SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 12,
1996
Charter Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-27304 37-1345386
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction Identification No.)
of incorporation)
Registrant's telephone number, including area code:(618) 443-2166
Not Applicable
(Former name or former address, if changed since last report)
PAGE
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Item 2. Acquisition or Disposition of Assets.
On August 12, 1996, Charter Financial, Inc. (the
"Registrant"), its wholly owned stock savings bank subsidiary,
Charter Bank, S.B. ("Charter") and Charter Interim Savings Bank, a
to-be-formed interim savings bank entered into an Agreement and
Plan of Merger (the "Agreement") with Home Federal Savings Bank,
Carbondale, Illinois ("Home Federal"), which provides, among other
things, for the (i) acquisition of Home Federal by Charter, and
(ii) the payment of $21.00 per share (subject to adjustment if
transaction costs exceed $100,000) for each share of Community's
Common Stock issued and outstanding (the "Acquisition"). The
holders of Home Federal stock options shall receive cash
consolidation equal to the difference between the option exercise
price and $21.00 multiplied by the number of shares underlying the
stock option. It is expected that the total purchase price will be
approximately $6.3 million. Under the Agreement Charter will
receive a fee of $300,000, should the Agreement be terminated under
certain circumstances.
Consummation of the Acquisition is subject to certain
conditions, including the approval of Home Federal's stockholders
and receipt of all regulatory approvals. With those approvals, it
is expected that the Acquisition will be completed during the first
quarter of calendar year 1997. For further information see
Exhibits 2 and 99 which are incorporated by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
The financial statements and pro forma information required to
be filed by this Item are not available at this time. Such
information will be filed as an amendment to this Form 8-K Current
Report when the information becomes available; however, in no event
will such information be filed any later than 60 days from the last
date on which this Form 8-K was required to be filed.
The following Exhibits are filed as part of this report:
Exhibit 2 Agreement and Plan of Merger By and Among
Charter Financial, Inc., Charter Bank, S.B.,
Community Interim Bank and Home
Federal Savings Bank.
Exhibit 99 Press Release of Charter Financial, Inc.
PAGE
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Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
CHARTER FINANCIAL, INC.
DATE: August 15, 1996 By: (s) Michael Howell
Executive Vice President and
Principal Financial Officer
Agreement and Plan of Merger
By and Among
Charter Financial, Inc.
Charter Bank, S.B.
Charter Interim Bank
and
Home Federal Savings Bank
Dated: August 12, 1996
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TABLE OF CONTENTS
Page No.
ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.1. The Merger. . . . . . . . . . . . . . . . . . . . .2
1.2. Effective Time of the Merger. . . . . . . . . . . .2
1.3. Closing.. . . . . . . . . . . . . . . . . . . . . .2
1.4. Modification of Structure . . . . . . . . . . . . .2
ARTICLE II.. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
EFFECT OF THE MERGER; CERTAIN ACTIONS IN CONNECTION THEREWITH 3
2.1. Effect of the Merger. . . . . . . . . . . . . . . .3
2.2. Effect on Common Stock of Home Federal
and Financial.. . . . . . . . . . . . . . . . . . .4
2.3. Options.. . . . . . . . . . . . . . . . . . . . . .4
2.4. Charter to Make Cash Available. . . . . . . . . . .4
2.5. Payment of Cash.. . . . . . . . . . . . . . . . . .4
2.6. Dissenters' Rights. . . . . . . . . . . . . . . . .6
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
REPRESENTATIONS AND WARRANTIES OF FINANCIAL, CHARTERAND
CHARTER INTERIM BANK . . . . . . . . . . . . . . . . . . . . . .6
3.1. Corporate Organization. . . . . . . . . . . . . . .6
3.2. Authorization.. . . . . . . . . . . . . . . . . . .7
3.3. No Violation. . . . . . . . . . . . . . . . . . . .7
3.4. Consents and Approvals. . . . . . . . . . . . . . .7
3.5. Information Supplied for Inclusion in the
Home Federal Proxy Statement. . . . . . . . . . . .8
3.6. Cash Payment. . . . . . . . . . . . . . . . . . . .8
3.7. Accuracy of Information.. . . . . . . . . . . . . .8
3.8. Supplement to Financial Disclosure Schedule . . . .8
3.9. Litigation. . . . . . . . . . . . . . . . . . . . .8
3.10. Brokers and Finders . . . . . . . . . . . . . . . .8
3.11. Regulatory Approvals. . . . . . . . . . . . . . . .9
ARTICLE IV.. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
REPRESENTATIONS AND WARRANTIES OF HOME FEDERAL . . . . . . . . .9
4.1. Corporate Organization. . . . . . . . . . . . . . .9
4.2. Capitalization. . . . . . . . . . . . . . . . . . 10
4.3. Authorization.. . . . . . . . . . . . . . . . . . 10
4.4. No Violation. . . . . . . . . . . . . . . . . . . 11
4.5. Reports and Consolidated Financial Statements.. . 11
4.6. Consents and Approvals. . . . . . . . . . . . . . 12
4.7. Absence of Certain Changes. . . . . . . . . . . . 12
4.8. Employee and Employee Benefits Matters. . . . . . 13
4.9. Litigation. . . . . . . . . . . . . . . . . . . . 15
4.10. Tax Matters.. . . . . . . . . . . . . . . . . . . 15
4.11. Information in the Home Federal Proxy Statement.. 16
4.12. Environmental Matters . . . . . . . . . . . . . . 17
4.13. Insurance.. . . . . . . . . . . . . . . . . . . . 19
4.14. Compliance with Laws and Orders.. . . . . . . . . 19
4.15. Governmental Regulation.. . . . . . . . . . . . . 19
4.16. Contracts and Commitments.. . . . . . . . . . . . 19
4.17. Agreements with Directors, Officers and
Shareholders. . . . . . . . . . . . . . . . . . . 20
4.18. Accuracy of Information.. . . . . . . . . . . . . 20
4.19. Supplement to Home Federal Disclosure Schedule. 20
4.20. Title to Assets; Leases . . . . . . . . 21
4.21. Fees. . . . . . . . . . . . . . . . . . 21
4.22. Business of Home Federal. . . . . . . . 22
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
COVENANTS OF FINANCIAL. . . . . . . . . . . . . . . . . . . 22
5.1. Affirmative Covenants. . . . . . . . . . . . 22
5.2. Negative Covenants.. . . . . . . . . . . . . 22
5.3. Breaches.. . . . . . . . . . . . . . . . . . 23
5.4. Employee Benefit Plans: Employment
Arrangements . . . . . . . . . . . . . . . . 23
5.5. Filing of Applications.. . . . . . . . . . . 24
5.6. Expenses.. . . . . . . . . . . . . . . . . . 24
5.7. Supplement to Financial Disclosure Schedule. 24
5.8. Non-Assignability. . . . . . . . . . . . . . 24
ARTICLE VI.. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
COVENANTS OF HOME FEDERAL . . . . . . . . . . . . . . . . . 25
6.1. Affirmative Covenants. . . . . . . . . . . . 25
6.2. Negative Covenants.. . . . . . . . . . . . . 26
6.3. Report to Financial. . . . . . . . . . . . . 29
6.4. Breaches.. . . . . . . . . . . . . . . . . . 29
6.5. Supplement to Disclosure Schedule. . . . . . 29
6.6. Expenses.. . . . . . . . . . . . . . . . . . 29
6.7. Consents and Approvals.. . . . . . . . . . . 29
6.8. Dissenting Stockholders. . . . . . . . . . . 29
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . 30
7.1. Home Federal Shareholders' Meeting.. . . . . 30
7.2. Proxy Statement for Home Federal
Shareholders' Meeting.. . . . . . . . . 30
7.3. Cooperation: Regulatory Approvals. . . . . . 30
7.4. Reports. . . . . . . . . . . . . . . . . . . 30
7.5. Brokers or Finders.. . . . . . . . . . . . . 31
7.6. Additional Agreements: Reasonable Efforts. . 31
7.7. Release of Information.. . . . . . . . . . . 31
7.8. Access to Properties and Records;
Confidentiality. . . . . . . . . . . . . . . 31
7.9. Certain Policies . . . . . . . . . . . . . . 32
ARTICLE VIII.. . . . . . . . . . . . . . . . . . . . . . . . . . 33
CONDITIONS TO THE OBLIGATIONS OF FINANCIAL. . . . . . . . . 33
8.1. No Material Adverse Effect.. . . . . . . . . 33
8.2. Representations and Warranties.. . . . . . . 34
8.3. Performance and Compliance.. . . . . . . . . 34
8.4. No Proceeding or Litigation. . . . . . . . . 34
8.5. Consents Under Agreements. . . . . . . . . . 34
8.6. No Amendments to Resolutions.. . . . . . . . 35
8.7. Certificate of Home Federal Officers.. . . . 35
8.8. Corporate Proceedings . . . . . . . . . . . 35
8.9.(a) Legal Opinion.. . . . . . . . . . . . . 35
ARTICLE IX.. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
CONDITIONS TO THE OBLIGATIONS OF HOME FEDERAL . . . . . . . 37
9.1. Representations and Warranties.. . . . . . . 37
9.2. Performance and Compliance.. . . . . . . . . 37
9.3. Corporate Proceedings . . . . . . . . . . 37
9.4. Certificate of Financial Officers. . . . . . 37
9.5.(a) Legal Opinion.. . . . . . . . . . . . . 38
9.6. Fairness Opinion . . . . . . . . . . . . . . 39
ARTICLE X. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES. . . . . . . . 39
10.1. Governmental Approvals. . . . . . . . . 39
10.2. No Injunctions or Restraints. . . . . . 40
10.3. Home Federal Shareholder Approval.. . . 40
10.4 Corporate Proceedings. . . . . . . . . . . . 40
ARTICLE XI.. . . . . . . . . . . . . . . . . . . . . . . . . . . 40
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1. Reasons for Termination.. . . . . . . . 40
11.2. Effect of Termination.. . . . . . . . . 42
ARTICLE XII. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 42
12.1. Nonsurvival of Representations,
Warranties and Agreements. . . . . . . .42
12.2. Expenses. . . . . . . . . . . . . . . . 42
12.3. Waivers: Amendments.. . . . . . . . . . 43
12.4. Assignment: Parties in Interest.. . . . 43
12.5. Entire Agreement. . . . . . . . . . . . 44
12.6. Captions and Counterparts.. . . . . . . 44
12.7. Certain Definitions.. . . . . . . . . . 44
12.8. Enforcement of the Agreement. . . . . . 45
12.9. Governing Law.. . . . . . . . . . . . . 45
12.10. Notices.. . . . . . . . . . . . . . . . . 45
PAGE
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SCHEDULES
Schedule 3.1
Schedule 3.9
Schedule 4.1(a)
Schedule 4.2
Schedule 4.4
Schedule 4.5
Schedule 4.6
Schedule 4.7
Schedule 4.8(a)
Schedule 4.8(b)
Schedule 4.9
Schedule 4.10
Schedule 4.12(a)
Schedule 4.12(b)
Schedule 4.12(c)
Schedule 4.12(d)
Schedule 4.12(e)
Schedule 4.12(f)
Schedule 4.13
Schedule 4.14
Schedule 4.15
Schedule 4.16
Schedule 4.17
Schedule 4.20(b)
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of August 12, 1996
(the "Agreement"), is entered into by and among Charter Financial,
Inc. ("Financial"), Charter Bank, S.B. ("Charter"), Charter Interim
Bank, a to be formed Illinois-chartered interim savings bank which
will be wholly-owned by Charter, and Home Federal Savings Bank ("Home
Federal"). References to Financial shall include Charter and any
subsidiaries of Charter unless the context indicates otherwise.
W I T N E S S E T H:
WHEREAS, Charter is an Illinois-chartered stock savings
bank headquartered in Sparta, Illinois, 100% of the issued and
outstanding capital stock of which is owned by Financial, a Delaware
corporation in stock form; and
WHEREAS, Home Federal is a federally-chartered stock
savings bank headquartered in Carbondale, Illinois; and
WHEREAS, the parties desire to provide for Financial's
acquisition of Home Federal pursuant to a merger (the "Merger") of
Charter and Home Federal (as described in Section 1.1 hereof) on or
after the Effective Time (as defined in Section 1.2 hereof); and
WHEREAS, in connection with the Merger the outstanding
capital stock of Home Federal will be converted into the right to
receive cash; and
WHEREAS, it is intended that Charter and Home Federal will
be merged such that Charter will be the surviving corporation and
that the resulting savings institution will expand its market area
and achieve certain economies of scale and efficiencies as a result
of the Merger; and
NOW, THEREFORE, in consideration of the premises and the
mutual covenants, representations, warranties, and agreements herein
contained, and in order to set forth the conditions upon which the
foregoing Merger will be carried out, the parties, intending to be
legally bound, hereby agree as follows:
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ARTICLE I.
THE MERGER
1.1. The Merger. Subject to the terms and conditions of
this Agreement, and in accordance with the provisions of Section
18(c) of the Federal Deposit Insurance Act (12 U.S.C. 1828(c)), as
amended (the "Bank Merger Act"), the Home Owners' Loan Act (the
"HOLA"), and Section 8004 of the Illinois Savings Bank Act (the
"Savings Bank Act"), and the rules and regulations promulgated under
each of the Bank Merger Act, HOLA and the Savings Bank Act (the
"Regulations"), at the Effective Time, Home Federal shall be merged
with and into Charter pursuant to the terms and conditions set forth
herein. In effecting the Merger, Charter shall charter an Illinois
interim savings bank ("Interim") which shall be merged with and into
Home Federal with Home Federal as the surviving institution, and
thereafter Home Federal shall be merged into Charter. Upon the
consummation of the Merger, the separate existence of Home Federal
shall cease, and Charter, which is wholly owned by Financial, shall
continue as the surviving institution in the Merger. Financial shall
remain a unitary holding company as defined under the HOLA and
regulations promulgated thereunder.
1.2. Effective Time of the Merger. As soon as practicable
after each of the conditions set forth in Articles VIII, IX and X
hereof have been satisfied or waived, Charter and Home Federal will
file, or cause to be filed, an executed merger agreement (the "Merger
Agreement"), along with copies of the resolutions approved (i) by
Home Federal's stockholders and (ii) Financial as the sole
stockholder of Charter, approving the Merger, with the Illinois
Commissioner of Banks and Real Estate ("Commissioner"). The
Commissioner shall then issue to Charter, as the surviving
institution, a certificate of merger. The Merger shall become
effective at the time when the certificate of merger is recorded in
the counties in which Charter or Home Federal have their main office
(the "Effective Time").
1.3. Closing. If (a) the Agreement and the transactions
contemplated hereby have been duly approved as required by the
shareholders of Home Federal, and (b) all relevant conditions of the
Agreement have been satisfied or waived and all applicable waiting
periods have expired, the closing (the "Closing") shall take place
within ten (10) business days thereafter at the executive offices of
Charter or at such other location mutually acceptable to Charter and
Home Federal. At the Closing, the parties hereto will exchange
certificates, letters and other documents as required hereby and will
cause the filing described in Section 1.2 hereof with respect to the
Merger to be made. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
1.4. Modification of Structure. Notwithstanding any
provision of this Agreement to the contrary, Financial may elect,
subject to the filing of all necessary applications and the receipt
of all required regulatory approvals, to modify the structure of the
transactions contemplated hereby so long as (i) there are no material
adverse federal income tax consequences to the stockholders of Home
Federal as a result of such modification, (ii) the consideration to
be paid to holders of Home Federal Common Stock under this Agreement
is not thereby changed in kind or reduced in amount solely because
of such modification and (iii) such modification will not be likely
to materially delay or jeopardize receipt of any required regulatory
approvals.
ARTICLE II.
EFFECT OF THE MERGER; CERTAIN ACTIONS IN CONNECTION THEREWITH
2.1. Effect of the Merger.
(a) Charter, as the surviving institution in the Merger,
shall possess all of the properties and rights and be subject to all
of the liabilities and obligations of Home Federal, all as more fully
described in the Merger Agreement and the Regulations. The name of
Charter, as the surviving institution in the Merger, shall remain
"Charter Bank, S.B."
(b) At the Effective Time, each share of common stock par
value $1.00 per share of Home Federal ("Home Federal Common Stock")
issued and outstanding immediately prior thereto (except shares as
to which the holders have perfected dissenters' rights in accordance
with 12 C.F.R. 552.14) shall be cancelled. Each option to purchase
Home Federal Common Stock granted pursuant to Home Federal's stock
option plans and outstanding immediately prior to the Effective time,
shall, by virtue of the Merger, be canceled as set forth in Section
2.3. No new shares of the capital stock or other securities or
obligations of Financial shall be issued or be deemed issued with
respect to or in exchange for such canceled shares and options, and
such canceled shares and options shall not be converted into any
shares or other securities or obligations of Financial.
(c) The Certificate of Incorporation and bylaws of
Financial, as in effect immediately prior to the Effective Time,
shall be the Certificate of Incorporation and bylaws of Financial
following the Merger.
(d) The Articles of Incorporation and bylaws of Charter,
as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation and bylaws of Charter, as the surviving
institution of the Merger.
(e) The directors and officers of Charter immediately
prior to the Effective Time shall be the directors and officers of
Charter, as the surviving institution of the Merger, and shall
continue in office until their successors are duly elected or
otherwise duly selected.
(f) All deposit accounts of Home Federal existing
immediately prior to the Merger shall, upon consummation of the
Merger, remain insured by the Federal Deposit Insurance Corporation
("FDIC") to the fullest extent permitted by law and regulation.
2.2. Effect on Common Stock of Home Federal and Financial.
As of the Effective Time, by virtue of the Merger and without any
action except as specified herein on the part of the holders of
shares of Home Federal Common Stock, each issued and outstanding
share of Home Federal Common Stock (except as otherwise provided in
the Office of Thrift Supervision ("OTS") regulations with respect to
the rights of dissenting shareholders of Home Federal) shall be
converted into the right to receive $21.00 in cash (the "Purchase
Price"), except to the extent such Purchase Price is adjusted
pursuant to Section 7.10 and all outstanding certificates
representing Home Federal Common Stock shall thereafter represent
solely the right to receive the Purchase Price. All shares of Home
Federal Common Stock which are held in the treasury of Home Federal
and any shares of Home Federal Common Stock owned by Charter or any
direct or indirect wholly owned subsidiary or parent of Charter shall
be canceled and no consideration shall be paid or delivered in
exchange therefor.
2.3. Options. As of the Effective Time, Financial or
Charter shall pay to each holder of an option which has been granted
by Home Federal to purchase shares of Home Federal Common Stock, and
which is outstanding and exercisable but unexercised immediately
prior to the Effective Time in accordance with Home Federal's stock
option plans, an amount in cash computed by multiplying (i) any
positive difference obtained by subtracting from (x) the per share
amount of the Purchase Price and (y) the per share exercise price
applicable to such option by (ii) the number of shares of Home
Federal Common Stock subject to such option, subject, with respect
to each such holder, to the receipt by Financial of an acknowledgment
from such holder that such payment shall constitute consideration for
the termination and cancellation of such option, such acknowledgment
to be received no later than the Closing Date. Home Federal agrees
to take or cause to be taken all action necessary so that each such
option outstanding immediately before the Effective Time as a result
of the failure of the holder thereof to deliver the acknowledgment
described in the preceding sentence shall be converted into a right
to receive the amount described in the preceding sentence.
2.4. Charter to Make Cash Available. At the Effective
Time, Charter shall make available the amount of cash payable
pursuant to Section 2.2 and Section 2.3 hereof; such cash to be
deposited in an escrow account for the benefit of Home Federal
stockholders and option holders as set forth pursuant to Sections 2.2
and 2.3 hereof.
2.5. Payment of Cash.
(a) Charter shall act as the exchange agent (the "Exchange
Agent") in connection with the Merger. The Exchange Agent shall
promptly, following the Effective Time, mail to each former
shareholder of Home Federal a notice specifying the procedures to be
followed in surrendering such shareholder's Home Federal Common Stock
certificates. Promptly following the Effective Time, the Exchange
Agent shall (except to those holders of Home Federal Common Stock who
have properly exercised dissenters' rights of appraisal) pay to each
holder who delivers his or her certificate or certificates
representing such shares to the Exchange Agent at the closing a check
for an amount equal to the number of shares represented by the
certificate or certificates so surrendered to the Exchange Agent
multiplied by the Purchase Price. As to each holder of record of
Home Federal Common Stock who does not surrender his shares at
Closing, the Exchange Agent shall send within ten (10) business days
thereafter a notice and form of letter of transmittal advising such
shareholder of the effectiveness of the Merger and the procedures for
surrendering to the Exchange Agent outstanding certificates formerly
evidencing shares of Home Federal Common Stock. Each shareholder who
thereafter delivers his or her certificate or certificates
representing such shares to the Exchange Agent, together with a
properly completed and duly executed letter of transmittal, shall
promptly be mailed a check for an amount, without interest, equal to
the number of shares represented by the certificate or certificates
so surrendered to the Exchange Agent multiplied by the Purchase
Price. Upon surrender, each certificate evidencing Home Federal
Common Stock shall be canceled. Until so surrendered, each
outstanding certificate which prior to the Effective Time evidenced
shares of Home Federal Common Stock will be deemed for all purposes
(except as otherwise provided in Section 2.2 hereof) to evidence the
right to receive cash, without interest, equal to the number of
shares represented by the certificate or certificates multiplied by
the Purchase Price. After the Effective Time, there shall be no
further registration of transfers on the records of Home Federal of
shares of Home Federal Common Stock and, if a certificate evidencing
such shares is presented for transfer, it shall be canceled in
exchange for a check (except as otherwise provided in Section 2.2
hereof) in the appropriate amount as calculated above.
Notwithstanding any provision of this Agreement, neither the Exchange
Agent nor any person, firm or entity shall be liable or obligated to
any former holder of any share of Home Federal Common Stock (or to
anyone claiming through any such former holder) with respect to
amounts to which any such holder would have been entitled as a
consequence of the Merger, if such amounts have been paid, or are
payable, to any public official pursuant to any abandoned property,
escheat or similar laws.
(b) If delivery of all or any part of the cash to be paid
in connection with the Merger is to be paid to a person other than
the person in whose name the certificate surrendered in exchange
therefor is registered, it shall be a condition to such delivery that
the certificate surrendered in exchange shall be properly endorsed
and otherwise in proper form for transfer and that the person
requesting such a delivery pay to the Exchange Agent any transfer or
other taxes required by reason of such delivery in any name other
than that of the registered holder of the certificate surrendered or
establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
(c) In the event any certificate for Home Federal Common
Stock shall have been lost, stolen or destroyed, the Exchange Agent
shall deliver (except as otherwise provided in Section 2.2 hereof)
in exchange for such lost, stolen or destroyed certificate, upon the
making of an affidavit of that fact by the holder thereof, the cash
to be paid in the Merger as provided for herein; provided, however,
that Financial may, in its sole discretion and as a condition
precedent to the delivery thereof, require the owner of such lost,
stolen or destroyed certificate to deliver a bond in such reasonable
sum as Financial may direct as indemnity against any claim that may
be made against Home Federal, the Exchange Agent or any other party
with respect to the certificate alleged to have been lost, stolen or
destroyed.
2.6. Dissenters' Rights. Any holder of Home Federal Common
Stock otherwise entitled to receive the Purchase Price for each of
his or her shares shall be entitled to demand payment of the fair
cash value of such shares as specified in 12 CFR 552.14 if the holder
follows the procedures specified therein. These shares shall
hereafter be specified as "Dissenting Shares." Any Dissenting Shares
shall not, after the Effective Time, be entitled to vote for any
purpose or receive any dividends or other distributions and shall not
be converted into cash as provided in Section 2.2 hereof; provided,
however, that shares of Home Federal Common Stock held by a
dissenting shareholder who subsequently withdraws a demand for
payment, fails to comply fully with the requirements of 12 CFR
552.14, or otherwise fails to establish the right of such shareholder
to be paid the fair cash value of such shareholder's shares under 12
CFR 552.14 shall be deemed to be converted into cash pursuant to the
terms and conditions specified herein.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF FINANCIAL, CHARTER
AND CHARTER INTERIM BANK
Charter, Financial and Charter Interim Bank hereby
represent and warrant to Home Federal as follows:
3.1. Corporate Organization. Charter is a stock savings
bank duly organized and validly existing and in good standing under
the laws of the State of Illinois. Financial is a holding company
duly organized and validly existing and in good standing under the
laws of the State of Delaware and a registered savings and loan
holding company under HOLA. All eligible accounts issued by Charter
are insured by the FDIC to the maximum extent permitted under
applicable law. Each of Financial and Charter has all requisite
corporate power and authority to own, operate and lease its
properties as presently owned, operated and leased and to engage in
the activities and business now being conducted by it. Schedule 3.1
to the Financial disclosure schedule attached hereto as Annex I (the
"Financial Disclosure Schedule") lists each "subsidiary" of Financial
and Charter. Charter Interim Bank will at the Effective Time be a
savings bank duly incorporated and validly existing under the laws
of the State of Illinois. Prior to the Effective Time, Charter
Interim Bank will not engage in any other business other than the
transactions contemplated by this agreement.
3.2. Authorization. The Boards of Directors of Financial
and Charter have approved the Agreement and the transactions
contemplated hereby and have authorized the execution, delivery and
performance by Financial and Charter of the Agreement. No corporate
proceeding on the part of Financial or Charter other than those
previously obtained is necessary to authorize the Agreement or to
consummate the transactions contemplated hereby, and Financial and
Charter have full corporate power and authority to enter into the
Agreement and to consummate the transactions contemplated hereby
subject to the conditions set forth in Articles VIII and X of this
Agreement. This Agreement has been duly and validly executed and
delivered by Financial and Charter and constitutes the valid and
binding obligation of Financial and Charter, enforceable against each
of them in accordance with its terms, subject to (a) all applicable
bankruptcy, insolvency, moratorium or other similar laws affecting
the enforcement of creditors' rights generally, and (b) the
application of equitable principles if equitable remedies are sought.
3.3. No Violation. Neither the execution and delivery of
the Agreement nor, subject to the receipt of the consents and
approvals contemplated by Section 3.4, the consummation of the
transactions contemplated herein will, (a) conflict with, result in
the breach of, constitute a violation of, constitute a default under
or accelerate the performance of the terms of any government
regulation, judgment, order or decree of any court or other
governmental agency to which Financial, Charter or First Sparta
Corporation (the "Charter Subsidiary") may be subject, or any
contract, agreement or instrument to which Financial, Charter or
Charter Subsidiary is a party or by which Financial, Charter or any
of the Charter Subsidiaries are bound or committed, or the
Certificate of Incorporation of Financial, the Articles of
Incorporation of Charter, the Articles of Incorporation of the
Charter Subsidiary, or the bylaws of Financial, Charter or the
Charter Subsidiary, or, any law, or any rule or regulation of any
governmental agency or authority, or (b) constitute an event that
with the lapse of time or action by a third party could result in a
default under any of the foregoing, or (c) result in the creation of
any lien, charge or encumbrance upon any of the assets or properties
of Financial, Charter or the Charter Subsidiary.
3.4. Consents and Approvals. Other than the receipt of
approvals required by the Savings Bank Act, the Bank Merger Act, the
HOLA, and the regulations promulgated under said acts, no filing or
registration with, no notice to and no permit, authorization, consent
or approval of the shareholders of Financial or any public or
governmental body or authority is necessary for the consummation by
Financial of the transactions contemplated by the Agreement.
Financial knows of no reason (including those relating to fair
lending laws or other laws relating to discrimination, including,
without limitation, the Equal Credit Opportunity Act, the Fair
Housing Act, the Community Reinvestment Act and the Home Mortgage
Disclosure Act, and anti-trust or consumer disclosure laws and
regulations) why the regulatory approvals should not be obtained, and
has no reason to believe that such approvals would include any term,
condition or requirement that, individually or in the aggregate,
would have a Material Adverse Effect on the results, business,
operations, assets, or financial condition of Financial and Charter
on a consolidated basis.
3.5. Information Supplied for Inclusion in the Home Federal
Proxy Statement. Any information regarding Financial, Charter or the
Charter Subsidiary supplied by Financial to Home Federal specifically
for inclusion in the Home Federal Proxy Statement (as defined in
Section 7.2(a) hereof) will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
3.6. Cash Payment. Charter has sufficient funds to pay the
cash payment required under Sections 2.2 and 2.3 and such payment
will not cause it to fail to meet any regulatory capital requirements
to which it is subject.
3.7. Accuracy of Information. The statements made by
Financial in the Agreement and in any other written documents
executed and/or delivered by or on behalf of Financial pursuant to
the terms of the Agreement are true and correct in all material
respects. None of the information supplied or to be supplied by
Financial or Charter for inclusion, or included, in (i) the Proxy
Statement to be mailed to the shareholders of Home Federal (as
described below), in connection with the Home Federal Shareholder
Meeting and (ii) any other documents to be filed with the State of
Illinois, FDIC, OTS or any regulatory agency in connection with the
transactions contemplated hereby will, to the best knowledge of
Financial or Charter and at such respective times as such information
is supplied or such documents are filed or mailed, 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 Financial or Charter is responsible
for filing with the State of Illinois, FDIC, OTS and any regulatory
agency in connection with the Merger will comply as to form in all
material respects with the provisions of applicable law.
3.8. Supplement to Financial Disclosure Schedule. Financial
will promptly supplement or amend the Financial Disclosure Schedule
with respect to any matter hereafter arising that, if existing or
occurring at the date of this Agreement, would have been required to
be set forth or described in the Financial Disclosure Schedule. No
supplement or amendment to the Financial Disclosure Schedule will
have any effect for the purpose of determining satisfaction of the
condition set forth in Section 9.1 hereof.
3.9. Litigation. Except as set forth in Schedule 3.9 to
the Financial Disclosure Schedule, no claims have been asserted and
no relief has been sought against Financial, Charter or the Charter
Subsidiary in any pending litigation or governmental proceedings or
otherwise which would be reasonably likely to result in Financial
becoming unable to pay the Purchase Price or otherwise perform its
obligations under, and consummate the transactions contemplated by,
this Agreement.
3.10. Brokers and Finders. Neither Financial, Charter,
nor any of their 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 Financial or Charter in
connection with this Agreement or the transactions contemplated
hereby, except for Financial's and Charter's employment of Charles
E. Webb & Co., in connection with the transactions contemplated by
this Agreement.
3.11. Regulatory Approvals. Financial is not aware of
any facts or circumstances relating to the business, operations or
financial condition of Financial, Charter or their wholly-owned
subsidiaries which would result in the denial, or conditioning in a
manner unacceptable to Financial or Charter, of any of the regulatory
approvals required for consummation of the Merger.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF HOME FEDERAL
Subject to Home Federal's opportunity to cure, as set forth in
Section 11.1(b)(iii), Home Federal represents and warrants to
Financial and Charter as follows:
4.1. Corporate Organization.
(a) Home Federal has all requisite corporate power and
authority to own, operate and lease its properties as presently
owned, operated or leased and to engage in the activities and
business now conducted by it. Home Federal is qualified to do
business in each jurisdiction in which the nature of business
conducted or assets owned or leased by it makes such qualification
necessary and where a failure to do so would have a Material Adverse
Effect. The jurisdictions in which Home Federal is qualified to do
business as a foreign corporation are identified in Schedule 4.1(a)
to the Home Federal disclosure schedule attached hereto as Annex II
(the "Home Federal Disclosure Schedule"). Home Federal is a member
in good standing of the Federal Home Loan Bank of Chicago and all
eligible accounts issued by Home Federal are insured by the FDIC to
the maximum extent permitted under applicable law. Home Federal is
a savings bank duly organized, validly existing and in good standing
under the laws of the United States of America. Except for Greater
Service Corporation, Home Federal has no direct or indirect
subsidiaries. Greater Service Corporation is a wholly-owned
subsidiary of Home Federal and is a duly organized, validly existing
company and in good standing under the laws of the State of Illinois.
Greater Service Corporation has the corporate power and authority to
carry on its business as it is now conducted and to own, lease and
operate its properties, and is duly qualified to do business and is
in good standing in each jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by it
makes such qualification necessary. Greater Service Corporation is
sometimes referred to herein as "Subsidiary". The Subsidiary is
currently inactive.
(b) Home Federal has heretofore delivered to Financial true and
complete copies of the Federal Stock Charter, and bylaws of Home
Federal, in effect on the date hereof. The minute books of Home
Federal contain accurate minutes of all meetings and accurate
consents in lieu of meetings of the board of directors (and any
committee thereof) and of the stockholder(s) of Home Federal recorded
therein, and as of the Effective Time such minute books will contain
accurate minutes of all such meetings and such consents in lieu of
meetings respectively held or executed prior thereto. The minute
books accurately reflect all transactions referred to in such minutes
and consents in lieu of meetings and disclose all material corporate
actions of the stockholder(s) and board of directors of Home Federal
and all committees thereof. Except as reflected in such minute
books, there are no minutes of meetings or consents in lieu of
meetings of the board of directors (or any committee thereof) or of
the stockholder(s) of Home Federal.
4.2. Capitalization.
The authorized capital stock of Home Federal consists of
1,500,000 shares of Home Federal capital stock, of which 1,000,000
shares are common stock, par value $1.00 per share, and of which
500,000 shares are serial preferred stock, par value $1.00 per share.
As of July 31, 1996, there were issued and outstanding 288,834 shares
of Home Federal Common Stock and no shares were outstanding of serial
preferred stock. As of June 30, 1996, 27,772 shares of Home Federal
Common Stock were reserved for issuance pursuant to stock options and
no shares of serial preferred stock were reserved for issuance. All
of such issued and outstanding shares of Home Federal capital stock
are validly issued, fully paid and nonassessable and not issued in
violation of any preemptive rights. Home Federal does not have any
arrangements or commitments obligating Home Federal to issue or sell
or otherwise dispose of, or to purchase or redeem, shares of its
capital stock or any securities convertible into or having the right
to purchase shares of its capital stock. Schedule 4.2 of the Home
Federal Disclosure Schedule sets forth a complete and accurate list
of all options to purchase Home Federal Common Stock that have been
granted and which remain unexercised, including the dates of grant,
exercise prices, dates of vesting, dates of termination and shares
subject to option for each grant. To the best of Home Federal's
knowledge, no person or group (as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934 (the "Exchange Act")
other than as set forth at Schedule 4.2 of the Home Federal
Disclosure Schedule, is the beneficial owner of more than 5% of the
outstanding Home Federal Common Stock.
4.3. Authorization. The Board of Directors of Home Federal
has approved the Agreement and the transactions contemplated thereby
and authorized the execution, delivery and performance by Home
Federal of the Agreement. No other corporate proceeding on the part
of Home Federal is necessary to authorize the Agreement or to
consummate the transactions contemplated thereby other than the
approval of the holders of Home Federal Common Stock as provided in
Section 7.1 hereof and an amendment to Home Federal's Federal Stock
Charter to delete Section 8A said Federal Stock Charter. Home
Federal has full corporate power and authority to enter into the
Agreement and, upon approval of the shareholders of Home Federal
Common Stock in accordance with law and subject to the additional
conditions set forth in Articles IX and X of this Agreement, to
consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Home Federal and
constitutes the valid and binding obligations of Home Federal,
enforceable against it in accordance with its terms, subject to (a)
all applicable bankruptcy, insolvency, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally or the
rights of creditors of savings associations the accounts of which are
insured by the FDIC, (b) the application of equitable principles if
equitable remedies are sought, and (c) the provisions of this
Agreement providing that the Merger will be enforceable only upon
approval by the holders of Home Federal Common Stock as described in
Section 7.1 hereof. The Board of Directors of Home Federal has
received the written opinion of Trident Financial Corporation to the
effect that the Purchase Price to be received by the stockholders of
Home Federal is fair, from a financial point of view, to such
stockholders.
4.4. No Violation. Other than as set forth in Schedule 4.4
of the Home Federal Disclosure Schedule, neither the execution and
delivery of the Agreement nor, subject to the receipt of the consents
and approvals contemplated by Section 4.6, the consummation of the
transactions contemplated herein will (a) conflict with, result in
the breach of, constitute a default under or accelerate the
performance provided by the terms of any judgment, order or decree
of any court or other governmental agency to which Home Federal may
be subject, or any contract, agreement or instrument to which Home
Federal is a party or by which Home Federal is bound or committed,
or the Federal Stock Charter of incorporation of Home Federal or the
bylaws of Home Federal, or, to the knowledge of Home Federal (as
defined in Section 12.7(e) hereof), any law, or any rule or
regulation of any governmental agency or authority, or (b) constitute
an event that with the lapse of time or action by a third party, or
both, could result in a default under any of the foregoing or (c)
result in the creation of any material lien, charge or encumbrance
upon any of the assets, properties or stock of Home Federal or its
Subsidiary or the capital stock of Home Federal.
4.5. Reports and Consolidated Financial Statements. (a)
Home Federal has previously furnished Financial with true and
complete copies of its Annual Report on Form 10-KSB, Quarterly
Reports on Form 10-QSB and all other documents filed subsequent to
December 31, 1994 under Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act") as
administered by the OTS pursuant to 12 C.F.R. 563d.1. As of their
respective dates, such reports and statements did not contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and
unaudited interim financial statements of Home Federal included in
such reports or otherwise delivered to Financial (collectively
referred to herein as the "Home Federal Financial Statements") have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial
position of Home Federal as of the dates thereof and the results of
its operations and changes in financial position for the periods then
ended, subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments, any other
adjustments described therein, and the absence of certain footnotes.
Except as set forth in Schedule 4.5 to the Home Federal Disclosure
Schedule, since March 31, 1996 to the Closing Date, Home Federal has
not suffered a Material Adverse Effect and Home Federal is not aware
of any event or circumstance, or series of events and circumstances,
which is reasonably likely to result in a Material Adverse Effect to
Home Federal. The books and records of Home Federal have been, and
are being, maintained in accordance with applicable legal and
accounting requirements and reflect only actual transactions. As of
March 31, 1996 to the Closing Date, except and to the extent (i)
reflected, disclosed or provided for in the financial statements
referred to above and (ii) of liabilities incurred since March 31,
1996 to the Closing Date, in the ordinary course of business and
consistent with prudent banking practice, Home Federal does not have
any liabilities, whether absolute, accrued, contingent or otherwise,
material to the business, operations, assets or financial condition
of Home Federal.
(b) Home Federal has filed all reports, together with any
amendments required to be made with respect thereto, that were
required to be filed since December 31, 1994 to the date of this
Agreement with (1) the OTS; (2) the FDIC; and (3) any state banking
commission or other banking authority, and has paid all fees and
assessments due and payable in connection therewith.
4.6. Consents and Approvals. Other than as set forth in
Schedule 4.6 to the Home Federal Disclosure Schedule and other than
the receipt of approvals required by the Savings Bank Act, the Bank
Merger Act, the HOLA, the Regulations, and applicable federal
securities and state laws, and the approval of the holders of Home
Federal Common Stock as described in Section 7.1 hereof, no filing
or registration with, no notice to and no permit, authorization,
consent or approval of any third party or any public or governmental
body or authority is necessary for the consummation by Home Federal
of the transactions contemplated by the Agreement or to enable Home
Federal to continue to conduct its business after the Effective Time
in a manner which is consistent with that in which it is presently
conducted, except where the failure to make such filing or obtain
such permit, authorization, consent or approval will not in the
aggregate have a Material Adverse Effect.
4.7. Absence of Certain Changes. Since June 30, 1996 to
the Closing Date, and except as otherwise permitted by this
Agreement, Home Federal has not except as set forth in Schedule 4.7
to the Home Federal Disclosure Schedule: (a) issued or sold any
corporate debt securities as issuer thereof; (b) granted any option
for the purchase of its capital stock; (c) declared or set aside or
paid any dividend or other distribution in respect of its capital
stock other than a dividend of $.12 per share per quarter paid in
accordance with the past practice; (d) incurred any material
obligation or liability (absolute or contingent), except obligations
or liabilities incurred in the ordinary course of business in
accordance with past practices; (e) mortgaged, pledged or subjected
to lien or encumbrance (other than statutory liens for taxes not yet
delinquent and landlord liens) any of its material assets or
properties except pledges to secure government deposits and in
connection with repurchase or reverse repurchase agreements; (f)
discharged or satisfied any material lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than current
liabilities included in Home Federal's balance sheet as of June 30,
1996, and current liabilities incurred since the date thereof in the
ordinary course of business in accordance with past practices; (g)
sold, exchanged or otherwise disposed of any of its material capital
assets other than in the ordinary course of business in accordance
with past practices; (h) materially made or modified any wage or
salary increase other than routine periodic increases in salary for
employees in the ordinary course of business and in accordance with
past practices or as required by law, entered into any employment
contract with any officer or salaried employee or instituted any
employee welfare, bonus, stock option, profit sharing, retirement or
similar plan or arrangement; (i) suffered any damage, destruction or
loss, whether or not covered by insurance, materially and adversely
affecting its business, property or assets or waived any rights of
value that are material in the aggregate, considering its business
taken as a whole; (j) except in the ordinary course of business in
accordance with past practices, entered, or agreed to enter, into any
agreement or arrangement granting any preferential right to purchase
any of its assets, properties or rights or requiring the consent of
any party to the transfer and assignment of any such assets,
properties or rights; (k) entered into any material transaction
outside the ordinary course of its business in accordance with past
practices, except as expressly contemplated by the Agreement; or (1)
except in the ordinary course of business in accordance with past
practices or as reflected in the Home Federal Financial Statements,
sold or otherwise disposed of any of its material investment
securities.
4.8. Employee and Employee Benefits Matters. (a)
Schedule 4.8(a) to the Home Federal Disclosure Schedule lists (i)
each employee benefit plan which is maintained by Home Federal for
the benefit of any current or former employee, officer, director,
consultant or agent; (ii) each plan, program or arrangement for the
provision of medical, surgical, or hospital care or benefits,
benefits in the event of sickness, accident, disability, death,
unemployment, severance, vacation, apprenticeship, day care,
scholarship, prepaid legal services or other benefits; and (iii)
every other retirement or deferred compensation plan, bonus or
incentive compensation plan or arrangement, severance or vacation pay
arrangement, or other fringe benefit plan, program or arrangement
through which Home Federal provides benefits for or on behalf of any
current or former employee, officer, director, consultant or agent.
Home Federal has delivered or made available to Financial a true and
correct copy of (a) each Home Federal Benefit Plan, (b) the most
recent annual report (Form 5500) filed with the Internal Revenue
Service ("IRS") with respect to each Home Federal Benefit Plan, if
applicable, (c) each trust agreement and group annuity contract, if
any, relating to such Home Federal Benefit Plan, (d) the most recent
actuarial report or valuation relating to a Home Federal Benefit Plan
subject to Title IV of ERISA and (e) all rulings and determination
letters and any open requests for rulings or letters that pertain to
any Home Federal Benefit Plan.
(b) To the knowledge of Home Federal, all of the plans,
programs and arrangements described in this Section 4.8 or listed in
Schedule 4.8(a) to the Home Federal Disclosure Schedule (hereinafter
referred to as the "Home Federal Benefit Plans") that are subject to
ERISA and the Internal Revenue Code ("Code") are in material
compliance with all applicable requirements of ERISA and the Code and
all other applicable federal and state laws, including, without
limitation, the reporting and disclosure requirements of Part I of
Title I of ERISA. To the knowledge of Home Federal, each of the Home
Federal Benefit Plans that is intended to be a pension, profit
sharing, stock bonus, thrift, savings or employee stock ownership
plan that is qualified under Section 401(a) of the Code satisfies the
applicable requirements of such provision and there exist no
circumstances that would adversely affect the qualified status of any
such Plan under that section, except with respect to any required
retroactive amendment for which the remedial amendment period has not
yet expired. Except as set forth in Schedule 4.8(b) to the Home
Federal Disclosure Schedule, there is no pending or, to the knowledge
of Home Federal, threatened litigation, claim, action, governmental
proceeding or investigation against or relating to any Home Federal
Benefit Plan which could give rise to any material liability, and
there is no reasonable basis for any material litigations, claims,
actions or proceedings against any such Home Federal Benefit Plan.
To the knowledge of Home Federal, no Home Federal Benefit Plan (or
Home Federal Benefit Plan fiduciary) has engaged in a non-exempt
"Prohibited Transaction" (as defined in Section 406 of ERISA and
Section 4975(c) of the Code) since the date on which said sections
became applicable to such Plan. There have been no acts or omissions
by Home Federal that have given rise to any fines, penalties, taxes
or related charges under Sections 502(c), 502(i) or 4071 of ERISA or
Chapter 43 of the Code, or that may give rise to any material fines,
penalties, taxes or related damages under such laws for which Home
Federal may be liable. Home Federal has no knowledge of, or any
reasonable basis to believe, that any material liability under Title
IV of ERISA has been incurred by Home Federal, any former Affiliates
of Home Federal or the Home Federal Benefit Plans since the effective
date of ERISA that has not been satisfied in full, and that any
condition exists that presents a material risk of incurring a
liability under such Title, other than liability for premiums due the
Pension Benefit Guaranty Corporation ("PBGC"), which payments have
been made or will be made when due. With respect to each of the Home
Federal Benefit Plans which is subject to Title IV of ERISA, the
present value of accrued benefits under such Plan or Plans, based
upon the actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Plan's actuary with respect
to such Plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such Plan allocable to such
accrued benefits and Home Federal is not aware of any facts or
circumstances that would materially change the funded status of any
such ERISA Plan. None of the Home Federal Benefit Plans is a
"multiemployer pension plan" as such term is defined in section 3(37)
of ERISA. Except as listed on Schedule 4.8(a) of the Home Federal
Disclosure Schedule, no employee of Home Federal will be entitled to
any additional benefits or any acceleration of the time of payment
or vesting of any benefits under any Home Federal Benefit Plan as a
result of the transactions contemplated by this Agreement. Other
than current or contingent liabilities previously disclosed on
Schedule 4.8(a) of the Home Federal Disclosure Schedule, neither Home
Federal nor any Home Federal Benefit Plan will have any material
current or contingent liability with respect to any Plan. To the
knowledge of Home Federal, all group health plans of Home Federal,
including any plans of current and former Affiliates of Home Federal
that must be taken into account under Section 4980B of the Code or
Section 601 of ERISA or the requirements of any similar state law
regarding insurance continuation, have been operated in material
compliance with the group health plan continuation coverage
requirements of Section 4980B of the Code and Section 601 of ERISA
to the extent such requirements are applicable. All payments due
from any Home Federal Benefit Plan (or from Home Federal with respect
to any Home Federal Benefit Plan, in any case, not including the
Management Stock Bonus Plan of Home Federal) have been made, and all
amounts properly accrued to date as liabilities of Home Federal that
have not yet been paid have been properly recorded on the books of
Home Federal.
(c) The termination of the Home Federal Savings Bank
Employee Stock Ownership Plan (the "ESOP") and the allocation and
distribution of assets under the terms of such plan will not
adversely affect the qualified status of such plan and will comply
with the requirements of the Code and ERISA.
(d) Neither Home Federal, nor its Subsidiary, is a party
to, or is bound by, any collective bargaining agreement, contract,
or other agreement or understanding with a labor union or labor
organization with respect to its employees. Neither Home Federal nor
its Subsidiary is the subject of any proceeding asserting that its
has committed an unfair labor practice or seeking to compel it or its
Subsidiary to bargain with any labor organization as to the wages and
conditions of employment, nor is the management of Home Federal
aware of any strike or other labor dispute involving Home Federal or
its Subsidiary.
4.9. Litigation. No claims have been asserted and no relief
has been sought against Home Federal or its Subsidiary in any pending
litigation or governmental proceedings or otherwise which would be
reasonably expected to result in damages or other relief which would
be reasonably likely to have a Material Adverse Effect. To the
knowledge of Home Federal, there are no circumstances, conditions,
events or arrangements, contractual or otherwise, which may hereafter
give rise to any proceedings, claims, actions or government
investigations involving Home Federal or its Subsidiary which would
reasonably be expected to result in damages or other relief which
would be reasonably likely to have a Material Adverse Effect, nor are
any such proceedings, claims, actions or government investigations
threatened. Except as set forth in Schedule 4.9 to the Home Federal
Disclosure Schedule, Home Federal and its Subsidiary are not a party
to any order, judgment or decree which would reasonably be expected
to have a Material Adverse Effect, and Home Federal (a) is not the
subject of any cease and desist order, or other formal or informal
enforcement action by any regulatory authority and (b) has not made
any commitment to or entered into any agreement with any regulatory
authority that restricts or adversely affects its operations or
financial condition.
4.10. Tax Matters. Home Federal has timely filed
(inclusive of applicable extension periods) with the appropriate
governmental agencies all material federal, state and local income,
franchise, excise, sales, use, real and personal property and other
tax returns and reports (including information returns and reports)
that are required to be filed, and Home Federal is not materially
delinquent in the payment of any taxes shown on such returns or
reports or on any assessments for any such taxes received by Home
Federal. There are included in the Home Federal Financial Statements
adequate reserves for the payment of all accrued but unpaid material
federal, state and local taxes of Home Federal, including interest
and penalties, whether or not disputed for such fiscal years as
reflected therein and all fiscal years prior thereto. Home Federal
has not executed or filed with the Internal Revenue Service ("IRS")
or any state tax authority any agreement extending the period for
assessment and collection of any federal or state tax, and Home
Federal is not a party to any action or proceeding by any
governmental authority for assessment or collection of taxes. There
is no outstanding material assessment or claim for collection of
taxes against Home Federal. Except as set forth in Schedule 4.10
to the Home Federal Disclosure Schedule, the federal income tax
returns of Home Federal have been audited by the IRS (or are closed
to examination due to the expiration of the applicable statute of
limitations) and no deficiencies were asserted as a result of such
audit which have not been resolved and paid in full or adequate
reserves or accruals established in accordance with generally
accepted accounting principles with respect thereto.
"Taxes" shall mean all taxes, charges, fees, levies,
penalties or other assessments imposed by federal, state, local or
foreign taxing authorities, including but not limited to, income,
excise, property, sales, transfer, franchise, payroll, withholding,
social security or other taxes, including any interest, penalties or
additions thereto.
Home Federal has not, during the past five (5) years,
except as disclosed in Schedule 4.10 to the Home Federal Disclosure
Schedule, received any notice of deficiency, proposed deficiency or
assessment from the IRS or any other governmental agency, with
respect to any federal, state, county or local taxes. No federal or
state tax return of Home Federal is currently the subject of any
audit by the IRS or any other governmental agency. During the past
five (5) years, no material deficiencies have been asserted in
connection with the federal and state income tax returns of Home
Federal, and Home Federal has no reason to believe that any material
deficiency would be asserted relating thereto. Except as disclosed
in Schedule 4.10 to the Home Federal Disclosure Schedule, Home
Federal is not a party to any agreement providing for allocation or
sharing of taxes. Home Federal has not ever been a member of an
"affiliated group of corporations" (within the meaning of Section
1504(a) of the Code) filing consolidated returns, other than the
affiliated group of which Home Federal is or Home Federal was the
common parent.
4.11. Information in the Home Federal Proxy Statement.
Home Federal represents and warrants that the Home Federal Proxy
Statement will not, either at the time it is mailed to the
shareholders of Home Federal in connection with the Home Federal
Shareholders' Meeting (as defined in Section 7.1 hereof) or at the
time of the Home Federal Shareholders Meeting, contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that none of the representations and
warranties in this Section 4.11 shall apply to statements in or
omissions from the Home Federal Proxy Statement made in reliance upon
and in conformity with information about or furnished by or on behalf
of Financial or Charter for use in the Home Federal Proxy Statement.
4.12. Environmental Matters. For purposes of this
Section 4.12, the following terms shall have the indicated meaning:
"Environmental Law" means any federal, state or local law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, order, judgment, decree, injunction
or agreement with any governmental entity relating to (1) the
protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface soil, subsurface soil,
plant and animal life or any other natural resource), and/or (2) the
use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of
Materials of Environmental Concern. The term Environmental Law
includes without limitation (1) the Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C.
Section 9601, et seq; the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Section 6901, et seq; the Clean Air Act, as
amended, 42 U.S.C. Section 7401, et seq; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. Section 1251, et seq; the Toxic
Substances Control Act, as amended, 15 U.S.C. Section 9601, et seq;
the Emergency Planning and Home Federal Right to Know Act, 42 U.S.C.
Section 11001, et seq; the Safe Drinking Water Act, 42 U.S.C. Section
300f, et seq; and all comparable state and local laws, and (2) any
common law (including without limitation common law that may impose
strict liability) that may impose liability or obligations for
injuries or damages due to, or threatened as a result of, the
presence of or exposure to any Materials of Environmental Concern.
"Environmental Claim" means any written notice from any
governmental authority or third party alleging potential liability
(including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources
damages, property damages, personal injuries or penalties) arising
out of, based on, or resulting from the presence, or release into the
environment, of any Materials of Environmental Concern.
"Materials of Environmental Concern" means pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum
products and any other materials regulated under Environmental Laws.
"Properties Owned" means those properties owned, leased or
operated by Home Federal, not including those properties serving as
collateral for any loans made and retained by Home Federal or for
which Home Federal serves in a trust relationship for the loans
retained in portfolio.
(a) Other than as set forth on Schedule 4.12(a) to the
Home Federal Disclosure Schedule, to the knowledge of Home Federal,
Home Federal is in compliance with all Environmental Laws, except for
any violations of any Environmental Law which would not, singly or
in the aggregate, have a material adverse effect on the business,
operations, assets, financial condition or prospects of Home Federal.
Other than as set forth on Schedule 4.12(a) to the Home Federal
Disclosure Schedule, since December 31, 1994, Home Federal has not
received any communication alleging that Home Federal is not in such
compliance and, to the knowledge of Home Federal, there are no
present circumstances that would prevent or interfere with the
continuation of such compliance.
(b) Other than as set forth on Schedule 4.12(b) to the
Home Federal Disclosure Schedule, to the knowledge of Home Federal,
Home Federal has not been or is not in violation of or liable under
any Environmental Law, except any such violations or liabilities
which would not singly or in the aggregate have a material adverse
effect on the business, operations, assets or financial condition of
Home Federal.
(c) Other than as set forth on Schedule 4.12(c) to the
Home Federal Disclosure Schedule, to the knowledge of Home Federal,
none of the Properties Owned by it has been or is in violation of or
liable under any Environmental Law, except any such violations or
liabilities which singly or in the aggregate would not have a
material adverse effect on the business, operations, assets or
financial condition of Home Federal.
(d) Other than as set forth on Schedule 4.12(d) to the
Home Federal Disclosure Schedule, to the knowledge of Home Federal,
there are no actions, suits, demands, notices, claims, investigations
or proceedings pending or threatened relating to the liability of the
Properties Owned by Home Federal under any Environmental Law,
including without limitation any notices, demand letters or requests
for information from any federal or state environmental agency
relating to any such liabilities under or violations of Environmental
Law, except such which would not have or result in a material adverse
effect on the business, operations, assets or financial condition of
Home Federal.
(e) Other than as set forth on Schedule 4.12(e) to the
Home Federal Disclosure Schedule, to the knowledge of Home Federal,
there are no past or present actions, activities, circumstances,
conditions, events or incidents that could reasonably form the basis
of any Environmental Claim or other claim or action or governmental
investigation that could result in the imposition of any liability
arising under any Environmental Law against Home Federal or against
any person or entity whose liability for any Environmental Claim Home
Federal has or may have retained or assumed either contractually or
by operation of law, except such which would not have a material
adverse effect on the business, operations, assets, financial
condition or prospects of Home Federal.
(f) Home Federal has set forth on Schedule 4.12(f) to the
Home Federal Disclosure Schedule, any environmental studies conducted
by it during the past five years with respect to any properties owned
by it as of the date hereof.
4.13. Insurance. Home Federal has delivered to
Financial as part of Schedule 4.13 to the Home Federal Disclosure
Schedule true, accurate and complete copies of all insurance policies
and fidelity bonds of Home Federal. Each such policy is in full
force and effect, with all premiums due thereon on or prior to the
Closing Date having been paid as and when due. Home Federal has not
been notified that its fidelity or insurance coverage will not be
renewed by its carrier(s) on substantially the same terms as its
existing coverage. All such policies (i) are sufficient for
compliance by Home Federal with all requirements of law and all
agreements to which Home Federal is a party, and (ii) will not
terminate or lapse prior to the Effective Time without similar
policies being obtained that would continue until the Effective Time.
4.14. Compliance with Laws and Orders. Except as set
forth in Schedule 4.14 to the Home Federal Disclosure Schedule, Home
Federal has not received notice of any violation or alleged material
violation of, or, to the knowledge of Home Federal, is subject to
any liability (whether accrued, absolute, contingent, direct or
indirect) for past or continuing material violations of, any law,
statute or regulation. Home Federal is not in default under, and no
event has occurred that, with the lapse of time or action by a third
party or both, could result in a default under the terms of any
judgment, decree, order, writ, rule or regulation of any governmental
authority or court, whether federal, state or local and whether at
law or in equity, where the failure to be in full compliance would
reasonably be expected to result alone or in the aggregate in
damages, which would be reasonably likely to have a Material Adverse
Effect.
4.15. Governmental Regulation. Home Federal holds all
material licenses, certificates, permits, franchises and rights from
all appropriate federal, state and other public authorities necessary
for the conduct of its business; and, between the date hereof and the
Closing Date, Home Federal will maintain all such licenses,
certificates, permits, franchises and rights in effect. Except as
set forth in Schedule 4.15 to the Home Federal Disclosure Schedule,
Home Federal is not a party or subject to any agreements, directives,
orders or similar arrangements between or involving Home Federal and
any state or federal savings institution regulatory authority. In
connection with its most recent examination of Home Federal, neither
the OTS nor the FDIC have informed Home Federal; whether by written
communication or otherwise, to amend or change in any material way
its accounting methods, methods of operation or business practices,
or to classify any loans not previously classified or to charge-off
loans, or increase its allowance for loan losses or to take or
discontinue any activity or action.
4.16. Contracts and Commitments. Except as set forth
in Schedule 4.16 to the Home Federal Disclosure Schedule, Home
Federal is not a party to or bound by any (a) material lease or
license with respect to any property, real or personal; (b) material
contract or commitment for capital expenditures; (c) material
contract or commitment for total expenses for the purchase of
materials, supplies or for the performance of services by third
parties for a period of more than 60 days from the date of this
Agreement; (d) material contract or option for the purchase or sale
of any real or personal property other than in the ordinary course
of business; or (e) agreement, arrangement or understanding relating
to the employment, election, retention in office or severance of any
present or former director, officer or employee of Home Federal. To
its knowledge, Home Federal has performed in all material respects
all obligations required to be performed by it to date and is not in
default under, and no event has occurred which, with the lapse of
time or action by a third party or both, could result in a default
resulting in material damages or other material default under any
outstanding mortgage, lease, contract, commitment or agreement to
which Home Federal is a party or by which Home Federal is bound or
under any provision of its articles of incorporation or bylaws. Each
such outstanding material mortgage, lease, contract, commitment or
agreement is a valid and legally binding obligation of Home Federal
subject to (x) all applicable bankruptcy, insolvency, moratorium or
other similar laws affecting the enforcement of creditors rights
generally or the rights of creditors of savings associations the
accounts of which are insured by the FDIC, and (y) the application
of equitable principles if equitable remedies are sought.
4.17. Agreements with Directors, Officers and
Shareholders. Except as set forth in Schedule 4.17 to the Home
Federal Disclosure Schedule, no director, executive officer, or
holder of five percent (5.0%) or more of the outstanding capital
stock of Home Federal nor any associate of any such person (a "Home
Federal Principal") (a) is or has during the period subsequent to
June 30, 1996, been a party (other than as a depositor) to any
transaction with Home Federal, whether as a borrower or otherwise,
that (i) was made other than in the ordinary course of business, (ii)
was made on other than substantially the same terms, including
interest rate and collateral, as those prevailing at the time for
comparable transactions with other persons, or (iii) involves more
than the normal risk of collectability or presents other unfavorable
features; or (b) is a party to any material loan or loan commitment,
whether written or oral.
4.18. Accuracy of Information. The statements made by
Home Federal in the Agreement and in any other written documents
executed and/or delivered by or on behalf of Home Federal pursuant
to the terms of the Agreement are true and correct in all material
respects. The statements contained in such other documents or
specifically referred to in the Agreement will be deemed to
constitute representations and warranties of Home Federal under this
Agreement to the same extent as if set forth herein in full.
4.19. Supplement to Home Federal Disclosure Schedule.
Home Federal will promptly supplement or amend the Home Federal
Disclosure Schedule to the date of Closing with respect to any matter
hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in
the Home Federal Disclosure Schedule. No supplement or amendment to
the Home Federal Disclosure Schedule will have any effect for the
purpose of determining satisfaction of the condition set forth in
Section 8.2 hereof.
4.20. Title to Assets; Leases
(a) Except for (i) liens and encumbrances specifically
disclosed in any of the consolidated financial statements of Home
Federal referred to in Section 4.5 hereof, (ii) landlords' or
statutory liens or other liens incurred in the ordinary course of
business and not securing indebtedness for borrowed money and not yet
delinquent, and (iii) liens and encumbrances which are not material
in amount and do not materially impair the value of any property
subject thereto or the use of such property for the purposes for
which it is presently used or intended to be used, Home Federal has
good and marketable title, free and clear of all security interests,
encumbrances, trust agreements, liens or other adverse claims, to all
its assets and property, real and personal, reflected in the
financial statements referred to in Section 4.5 hereof or acquired
thereafter, which includes all property and assets used by Home
Federal that are material to the conduct of its businesses, except
for assets and property disposed of in the ordinary course of
business after June 30, 1996.
(b) Home Federal as lessee has the right under valid and
subsisting leases to occupy, use, possess and control all property
leased by it in all material respects as presently occupied, used,
possessed and controlled by Home Federal and such leases will not
terminate or lapse prior to the Effective Time or be affected in any
material respect by consummation of the transactions contemplated
hereby. Schedule 4.20(b) contains an accurate listing of each lease
pursuant to which Home Federal acts as lessor or lessee, including
the expiration date and the terms of any renewal options which relate
to the same, as well as a listing of each material real property
owned by Home Federal and used in the conduct of its business.
(c) All real and personal property is available for
inspection by Financial and Home Federal disclaims any warranty of
fitness for any particular purpose. All real and personal property
of Home Federal is in an "AS IS" condition. Home Federal has
furnished an Illinois Responsible Property Transfer Act Disclosure
to Charter and Financial disclosing any information about any real
properties to the best of Home Federal's knowledge. However, Home
Federal has made no independent investigation or assessments of the
condition of the real properties in any manner whatsoever including
but not limited to any of the representations as to the environmental
condition of any assets under this Agreement.
4.21. Fees. Except as set forth in Schedule 4.21
to the Home Federal Disclosure Schedule, and other than the financial
advisory services performed by Trident Financial Corporation, the
terms of which are disclosed in Schedule 4.21, Home Federal and its
Subsidiary have not, and to the knowledge of Home Federal none of
their respective officers, directors, employees or agents, has
employed, any broker or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, or finder's
fee, and no broker or finder has acted directly or indirectly for
Home Federal or its Subsidiary, in connection with this Agreement or
the transactions contemplated hereby.
4.22. Business of Home Federal. Since December 31,
1995, Home Federal has conducted its business in the ordinary course.
For purposes of the foregoing, Home Federal has not, since December
31, 1995, controlled expenses through the (i) elimination of employee
benefits; (ii) deferral of routine maintenance of real property or
leased premises; (iii) elimination of reserves where the liability
related to such reserve has remained; (iv) reduction of capital
improvements from previous levels; (v) failure to depreciate capital
assets in accordance with past practice or to eliminate capital
assets no longer used in Home Federal's business; (vi) capitalized
loan production expenses other than in accordance with SFAS No. 91,
or (vii) extraordinary reduction or deferral of ordinary or necessary
expenses.
ARTICLE V.
COVENANTS OF FINANCIAL
Financial hereby agrees that from the date of this
Agreement until the Effective Time:
5.1. Affirmative Covenants.
(a) Unless the prior written consent of Home Federal shall
have been obtained (which shall not be unreasonably withheld),
Financial will maintain and will cause each of its Subsidiaries to
maintain their corporate existence in good standing so as to be able
to consummate the transactions contemplated by the Agreement.
(b) As soon as reasonably practicable, Financial will
furnish Home Federal with copies of all of Financial's periodic
reports on Forms 10-K, 10-Q and 8-K and all proxy statements filed
with the Securities and Exchange Commission ("SEC") subsequent to the
date hereof.
5.2. Negative Covenants. Except as specifically
contemplated by this Agreement, Financial shall not do, or agree or
commit to do, or permit Charter or the Charter Subsidiary to do,
without the prior written consent of Home Federal (which shall not
be unreasonably withheld), any of the following:
(a) willfully take action which would or is reasonably
likely to (i) adversely affect the ability of either Financial,
Charter or Home Federal to obtain any necessary approvals of
governmental authorities required for the transactions contemplated
hereby; (ii) adversely affect Financial's ability to perform its
covenants and agreements under this Agreement; or (iii) result in any
of the conditions to the Merger set forth in Articles IX and X not
being satisfied; or
(b) agree in writing or otherwise to do any of the
foregoing.
5.3. Breaches. Financial shall, in the event it becomes
aware of the impending or threatened occurrence of any event or
condition which would cause or constitute a material breach (or would
have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any of its representations or
agreements contained or referred to herein, give prompt written
notice thereof to Home Federal and use its best efforts to prevent
or promptly remedy the same.
5.4. Employee Benefit Plans: Employment Arrangements
(a) Charter shall use its best efforts to offer continued
employment to employees of Home Federal. Employees of Home Federal
who continue employment with Charter on or after the Effective Time
(all such persons referred to herein as "Continuing Employees") shall
be eligible to participate in such employee benefit plans as may be
in effect generally for employees of Charter from time to time (the
"Charter Plans"). Except as specifically set forth in this Section
5.4, Continuing Employees shall be entitled to participate in the
Charter Plans on the same basis as similarly situated employees of
Charter, except that Continuing Employees shall be entitled to full
credit for each year of service for which a year of credit was
received from Home Federal for purposes of determining eligibility
for participation and vesting, but not for benefit accruals, in the
Charter Plans, subject to applicable break in service rules. With
respect to Charter's Employee Stock Ownership Plan ("ESOP"),
Continuing Employees shall not be entitled to credit for prior
service with Home Federal for any purpose but shall be eligible for
participation in the ESOP on the same basis as new employees of
Charter. Notwithstanding anything in this Section 5.4(a) to the
contrary, participation by Continuing Employees in employee benefit
plans of Charter with respect to which eligibility and participation
is at the discretion of the employer, such as non-qualified deferred
compensation plans, stock option plans, stock bonus plans, restricted
stock plans, and other such similar plans, (but not including
employee benefit plans generally available to all full-time employees
of Charter) shall be discretionary with such employer.
(b) With respect to Continuing Employees, there shall be
no waiting period or preexisting condition exclusions applicable
under the health benefits coverage to be provided following the
Effective Time to such persons, but the benefits previously received
by such persons will not count toward the maximum benefit coverages
provided by Charter.
(c) Any full-time employee of Home Federal as of the
Effective Time who is terminated by Charter within one (1) year
following the Effective Time without "cause" (as defined herein),
except in the case of voluntary resignation, disability or death,
shall be entitled to severance benefits equal to one week's salary
for each year of service to Home Federal as of the date of
termination calculated on a pre-tax basis. For purposes of the
preceding sentence, "cause" shall mean either (a) a continued failure
by the employee to substantially perform his or her assigned duties,
which duties shall be substantially similar to the duties which have
been performed by such employees for Home Federal, or (b) the
engaging by the employee in willful misconduct which is injurious to
Financial or Charter. A refusal by an employee to relocate shall not
constitute "cause" and any termination resulting therefrom, whether
voluntary or involuntary, shall be deemed an involuntary termination
without cause, unless such relocation is not more than thirty miles
in distance from such employee's place of employment prior to
relocation, or not more than thirty miles in distance greater from
such person's residence at the time of the relocation. It is the
intention of Financial and Charter that various employee benefit
plans or other arrangements of Home Federal will be terminated and
others merged into the corresponding plans or arrangements of
Financial or Charter.
(d) Between the date hereof and the Effective Time, Home
Federal may, in its discretion, make contributions to the ESOP in
amounts consistent with past practice; provided the Home Federal may
adjust past practice to take into account the ESOP's termination on
a date other than the last day of the plan year.
5.5. Filing of Applications. Financial and Charter shall
use their best efforts to prepare within 45 days of the date of this
Agreement, submit, publish and file (a) an application to the FDIC
under the Bank Merger Act; (b) an application to the Office of Thrift
Supervision ("OTS") under 12 C.F.R. Part 574; and (c) any other
applications, notices or statements required to be filed in
connection with the transactions contemplated hereby.
5.6. Expenses. Financial hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated by
Home Federal pursuant to Sections 11.1(c) (iii) or (iv) as a result
of a willful breach by Financial, Financial shall promptly (and in
any event within ten (10) business days after such termination) pay
all reasonable Expenses of Home Federal in an amount not to exceed
$50,000. For purposes of this Section 5.6, the "Expenses of Home
Federal" shall include all reasonable out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to Home Federal and its Affiliates)
incurred by it or on its behalf in connection with the consummation
of the transactions contemplated by this Agreement.
5.7. Supplement to Financial Disclosure Schedule.
Financial will promptly supplement or amend the Financial Disclosure
Schedule with respect to any matter hereafter arising that, if
existing or occurring at the date of this Agreement, would have been
required to be set forth or described in the Financial Disclosure
Schedule. No supplement or amendment to the Financial Disclosure
Schedule will have any effect for the purpose of determining
satisfaction of the condition set forth in Section 9.1 hereof.
5.8. Non-Assignability. Financial hereby agrees that its
rights under this Agreement may not be assigned, sold or otherwise
transferred to any other party.
ARTICLE VI.
COVENANTS OF HOME FEDERAL
Home Federal hereby agrees that from the date of this
Agreement until the Effective Time:
6.1. Affirmative Covenants. Unless the prior written
consent of Financial shall have been obtained (which shall not be
unreasonably withheld) and except as otherwise contemplated herein,
Home Federal will:
(a) operate its business in the ordinary course in
accordance with past business practices;
(b) use its best efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain
the services of its officers and key employees (except that it shall
have the right to terminate the employment of any officer or key
employee in accordance with established employment procedures) and
maintain its relationships with customers:
(c) maintain its corporate existence in good standing and
file all required Home Federal Reports (as defined in such Section
12.7(c) hereof);
(d) use its best efforts to maintain and keep its
properties in as good repair and condition as at present, except for
ordinary wear and tear;
(e) use its best efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to
that now maintained by it and, in the event that Home Federal is
unable to keep such insurance and bonds in full force and effect, to
provide prompt notice of such failure to Financial;
(f) perform all obligations required to be performed by
it under all material contracts, leases, and documents relating to
or affecting its assets, properties, and business;
(g) use its best efforts to comply with and perform in all
material respects all obligations and duties imposed upon it by all
applicable laws and regulations, including the filing of all reports
required to be filed with the OTS, the FDIC and any state banking
commission or other banking authority; and
(h) as soon as reasonably practicable, furnish Financial
copies of all of Home Federal's financial and regulatory reports
subsequent to the date hereof.
(i) promptly inform Financial of its receipt of a
Different Proposal.
6.2. Negative Covenants. Except as specifically
contemplated by this Agreement, from the date hereof until the
Effective Time, Home Federal shall not do, without the prior written
consent of Financial (which shall not be unreasonably withheld), any
of the following:
(a) incur any material liabilities or material
obligations, whether directly or by way of guaranty, including any
obligation for borrowed money whether or not evidenced by a note,
bond, debenture or similar instrument or enter into or extend any
material agreement or lease, except in the ordinary course of
business consistent with prudent business practices or in connection
with the transactions contemplated and permitted by the Agreement;
(b) (i) grant any bonus or material increase in
compensation to its directors or grant any bonus or any increase in
compensation to its officers and employees either individually or as
a class, except routine periodic increases in salary for employees
in the ordinary course of business and in accordance with past
practices or as required by law, (ii) effect any change in retirement
benefits to any class of employees or officers (unless any such
change shall be required by applicable law) that would increase its
retirement benefit liabilities, (iii) adopt, enter into, amend or
modify any Home Federal Benefit Plan (except as provided in Section
7.11 of this Agreement), (iv) enter into any employment, severance
or similar agreements or arrangements with any directors or officers,
or enter into any employment agreement.
(c) declare or pay any dividend on, or make any other
distribution in respect of, its outstanding shares of capital stock,
except for a $.12 per share dividend to be paid on a quarterly basis
until the Effective Time, and to be paid in a manner consistent with
past practice and except that the quarterly dividend for the quarter
ended December 31, 1996 shall only be payable in the event the
Effective Time does not occur prior to February 1, 1997.
(d) (i) redeem, purchase or otherwise acquire any shares
of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, conversion
or other rights to acquire any shares of its capital stock or any
such securities or obligations; (ii) merge with or into any other
corporation, savings institution or bank, permit any other
corporation, savings institution or bank to merge into it or
consolidate with any other corporation or bank, in either case,
unless the fiduciary duties of Home Federal's Board of Directors
require it to do so, or effect any reorganization or
recapitalization; (iii) purchase or otherwise acquire any assets, or
shares of any class of stock, of any corporation, savings
institution, bank or other business; (iv) liquidate, sell, dispose
of, or encumber any assets or acquire any assets, other than in the
ordinary course of its business consistent with past practices; or
(v) split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for, shares of its capital
stock;
(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares
of its capital stock of any class (including shares held in
treasury), any debt instrument having a right to vote or any
securities convertible into, or any rights, including options, to
acquire, any such shares, voting debt or convertible securities but
not including a vesting of shares of Home Federal Common Stock or
issuance of shares of capital stock pursuant to exercise of
previously granted options for Home Federal Common Stock pursuant to
the Management Recognition and Stock Option plans, respectively
described in Schedule 4.8(a);
(f) initiate, solicit or encourage, or take any other
action to facilitate, any inquiries or the making of any proposal
which constitutes a Different Proposal, take any action in
furtherance of such inquiries or to obtain a Different Proposal, or
negotiate with any person in, or agree to or endorse any Different
Proposal, or authorize or permit any of its officers, directors or
employees or any investment banker, financial advisor, accountant or
other representative retained by it to take any such action; except
for such actions relating to a Different Proposal which are
reasonably considered by the Board of Directors of Home Federal,
based upon consultation with outside legal counsel, to be required
in order to fulfill the Board of Directors' fiduciary obligations.
"Different Proposal" means a bona fide proposal to acquire the entire
equity interest in Home Federal or substantially all of the assets
of Home Federal, which is expressly conditioned upon the termination
of this Agreement and is made by a third party;
(g) propose or adopt any amendments to its Federal Stock
Charter or bylaws, except such amendments as may be required to
consummate the transactions contemplated by this Agreement, including
an amendment to eliminate Section 8A of the Federal Stock Charter;
(h) enter into an agreement in principle with respect to
any acquisition of a material amount of assets or securities or any
release or relinquishment of any material contract rights not in the
ordinary course of business;
(i) except in its fiduciary capacity, purchase any shares
of capital stock of Financial;
(j) change any of its methods of accounting in effect at
June 30, 1996, or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year
ending December 31, 1995, except as may be required by law or
generally accepted accounting principles;
(k) willfully take action which would or is reasonably
likely to (i) adversely affect the ability of either of Financial or
Home Federal to obtain any necessary approvals of governmental
authorities required for the transactions contemplated hereby; (ii)
adversely affect Home Federal's ability to perform its covenants and
agreements under this Agreement; or (iii) result in any of the
conditions to the Merger set forth in Articles VIII and X not being
satisfied;
(l) change in any material respect the lending,
investment, deposit, asset and liability management and other
material policies concerning the business of Home Federal, unless
required by law or regulation or, with respect to lending or
depository activities, unless such change is made in response to
market conditions;
(m) file any applications or make any contract with
respect to branching by Home Federal (whether de novo or by purchase,
sale or relocation);
(n) form any new subsidiary or enter into or invest in any
partnership, joint venture or other business enterprise;
(o) purchase any debt securities or derivative securities;
(p) purchase any equity securities other than Federal Home
Loan Bank stock;
(q) discharge or satisfy any lien or encumbrance or pay
any material obligation or liability (absolute or contingent) other
than at scheduled maturity or in the ordinary course of business;
(r) sell or otherwise dispose of any loan, mortgage-backed
security or investment security except in the ordinary course of
business consistent with prudent banking practices and policies;
(s) modify or restructure the terms of any loans except
in the ordinary course of business consistent with prudent banking
practices;
(t) make any capital expenditures in excess of $15,000
individually or $30,000 in the aggregate, other than pursuant to
binding commitments existing on the date hereof and other than
expenditures necessary to maintain existing assets in good repair;
(u) acquire in any manner whatsoever (other than to
realize upon collateral for a defaulted loan) any business or entity;
or
(v) fail to keep in full force and effect its insurance
and bonds as now carried;
(w) fail to notify Financial promptly of its receipt of
any letter, notice or other communication, whether written or oral,
from any regulatory authority advising that it is contemplating
issuing, requiring or requesting any agreement, memoranda,
understanding or similar undertaking, or order, directive, or
extraordinary supervisory letter;
(x) agree in writing or otherwise to do any of the
foregoing.
6.3. Report to Financial. Home Federal will use its best
efforts to keep Financial fully informed concerning all trends and
developments of which it becomes aware that may have a material
effect upon the business, any properties or condition (either
financial or otherwise) of Home Federal.
6.4. Breaches. Home Federal shall, in the event it becomes
aware of the impending or threatened occurrence of any event or
condition which would cause or constitute a material breach (or would
have caused or constituted a breach had such event occurred or been
known prior to the date hereof) of any of its representations or
agreements contained or referred to herein, give prompt written
notice thereof to Financial and use its best efforts to prevent or
promptly remedy the same.
6.5. Supplement to Disclosure Schedule. Home Federal will
promptly supplement or amend the Home Federal Disclosure Schedule
with respect to any matter hereafter arising that, if existing or
occurring at the date of this Agreement, would have been required to
be set forth or described in the Home Federal Disclosure Schedule.
No supplement or amendment to the Home Federal Disclosure Schedule
will have any effect for the purpose of determining satisfaction of
the condition set forth in Section 8.2 hereof.
6.6. Expenses. Home Federal hereby agrees that if this
Agreement or the transactions contemplated hereby are terminated
pursuant to Sections 11.1 (b)(iii) or 11.1 (b)(iv) as a result of a
willful breach by Home Federal, Home Federal shall promptly (and in
any event within ten (10) business days after such termination) pay
all reasonable Expenses of Financial in an amount not to exceed
$50,000. For purposes of this Section 6.6, the "Expenses of
Financial" shall include all reasonable out-of-pocket expenses of
Financial (including all fees and expenses of counsel, accountants,
investment bankers, experts and consultants to Financial and its
Affiliates) incurred by it or on its behalf in connection with the
consummation of the transactions contemplated by this Agreement.
6.7. Consents and Approvals. Home Federal shall use its
best efforts to assist Financial in obtaining the consents and
approvals referenced in Section 8.5 hereof.
6.8. Dissenting Stockholders. Home Federal shall give
Financial prompt notice of any written demands for appraisal of any
shares of Home Federal Common Stock, attempted withdrawals of any
such demands, and any other instruments served pursuant to 12 CFR
552.14 and received by Home Federal relating to shareholders' rights
of appraisal. Home Federal shall not, except with the prior written
consent of Financial, voluntarily make any payment with respect to
any demands for appraisals of any shares of Home Federal Common
Stock, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.1. Home Federal Shareholders' Meeting. Home Federal
shall, as soon as is reasonably practicable, call and hold a meeting
of its shareholders (the "Home Federal Shareholders' Meeting") to
submit for shareholder approval this Agreement and to amend its
Federal Stock Charter to delete Section 8A thereof. The Board of
Directors of Home Federal will recommend that holders of Home Federal
Common Stock vote in favor of and approve this Agreement at the Home
Federal Shareholders' Meeting, subject to the exercise by the Board
of Directors of their fiduciary duties, and to the receipt of a
fairness opinion described in Section 9.6 hereof.
7.2. Proxy Statement for Home Federal Shareholders'
Meeting. For the purposes of holding the Home Federal Shareholders'
Meeting, Home Federal shall prepare an appropriate proxy statement
satisfying all applicable requirements under state and federal law
and regulations thereunder (said proxy statement, together with any
and all amendments or supplements thereto, being herein referred to
as the "Home Federal Proxy Statement").
7.3. Cooperation: Regulatory Approvals. The parties shall
cooperate, and shall cause each of their affiliates and subsidiaries
to cooperate, in the preparation and submission by them, as promptly
as reasonably practicable, of such applications, petitions, and other
documents and materials as any of them may reasonably deem necessary
or desirable to the Commissioner, the OTS, the FDIC, the Department
of Justice ("DOJ"), other regulatory authorities, and any other
persons for the purpose of obtaining any approvals or consents
necessary to consummate the transactions contemplated by the
Agreement. Each party will have the right prior to filing to review
and comment on such applications, petitions and other documents and
materials and shall furnish to the other copies thereof promptly
after filing or submission thereof. At the date hereof, none of the
parties is aware of any reason that the regulatory approvals required
to be obtained by it would not be obtained. The obligation to take
action as provided in this Section 7.3 shall not be construed as
including an obligation to accept any terms of or conditions to a
consent, authorization, order or approval of, or any exemption by,
any party that are unduly burdensome as reasonably determined by the
Boards of Directors of Financial or Home Federal. In the event of
a restraining order or injunction which prevents the Closing by
reason of the operation of Section 10.2, each of the parties hereto
shall use its respective best efforts to cause such order or
injunction to be lifted and the Closing to be consummated as soon as
reasonably practicable.
7.4. Reports. Prior to the Effective Time, Home Federal
shall prepare and file as and when required all Home Federal Reports.
Home Federal shall prepare such Home Federal Reports so that (a) they
comply in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the regulatory authority with
which they are filed and do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading, and (b) with respect to any Home Federal Reports
containing financial information of the type included in the Home
Federal Financial Statements, the financial information (i) is
prepared in accordance with generally accepted accounting principles
and practices as utilized in the Home Federal Financial Statements
applied on a consistent basis, (ii) presents fairly the financial
condition of Home Federal at the dates, and the results of operations
and cash flows for the periods, stated therein and (iii) in the case
of interim fiscal periods, reflects all adjustments, consisting only
of normal recurring items, subject to year-end audit adjustments.
All Home Federal Reports shall be provided to Financial promptly
following the filing of such reports with the respective regulatory
authority.
7.5. Brokers or Finders. Each of Financial and Home
Federal represents that no agent, broker, investment banker,
financial advisor or other firm or person other than Trident
Financial Corporation in the case of Home Federal and Charles Webb
& Co. in the case of Financial is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement.
7.6. Additional Agreements: Reasonable Efforts. Subject
to the terms and conditions of this Agreement, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by the
Agreement, subject to the appropriate vote of the shareholders of
Home Federal described in Section 7.1, including cooperating fully
with the other party. In case at any time after the Effective Time
any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest Financial with full title to
all properties, assets, rights, approvals, immunities and franchises
of Home Federal, the proper officers and directors of each party to
this Agreement shall take all such necessary action.
7.7. Release of Information. Home Federal and Financial
agree that prior to making any public announcement with respect to
the transactions contemplated by this Agreement, each party will
consult with the other and will use its best efforts either to agree
upon the text of the proposed joint announcement to be made by both
parties or to obtain the other's approval (which approval shall not
be unreasonably withheld) of the text of an announcement to be made
solely on behalf of such party. In the event that the parties do not
ultimately agree on the text of any proposed public announcement, no
such disclosure shall be made unless the party seeking to make an
announcement is advised by counsel that its failure to do so would
be reasonably likely to constitute a violation of law.
7.8. Access to Properties and Records; Confidentiality.
(a) Home Federal shall permit Financial and its representatives
reasonable access to its properties, and shall disclose and make
available to them all books, papers and records relating to the
assets, stock ownership, properties, operations, obligations and
liabilities of Home Federal, including, but not limited to, all books
of account (including the general ledger), tax records, minute books
of meetings of boards of directors (and any committees thereof) and
stockholders, organizational documents, bylaws, material contracts
and agreements, filings with any regulatory authority, accountants'
work papers, litigation files (except to the extent necessary to
preserve the attorney-client privilege for the benefit of Home
Federal), plans affecting employees, and any other business
activities or prospects in which Home Federal may have a reasonable
interest; except that no such access or disclosure shall be provided
to Financial or its representatives as to such books, records, papers
or properties relating to the transactions contemplated by this
Agreement. Home Federal shall make its officers, employees and
agents and authorized representatives (including counsel and
independent public accountants) available to confer with Financial
and its representatives.
(b) All information furnished previously in connection with the
transactions contemplated by this Agreement or pursuant hereto shall
be treated as the sole property of the party furnishing the
information until consummation of the transactions contemplated
hereby and, if such transactions shall not occur, the party receiving
the information shall, upon request, return to the party which
furnished such information all documents or other materials
containing, reflecting or referring to such information, shall use
its best efforts to keep confidential all such information, and shall
not directly or indirectly use such information for any competitive
or other commercial purposes. The obligation to keep such
information confidential shall continue from the date the proposed
transactions are abandoned but shall not apply to (i) any information
which (x) the party receiving the information can establish by
convincing evidence was already in its possession prior to the
disclosure thereof by the party furnishing the information; (y) was
then generally known to the public; or (z) became known to the public
through no fault of the party receiving the information; or (ii)
disclosures pursuant to a legal requirement or in accordance with an
order of a court of competent jurisdiction, provided that the party
which is the subject of any such legal requirement or order shall use
its best efforts to give the other party at least ten business days
prior notice thereof.
7.9. Certain Policies. At the request of Financial, Home
Federal shall, no earlier than two business days prior to the
Effective Time, (i) establish and take such reserves and accruals as
Financial shall reasonably request to conform, on a mutually
satisfactory basis, Home Federal's loan, real estate, accrual and
reserve policies to Charter's policies and (ii) establish and take
such accruals, reserves and charges in order to implement such
policies in respect of severance costs, write-off or write-down of
various assets and other appropriate accounting adjustments, and to
recognize for financial accounting purposes such expenses incurred
in connection with the Merger, provided, however, that Home Federal
shall not be obligated to take any such action pursuant to this
Section 7.9 unless and until (x) Financial specifies its request in
a writing delivered to Home Federal, and acknowledges that all
conditions to the obligations of Charter to consummate the Merger set
forth in Articles VIII and X have been waived (if available) or
satisfied and (y) Home Federal acknowledges that the conditions to
its obligation to consummate the Merger set forth in Articles IX and
X have been waived (if available) or satisfied. Home Federal shall
not be required to take any such action that is not consistent with
generally accepted accounting principles, as determined by Home
Federal's independent auditors, or any requirement applicable to Home
Federal by any bank regulatory agency. The representations,
warranties and covenants of Home Federal contained in this Agreement
shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any action undertaken on account of
Sections 7.12 and shall not constitute grounds for termination of the
Agreement by Financial.
7.10. Reduction in Purchase Price. In the event that the
aggregate costs incurred by Home Federal for fees and expenses of
third parties (except for fees payable Home Federal's financial
advisor) in connection with this Agreement and the transactions
contemplated herein including but not limited to the Merger, the ESOP
and 401K Plan, including but not limited to legal, accounting,
printing and mailing exceed $100,000, the amount of such excess shall
be divided by the sum of the number of outstanding shares of Home
Federal and the number of outstanding options under Stock Option
Plan, and the resulting amount shall constitute a decrease adjustment
to the Purchase Price pursuant to Sections 2.2 and 2.3. For purposes
of calculating the $100,000 in fees and expenses, such fees and
expenses shall be for all work billed on or after July 1, 1996.
7.11. Termination of ESOP. Prior to the Effective Date, Home
Federal will take all action necessary to terminate the Home Federal
Savings Bank Employee Stock Ownership Plan as of the Effective Date
and file an application for determination with the Internal Revenue
Service requesting a determination that the termination of the Plan
and the distribution of the assets under the terms of the Plan will
not affect the qualification of the Plan. If the final distribution
of the ESOP's assets has not been completed prior to the Effective
Time, Charter shall cause the ESOP to be continued for the exclusive
benefit of participants (and their beneficiaries) in the ESOP as of
the Effective Time.
ARTICLE VIII.
CONDITIONS TO THE OBLIGATIONS OF FINANCIAL
The obligations of Financial under this Agreement to cause
the transactions contemplated herein to be consummated shall be
subject to the satisfaction or written waiver by Financial or cure
by Home Federal pursuant to the provisions of Section 11.1(b)(i) of
the following conditions:
8.1. No Material Adverse Effect. Except as disclosed in
Schedule 4.5 to the Home Federal Disclosure Schedule and except for
costs and expenses relating to this Agreement and the transactions
contemplated hereby and changes attributable to or resulting from any
changes in law, obligation, or generally accepted accounting
principles, changes in interest rates, economic, financial or market
conditions affecting the banking or thrift industry generally or
changes that may occur as a consequence of actions or inactions that
either party hereto is expressly obligated to take under this
Agreement there shall not have been any Material Adverse Effect, or
discovery of a condition or the occurrence of any event that has or
is likely to result in such a Effect, in the financial condition,
results of operations or business of Home Federal from June 30, 1996
to the Closing Date; provided, however, that there shall not have
occurred a Material Adverse Effect for purposes of this Section 8.1
if such action that would have given rise to a Material Adverse
Effect was taken by Home Federal at the request of Financial pursuant
to Section 7.9 of this Agreement. Any regulatory changes affecting
Home Federal, Charter and Financial, including all BIF/SAIF premium
changes and assessments, shall not be deemed a Material Adverse
Effect.
8.2. Representations and Warranties. Each of the
representations and warranties by Home Federal contained in this
Agreement shall be true and correct in all material respects (or
where any statement in a representation or warranty expressly
contains a standard of materiality, such statement shall be true and
correct in all respects taking into consideration the standard of
materiality contained therein) at, or as of, the date of this
Agreement and (except to the extent such representation speaks as of
an earlier date) and as of any date subsequent, until and including
the Closing Date (except as otherwise contemplated or permitted by
this Agreement) as though such representations and warranties were
made on and as of said date, except (i) for any such representations
and warranties which specifically relates to an earlier date and (ii)
for breaches of representations and warranties which would not have,
or would not reasonably be expected to have, a material adverse
effect on the business or operations of Home Federal and the
Subsidiary taken as a whole. Any information provided by Home Federal
pursuant to Section 6.5 hereof as a supplement to the Home Federal
Schedule shall be true and correct in all material respects as of the
date such information is supplied to Charter.
8.3. Performance and Compliance. Home Federal shall have
performed or complied in all material respects with all covenants and
agreements required by the Agreements to be performed and satisfied
by it on or prior to the Closing Date, except where the failure to
so perform or comply would not have a Material Adverse Effect on the
business or operations of Home Federal.
8.4. No Proceeding or Litigation. On the Closing Date, no
suit, action or proceeding shall be pending or overtly threatened,
and no liability or claim shall have been asserted against Home
Federal involving any of the assets, properties, business or
operations of Home Federal that would reasonably be expected to have
a Material Adverse Effect, except as may have been previously
disclosed in the Home Federal Disclosure Schedule.
8.5. Consents Under Agreements. Financial shall have
received the consent or approval of each person whose consent or
approval shall be required in order to permit consummation of the
Merger under any loan or credit agreement, note, mortgage, indenture,
lease or other agreement or instrument to which Home Federal is a
party or to which its respective property is subject, except those
for which failure to obtain such consents and approvals would not,
individually or in the aggregate, have a Material Adverse Effect on
Financial on a consolidated basis, whether prior to (if applicable)
or following the consummation of the transactions contemplated
hereby.
8.6. No Amendments to Resolutions. Neither the Board of
Directors of Home Federal nor any committee thereof shall have
amended, modified, rescinded or repealed the resolutions adopted by
such Board of Directors with respect to the Agreement or shall have
adopted any other resolutions in connection with the Agreement and
the transactions contemplated hereby which are inconsistent with such
resolutions, except resolutions adopted consistent with the express
rights of Home Federal under the Agreement.
8.7. Certificate of Home Federal Officers. Home Federal
shall have furnished Financial a certificate, signed by its Chief
Executive Officer and its Chief Financial Officer, dated the Closing
Date, to the effect, based on his knowledge, that the conditions
described in Sections 8.1, 8.2, 8.3, 8.4, 8.5, and 8.6. of this
Agreement have been fully satisfied.
8.8. Corporate Proceedings. All action required to be
taken by, or on the part of Home Federal to authorize the execution,
delivery and performance of this Agreement and the consummation of
the transactions contemplated by this Agreement shall have been duly
and validly taken by Home Federal.
8.9.(a) Legal Opinion. Financial shall have received an
opinion or opinions, dated the Closing Date from Housley Kantarian
& Bronstein, P.C., special counsel to Home Federal, to the effect
that:
(i) Home Federal is a federally chartered stock savings
bank duly incorporated and in existence under the laws of the United
States of America;
(ii) Home Federal has the corporate power and authority to
carry on its business and to own, lease and operate its properties
as such business and properties are described in Home Federal's Form
10-KSB for the year ended March 31, 1996 and to consummate the merger
of Interim into Home Federal and the Subsidiary has the corporate
power and authority to carry on its business currently conducted and
to own, lease and operate its properties as described in Home
Federal's Form 10-KSB;
(iii) this Agreement and the merger of Interim into
Home Federal have been duly authorized and approved by Home Federal's
Board of Directors and Home Federal's shareholders and this Agreement
constitutes the valid and binding obligation of Home Federal in
accordance with its terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership or other similar
laws relating to or affecting creditors' rights generally and subject
to general principles of equity;
(iv) Neither the execution and delivery of this Agreement nor
the consummation of the merger of Interim into Home Federal, with or
without the giving of notice or the lapse of time, or both, will (i)
violate any provision of the Charter or Bylaws of Home Federal or the
Subsidiary; or (ii) to the actual knowledge of such counsel, violate,
any federal banking statute, rule or regulation applicable to Home
Federal or the Subsidiary, which would have a Material Adverse Effect
on the financial condition, assets, liabilities, or business of Home
Federal or the Subsidiary; to the actual knowledge of such counsel,
no consent, approval, authorization, order, registration or
qualification of or with any court, regulatory authority or other
governmental body, other than as specifically contemplated by this
Agreement is required for the consummation by Home Federal or the
Subsidiary of the merger of Interim into Home Federal;
(v) except as disclosed pursuant to Schedule 4.9 of the Home
Federal Disclosure Schedule or as disclosed in such legal opinion,
to counsel's actual knowledge, there are no actions, suits,
proceedings or investigations of any nature pending or threatened
that challenge the validity or legality of the merger of Interim into
Home Federal or which seek or threaten to restrain, enjoin or
prohibit (or obtain substantial damages in connection with) the
consummation of the merger of Interim into Home Federal.
(vi) to the actual knowledge of such counsel and except as is
set forth in Schedule 4.9 of the Home Federal Disclosure Schedule or
as disclosed in such legal opinion, there is no litigation or
governmental investigation pending or threatened in writing against
or relating to Home Federal or the Subsidiary.
(vii) the Proxy Statement prepared by Home Federal complied
as to form in all material respects with the requirements of Schedule
14A under the Securities Exchange Act of 1934, as administered by the
OTS pursuant to 12 CFR 563d.2.
Such opinion may (i) expressly rely as to matters of fact upon
certificates furnished by appropriate officials of Home Federal or
appropriate governmental officials, (ii) be limited to federal law,
and (iii) incorporate, be guided by, and be interpreted in accordance
with, the Legal Opinion Accord of the ABA Section of Business Law
(1991).
(b) Securities Letter. Home Federal shall have delivered to
Financial, a letter, dated the Effective Time, of Housley Kantarian
& Bronstein, P.C., counsel to Home Federal, in form and substance
reasonably satisfactory to Financial and its counsel, to the effect
that such counsel has no reason to believe that the Proxy Statement,
as it may be amended or supplemented, contained an untrue statement
of a material fact or omitted any material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances in which they were made, not misleading,
as of the time of the Home Federal shareholder meeting, provided that
no statement need be made as to any financial statements and other
financial or statistical data or as to materials relating to or
supplied by Financial or Charter or any of their respective
subsidiaries for inclusion in the Proxy Statement.
ARTICLE IX.
CONDITIONS TO THE OBLIGATIONS OF HOME FEDERAL
The obligations of Home Federal under this Agreement to
cause the transactions contemplated herein to be consummated shall
be subject to the satisfaction or written waiver by Home Federal of
the following conditions:
9.1. Representations and Warranties. Each of the
representations and warranties of Financial and Charter contained in
this Agreement shall be true and correct in all material respects (or
where any statement in a representation or warranty expressly
contains a standard of materiality, such statement shall be true and
correct in all respects taking into consideration the standard of
materiality contained therein) at, or as of, the date of this
Agreement and (except to the extent such representation speaks as of
an earlier date) and as of any date subsequent, until and including
the Closing Date (except as otherwise contemplated or permitted by
this Agreement) as though such representations were made on and as
of said date. Any information provided by Financial or Charter
pursuant to Section 5.7 hereof as a supplement to the Financial
Disclosure Schedule shall be true and correct in all material
respects as of the date such information is supplied to Home Federal.
9.2. Performance and Compliance. Financial shall have
performed or complied in all material respects with all covenants and
agreements required by this Agreement to be performed and satisfied
by it on or prior to the Closing Date.
9.3. Corporate Proceedings. All action required to be
taken by, or on the part of Financial and Charter to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement shall
have been duly and validly taken by Financial and Charter.
9.4. Certificate of Financial Officers. Financial shall
have furnished to Home Federal a certificate, signed by its Chief
Executive Officer and its Chief Financial Officer and dated the
Closing Date, to the effect, based on their best knowledge, that the
conditions described in Sections 9.1, 9.2 and 9.3 of this Agreement
have been satisfied.
9.5.(a) Legal Opinion. Home Federal shall have received
an opinion, dated as of the Closing Date, from Luse Lehman Gorman
Pomerenk & Schick, P.C., counsel for Financial to the effect that:
(i) Financial is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, and Charter is an Illinois savings bank organized under the
laws of the State of Illinois;
(ii) Financial has the corporate power and authority to
carry on its business as now conducted, to own, lease and operate its
properties and to consummate the transactions contemplated by the
Agreement;
(iii) the Agreement has been duly authorized, executed
and delivered by Financial and Charter and constitutes the valid and
binding obligation of Financial and Charter in accordance with its
terms subject to applicable bankruptcy, insolvency, reorganization,
moratorium, receivership or other similar laws relating to or
affecting creditors' rights generally and subject to general
principles of equity;
(iv) to counsel's actual knowledge, all corporate acts and
other proceedings required to be taken by or on the part of Financial
and Charter to consummate the transactions contemplated by the
Agreement have been properly taken; neither the execution and
delivery of the Agreement, nor the consummation of the transactions
contemplated hereby and thereby, with and without the giving of
notice or the lapse of time, or both, will violate any provision of
the Certificate of Incorporation or Bylaws of Financial or Articles
of Incorporation and Bylaws of Charter;
(v) except as disclosed in such opinion, to the actual
knowledge of such counsel there are no actions, suits, proceedings
or investigations (public or private) of any nature pending or
threatened that challenge the validity or propriety of the
transactions contemplated by the Agreement or which seek or threaten
to restrain, enjoin or prohibit or to obtain substantial damages in
connection with the consummation of such transactions; and
(vi) all regulatory and governmental approvals and consents
which are necessary to be obtained by Financial and its subsidiaries
to permit the execution, delivery and performance of the Agreement
have been obtained.
Such counsel shall also state that it has no reason to
believe that the information relating to Financial and Charter
provided to Home Federal for inclusion in the Home Federal Proxy
Statement, as of the date of the Proxy Statement and up to and
including the meeting of stockholders contained an untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading.
9.6. Fairness Opinion. Home Federal shall have received
from Trident Financial Corporation, an opinion dated as of a date
immediately prior to the date of the Proxy Statement, and a
supplemental opinion dated as of the Closing Date, to the effect that
the Purchase price is fair to the shareholders of Home Federal from
a financial point of view, provided, however, that the scope of such
supplemental opinion shall be limited to events and circumstances
arising subsequent to the date of the initial opinion.
9.7. Exchange Agent Certification. Home Federal shall have
received from the Exchange Agent written confirmation of receipt by
the Exchange Agent of immediately available funds in an amount equal
to the aggregate Purchase Price together with, if applicable, the
aggregate amount required to pay for all outstanding Home Federal
stock options pursuant to Section 2.3 herein.
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF ALL PARTIES
In addition to the provisions of Articles VIII and IX
hereof, the obligations of Financial and Home Federal to cause the
transactions contemplated herein to be consummated, shall be subject
to the satisfaction or written waiver by both Financial and Home
Federal of the following conditions:
10.1. Governmental Approvals. The parties hereto shall
have received all necessary approvals of the transactions
contemplated by the Agreement from governmental agencies and
authorities, including, without limitation, those of the
Commissioner, the OTS, the FDIC and, if necessary, the DOJ, and each
of such approvals shall remain in full force and effect and all
statutory waiting periods in connection therewith shall have expired
at the Closing Date and such approvals and the transactions
contemplated thereby shall not have been contested by any federal or
state governmental authority nor by any other third party by formal
proceeding. Provided, however, that no approval or consent referred
to in this Section 10.1 shall be deemed to have been received by
Financial if it shall include any term, condition or requirement
that, individually or in the aggregate, (i) would result in a
Material Adverse Effect on the results, business, operations,
assets, or financial condition of Financial on a consolidated basis,
or (ii) would reduce the economic or business benefits of the
transactions contemplated by this Agreement to Financial in so
material a manner that Financial, in its reasonable judgment, would
not have entered into this Agreement; provided further, that no
condition or requirement which does no more than subject Home
Federal, Charter or Financial to legal requirements generally
applicable to entities and transactions of the same type as a matter
of law or regulation shall be deemed to affect materially the
economic benefits of the transactions contemplated by this Agreement.
Financial shall notify Home Federal in writing of its intention to
terminate this Agreement pursuant to Section 11.1(b) hereof as a
result of the receipt by Financial of any such term, condition or
requirement within five business days of the written receipt of such
term, condition or requirement, or the condition set forth in the
second sentence of this Section 10.1 shall be deemed waived by
Financial.
10.2. No Injunctions or Restraints. No suit, action
or proceeding shall be pending or overtly threatened before any court
or other governmental agency by the federal or any state government
in which it is sought to restrain or prohibit the consummation of the
Merger and no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect.
10.3. Home Federal Shareholder Approval. This
Agreement shall have been duly approved by the requisite affirmative
vote of the shareholders of Home Federal as contemplated by Section
7.1 hereof.
10.4 Corporate Proceedings. The obligations of the parties
to this Agreement required to be performed at or prior to the Closing
Date shall have been duly performed and complied with in all material
respects. All action required to be taken by, or on the part of, the
parties to this Agreement to authorize the execution, delivery and
performance of this Agreement, and the consummation of the
transactions contemplated hereby, shall have been duly and validly
taken by the parties hereto.
ARTICLE XI.
TERMINATION
11.1. Reasons for Termination. This Agreement may be
terminated and the Merger abandoned at any time before the Closing
Date, whether before or after the approval or adoption of the
Agreement by the shareholders of Home Federal:
(a) By mutual written consent of the Board of Directors
of Financial and the Board of Directors of Home Federal;
(b) By written notice from Financial to Home Federal if:
(i) any condition set forth in Article VIII of this
Agreement shall have become impossible to substantially satisfy at
any time or has not been substantially satisfied or waived in
writing, or cured by Home Federal within 30 days of receipt of
written notice from Financial of such failure by Home Federal; or
(ii) any condition set forth in Article X of this
Agreement shall have become impossible to substantially satisfy at
any time or has not been substantially satisfied or waived in
writing, provided, however, Financial shall not have the right to
terminate this Agreement pursuant to this Section 11.1(b)(ii) if any
condition set forth in a regulatory approval received in connection
with Section 10.1 hereof was not met due to the failure of Financial
to perform or observe the covenants and agreements set forth in this
Agreement;
(iii) any warranty or representation as set forth
in Article IV hereof made by Home Federal shall be discovered to be
or to have become untrue or incorrect to the extent such
representation and warranty is required to be satisfied pursuant to
Section 8.2, or where any statement in a representation or warranty
expressly includes a standard of materiality, such statement shall
be discovered to be or to have become untrue or incorrect in any
respect taking into consideration the standard of materiality
contained therein, in either case where any such breach has not been
cured within thirty (30) days following receipt by Home Federal of
written notice of such discovery;
(iv) Home Federal shall have breached one or more
provisions of the Agreement in any material respect considering all
such breaches in the aggregate, and to the extent the breach fails
to meet the standard set forth in Section 8.3, where such breach has
not been cured within thirty (30) days following receipt by Home
Federal of written notice of such breach; or
(c) By written notice from Home Federal to Financial,
which has been approved by the Board of Directors of Home Federal,
if
(i) any condition set forth in Article IX of this
Agreement has not been substantially satisfied or waived in writing;
or
(ii) any condition set forth in Article X of this
Agreement has not been substantially satisfied or waived in writing;
provided, however, Home Federal shall not have the right to terminate
this Agreement pursuant to this Section 11.1(c)(ii) if any condition
set forth in a regulatory approval received in connection with
Section 10.1 hereof was not met due to the failure of Home Federal
to perform or observe the covenants and agreements set forth in this
Agreement, or
(iii) any warranty or representation as set forth
in Article III hereof made by Financial shall be discovered to be or
to have become untrue or incorrect to the extent such representation
and warranty is required to be satisfied pursuant to Section 9.1, or
where any statement in a representation or warranty expressly
includes a standard of materiality, such statement shall be
discovered to be or to have become untrue or incorrect in any respect
taking into consideration the standard of materiality contained
therein, in either case where any such breach has not been cured
within thirty (30) days following receipt by Financial of written
notice of such discovery; or
(iv) Financial shall have breached one or more
provisions of the Agreement in any material respect considering all
such breaches in the aggregate, and to the extent the breach fails
to meet the standard in Section 9.2, where such breach has not been
cured within thirty (30) days following receipt by Financial of
written notice of such breach.
(d) By the Board of Directors of Financial or Home Federal
at any time after the Home Federal Shareholders' Meeting as
contemplated in Section 7.1 if the shareholders of Home Federal have
not approved this Agreement by the requisite affirmative vote.
(e) By the Board of Directors of Financial or Home Federal
if the Merger has not been consummated on or before June 30, 1997.
11.2. Effect of Termination. In the event of
termination of this Agreement by either Home Federal or Financial as
provided in Section 11.1, this Agreement shall forthwith become void
and have no effect except with respect to Sections 5.6, 5.8, 6.6,
7.5, 7.8(b) and 12.2 hereof which shall survive termination of this
Agreement. Notwithstanding anything to the contrary contained in
this Agreement, no party shall be relieved or released from any
liabilities or damages arising out of its wilful breach of any
provision of the Agreement.
ARTICLE XII.
MISCELLANEOUS
12.1. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties, covenants and
agreements in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Effective Time, except for the
covenants and agreements which by their terms are contemplated to be
performed after the Effective Time.
12.2. Expenses. (a) Except as otherwise provided
herein, all expenses incurred by Financial and Home Federal in
connection with or related to the authorization, preparation and
execution of the Agreement, the solicitation of shareholder approvals
and all other matters related to the closing of the transactions
contemplated thereby, including, without limitation of the generality
of the foregoing, all fees and expenses of agents, representatives,
counsel and accountants employed by either such party or its
Affiliates, shall be borne solely and entirely by the party that has
incurred the same.
(b) Home Federal also hereby agrees to pay Financial, and
Financial shall be entitled to payment of, a fee (the "Fee") of
$300,000, upon the occurrence of any of the following events on or
before the earlier of the date this Agreement is terminated or June
30, 1997: (i) if Home Federal's Board recommends a Proposal other
than this Agreement; or (ii) if Home Federal's Board withdraws, or
modifies its recommendation of approval of this Agreement, after a
Different Proposal is made; or (iii) if Home Federal shareholders do
not approve the Agreement after a Different Proposal is made; or
(iv) if Home Federal enters into an agreement to be acquired by any
other party. Such payment shall be made to Financial in immediately
available funds within five business days after the occurrence of an
event set forth above .
(c) Financial agrees that as of the Closing Date, it shall
assume and pay the unpaid reasonable expenses of Home Federal accrued
in connection with the Merger. In addition, at the Closing Date,
Charter shall, for a period of six years, continue to provide and
maintain directors and officers of Home Federal with liability
coverage under the Charter Directors' and Officers' liability policy
and to pay any deductible required to be paid under the Charter D&O
liability policy.
(d) Financial hereby agrees that following the Closing
Date it shall indemnify the directors, officers and employees of Home
Federal to the extent such indemnification is permitted pursuant to
12 C.F.R. 545.121.
12.3. Waivers: Amendments. At any time prior to the
Closing Date, either Financial, by action taken by its Board of
Directors, or any committee or officers thereunto authorized, or Home
Federal, by action taken by its Board of Directors, or any committee
or officers thereunto authorized, may waive the performance of any
of the obligations of the other or waive compliance by the other with
any of the covenants or conditions contained in the Agreement or
agree to the amendment or modification of the Agreement by an
agreement in writing executed in the same manner as the Agreement;
provided, however, that after the favorable vote by the shareholders
of Home Federal pursuant to Section 7.1 of this Agreement any such
action shall be taken only if, in the opinion of Home Federal's Board
of Directors, such waiver, amendment or modification will not have
a Material Adverse Effect on the benefits intended under the
Agreement for the shareholders of Home Federal and will not require
resolicitation of any proxies from such shareholders.
12.4. Assignment: Parties in Interest. The Agreement
shall be binding upon and inure solely to the benefit of the parties
hereto and their respective successors and assigns, but shall not be
assigned by the parties hereto, by operation of law or otherwise.
Nothing in the Agreement, express or implied, is intended to confer
upon any third party any rights or remedies of any nature whatsoever
under or by reason of the Agreement.
12.5. Entire Agreement. This Agreement supersedes any
other agreement, whether written or oral, that may have been made or
entered into by Home Federal or Financial or by any officer or
officers of such parties relating to the acquisition of the business
or the capital stock of Home Federal by Financial. The
aforementioned agreements constitute the entire agreement by the
respective parties, and there are no agreements or commitments except
as set forth herein and therein.
12.6. Captions and Counterparts. The captions in this
Agreement are for convenience only and shall not be considered a part
of or affect the construction or interpretation of any provision of
this Agreement. This Agreement may be executed in several
counterparts, each of which shall constitute one and the same
instrument.
12.7. Certain Definitions. For purposes of this
Agreement, the term:
(a) "Affiliate" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, another person.
(b) "Material Adverse Effect," with respect to a person,
means a material adverse effect upon (A) the business, assets,
financial condition or results of operations, in each case, of Home
Federal or its Subsidiary, either individually or taken as a whole,
except for any material adverse effect caused by any change occurring
after the date hereof in general economic conditions applied to Home
Federal, Financial and Charter, generally or any federal or state law
rule or regulation or in GAAP, which change affects federally
chartered savings banks generally, or (B) the ability of such person
to consummate the transactions contemplated by this Agreement except
than any changes in the aggregate value of the securities or loan
portfolios held by Home Federal or by Charter as of the date hereof
as a result of changes in generally prevailing market interest rates
shall not be deemed a Material Adverse Effect.
(c) "Home Federal Reports" shall mean all reports,
registrations and statements, together with any amendments required
to be made with respect thereto, that were and are required to be
filed with the Commissioner, the FDIC, and any other applicable state
securities or savings institution authorities.
(d) "to the knowledge of Financial" or "to the best
knowledge of Financial" shall mean the actual knowledge of any member
of the Board of Directors or of any senior officer of Financial or
Charter.
(e) "to the knowledge of Home Federal" or "to the best
knowledge of Home Federal" shall mean the actual knowledge of any
member of the Board of Directors or of any senior officer of Home
Federal.
12.8. Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of
the provisions of the Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties hereto will be entitled to an injunction or
injunctions to prevent breaches of the Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in
equity.
12.9. Governing Law. The Agreement shall be construed
and interpreted in accordance with the laws of the State of Illinois,
except to the effect that Federal Law applies, without regard to the
conflicts of laws rules.
12.10. Notices. All notices given hereunder shall be in
writing and shall be mailed by first class mail, postage prepaid, or
sent by facsimile transmission or by nationally recognized overnight
delivery service, addressed as follows:
(a) If to Financial to:
Charter Financial, Inc.
114 West Broadway
Sparta, Illinois 62286
Attention: John A. Becker, President
Facsimile No. (618) 443-4558
With A Copy To:
Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
Attention: Alan Schick, Esq.
Eric Luse, Esq.
Facsimile No. (202) 362-2902
(b) If to Home Federal to:
Home Federal Savings Bank
635 East Walnut Street
Carbondale, Illinois 62901
Attention: Patricia H. Shay, President
Facsimile No. (618) 457-4698
with a copy to:
Housley Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, D.C. 20036
Attention: Howard S. Parris, Esq.
Facsimile No. (202) 822-0140
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
ATTEST: CHARTER FINANCIAL, INC.
By: (s) Linda M. Johnson By: (s) John A. Becker
Linda M. Johnson, Secretary John A. Becker, President
ATTEST: CHARTER BANK, S.B.
By: (s) Linda M. Johnson By: (s) John A. Becker
Linda M. Johnson, Secretary John A. Becker, President
ATTEST: CHARTER INTERIM BANK (IN FORMATION)
By: (s) Linda M. Johnson By: (s) John A. Becker
Linda M. Johnson, Secretary John A. Becker, President
ATTEST: HOME FEDERAL SAVINGS BANK
By: (s) William N. Huffman By: (s) Patricia H. Shay
William N. Huffman, Secretary Patricia H. Shay, President
<PAGE>
EXHIBIT A
PLAN OF MERGER
BETWEEN
CHARTER INTERIM SAVINGS BANK
AND
HOME FEDERAL SAVINGS BANK
DATED AS OF AUGUST 12, 1996
<PAGE>
This Plan of Merger dated as of August 12, 1996 (the "Merger
Plan") is entered into by and between: (i) CHARTER INTERIM SAVINGS
BANK ("Interim"), an Illinois savings bank formed as a subsidiary of
Charter Bank, S.B. ("Charter") solely to facilitate the transactions
contemplated by the Merger Agreement, as defined; and (ii) HOME
FEDERAL SAVINGS BANK, a federally chartered savings bank ("Home
Federal" or the "Seller"), pursuant to the Agreement and Plan of
Merger by and among Charter Financial, Inc., Charter Bank, S.B.,
Charter Interim Savings Bank and Home Federal Savings Bank, dated as
of August 12, 1996 (the "Merger Agreement"). The Merger Agreement
has been approved by at least a majority vote of the Boards of
Directors of Financial, Charter, Interim and Seller. Capitalized
terms not otherwise defined herein shall have the meanings set forth
in the Merger Agreement.
In consideration of the mutual covenants and agreements set forth
herein and subject to the terms and conditions of the Merger
Agreement, the parties hereto agree as follows:
Section 1. Definition. Except as otherwise provided herein,
the capitalized terms set forth below shall have the following
meanings:
1.1 "Effective Time" shall mean the date at which the
Merger contemplated by this Merger Plan becomes effective as provided
in Section 2 hereof.
1.2 "Interim Common Stock" shall mean the common stock,
par value $1.00 per share, of Interim owned by Charter.
1.3 "Home Federal Common Stock" shall mean the common
stock, par value $1.00 per share, of Home Federal.
1.4 "Merger" shall refer to the merger of Interim with and
into Seller.
1.5 "Stockholder Meeting" shall mean the meeting of the
stockholders of Seller held pursuant to Section 11 of this Merger
Plan.
1.6 "Surviving Institution" shall refer to Seller as the
surviving institution of the Merger.
Section 2. The Merger. At the Effective Time, Interim, will
merge with and into Seller (the "Merger"). The separate corporate
existence of Interim shall thereupon cease. Seller as the Surviving
Institution shall continue to be governed by the laws of the United
States of America, it becomes the wholly owned subsidiary of Charter
and its existence with all of its rights, privileges, immunities,
powers and franchises shall continue unaffected by the Merger. The
Merger shall become effective on the later of (i) the filing of
articles of combination with the Office of Thrift Supervision and
receipt of proper endorsement thereon, and (ii) the filing of this
Plan of Merger in the counties in which Interim and Home Federal each
has its main office. The liquidation account of Home Federal shall
be assumed by Interim following the Merger.
Section 3. Name of Surviving Institution. The name of the
Surviving Institution shall be Home Federal Savings Bank.
Section 4. Location of Main Office and Branch Officers. At the
Effective Time, the main office of Charter, and each of its branches,
as well as Home Federal, shall remain open. The main office and
branch locations of Charter following consummation of the Merger
shall be:
Charter: Home Federal:
Main Office Branch Office 635 East Walnut St
114 West Broadway 1101 Walnut Carbondale, Illinois
Sparta, Illinois 62286 Murphysboro, IL 62966 62901
Branch Office Branch Office
358 South Main 424 West Broadway
Anna, Illinois 62906 Steeleville, Illinois 62288
Branch Office Branch Office
500 West Main 1706 West DeYoung Street
Carbondale, IL 62901 Marion, Illinois 62959
Branch Office
Southtowne Shopping Centre
Du Quoin, Illinois 62832
Section 5. Exchange Procedures. Shares of Seller Common Stock
at the Effective Time will be converted into the right to receive the
Purchase Price pursuant to Section 2.2 of the Merger Agreement.
Shares of Seller Common Stock will be exchanged in accordance with
the provisions of Section 2.4 of the Merger Agreement.
Section 6. Dissenter's Rights. Any stockholder of Seller's
Common Stock who complies with the procedures provided at 12 CFR
552.14 and shall be entitled to obtain payment of the fair or
appraised value of the shares owned by such dissenting stockholder.
Section 7. Assets and Liabilities. At the Effective Time, all
assets and property (real, personal, and mixed, tangible and
intangible, choses in action, rights, and credits), then owned by
Interim shall immediately become the property of the Surviving
Institution. The Surviving Institution shall be deemed to be a
continuation of the Interim, the rights and obligations of which
shall succeed to such rights and obligations and the duties and
liabilities connected therewith.
Section 8. Directors of Surviving Institution. At the Effective
Time, the directors of Interim shall be and become the directors of
the Surviving Institution, each to hold office in accordance with the
Charter and Bylaws of the Surviving Institution until changed in
accordance therewith. The names and addresses, and terms of such
directors are set forth below.
Name Address Term Expires
John A. Becker 1008 Norwood Drive 1996
Sparta, Illinois 62286
Truman D. Cashman 401 West Hood Avenue 1997
Sparta, Illinois 62286
William A. Norton 507 South Drive 1996
Marissa, Illinois 62251
Klondis T. Pirtle 300 East Main 1998
Sparta, Illinois 62286
Carl S. Schlageter 612 East Broadway 1997
Sparta, Illinois 62286
Linda M. Johnson 23 Eagle Drive 1997
Sparta, Illinois 62286
Michael R. Howell 1115 Birch Lane 1996
Sparta, Illinois 62286
John Petkas, Jr. 617 Cypress Lane 1998
Sparta, Illinois 62286
James H. Clutts RR#1, Box 382 1997
Carbondale, Illinois 62901
Dennis F. Doelitzsch 1 Broadcast Center 1996
Marion, Illinois
Ralph Eugene Watson 2200 W. Main 1996
P.O. Box 82
Marion, Illinois
Section 9. Charter and Bylaws. At the Effective Time, the
charter and bylaws of Seller shall remain in effect and shall become
the charter and bylaws of the Surviving Institution.
Section 10. Termination. This Merger Plan shall terminate
automatically at such time as the Merger Agreement is terminated.
Section 11. Shareholder and Board Approval. The transactions
contemplated by the Merger Agreement and this Merger Plan shall be
ratified and approved by at least a two-thirds majority of
outstanding shares entitled to vote at a meeting of Seller's
shareholders to approve and adopt the Merger Agreement. The Merger
Agreement has been approved by the boards of directors of each of the
Financial, Charter, Interim and the Seller.
Section 12. Counterparts. This Merger Plan may be executed
in one or more counterparts, each of which shall be deemed to be an
original and all of which taken together shall constitute one
instrument.
Section 13. Amendments. This Merger Plan may be amended by
the parties hereto, by or pursuant to action taken by their
respective boards of directors, at any time before or after approval
hereof by the shareholders of the Seller but, after such approval,
no amendment shall be made which reduces the amount or changes the
form of the Purchase Price as provided in Section 2.2 of the Merger
Agreement or which in any way materially adversely affects the rights
of such shareholders, without the further approval of such
shareholders. This Merger Plan may not be amended except by an
instrument in writing specifically referring to this Section 13 and
signed on behalf of each of the parties hereto.
Section 14. Severability. Any provision of this Merger Plan
which is prohibited or unenforceable shall be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof.
Section 15. Governing Law. This Merger Plan shall be
governed by, and interpreted in accordance with, the laws of the
State of Illinois, except to the extent federal law applies, without
regard to conflicts of laws principles.
Section 16. Captions and References. The captions contained
in this Merger Plan are for convenience of reference only and do not
form a part of this Merger Plan.
IN WITNESS WHEREOF, the parties hereto have caused this Merger
Plan to be duly executed as of the date first above written.
CHARTER INTERIM SAVINGS BANK
By: (s) John A. Becker
John A. Becker
President and Chief Executive Officer
HOME FEDERAL SAVINGS BANK
By: (s) Patricia H. Shay
Patricia H. Shay
President and Chief Executive Officer
(Charter Bank Letterhead)
NEWS RELEASE
For Immediate Release
August 13, 1996
For More Information
Contact:
John A. Becker, President and CEO
Charter Financial, Inc.
(618) 443-2166
Taffie Helleny, Chairman
Home Federal Savings Bank
(618) 529-2900
CHARTER FINANCIAL, INC. AND HOME FEDERAL SAVINGS BANK
EXECUTE DEFINITIVE MERGER AGREEMENT
Sparta, IL (August 13, 1996) - John A. Becker, President and
Chief Executive Officer of Charter Financial, Inc. (NASDAQ N-Mkt:
CBSB) and Taffie Helleny, Chairman of Home Federal Savings Bank,
Carbondale, IL, announced today the execution of a definitive
agreement under the terms of which Charter Financial, Inc., intends
to acquire Home Federal Savings Bank for a purchase price of $21.00
per share, in cash (as may be adjusted in the event transaction
expenses exceed a specified threshold). The acquisition purchase
price will be approximately $6.3 million.
The acquisition is subject to approval by shareholders of Home
Federal Savings Bank and to receipt of regulatory approval. The
closing of the transaction is contemplated in the first quarter of
1997.
Charter Financial, Inc., headquartered in Sparta, Illinois, is
the holding company for Charter Bank, S.B. (the "Bank"). The Bank
is an Illinois chartered, FDIC insured savings bank conducting its
business from its headquarters in Sparta, Illinois and six branches
located in Anna, Carbondale, DuQuoin, Marion, Murphysboro and
Steeleville, Illinois. Charter Financial, Inc. reported net income
for the third quarter of fiscal year 1996 of $1.1 million or $.22 per
share resulting in a return on average assets and return on average
stockholders' equity of 1.30% and 6.70%, respectively. Charter
Financial's total assets increased $82 million or 28.7% to $367
million at June 30, 1996 from $285 million at June 30, 1995. The
book value per share of Charter Financial, Inc. common stock at June
30, 1996 was $13.08.
Home Federal Savings Bank is an FDIC-insured savings bank
conducting its business from its headquarters located in Carbondale,
Illinois. Home Federal Savings Bank reported net income for fiscal
year ended March 31, 1996 of $335,000 or $1.26 earnings per share
resulting in a return on average assets and a return on average
stockholders' equity of 1.04% and 7.4%, respectively. Home Federal
Savings Bank had total assets as of June 30, 1996 of $33 million.
The book value per share of Home Federal Savings Bank common stock
at June 30, 1996 was $16.25.
Commenting on the proposed transaction, Mr. Becker stated, "We
are pleased at the prospect of Home Federal Savings Bank becoming a
part of Charter Financial, Inc. Home Federal Savings Bank will
complement our existing branch network. The acquisition is
anticipated to be accretive to Charter Financial, Inc.'s net
earnings."
Patricia Shay, President of Home Federal Savings Bank, added,
"We look forward to the merger of Home Federal Savings Bank with
Charter Financial, Inc. We believe the transaction is in the best
interest of Home Federal Savings Bank, its shareholders and
customers. The two companies have complementary market areas and
similar product lines. The customers will be served by the larger
combined company, which will continue Home Federal Savings Bank's
tradition of providing quality products and services to its
customers."
