as of the Effective Time, except (i) to the extent such
representations and warranties are by their express provisions made as
of a specific date and (ii) for the effect of transactions contemplated
by this Agreement, and First Midwest shall have received a certificate
of the president and chief executive officer of CWB to that effect,
dated the Closing Date.
(b) Performance of Obligations. CWB shall have performed in
all material respects all obligations required to be performed by it
under this Agreement prior to the Effective Time, and First Midwest
shall have received a certificate of the president and chief executive
officer of CWB to that effect, dated the Closing Date.
(c) Opinion of Counsel. First Midwest shall have received an
opinion from Davis, Brown, Koehn, Shors & Roberts, P.C., counsel to
CWB, dated the Closing Date, substantially in the form attached as
Exhibit D, provided that in the event that First Midwest exercises its
right to restructure the Merger pursuant to Section 1.6 of this
Agreement, such form of legal opinion shall be appropriately modified,
subject to the reasonable satisfaction of First Midwest's counsel.
(d) Waivers; Shareholder Agreement. To the extent that this
Agreement and the CWB Shareholders' approval of this Agreement and the
Merger (i) would give rise to rights of CWB under Section 3.14 of its
by-laws, CWB shall have waived its rights thereunder, and (ii) would
give rise to rights under that certain agreement entitled "SHAREHOLDER
AGREEMENT CENTRAL WEST BANCORPORATION," dated January 19, 1993, all
parties to such agreement shall have waived their rights thereunder.
The shareholders of CWB shall have executed the Shareholder Agreement
and delivered an executed original of such Agreement to First Midwest
<PAGE>
as of the date hereof, together with evidence, reasonably satisfactory
to First Midwest, of the authority of each person who executes such
Agreement on behalf of a shareholder of CWB which is not a natural
person (a "Corporate Shareholder") to execute such document on behalf
of such Corporate Shareholder. First Midwest shall have received copies
of the resolutions of the board of directors of CWB and of the
Shareholders of CWB approving this Agreement and the Merger, with a
certification, dated the Closing Date, signed by the Secretary of CWB
and stating that such resolutions have not been modified or rescinded
since they were adopted.
(e) No Unduly Burdensome Condition or Commercial Banking Power
Restriction. No regulatory approval obtained in connection with the
transactions contemplated herein shall (i) contain a condition which
First Midwest reasonably determines is unduly burdensome to First
Midwest or any First Midwest Subsidiary (including Security State Bank)
or (ii) limit or restrict the powers of Security State Bank.
(f) Agreements of Affiliates. If CWB has identified any
additional "affiliates" pursuant to Section 5.4 of this Agreement,
First Midwest shall have received from such persons the written
affiliates' agreements described in Section 5.4.
(g) Significant Restriction on Activities. The consummation of
the Merger will not result in any significant restriction on the
activities of, or significant limitation upon the conduct of business
by, any existing First Midwest Subsidiary, other than a significant
restriction or limitation that can be cured by having another First
Midwest Subsidiary perform such activity or conduct such business in
the manner theretofore performed or conducted.
(h) Capital of Security State Bank. At the Closing Date, (i)
the capital, surplus and undivided profits of Security State Bank, when
reduced by the aggregate amount of net after-tax earnings to be
distributed to shareholders of CWB pursuant to Section 1.3 hereof,
shall be at least $2,400,000.00, and (ii) on a pro forma basis after
such distribution of such aggregate net after-tax earnings, Security
State Bank shall be "well capitalized" as defined in 12 C.F.R. ss.
325.103(b)(1).
(i) No Dissenters. No holder of CWB Common Stock shall be a
Dissenter as defined in Iowa Code ss. 490.1301.3.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after any requisite shareholder approval:
(a) by mutual consent of the Boards of Directors of First
Midwest and CWB;
(b) by the Board of Directors of First Midwest or the Board of
Directors of CWB (i) at any time after March 31, 1997, if the Merger
shall not theretofore have been consummated (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant or other agreement contained herein) or (ii) if any
Regulatory Authority denies approval of the Merger.
<PAGE>
(c) by the Board of Directors of First Midwest in the event of
a material breach by CWB of any representation, warranty, covenant or
other agreement contained in this Agreement, which breach is not cured
within 30 days after written notice thereof to CWB by First Midwest.
(d) by the Board of Directors of CWB in the event of a
material breach by First Midwest of any representation, warranty,
covenant or other agreement contained in this Agreement, which breach
is not cured within 30 days after written notice thereof is given to
First Midwest by CWB;
7.2 Effect of Termination. In the event of termination of this
Agreement as provided in Sections 7.1(a) or 7.1(b) hereof, this Agreement shall
forthwith become void and there shall be no liability under this Agreement on
the part of First Midwest or CWB or their respective officers or directors
except as set forth in the second sentence of Section 5.1 and in Section 5.5. In
the event of a termination of this Agreement pursuant to Section 7.1(c) or
7.1(d), based upon a material breach by a party, the non-breaching party shall
be entitled to such relief and remedies against the breaching party as are
available at law or in equity, including but not limited to, specific
performance, it being agreed by the parties that the remedies of a party for a
material breach by the other party are inadequate at law.
7.3 Amendment. This Agreement and the Schedules hereto may be amended
by the parties hereto, by action taken by or on behalf of their respective
Boards of Directors, at any time before or after approval of this Agreement by
the shareholders of CWB; provided, however, that, after approval by the
shareholders of CWB, no such modification shall (i) alter or change the amount
or kind of consideration
<PAGE>
to be received by holders of CWB Common Stock as provided in this Agreement or
(ii) adversely affect the tax treatment to CWB shareholders of the Merger
Consideration, without securing the approval of the CWB shareholders by the vote
required under the Iowa Act. First Midwest may make, and CWB's Board of
Directors shall approve and its duly authorized representative shall execute,
such amendments as are permitted by Section 1.6 hereof. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of First
Midwest and CWB.
7.4 Severability. Any term, provision, covenant or restriction
contained in this Agreement held by a court or a Regulatory Authority of
competent jurisdiction to be invalid, void or unenforceable, shall be
ineffective to the extent of such invalidity, voidness or unenforceability, but
neither the remaining terms, provisions, covenants or restrictions contained in
this Agreement nor the validity or enforceability thereof in any other
jurisdictions shall be affected or impaired thereby. Any term, provision,
covenant or restriction contained in this Agreement that is so found to be so
broad as to be unenforceable shall be interpreted to be as broad as is
enforceable.
7.5 Waiver. Any term, condition or provision of this Agreement may be
waived in writing at any time by the Board of Directors of the party which is,
or whose shareholders are, entitled to the benefits thereof.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations, Warranties and Agreements. No
investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties which are contained herein and
each such representation and warranty shall survive such investigation. All
representations, warranties, covenants and agreements in this Agreement of the
parties or in any instrument delivered by a party pursuant to or in connection
with this Agreement shall not survive at the Effective Time or the termination
of this Agreement in accordance with its terms, except (i) in the case of
consummation of the Merger, the obligations of First Midwest which are
specifically contemplated to be performed after the Effective Time shall
survive, (ii) in the case of the termination of this Agreement, the agreements
contained in or referred to in the second sentence of Section 5.1 and in
Sections 5.5 and 7.2 shall survive such termination, and (iii) representations
and warranties contained in the Shareholder Agreement shall survive the Merger.
<PAGE>
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to be duly received (i) on the date given if
delivered personally or (ii) upon confirmation of receipt if by facsimile
transmission or (iii) on the date received if mailed by registered or certified
mail (return receipt requested), in each case to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to First Midwest:
First Midwest Financial, Inc.
Fifth at Erie
Storm Lake, Iowa 50588
Attention: James S. Haahr, Chairman
of the Board, President and Chief
Executive Officer
Copies to:
Steven P. Myers
Vice Chairman of the Board and Senior Vice President
First Midwest Financial, Inc.
Fifth at Erie
Storm Lake, Iowa 50588
and
Jeffrey M. Werthan, P.C.
Silver, Freedman & Taff, L.L.P.
1100 New York Avenue, N.W.
Washington, D.C. 20005
(ii) if to CWB:
Central West Bancorporation
615 Division Street
Stuart, Iowa 50250
Attention: William M. Wilson
Chairman of the Board
Copy to:
Robert A. Gamble, Esq.
Davis, Brown, Koehn, Shors & Roberts, P.C.
666 Walnut Street, Suite 2500
Des Moines, Iowa 50309
8.3 Miscellaneous. This Agreement (including the Schedules referred to
herein) (i) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral, among the parties, or any
of them, with respect to the subject matter hereof, including any
confidentiality agreement between the parties hereto, (ii) except as expressly
provided herein, is not intended to confer upon any person not a party hereto
any rights or remedies hereunder, (iii) shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns
and (iv) shall be governed in all respects by the laws of the State of Iowa,
except as otherwise specifically provided herein or required by federal law or
regulation. The table of contents and headings contained in this Agreement are
<PAGE>
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement may be executed in counterparts
which together shall constitute a single agreement.
First Midwest and CWB have caused this Agreement to be duly executed by
their authorized representatives on the date first above written.
CENTRAL WEST BANCORPORATION
By:
William M. Wilson,
Chairman of the Board
ATTESTED:
By:
Claude F. Havick
Secretary:
FIRST MIDWEST FINANCIAL, INC.
By:
James S. Haahr, Chairman of the Board,
President and Chief Executive Officer
ATTESTED:
By:
Steven P. Myers
Vice Chairman of the Board
and Senior Vice President
August 9, 1996
Board of Directors
First Midwest Financial, Inc.
Fifth at Erie
Storm Lake, Iowa 50588
Members of the Board:
Reference is made to the Registration Statement on Form S-3 (the
"Registration Statement"), under the Securities Act of 1933, as amended, being
filed by First Midwest Financial, Inc., a Delaware corporation (the "Company"),
with the Securities and Exchange Commission, relating to the registration of
190,000 shares of the Company's common stock, par value of $.01 per share (the
"Shares"), to be offered and sold by the Selling Shareholders described in the
Registration Statement.
In this connection, we have reviewed originals or copies, certified or
otherwise identified to our satisfaction, of the Company's Certificate of
Incorporation, Bylaws, resolutions of its Board of Directors and such other
documents and corporate records as we deem appropriate for the purpose of
rendering this opinion. In such examinations, we have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all copies submitted to us as certified,
conformed or photostatic copies, and the authenticity of all originals of such
copies.
Based upon the foregoing, it is our opinion that the Shares will be,
when and if issued, duly authorized, validly issued, fully paid and
non-assessable.
Very truly yours,
/s/ Silver, Freedman & Taff, L.L.P.
SILVER, FREEDMAN & TAFF, L.L.P.
August 9, 1996
Members of the Board:
We hereby consent to the inclusion of our opinion as Exhibit 5 of this
Registration Statement and the reference to our firm in the Prospectus. In
giving this consent, we do not admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended, or the rules and regulations of the Securities and Exchange Commission
thereunder.
SILVER, FREEDMAN & TAFF, L.L.P.
/s/ Silver, Freedman & Taff, L.L.P.
Independent Auditors' Consent
We consent to the incorporation by reference in this Registration
Statement of First Midwest Financial, Inc. on Form S-3 of our report dated
November 17, 1995, appearing in Part II of Item 7 in the Annual Report on Form
10-KSB of First Midwest Financial, Inc. for the year ended September 30, 1995,
and to reference to us under the heading "Experts" in the Prospectus, which is
part of the Registration Statement.
/s/ Deloitte & Touche LLP
Omaha, Nebraska
August 9, 1996
