UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
Hardin Bancorp, Inc.
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(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Hardin Bancorp, Inc. common stock, par value $.01 per share
______________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
731,453 shares of common stock (plus outstanding options to acquire 105,800
shares of common stock).
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
$21.75 per share of Hardin Bancorp, Inc. common stock, and $21.75, less the
exercise price, for underlying options to purchase Hardin Bancorp, Inc.
common stock
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
$16,918,000
________________________________________________________________________________
5) Total fee paid:
$3,384
________________________________________________________________________________
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
N/A
________________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
N/A
________________________________________________________________________________
3) Filing Party:
N/A
________________________________________________________________________________
4) Date Filed:
N/A
_______________________________________________________________________________
<PAGE>
HARDIN BANCORP, INC.
201 Northeast Elm Street
Hardin, Missouri 64035
January 3, 2001
Dear Stockholder:
We cordially invite you to attend a special meeting of stockholders of
Hardin Bancorp, Inc., to be held at the Hardin United Methodist Church
Fellowship Hall located at 101 Northeast First Street, Hardin, Missouri, on
Friday, February 2, 2001 at 1:00 p.m., local time.
On October 25, 2000, Hardin Bancorp, Inc. agreed to merge with
Dickinson Financial Corporation. If the merger is completed, you will receive a
cash payment of $21.75 for each share of Hardin Bancorp, Inc. stock that you
own. Upon completion of the merger you will no longer own any stock or have any
interest in Hardin Bancorp, Inc., nor will you receive, as a result of the
merger, any stock of Dickinson Financial Corporation.
At the special meeting, you will be asked to approve and adopt the
merger agreement. A majority of the votes entitled to be cast at the special
meeting must vote for approval and adoption of the merger agreement for the
merger to be completed. If the merger agreement is approved, and all other
conditions described in the merger agreement have been met or waived, the merger
is expected to occur during the first quarter of 2001.
Your exchange of shares of Hardin Bancorp, Inc. stock for cash
generally will cause you to recognize income for federal, and possibly state and
local, tax purposes. You should consult your personal tax advisor for a full
understanding of the tax consequences of the merger to you.
Your board of directors believes that the merger is in the best
interests of Hardin Bancorp, Inc. stockholders and unanimously recommends that
you vote FOR the merger agreement. Your board of directors has received the
opinion of Trident Securities, Inc. that the consideration to be received by
Hardin Bancorp, Inc.'s stockholders in the merger is fair from a financial point
of view.
This proxy statement provides you with detailed information about the
proposed merger and includes, as Appendix A, a complete text of the merger
agreement. I urge you to read the enclosed materials carefully for a complete
description of the merger.
It is very important that your shares be represented at the special
meeting. Whether or not you plan to attend the special meeting, please complete,
date and sign the enclosed proxy card and return it promptly in the postage-paid
envelope we have provided.
On behalf of the Board, I thank you for your prompt attention to this
important matter.
Sincerely,
/s/ Robert W. King
Robert W. King
President and Chief Executive Officer
<PAGE>
HARDIN BANCORP, INC.
201 Northeast Elm Street
Hardin, Missouri 64035
(660) 398-4312
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON FEBRUARY 2, 2001
Notice is hereby given that a special meeting of stockholders of Hardin
Bancorp, Inc. will be held at the Hardin United Methodist Church Fellowship Hall
located at 101 Northeast First Street, Hardin, Missouri, on February 2, 2001,
commencing at 1:00 p.m., local time, and thereafter as it may from time to time
be adjourned.
A proxy card and a proxy statement for the special meeting are
enclosed. The meeting is being held for the following purposes:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger dated as of October 25, 2000 by
and among Dickinson Financial Corporation and Hardin Bancorp,
Inc., pursuant to which DFC Acquisition Corporation Five, a
recently formed subsidiary of Dickinson Financial, will merge
with and into Hardin Bancorp and each of the outstanding
shares of Hardin Bancorp common stock will be converted into
the right to receive $21.75 in cash, as more fully described
in the accompanying proxy statement; and
2. To transact such other business as properly may come before
the meeting and any adjournment or adjournments thereof. The
board of directors is not aware of any other business to come
before the special meeting.
Any action may be taken on this proposal at the special meeting or on
any date or dates to which the special meeting may be adjourned or postponed.
You can vote at the meeting if you owned Hardin Bancorp common stock at the
close of business on the December 26, 2000 record date. A complete list of
stockholders entitled to vote at the meeting will be available at the main
office of Hardin Bancorp during the ten days prior to the meeting and at the
meeting.
As a stockholder of Hardin Bancorp, you have the right to dissent from
the proposed merger and obtain an appraisal of the fair value of your shares of
Hardin Bancorp common stock under applicable provisions of Delaware law. In
order to perfect dissenters' rights, you must not vote in favor of the merger
and must comply with the requirements of Delaware law. A copy of the Delaware
statutory provisions regarding dissenters' rights is provided as Appendix C to
the accompanying proxy statement and a summary of these provisions can be found
under the caption "Rights of Dissenting Stockholders" beginning on page __.
In the event there are not sufficient votes to approve the proposal for
the adoption of the merger agreement at the time of the meeting, the meeting may
be adjourned in order to permit further solicitation by Hardin Bancorp, Inc.
Your attention is directed to the proxy statement accompanying this
notice for a more complete statement regarding the matters to be acted upon at
the special meeting.
By Order of the Board of Directors
/s/ Robert W. King
Robert W. King
President and Chief Executive Officer
Hardin, Missouri
January 3, 2001
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Important: The prompt return of proxies will save Hardin Bancorp the expense of
further requests for proxies to ensure a quorum at the meeting. Please complete,
sign and date the enclosed proxy and promptly mail it in the enclosed envelope.
You may revoke your proxy in the manner described in the proxy statement at any
time before it is voted.
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<PAGE>
HARDIN BANCORP, INC.
PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
SUMMARY TERM SHEET
This is a summary of the most material terms of the transaction between
Hardin Bancorp and Dickinson Financial. It does not contain all the information
that may be important to you. We urge you to read carefully the entire document
and the other documents to which we refer, including the merger agreement, to
fully understand the merger.
o Pursuant to the agreement and plan of merger between Hardin
Bancorp and Dickinson Financial, DFC Acquisition Corporation
Five, a wholly-owned subsidiary of Dickinson Financial
recently organized to facilitate the merger, will first be
merged with and into Hardin Bancorp, with Hardin Bancorp
surviving as a subsidiary of Dickinson Financial. Immediately
following this merger, Hardin Federal Savings Bank will be
merged with and into Bank Midwest, National Association, with
Bank Midwest, National Association being the surviving entity
and continuing with its current name. See the discussion under
the caption "The Merger--General" on page __ for more
information.
o If the merger occurs, each stockholder of Hardin Bancorp will
receive, for each share he or she owns, an amount in cash
equal to $21.75 per share. See the discussion under the
caption "The Merger--Terms of the Merger" beginning at page __
for more information.
o The merger cannot occur unless Hardin Bancorp's stockholders
approve the merger by at least a majority of the outstanding
shares of common stock and all regulatory approvals necessary
to complete the merger are obtained. See the discussion under
the caption "The Merger--Conditions to the Merger" beginning
at page __ for more information.
o The Board of Directors of Hardin Bancorp has approved the
merger and has unanimously recommended that Hardin Bancorp's
stockholders vote in favor of it. See the discussion under the
caption "The Merger--Hardin Bancorp's Reasons for the Merger
and Recommendation of the Board of Directors" beginning at
page __ for more information.
o Trident Securities, Inc. has issued a fairness opinion that
the amount that will be paid to Hardin Bancorp's stockholders
is fair from a financial point of view. See the discussion
under the caption "The Merger--Opinion of Our Financial
Advisor" beginning at page __ for more information.
o Hardin Bancorp has agreed to pay Dickinson Financial a
termination fee of $500,000 if Hardin Bancorp terminates the
merger agreement in order to accept a superior offer and
within 12 months Hardin Bancorp or Hardin Federal enters into
a definitive acquisition agreement with a third party. See the
discussion under the caption "The Merger--Expenses and
Termination Fee" beginning at page __ for more information.
o In general, Hardin Bancorp has agreed that it will not seek or
encourage a competing transaction to acquire Hardin Bancorp,
except in very limited situations in which an unsolicited
offer is made. See the discussion under the caption "The
Merger--Agreement Not to Solicit Other Offers" beginning at
page __ for more information.
o Officers and directors of Hardin Bancorp who have stock
options and restricted stock awards under Hardin Bancorp's
stock benefit plans will receive payments for their awards
based upon the merger price per share. They and other
employees will also receive other benefits from the merger.
See the discussion under the caption "The Merger--Interests of
Certain Persons in the Merger" beginning at page __ for more
information.
o Stockholders who dissent from the merger have the right to
receive the appraised value of their shares if the merger is
consummated, provided that they satisfy certain requirements
of Delaware law. See the discussion under the caption "The
Merger--Rights of Dissenting Stockholders" beginning at page
__ for more information.
1
<PAGE>
TABLE OF CONTENTS
SUMMARY TERM SHEET........................................................1
THE SPECIAL MEETING.......................................................5
MARKET PRICE AND DIVIDEND DATA FOR HARDIN BANCORP COMMON STOCK............6
THE MERGER................................................................7
General..........................................................7
The Parties to the Merger........................................7
Background of the Merger.........................................8
Hardin Bancorp's Reasons for the Merger and Recommendation
of the Board Of Directors......................................9
Opinion of Our Financial Adviser.................................9
Surrender of Certificates.......................................13
Rights of Dissenting Stockholders...............................14
Interests of Certain Persons in the Merger......................17
Regulatory Approvals............................................19
Accounting Treatment............................................19
Terms of the Merger.............................................19
When the Merger Will Be Completed...............................20
Conditions to the Merger........................................20
Conduct of Business Pending the Merger..........................20
Agreement Not to Solicit Other Offers...........................23
Employee Matters................................................23
Certain Other Covenants.........................................23
Representations and Warranties in the Merger Agreement..........24
Termination of the Merger Agreement.............................24
Expenses and Termination Fee....................................25
Changing the Terms of the Merger Agreement......................25
Independent Public Accountants..................................25
OWNERSHIP OF HARDIN BANCORP COMMON STOCK BY
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.................................26
OTHER MATTERS............................................................27
STOCKHOLDER PROPOSALS....................................................27
WHERE YOU CAN FIND MORE INFORMATION......................................27
APPENDIX A--AGREEMENT AND PLAN OF MERGER................................A-1
APPENDIX B--OPINION OF TRIDENT SECURITIES, INC..........................B-1
APPENDIX C--SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW.........C-1
2
<PAGE>
HARDIN BANCORP, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
The following tables set forth selected historical consolidated
financial data for Hardin Bancorp. The annual historical financial condition and
operating data are derived from Hardin Bancorp's consolidated financial
statements audited by its independent accountants. Financial amounts as of and
for the six months ended September 30, 2000 and 1999 are unaudited, but, Hardin
Bancorp believes such amounts reflect all normal recurring adjustments necessary
for a fair presentation of the results of operations and financial position for
those periods. You should not assume that the six-month results indicate results
for any future period.
<TABLE>
<CAPTION>
At At March 31,
September 30, ---------------------------------------------------------------------------
2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ----
(Dollars in Thousands except per share data)
Selected Financial Data:
<S> <C> <C> <C> <C> <C> <C>
Total assets $ 143,325 $ 138,484 $ 137,056 $ 121,092 $ 103,354 $ 83,387
Loan receivable, net 83,587 78,059 69,505 61,274 54,568 45,031
Mortgage-backed securities:
Held to maturity - - - 10,995 13,457 16,299
Available for sale 11,691 11,806 12,584 8,020 5,757 7,907
Investment securities:
Held to maturity - - - 10,000 - -
Available for sale 37,273 37,793 44,519 22,656 22,340 6,363
FHLB stock 2,165 2,015 2,000 1,475 950 742
Other interest-bearing deposits 3,290 3,332 4,157 3,225 4,007 5,430
Deposits 85,686 86,565 83,327 76,884 70,201 66,605
FHLB advances 43,300 38,300 40,000 29,500 19,000 -
Total stockholders' equity 12,757 12,426 12,560 13,478 13,210 16,035
</TABLE>
<TABLE>
<CAPTION>
For the six months
ended September 30, For the years ended March 31,
-------------------------- -----------------------------------------------------------------
2000 1999 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(Dollars in thousands except per share data)
Selected Operating Data:
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income $ 5,183 $ 4,711 $ 9,618 $ 9,013 $ 8,234 $ 6,684 $ 5,552
Total interest expense 3,224 2,845 5,735 5,920 5,184 3,915 3,454
------------ ------------ ------------ ----------- ----------- ----------- ----------
Net interest income 1,959 1,866 3,883 3,093 3,050 2,769 2,098
Provision for loan losses 32 1 1 66 94 34 14
------------ ------------ ------------ ----------- ----------- ----------- ----------
Net interest income after
provision for loan losses 1,927 1,865 3,882 3,027 2,957 2,735 2,084
------------ ------------ ------------ ----------- ----------- ----------- ----------
Loan fees and service charges 369 302 626 451 176 117 110
Gain/(loss) on sales of loans,
investments and mortgage-
backed securities 5 16 16 569 182 (2) 2
Other non-interest income 82 132 234 172 134 158 167
------------ ------------ ------------ ----------- ----------- ----------- ----------
Total non-interest income 456 450 876 1,192 492 273 279
------------ ------------ ------------ ----------- ----------- ----------- ----------
Total non-interest expense 1,426 1,403 2,798 2,545 2,081 2,270(1) 1,576
------------ ------------ ------------ ----------- ----------- ----------- ----------
Earnings before income taxes 957 912 1,960 1,674 1,368 738 787
Income tax expense 341 306 688 601 499 274 277
------------ ------------ ------------ ----------- ----------- ----------- ----------
Net earnings $ 616 $ 606 $ 1,272 $ 1,073 $ 869 $ 464 $ 511
============ ============ ============ =========== =========== =========== ==========
Basic earnings per share $ 0.88 $ 0.88 $ 1.84 $ 1.48 $ 1.12 $ 0.52 $ 0.52
Diluted earnings per share $ 0.85 $ 0.85 $ 1.78 $ 1.42 $ 1.08 $ 0.51 $ 0.52
============ ============ ============ =========== =========== =========== ==========
Weighted average common &
common equivalent shares
outstanding 720,044 715,924 713,278 756,526 803,554 906,334 973,383
------------ ------------ ------------ ----------- ----------- ----------- ----------
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
At or for the
six months
ended
September 30, At or for the years ended March 31,
------------------------ ----------------------------------------------
2000 1999 2000 1999 1998 1997
----------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Selected Financial
Ratios and Other Data:
Performance Ratios:
Return on assets (ratio of net
earnings to average total assets) 0.87% 0.89% 0.94% 0.81% 0.76% 0.50%
Return on equity (ratio of net
earnings to average equity) 9.90 9.76 10.34 8.23 6.52 3.18
Interest rate spread (2):
Average during year 2.63 2.46 2.58 1.93 2.16 2.27
End of year 2.33 2.99 2.20 2.07 1.97 2.61
Net interest margin (3) 2.89 2.87 2.98 2.42 2.73 3.04
Ratio of non-interest expense to
average total assets 2.02 2.08 2.07 1.93 1.82 2.43
Ratio of average interest earning
assets to average interest-bearing liabilities 105.50 109.44 109.10 110.49 112.23 117.85
Quality Ratios:
Non-performing assets to total assets at end of year 0.13 0.19 0.17 0.20 0.19 0.37
Allowance for loan losses to non-performing loans 183.00 116.91 128.30 112.48 106.97 41.58
Allowance for loan losses to loans receivable, net 0.39 0.41 0.39 0.45 0.40 0.29
Capital Ratios (4):
Equity to total assets at end of year 8.90 8.94 8.98 9.16 11.12 12.78
Average equity to average assets 8.83 9.21 9.07 9.88 11.65 15.70
Other Data:
Number of full service offices 3 3 3 3 3 3
</TABLE>
(1) Total non-interest expense for the year ended March 31, 1997 includes the
one time SAIF assessment of $441,000.
(2) Interest rate spread represents the difference between the weighted average
yield on interest-earning assets and the weighted average rate on
interest-bearing liabilities.
(3) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
4
<PAGE>
THE SPECIAL MEETING
Place, Date and Time
The special meeting will be held in the Hardin United Methodist Church
Fellowship Hall located at 101 Northeast First Street, Hardin, Missouri on
February 2, 2001, commencing at 1:00 p.m., local time.
Purpose of the Meeting
At the special meeting, or any adjournment or postponement thereof, our
stockholders will be asked to approve a proposal to adopt the merger agreement.
Our stockholders also may consider and vote upon such other matters as are
properly brought before the special meeting. As of the date hereof, we know of
no business that will be presented for consideration at the special meeting,
other than the matters described in this proxy statement.
Record Date; Vote Required
Only our stockholders of record at the close of business on December
26, 2000 (the "Record Date") are entitled to notice of and to vote at the
special meeting. As of the Record Date, there were 731,453 shares of our common
stock outstanding and entitled to vote at the special meeting.
Each of our stockholders will be entitled to cast one vote per share
held at the special meeting. Such vote may be exercised in person or by properly
executed proxy. The presence, in person or by properly executed proxy, of the
holders of one-third of our outstanding shares of common stock entitled to vote
at the special meeting is necessary to constitute a quorum. Abstentions and
broker non-votes will be treated as shares present at the special meeting for
purposes of determining the presence of a quorum.
The affirmative vote of the holders of at least a majority of our
outstanding shares of common stock entitled to vote at the special meeting is
required for approval of the merger agreement. As a result, abstentions and
broker non-votes will have the same effect as votes against the approval of the
merger agreement.
Approval of the merger agreement by our stockholders is a condition to
completion of the merger. See "The Merger--Conditions to the Merger."
Beneficial Ownership of Hardin Bancorp Common Stock
As of the Record Date, our directors and executive officers and their
affiliates beneficially owned in the aggregate 105,678 shares, excluding stock
options, of our common stock, or 14.5% of our outstanding shares of common stock
entitled to vote at the special meeting. As of that date, neither Dickinson
Financial, nor any of the directors or executive officers of Dickinson
Financial, beneficially owned any shares of Hardin Bancorp common stock.
Proxies
Shares of our common stock represented by properly executed proxies
received prior to or at the special meeting will, unless such proxies have been
revoked, be voted at the special meeting and any adjournments or postponements
thereof in accordance with the instructions indicated in the proxies. If no
instructions are indicated on a properly executed proxy, the shares will be
voted FOR the adoption of the merger agreement.
Any proxy given pursuant to this solicitation or otherwise may be
revoked by the person giving it at any time before it is voted by delivering to
Karen Blankenship, Secretary, Hardin Bancorp, 201 Northeast Elm Street, Hardin,
Missouri 64035, or at the special meeting on or before the taking of the vote at
the special meeting, a written notice of revocation bearing a later date than
the proxy, or a later-dated proxy relating to the same shares of common stock,
or by attending the special meeting and voting in person. Attendance at the
special meeting will not by itself constitute the revocation of a proxy.
If any other matters are properly presented at the special meeting for
consideration, the persons named in the proxy or acting thereunder will have
discretion to vote on such matters in accordance with their best judgment.
5
<PAGE>
This includes a motion to adjourn or postpone the meeting in order to solicit
additional proxies. However, no proxy voted against the proposal to approve the
merger agreement will be voted in favor of an adjournment or postponement to
solicit additional votes in favor of the merger agreement. Hardin Bancorp does
not know of any other matters to be presented at the meeting.
Hardin Bancorp will bear the cost of solicitation of proxies. In
addition to solicitation by mail, our directors, officers and employees, who
will not receive additional compensation for such services, may solicit proxies
from our stockholders, personally or by telephone or other forms of
communication. Brokerage houses, nominees, fiduciaries and other custodians will
be requested to forward soliciting materials to beneficial owners and will be
reimbursed for their reasonable expenses incurred in sending proxy material to
beneficial owners. Moreover, we have retained ____________________ to solicit
proxies on behalf of the board of directors. ______________________ will receive
a fee of $______ for their services, plus up to $_____ for reimbursement of
their expenses.
You are requested to complete, date and sign the accompanying form of
proxy and to return it promptly in the enclosed postage-paid envelope.
You should not forward stock certificates with your proxy cards.
MARKET PRICE AND DIVIDEND DATA FOR HARDIN BANCORP COMMON STOCK
Hardin Bancorp's common stock is quoted on the Nasdaq SmallCap Market
under the symbol "HFSA". The following table shows the high and low prices per
share for Hardin Bancorp common stock as reported on the Nasdaq SmallCap Market
and the cash dividends declared by Hardin Bancorp for the periods indicated.
FISCAL 1999 High Low Dividends
----------- ---- --- ---------
First Quarter $19.63 $18.75 $.14
Second Quarter $19.25 $16.13 $.15
Third Quarter $20.50 $14.25 $.16
Fourth Quarter $18.13 $16.38 $.18
FISCAL 2000 High Low Dividends
----------- ---- --- ---------
First Quarter $17.50 $15.25 $.20
Second Quarte $17.50 $15.63 $.20
Third Quarter $16.50 $15.00 $.20
Fourth Quarter $15.50 $13.00 $.20
FISCAL 2001 High Low Dividends
----------- ---- --- ---------
First Quarter $15.00 $12.8125 $.20
Second Quarter $17.00 $13.875 $.20
Third Quarter $21.00 $17.125 $.20
(through December __, 2000)
On October 25, 2000, the last trading day prior to the public
announcement that Dickinson Financial and Hardin Bancorp had entered into the
merger agreement, the closing price of Hardin Bancorp common stock was $20.00
per share. On December __, 2000, which is the last practicable date prior to the
printing of this proxy statement, the closing price of Hardin Bancorp common
stock was $_____ per share.
As of December __, 2000, there were approximately ___ holders of record
of Hardin Bancorp common stock. This number does not reflect the number of
persons or entities who may hold their common stock in nominee or "street" name
through brokerage firms.
6
<PAGE>
THE MERGER
The information in this proxy statement concerning the terms of the
merger is qualified in its entirety by reference to the full text of the merger
agreement, which is attached as Appendix A and incorporated by reference herein.
All stockholders are urged to read the merger agreement in its entirety, as well
as the opinion of our financial advisor attached as Appendix B. All information
contained in this proxy statement with respect to Dickinson Financial and its
subsidiaries has been supplied by Dickinson Financial for inclusion herein and
has not been independently verified by Hardin Bancorp.
General
As soon as possible after the conditions to consummation of the merger
described below have been satisfied or waived, and unless the merger agreement
has been terminated as discussed below, Hardin Bancorp and a subsidiary of
Dickinson Financial will merge in accordance with Delaware law. Under the terms
of the merger agreement, an interim subsidiary of Dickinson Financial will be
merged with and into us, with Hardin Bancorp surviving as a subsidiary of
Dickinson Financial. Immediately after the merger is completed, Hardin Bancorp
's subsidiary, Hardin Federal Savings Bank, will merge with and into Dickinson
Financial's subsidiary, Bank Midwest. Bank Midwest will be the surviving bank.
Upon completion of the merger, our stockholders will be entitled to
receive $21.75 in cash in consideration for each of their shares of Hardin
Bancorp common stock they hold and shall cease to be stockholders of Hardin
Bancorp.
The Parties to the Merger
Dickinson Financial. Dickinson Financial, a Missouri corporation, is
headquartered in Kansas City, Missouri and is the parent of Bank Midwest, N.A.,
a national bank, and DFC Acquisition Corporation Five, a Delaware corporation.
Bank Midwest operates 49 branch offices in northern Missouri and the Kansas City
metropolitan area. The principal executive offices of Dickinson Financial are
located at City Center Square, 1100 Main Street, Suite 350, Kansas City,
Missouri 64105, and its telephone number is (816) 472-5244.
At September 30, 2000, Dickinson Financial had consolidated assets of
$2.7 billion, net loans receivable of $1.1 billion, deposits of $1.8 billion and
stockholders' equity of $238.6 million.
DFC Acquisition Corporation Five, a Delaware corporation, is a wholly
owned subsidiary of Dickinson Financial that was formed by Dickinson Financial
solely for the purpose of effecting the merger with Hardin Bancorp.
Hardin Bancorp. Hardin Bancorp is a Delaware corporation, which is the
holding company for Hardin Federal. Hardin Bancorp was organized by Hardin
Federal for the purpose of acquiring all of the capital stock of Hardin Federal
in connection with the conversion of Hardin Federal from mutual to stock form,
which was completed on September 28, 1995. The only significant assets of Hardin
Bancorp are the capital stock of Hardin Federal, Hardin Bancorp's loan to Hardin
Federal's Employee Stock Ownership Plan, and the remaining net proceeds of the
conversion retained by Hardin Bancorp. The business of Hardin Bancorp consists
of the business of Hardin Federal. The principal executive offices of Hardin
Bancorp are located at 201 Northeast Elm Street, Hardin, Missouri 64035, and its
telephone number is (660) 398-4312.
Hardin Federal, which was originally chartered in 1888 as a
Missouri-chartered mutual savings and loan association, is headquartered in
Hardin, Missouri. Hardin Federal amended its mutual charter to become a federal
mutual savings bank in 1995. The Federal Deposit Insurance Corporation insures
Hardin Federal's deposits up to the maximum allowable amount. Hardin Federal
serves the financial needs of its customers throughout Ray and Clay counties
through its offices in Hardin, Richmond, and Excelsior Springs, Missouri. On
September 30, 2000, Hardin Bancorp had total assets of $143.3 million, deposits
of $85.7 million and stockholders' equity of $12.8 million.
7
<PAGE>
Background of the Merger
Hardin Federal has operated since its organization in 1888 as a
community-oriented thrift serving the financial needs of its customers primarily
in Ray and Clay counties, Missouri. Hardin Federal continued to maintain its
community orientation following its mutual to stock conversion in 1995. Since
the stock conversion, the board of directors of Hardin Bancorp has pursued a
business plan that included pursuing opportunities for growth in Hardin
Federal's market area, periodic repurchases of outstanding shares Hardin Bancorp
common stock and other matters.
During late 1999 and early 2000, the board of directors sought to
reevaluate the strategic alternatives available to Hardin Bancorp in view of the
rapidly changing nature of banking and competitive forces. On March 16, 2000, at
the request of the board of directors, a representative of Trident Securities
met with the board to discuss possible strategic alternatives available to
Hardin Bancorp. The Board had begun the process of considering its alternatives
and, among other things, believed it was appropriate to inform itself regarding
the potential merger value of Hardin Bancorp and potential merger candidates. At
that meeting, the representative from Trident Securities made a presentation to
the Board of the current status of the market for thrift mergers and
acquisitions and a preliminary range of value for Hardin Bancorp. Trident
Securities also reviewed with the board of directors Hardin Bancorp's future
financial prospects as an independent thrift institution.
On April 4, 2000, Hardin Bancorp's board of directors formalized the
engagement of Trident Securities to assist in the evaluation of strategic
alternatives. As part of this engagement, the board of directors asked Trident
Securities to explore the possibility of a business combination involving Hardin
Bancorp and authorized Trident Securities to prepare an information memorandum
containing financial and other information regarding Hardin Bancorp. The Board
also authorized Trident Securities to contact potentially interested parties to
determine their interest in a potential business combination with Hardin Bancorp
and the valuation they would place on Hardin Bancorp in such a transaction.
In May and June, 2000, Trident Securities contacted 14 parties
inquiring about their interest in Hardin Bancorp. Trident Securities provided an
information memorandum to 12 of these companies. On July 27, 2000, a
representative of Trident Securities met with Hardin Bancorp's Board of
Directors to discuss the four preliminary indications of interest it had
received, one of which was from Dickinson Financial. The Trident Securities
representative discussed the terms of these four proposals and also discussed
the market for bank and thrift stocks generally. The Hardin Bancorp board
concluded that the proposal by Dickinson Financial was the most attractive, as
Dickinson Financial offered the highest value to Hardin Bancorp's shareholders
and also appeared to be best positioned to complete the transaction. Based on
advice from Trident Securities, and after considering relevant factors, the
board directed Trident Securities to pursue additional negotiations with
Dickinson Financial.
During the month of August, Dickinson Financial conducted due diligence
of Hardin Bancorp. Based on findings in due diligence, Dickinson Financial
lowered its offer. This lower offer continued to represent the highest offering
price for Hardin Bancorp. After approximately two weeks of additional
negotiation, Dickinson Financial indicated that it was willing to improve its
offer slightly to $21.75 cash for each outstanding share of Hardin Bancorp
common stock.
After discussing the revised purchase price and the presentation by
Trident Securities, the Hardin Bancorp board determined that pursuing a
transaction with Dickinson Financial on the terms proposed would be in the best
interests of Hardin Bancorp's stockholders. The Board then authorized its
representatives to pursue the negotiation of a definitive merger agreement
between the two parties. Thereafter, Hardin Bancorp's legal counsel and
Dickinson Financial negotiated the terms of the merger agreement. A final draft
of the merger agreement was provided to the Hardin Bancorp board. On October 25,
Hardin Bancorp's Board of Directors met to consider the merger agreement.
Representatives of Trident Securities and legal counsel were present at the
meeting and reviewed the terms of the merger agreement in detail with the Board.
Further, the representative of Trident Securities presented the opinion of his
firm that the consideration to be received by Hardin Bancorp's stockholders was
fair from a financial point of view. After extensive discussion, the Board of
Directors approved the merger agreement.
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Hardin Bancorp's Reasons for the Merger and Recommendation of the Board Of
Directors
Hardin Bancorp's board has determined that the merger and the merger
agreement are in the best interests of Hardin Bancorp and its stockholders. In
reaching this determination, the Hardin Bancorp board consulted with legal
counsel as to its legal duties and the terms of the merger agreement and with
its financial adviser with respect to the financial aspects and fairness of the
transaction consideration. In arriving at its determination, the Hardin Bancorp
board also considered a number of factors including, but not limited to, the
following:
o The merger price to be paid to Hardin Bancorp stockholders in
relation to the market value, book value, earnings per share
and dividend rates of our common stock.
o The results of the contacts and discussions between Hardin
Bancorp and Trident Securities and various third parties and
the belief of the Hardin Bancorp board that the merger with
Dickinson Financial offered the best transaction available to
Hardin Bancorp and its stockholders;
o Information concerning the businesses, earnings, operations,
financial condition and prospects of Hardin Bancorp as an
independent company;
o The financial advice rendered by Trident Securities, as
financial adviser to Hardin Bancorp, that the merger
consideration is fair, from a financial standpoint, to the
Hardin Bancorp stockholders (See "Opinion of Our Financial
Adviser" below);
o The terms of the merger agreement, including the taxable
nature of the cash to be paid to Hardin Bancorp stockholders;
o The historical trading prices for Hardin Bancorp common stock;
o The impact of the merger on the depositors, employees,
customers and communities served by us;
o The current and prospective economic, competitive and
regulatory environment facing Hardin Bancorp, Dickinson
Financial and the financial services industry;
o The results of the due diligence investigations of Dickinson
Financial, including an assessment of Dickinson Financial's
ability to pay the aggregate merger consideration and the
likelihood of the merger being approved by regulatory
authorities; and
o Hardin Bancorp's strategic alternatives to the merger,
including the continued operation of Hardin Federal as an
independent financial institution.
In reaching its determination to approve and recommend the merger, the
Hardin Bancorp board did not assign any specific or relative weights to any of
the foregoing factors, and individual directors may have weighed factors
differently.
Our board of directors believes that the merger is in the best interest
of Hardin Bancorp and our stockholders. The board of directors unanimously
recommends that our stockholders vote for the adoption of the merger agreement.
Opinion of Our Financial Adviser
Merger - General. Pursuant to an engagement letter dated April 4, 2000
between Hardin Bancorp and Trident Securities, Hardin Bancorp retained Trident
Securities to act as its sole financial advisor in connection with a possible
merger and related matters. As part of its engagement, Trident Securities
agreed, if requested by Hardin Bancorp, to render an opinion with respect to the
fairness, from a financial point of view, to the holders of Hardin Bancorp
common stock, of the financial consideration as set forth in the merger
agreement. Trident Securities is a nationally recognized specialist in the
financial services industry. Trident Securities is regularly engaged in
evaluations of similar businesses and in advising institutions with regard to
mergers and acquisitions, as well as
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raising debt and equity capital for such institutions. Hardin Bancorp selected
Trident Securities as its financial advisor based upon Trident Securities'
qualifications, expertise and reputation in such capacity.
On October 25, 2000, Trident Securities delivered its oral opinion that
the financial consideration was fair to Hardin Bancorp shareholders, from a
financial point of view, as of the date of such opinion. Trident Securities also
delivered to the Hardin Bancorp board a written opinion dated as of October 25,
2000, confirming its oral opinion. No limitations were imposed by Hardin Bancorp
on Trident Securities with respect to the investigations made or the procedures
followed in rendering its opinion.
The full text of Trident Securities' written opinion to the Hardin
Bancorp Board which sets forth the assumptions made, matters considered and
extent of review by Trident Securities, is attached as Appendix B and is
incorporated herein by reference. It should be read carefully and in its
entirety in conjunction with this proxy statement. The following summary of
Trident Securities' opinion is qualified in its entirety by reference to the
full text of the opinion. Trident Securities' opinion is addressed to the Hardin
Bancorp board and does not constitute a recommendation to any shareholder of
Hardin Bancorp as to how such shareholder should vote at the Hardin Bancorp
special meeting described in this document.
Trident Securities, in connection with rendering its opinion:
o Reviewed Hardin Bancorp's Annual Reports to Shareholders and
Annual Reports on Form 10-KSB for each of the years ended
March 31, 2000, March 31, 1999 and March 31, 1998, including
the audited financial statements contained therein, and Hardin
Bancorp's Quarterly Report on Form 10-QSB for the three months
ended June 30, 2000;
o Reviewed Dickinson Financial's Consolidated Financial
Statements for the years ended December 31, 1999 and 1998,
including the audited financial statements contained therein,
and reviewed Dickinson Financial's Call Report dated March 31,
2000;
o Reviewed certain other public and non-public information,
primarily financial in nature, relating to the respective
businesses, earnings, assets and prospects of Hardin Bancorp
provided to Trident Securities or publicly available;
o Participated in meetings and telephone conferences with
members of senior management of Hardin Bancorp concerning the
financial condition, business, assets, financial forecasts and
prospects of Dickinson Financial, as well as other matters
Trident Securities believed relevant to its inquiry;
o Reviewed certain stock market information for Hardin Bancorp
common stock, and compared it with similar information for
certain companies, the securities of which are publicly
traded;
o Compared the results of operations and financial condition of
Hardin Bancorp with that of certain companies, which Trident
Securities deemed to be relevant for purposes of this opinion;
o Reviewed the financial terms, to the extent publicly
available, of certain acquisition transactions, which Trident
Securities deemed to be relevant for purposes of its opinion;
o Reviewed the Agreement dated October 25, 2000 and certain
related documents; and
o Performed such other reviews and analyses as Trident
Securities deemed appropriate.
The oral and written opinions provided by Trident Securities to Hardin
Bancorp were necessarily based upon economic, monetary, financial market and
other relevant conditions as of the dates thereof.
In connection with its review and arriving at its opinion, Trident
Securities relied upon the accuracy and completeness of the financial
information and other pertinent information provided by Hardin Bancorp and
Dickinson Financial to Trident Securities for purposes of rendering its opinion.
Trident Securities did not assume any obligation to independently verify any of
the provided information as being complete and
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accurate in all material respects. With regard to the financial forecasts
established and developed for Hardin Bancorp with the input of management,
Trident Securities assumed that these materials had been reasonably prepared on
bases reflecting the best available estimates and judgments of Hardin Bancorp as
to the future performance of Hardin Bancorp and that the projections provided a
reasonable basis upon which Trident Securities could formulate its opinion.
Hardin Bancorp does not publicly disclose such internal management projections
of the type utilized by Trident Securities in connection with Trident
Securities' role as financial advisor to Hardin Bancorp with respect to the
review of the merger. Therefore, such projections cannot be assumed to have been
prepared with a view towards public disclosure. The projections were based upon
numerous variables and assumptions that are inherently uncertain, including,
among others, factors relative to the general economic and competitive
conditions facing Hardin Bancorp. Accordingly, actual results could vary
significantly from those set forth in the respective projections.
Trident Securities does not claim to be an expert in the evaluation of
loan portfolios or the allowance for loan losses with respect thereto and
therefore assumes that such allowances for Hardin Bancorp and Dickinson
Financial are adequate to cover such losses. In addition, Trident Securities
does not assume responsibility for the review of individual credit files and did
not make an independent evaluation, appraisal or physical inspection of the
assets or individual properties of Hardin Bancorp or Dickinson Financial, nor
was Trident Securities provided with such appraisals. Furthermore, Trident
Securities assumes that the merger will be consummated in accordance with the
terms set forth in the merger agreement, without any waiver of any material
terms or conditions by Hardin Bancorp, and that obtaining the necessary
regulatory approvals for the merger will not have an adverse effect on either
separate institution or the combined entity. Trident Securities assumes that the
merger will be recorded as a "purchase" in accordance with generally accepted
accounting principles.
In connection with rendering its October 25, 2000 opinion to the Hardin
Bancorp board, Trident Securities performed a variety of financial and
comparative analyses, which are briefly summarized below. Such summary of
analyses does not purport to be a complete description of the analyses performed
by Trident Securities. Moreover, Trident Securities believes that these analyses
must be considered as a whole and that selecting portions of such analyses and
the factors considered by it, without considering all such analyses and factors,
could create an incomplete understanding of the scope of the process underlying
the analyses and, more importantly, the opinion derived from them. The
preparation of a financial advisor's opinion is a complex process involving
subjective judgments and is not necessarily susceptible to partial analyses or a
summary description of such analyses. In its full analysis, Trident Securities
also included assumptions with respect to general economic, financial market and
other financial conditions. Furthermore, Trident Securities drew from its past
experience in similar transactions, as well as its experience in the valuation
of securities and its general knowledge of the banking industry as a whole. Any
estimates in Trident Securities' analyses were not necessarily indicative of
actual future results or values, which may significantly diverge more or less
favorably from such estimates. Estimates of company valuations do not purport to
be appraisals nor to necessarily reflect the prices at which companies or their
respective securities actually may be sold. None of the analyses performed by
Trident Securities were assigned a greater significance by Trident Securities
than any other in deriving its opinion.
Comparable Company Analysis: Trident Securities reviewed and compared
actual stock market data and actual and estimated selected financial information
for Hardin Bancorp with corresponding information for 5 publicly traded thrifts
with assets between $93 million and $342 million based in Missouri (the "Hardin
Bancorp Peer Group"). The Hardin Bancorp Peer Group is listed below:
1. CBES Bancorp Excelsior Springs, MO
2. Guaranty Federal Bancshares Springfield, MO
3. Lexington B&L Financial Lexington, MO
4. Perry County Financial Corporation Perryville, MO
5. Southern Missouri Bancorp Poplar Bluff, MO
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The following table below represents a summary analysis of the Hardin
Bancorp Peer Group based on market prices as of October 23, 2000 and the latest
publicly available financial data as of or for the last twelve months ended June
30, 2000:
Hardin
Mean Median Bancorp
Price to last twelve month earnings 13.3x 12.0x 9.6x
Price to book value 70.5% 67.7% 108.6%
Price to tangible book value 71.6% 69.9% 108.6%
Efficiency ratio 58.5% 62.1% 58.4%
Dividend yield 3.4% 3.4% 4.4%
Return on average assets NM 0.76% 0.93%
Return on average equity NM 5.85% 10.5%
Leverage ratio 12.5% 12.3% 9.7%
Comparable Transaction Analysis: Trident Securities reviewed and
compared actual information for groups of comparable pending, i.e., last twelve
months ending October 10, 2000, transactions deemed pertinent to an analysis of
the merger. The implied acquisition price was compared to the median ratios of
(i) price to last twelve months earnings, (ii) price to book value, (iii) price
to tangible book value, and (iv) price to assets for each of the following
pending and recently completed transaction comparable groups:
o all thrift acquisitions with the selling thrift headquartered
in the Midwest Region ("Comparable Regional Deals");
o all thrift acquisitions with the selling thrift having assets
between $100 million and $200 million ("Comparable Asset
Size");
o all thrift acquisitions with the selling thrift having an
equity to assets ratio between 8.0% and 10.0% ("Comparable
Capitalization");
o all thrift acquisitions with the selling thrift having a
return on average equity between 8.0% and 12.0% ("Comparable
Profitability");
o all thrift acquisitions with the selling thrift having a
nonperforming assets to assets ratio of between 0.01% and
0.50% ("Comparable Asset Quality"); and
o recent thrift transactions, announced since May 1, 2000, with
similar size and performance characteristics ("Guideline").
The following table represents a summary analysis of the comparable
transactions analyzed by Trident Securities based on the announced transaction
values:
Median Price to
---------------------------------------
Book Tang. LTM
Number Value Book EPS Assets
------ ------- -------- ------- --------
Comparable Regional Deals
Pending and Completed..... 26 135% 135% 19.8x 15.5%
Comparable Asset Size
Pending and Completed...... 12 170% 170% 22.7x 17.2%
Comparable Capitalization
Pending and Completed...... 12 168% 177% 18.5x 16.3%
Comparable Profitability
Pending and Completed...... 11 140% 140% 16.7x 11.6%
Comparable Asset Quality
Pending and Completed...... 39 133% 133% 19.7x 16.7%
Guideline Transactions
Pending.................... 8 124% 131% 15.9x 12.1%
Hardin Bancorp (1) ......... 125% 125% 12.1x 11.8%
--------------------------------------------------------------------------------
(1) Hardin Bancorp pricing data based on $21.75.
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Based on the above information, Trident Securities concluded that this
analysis showed an imputed reference range of $21.57 to $28.58 per share, based
on the Guideline transactions. Trident Securities noted that during periods of
declining bank stock prices, as had recently been experienced, the comparable
transaction analysis tends to indicate somewhat higher prices than may be
reflective of current market conditions.
Discounted Cash Flow Analysis: Trident Securities performed a
discounted cash flow analysis with regard to Hardin Bancorp in a stand-alone
scenario. This analysis utilized a range of discount rates of 11% to 17% and a
range of terminal earnings multiples of 9.0x to 14.0x. The analysis resulted in
a range of present values of $11.5 million ($14.78 per share) to $18.9 million
($24.30 per share) for Hardin Bancorp. This analysis was based on estimates
considering market and company specific events and is not necessarily indicative
of actual values or actual future results and does not purport to reflect the
prices at which any securities may trade at the present or at any time in the
future. Trident Securities noted that the discounted cash flow analysis was
included because it is a widely used valuation methodology, but noted that the
results of such methodology are highly dependent upon the numerous assumptions
that must be made, including earnings growth rates, discount rates, and terminal
values.
Other Analyses: Trident Securities also reviewed certain other
information including pro forma estimated balance sheet and related capital
ratios.
No company used as a comparison in the above analyses is identical to
Hardin Bancorp and no other transaction is identical to the merger. Accordingly,
an analysis of the results of the foregoing is not purely mathematical; rather,
such analyses involve complex considerations and judgments concerning
differences in financial market and operating characteristics of the companies
and other factors that could affect the public trading volume of the companies
to which Hardin Bancorp is being compared.
For its financial advisory services provided to Hardin Bancorp, Trident
Securities has been paid fees of $35,000 to date and will be paid a fee of
approximately $220,000 at the time of closing of the merger. In addition, Hardin
Bancorp has agreed to reimburse Trident Securities for all reasonable
out-of-pocket expenses, incurred by it on Hardin Bancorp's behalf, as well as
indemnify Trident Securities against certain liabilities, including any which
may arise under the federal securities laws.
Trident Securities is a member of all principal securities exchanges in
the United States and in the conduct of its broker-dealer activities has from
time to time purchased securities from, and sold securities to, Hardin Bancorp.
As a market maker Trident Securities may also have purchased and sold the
securities of Hardin Bancorp for Trident Securities' own account and for the
accounts of its customers.
Surrender of Certificates
Within five business days after the completion of the merger, a paying
agent designated by Dickinson Financial will mail to each holder of record of
Hardin Bancorp common stock a form of transmittal letter with instructions on
how to surrender certificates representing shares of Hardin Bancorp common stock
for the cash merger consideration.
Please do not send in your Hardin Bancorp stock certificates until you
receive the letter of transmittal and instructions from the paying agent. Do not
return your stock certificates with the enclosed proxy.
After you mail the letter of transmittal and your Hardin Bancorp stock
certificates in accordance with the instructions you will receive, a check in
the amount of cash that you are entitled to receive will be mailed to you. The
stock certificates you surrender will be canceled. You will not be entitled to
receive interest on any cash to be received in the merger.
Any portion of the cash to be paid in the merger that remains unclaimed
by the stockholders of Hardin Bancorp for 12 months after the effective date of
the merger will be repaid by the paying agent to Dickinson Financial upon
written request of Dickinson Financial. If you have not complied with the
exchange procedures prior to 12 months after the merger, you may only look to
Dickinson Financial for payment of the cash you are entitled to receive in
exchange for your shares of common stock, without any interest, and subject to
applicable abandoned property, escheat and similar laws.
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If your Hardin Bancorp stock certificates have been lost, stolen or
destroyed, you will have to prove your ownership of these certificates and that
they were lost, stolen or destroyed before you receive any consideration for
your shares. Dickinson Financial or the paying agent will send you instructions
on how to provide evidence of ownership. You may be required to make an
affidavit and post a bond in an amount sufficient to protect Dickinson Financial
against claims related to your common stock.
Certain Federal Income Tax Consequences
The following is a discussion of the material federal income tax
consequences of the merger to certain holders of Hardin Bancorp common stock.
The discussion is based upon the Internal Revenue Code (the "Code"), Treasury
regulations, Internal Revenue Service rulings and judicial and administrative
decisions in effect as of the date of this proxy statement. This discussion
assumes that the common stock is generally held for investment. In addition,
this discussion does not address all of the tax consequences that may be
relevant to you in light of your particular circumstances or to Hardin Bancorp
stockholders subject to special rules, such as foreign persons, financial
institutions, tax-exempt organizations, dealers in securities or foreign
currencies, insurance companies or employees who acquired the stock pursuant to
the exercise of employee stock options or other compensation arrangements.
The receipt of cash for Hardin Bancorp common stock in connection with
the merger will be a taxable transaction for federal income tax purposes to
stockholders receiving such cash. You will recognize a gain or loss measured by
the difference between your tax basis for the common stock owned by you at the
time of the merger and the amount of cash you receive for your Hardin Bancorp
shares. Your gain or loss will be a capital gain or loss if the common stock is
a capital asset to you. Under present law, long-term capital gain recognized by
an individual generally will be taxed at a maximum federal income tax rate of
20%.
The cash payments the holders of common stock will receive upon their
exchange of the common stock pursuant to the merger generally will be subject to
"backup withholding" for federal income tax purposes unless certain requirements
are met. Under federal law, the paying agent must withhold 31% of the cash
payments to holders of common stock to whom backup withholding applies. The
federal income tax withheld may be used by these persons to reduce their federal
income tax liability by the amount that is withheld. To avoid backup
withholding, a holder of common stock must provide the paying agent with his or
her taxpayer identification number and complete a form in which he or she
certifies that he or she has not been notified by the Internal Revenue Service
that he or she is subject to backup withholding as a result of a failure to
report interest and dividends. The taxpayer identification number of an
individual is his or her social security number.
Neither Dickinson Financial nor Hardin Bancorp has requested or will
request a ruling from the Internal Revenue Service as to any of the tax effects
to Hardin Bancorp's stockholders of the transactions discussed in this proxy
statement, and no opinion of counsel has been or will be rendered to Hardin
Bancorp's stockholders with respect to any of the tax effects of the merger to
holders of common stock
The above summary of the material federal income tax consequences of
the merger is not intended as a substitute for careful tax planning on an
individual basis. In addition to the federal income tax consequences discussed
above, consummation of the merger may have significant state and local income
tax consequences that are not discussed in this proxy statement. Accordingly,
persons considering the merger are urged to consult their tax advisers with
specific reference to the effect of their own particular facts and circumstances
on the matters discussed in this proxy statement.
Rights of Dissenting Stockholders
Under Delaware law, if you do not wish to accept the cash payment
provided for in the merger agreement, you have the right to dissent from the
merger and to have an appraisal of the fair value of your shares conducted by
the Delaware Court of Chancery. Hardin Bancorp stockholders electing to exercise
dissenters' appraisal rights must comply with the provisions of Section 262 of
the Delaware General Corporation Law in order to perfect their rights. Hardin
Bancorp will require strict compliance with the statutory procedures. A copy of
Section 262 is attached as Appendix C.
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The following discussion is intended as a summary of the material
provisions of the Delaware statutory procedures required to be followed by a
Hardin Bancorp stockholder in order to dissent from the merger and perfect
dissenters' appraisal rights. This summary, however, is not a complete statement
of all applicable requirements and is qualified in its entirety by reference to
Section 262 of the Delaware General Corporation Law, the full text of which
appears in Appendix C of this proxy statement.
Section 262 requires that stockholders be notified at least 20 days
before the date of the meeting to vote on the merger for which dissenters'
appraisal rights will be available. A copy of Section 262 must be included with
that notice. This proxy statement constitutes Hardin Bancorp's notice to its
stockholders of the availability of dissenters' appraisal rights in connection
with the merger in compliance with the requirements of Section 262. If you wish
to consider exercising your dissenters' appraisal rights you should carefully
review the text of Section 262 contained in Appendix C because if you do not
timely and properly comply with the requirements of Section 262, you will lose
your rights under Delaware law.
If you elect to demand appraisal of your shares of Hardin Bancorp
common stock, you must satisfy both of the following conditions:
1. You must deliver to Hardin Bancorp a written demand for
appraisal of your shares of common stock before the vote with
respect to the merger is taken. This written demand for
appraisal must be in addition to and separate from any proxy
or vote abstaining from or against the merger. Voting against
or failing to vote for the merger by itself does not
constitute a demand for appraisal within the meaning of
Section 262.
2. You must not vote in favor of the merger. An abstention or
failure to vote will satisfy this requirement, but a vote in
favor of the merger, by proxy or in person, will constitute a
waiver of your dissenters' appraisal rights in respect of the
shares of common stock so voted and will nullify any
previously filed written demands for appraisal.
If you fail to comply with either of these conditions and the merger is
completed, you will be entitled to receive the cash payment for your shares of
common stock as provided for in the merger agreement but will have no
dissenters' appraisal rights with respect to your shares of Hardin Bancorp
common stock.
All demands for appraisal must reasonably inform Hardin Bancorp of the
identity of the stockholder and the intention of the stockholder to demand
appraisal of his or her shares of common stock. The demand should be executed
by, or on behalf of, the record holder of the shares of common stock and must be
delivered to the following address prior to the time that the vote on the merger
is taken at the meeting:
Corporate Secretary
Hardin Bancorp, Inc.
201 Northeast Elm Street
Hardin, Missouri 64035
To be effective, a demand for appraisal by a holder of common stock
must be made by or in the name of such registered stockholder, fully and
correctly, as the stockholder's name appears on his or her stock certificate(s)
and cannot be made by the beneficial owner if he or she does not also hold the
shares of record. The beneficial holder must, in such cases, have the registered
owner submit the required demand in respect of such shares.
If shares of common stock are owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, execution of a demand for appraisal
should be made in that capacity; and if the shares of common stock are owned of
record by more than one person, as in a joint tenancy or tenancy in common, the
demand should be executed by or for all joint owners. An authorized agent,
including one for two or more joint owners, may execute the demand for appraisal
for a stockholder of record; however, the agent must identify the record owner
or owners and expressly disclose the fact that, in executing the demand, he or
she is acting as agent for the record owner. A record owner, such as a broker,
who holds shares of common stock as a nominee for others, may exercise his or
her right of appraisal with respect to the shares of common stock held for one
or more beneficial owners, while not exercising this right for other beneficial
owners. In that case, the written demand should state the number of shares of
common stock as to which appraisal is sought. Where no number of shares of
common stock is expressly
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mentioned, the demand will be presumed to cover all shares of common stock held
in the name of such record owner.
If you hold your shares of common stock in a brokerage account or in
other nominee form and you wish to exercise appraisal rights, you should consult
with your broker or other nominee to determine the appropriate procedures for
the making of a demand for appraisal by such nominee. Similarly, if you
participate in the Hardin Federal Savings Bank Employee Stock Ownership Plan and
you wish to exercise appraisal rights, you should consult with the trustee of
the Employee Stock Ownership Plan to determine the appropriate procedures for
the making of a demand for appraisal.
Section 262 provides that within 10 days after the effective date of
the merger, Dickinson Financial must give written notice that the merger has
become effective to each Hardin Bancorp stockholder who has properly filed a
written demand for appraisal and who did not vote in favor of the merger. Within
120 days after the effective date of the merger, either Dickinson Financial or
any stockholder who has complied with the requirements of Section 262 may file a
petition in the Delaware Court of Chancery demanding a determination of the fair
value of the shares held by all stockholders entitled to appraisal. Dickinson
Financial has advised us that it does not presently intend to file such a
petition in the event there are dissenting stockholders and has no obligation to
do so. Accordingly, your failure to file such a petition within the period
specified could nullify your previously written demand for appraisal.
At any time within 60 days after the effective date of the merger, any
stockholder who has demanded an appraisal has the right to withdraw the demand
and to accept the cash payment specified by the merger agreement for his or her
shares of Hardin Bancorp common stock. If a petition for appraisal is duly filed
by a stockholder and a copy of the petition is delivered to Dickinson Financial,
Dickinson Financial will be obligated within 20 days after receiving service of
a copy of the petition to provide the Chancery Court with a duly verified list
containing the names and addresses of all stockholders who have demanded an
appraisal of their shares of common stock. After notice to dissenting
stockholders, the Chancery Court is empowered to conduct a hearing upon the
petition, to determine those stockholders who have complied with Section 262 and
who have become entitled to the appraisal rights. The Chancery Court may require
the stockholders who have demanded payment for their shares to submit their
stock certificates to the Register in Chancery for notation on them of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with this direction, the Court may dismiss the proceedings as to such
stockholder.
After determination of the stockholders entitled to appraisal of their
shares of Hardin Bancorp common stock, the Chancery Court will appraise the
shares, determining their fair value exclusive of any element of value arising
from the accomplishment or expectation of the merger, together with a fair rate
of interest. When the value is determined, the Chancery Court will direct the
payment of this fair value, with interest accrued during the pendency of the
proceeding if the Chancery Court so determines, to the stockholders entitled to
receive the same, upon surrender by such holders of the certificates
representing such shares.
In determining fair value, the Chancery Court is required to take into
account all relevant factors. You should be aware that the fair value of the
shares of common stock as determined under Section 262 could be more, the same,
or less than the value that you are entitled to receive pursuant to the merger
agreement.
Costs of the appraisal proceeding may be imposed upon Dickinson
Financial and the stockholders participating in the appraisal proceeding by the
Chancery Court as the Chancery Court deems equitable in the circumstances. Upon
the application of a stockholder, the Chancery Court may order all or a portion
of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, to be charged pro rata against the value of all
shares of common stock entitled to appraisal.
After the effective date of the merger, any stockholder who demands
appraisal rights will not be entitled to vote shares of common stock subject to
such demand for any purpose or to receive payments of dividends or any other
distribution with respect to such shares of common stock, other than with
respect to payment as of a record date prior to the effective date of the
merger; however, if no petition for appraisal is filed within 120 days after the
effective date of the merger, or if such stockholder delivers a written
withdrawal of his or her demand for appraisal and an acceptance of the merger
within 60 days after the effective date of the merger, then the right of such
stockholder to appraisal will cease and such stockholder will be entitled to
receive the cash payment for shares of his
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or her common stock pursuant to the merger agreement. Any withdrawal of a demand
for appraisal made more than 60 days after the effective date of the merger may
only be made with the written approval of Dickinson Financial and must, to be
effective, be made within 120 days after the effective date of the merger.
The requirements of Section 262 are technical and complex. Hardin
Bancorp stockholders who may wish to dissent from the merger and pursue
appraisal rights should consult their legal advisers.
Interests of Certain Persons in the Merger
Some of Hardin Bancorp's directors and officers may have interests in
the merger that are in addition to, or different from, the interests of
stockholders. Hardin Bancorp's board of directors was aware of these interests
and considered them in approving the merger agreement.
Stock Ownership. The directors and executive officers of Hardin
Bancorp, together with their affiliates, beneficially owned a total of 105,678
shares of common stock, excluding stock options and unvested shares of
restricted stock, representing 14.5% of all outstanding shares of the common
stock, as of December 26, 2000. The directors and executive officers will
receive the same consideration in the merger for their shares as the other
Hardin Bancorp stockholders.
Payment for Restricted Stock. At the merger effective date, each share
of restricted stock granted by Hardin Bancorp pursuant to the 1995 Recognition
and Retention Plan, whether or not then vested, will be converted into the right
to receive $21.75 in cash, subject to applicable withholding taxes. As of
December 26, 2000, the directors and executive officers of Hardin Bancorp held
7,369 shares of unvested restricted stock pursuant to Hardin Bancorp's
Recognition and Retention Plan. See "Beneficial Ownership of Hardin Bancorp
Common Stock by Certain Beneficial Owners and Management" for the amount of
unvested awards held by our directors and executive officers. In addition, each
holder of restricted stock will receive such holder's allocable share of
dividends held by the Recognition and Retention Plan with respect to such
restricted stock. At the effective time, the Hardin Bancorp Recognition and
Retention Plan will be deemed terminated.
Conversion of Stock Options. At the merger effective date, each option
granted by Hardin Bancorp to purchase shares of Hardin Bancorp common stock
issued and outstanding pursuant to the 1995 Stock Option and Incentive Plan,
whether or not such option is vested or exercisable on the merger effective
date, will be converted into the right to receive in cash an amount equal to the
difference, if a positive number, between $21.75 and the exercise price of each
option multiplied by the number of shares of Hardin Bancorp common stock subject
to the option. As of December 26, 2000, the directors and executive officers of
Hardin Bancorp held options to purchase a total of 86,140 shares of common
stock, of which 17,827 were not vested. See "Beneficial Ownership of Hardin
Bancorp Common Stock by Certain Beneficial Owners and Management" for the amount
of vested and unvested stock options held by our directors and executive
officers.
Employee Stock Ownership Plan. Prior to consummation of the merger,
Hardin Bancorp will make a contribution approximately equal to but no greater
than the maximum contribution that is allowed under the tax laws, and then will
terminate its ESOP. After consummation of the merger, the ESOP will repay the
outstanding balance of its loan from the merger consideration received on
unallocated shares held in the suspense account and allocate any surplus cash to
the accounts of ESOP participants in proportion to their account balances, to
the extent allowed under applicable law and the governing documents of the ESOP.
Hardin Bancorp has applied for a favorable determination letter from the
Internal Revenue Service on the tax-qualified status of the ESOP on termination.
Upon receipt of the favorable determination letter and after the consummation of
the merger, the ESOP will distribute the account balances to the ESOP
participants.
Director Deferred Fee Agreements. In 1980, Hardin Federal established a
deferred compensation program for the benefit of its directors. This program
permitted directors who elected to participate to defer up to 100% of directors
fees over a 5-year period. All directors have participated in the deferred
compensation program, with the exception of directors Blankenship and Homan.
Each participating director upon reaching age 65, or in the event of death prior
to age 65, the director's beneficiary, is entitled to receive a specified
monthly payment for a period of 120 months. All directors are fully vested in
their benefits under the Director Deferred Fee Agreements. The merger agreement
provides that, at or prior to the effective time of the merger, the Director
Deferred Fee
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Agreements will be terminated and any benefits, or remaining benefits, to which
the directors are entitled will be paid to them by Hardin Bancorp in a lump sum
cash payment, reduced to present value using an 8% discount rate.
Officers Compensation Agreement. In 1994, Hardin Federal entered into
non-qualified agreements with Robert W. King and Karen K. Blankenship which
provide for annual retirement benefits or death benefits of $12,000 and $22,800,
respectively, payable monthly for a period of 120 months and commencing upon the
earlier of such executive's attainment of age 65 or death. Both Mr. King and Ms.
Blankenship are entirely vested in their benefits under the Officers
Compensation Agreements. The merger agreement provides that, at or prior to the
effective time, the Officers Compensation Agreements will be terminated and any
benefits to which Mr. King and Ms. Blankenship are entitled will be paid to them
by Hardin Bancorp in a lump sum cash payment, reduced to present value using an
8% discount rate. Mr. King and Ms. Blankenship will receive approximately
$68,885 and $85,545, respectively, under the Officers Compensation Agreements.
Employment and Change of Control Agreements. Hardin Bancorp has entered
into employment agreements with Robert W. King, as President and Chief Executive
Officer, and Karen K. Blankenship, as Senior Vice President and Secretary. These
agreements generally provide that in the event of a change in control of Hardin
Bancorp, the employee would be entitled to receive a severance payment if the
employee is terminated without cause or there is a material change in the
employee's duties, compensation or certain other aspects of the employee's
employment arrangement resulting in the employee's resignation. The severance
payment under these agreements would be equal to 299% of the base amount of
compensation, as defined, in the case of Mr. King, and 150% of the base amount
of compensation, in the case of Ms. Blankenship. The transactions contemplated
by the merger agreement would constitute a change in control of Hardin Bancorp.
Under the terms of the merger agreement, upon the effectiveness of the merger,
Mr. King and Ms. Blankenship will receive cash severance payments in the amounts
of approximately $403,340 and $128,099, respectively, provided however, that a
cash severance payment will be reduced, if necessary, to avoid an excess
parachute payment. In addition, each employee is entitled to continued health
benefits during the remaining term of the employment agreement substantially
similar to the benefits maintained for the employee prior to the change in
control.
Hardin Bancorp has also entered into a change in control severance
agreement with William L. Homan, Vice President and Treasurer. This agreement
provides that in the event of a change in control of Hardin Bancorp, the officer
would be entitled to receive a severance payment if he is terminated without
cause or there is a material change in his duties, compensation or certain other
aspects of his employment arrangement resulting in his resignation. The
severance payment under Mr. Homan's agreement would be equal to 100% of his base
annual compensation. Under the terms of the merger agreement, upon the
effectiveness of the merger, Mr. Homan will receive a cash severance payment in
the amount of $75,893. In addition, Mr. Homan would continue to receive life and
health insurance coverage substantially similar to the coverage maintained prior
to the change in control, for the longer of 12 months or the remaining term of
the severance agreement.
Consulting and Non-Competition Agreement. In connection with the
merger, Dickinson Financial agreed to offer a Consulting and Non-Competition
Agreement to Robert W. King. The Consulting Agreement has a term of one-year and
may be extended upon the mutual agreement of the parties. Under the Consulting
and Non-Competition Agreement, Mr. King agrees to, among other things, assist
with the transition following the change in control, help Dickinson Financial to
foster positive community and employee relations, and engage in goodwill
activities on behalf of Bank Midwest. In addition, for two years following the
change in control, Mr. King agrees not to compete with Dickinson Financial or
Bank Midwest within Ray County, Missouri or the City of Excelsior Springs. In
exchange for entering into the Consulting and Non-Competition Agreement, Mr.
King will receive an immediate payment of $7,500 and will further receive an
annual payment of $24,000 for each year that he is retained as a consultant.
Indemnification of Directors and Officers. Dickinson Financial has
agreed to indemnify and hold harmless each director and officer of Hardin
Bancorp for a period of six years from liability and expenses arising out of
matters existing or occurring at or prior to the consummation of the merger to
the extent allowed under applicable law. This indemnification would extend to
liability arising out of the transactions contemplated by the merger agreement.
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Regulatory Approvals
Completion of the merger and the bank merger are subject to prior
regulatory approval. The merger of Hardin Bancorp with Dickinson Financial is
subject to the approval of the Board of Governors of the Federal Reserve System
under the Bank Holding Company Act. Dickinson Financial filed a request for a
waiver of this application requirement on November 9, 2000, and on November 20,
2000 the requested waiver was obtained. The required notification to the Office
of Thrift Supervision was filed on or about November 21, 2000. The bank merger
is subject to the prior approval of the Office of the Comptroller of the
Currency under the Bank Merger Act. In reviewing applications under the Bank
Merger Act, the OCC must consider, among other factors, the financial and
managerial resources and future prospects of the existing and resulting
institutions, and the convenience and needs of the communities to be served. In
addition, the OCC may not approve a transaction if it will result in a monopoly
or otherwise be anticompetitive. Bank Midwest, N. A. filed an application for
approval of the bank merger with the OCC on November 15, 2000. The application
is now pending and action on that application is expected to be forthcoming at
or about the time of the meeting to vote on the merger. We are not aware of any
other regulatory approvals that are required for completion of the merger,
except as described above. Should any other approvals be required, we presently
contemplate that we or Dickinson Financial would seek those approvals. There can
be no assurance that approval of the OCC or any other approvals, if required,
will be obtained.
The approval of any application merely implies the satisfaction of
regulatory criteria for approval, which does not include review of the merger
from the standpoint of the adequacy of the consideration received by Hardin
Bancorp stockholders in exchange for their shares of Hardin Bancorp common
stock. Furthermore, regulatory approvals do not constitute an endorsement or
recommendation of the merger.
Accounting Treatment
Dickinson Financial will account for the merger under the purchase
method of accounting. This means that Dickinson Financial and Hardin Bancorp
will be treated as one company as of the date of the merger and Dickinson
Financial will record the fair value of Hardin Bancorp's assets and liabilities
on its financial statements. Dickinson Financial will record the excess of its
purchase price over the fair value of Hardin Bancorp's identifiable net assets
as goodwill.
Terms of the Merger
The merger agreement provides for a business combination in which DFC
Acquisition Corporation Five, a newly formed wholly owned acquisition subsidiary
of Dickinson Financial, will be merged into Hardin Bancorp. This transaction
will result in Hardin Bancorp becoming a wholly owned subsidiary of Dickinson
Financial.
The merger agreement further provides that once the merger of the
acquisition subsidiary into Hardin Bancorp is complete, Hardin Federal will
merge into Bank Midwest. An agreement for this bank merger to occur has been
entered into by Hardin Federal and Bank Midwest. When the bank merger occurs,
the assets and liabilities of Hardin Federal will become assets and liabilities
of Bank Midwest, and Hardin Federal will cease to exist.
The merger agreement provides that the officers and directors of the
acquisition subsidiary before it is merged into Hardin Bancorp are to be the
officers and directors of Hardin Bancorp after the merger. The officers and
directors of Bank Midwest immediately prior to the bank merger are to continue
as officers and directors of Bank Midwest after the bank merger.
The merger will result, except as otherwise stated, in each outstanding
share of Hardin Bancorp common stock being converted into the right to receive a
cash payment in the amount of $21.75. Shares of Hardin Bancorp common stock that
are held directly or indirectly by Dickinson Financial and shares held by Hardin
Bancorp as treasury stock will be canceled and retired upon completion of the
merger and no payment will be made for them. The shares of common stock that are
to be canceled will not include shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted. In addition, holders of common
stock for which dissenters' appraisal rights have been exercised will be
entitled only to the rights granted by Section 262 of the Delaware General
Corporation Law.
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Each option for the purchase of common stock under the Hardin Bancorp
stock option plan that is outstanding and unexercised and has not expired at the
time of the merger, whether or not it is vested, will be converted into the
right to receive a cash payment equal to the number of shares of common stock
subject to the option multiplied by the difference, if a positive number,
between $21.75 per share of common stock and the exercise price of the option.
When the Merger Will Be Completed
The closing of the merger will take place not more than 30 days after
the satisfaction or waiver of all of the conditions to the merger contained in
the merger agreement, unless Dickinson Financial and Hardin Bancorp agree to
another date. On the date of the closing, a certificate of merger will be filed
with the Delaware Secretary of State. The merger will become effective at the
time stated in the certificate of merger. Immediately after the effective time
of the merger of Hardin Bancorp into Dickinson Financial, Hardin Federal will be
merged into Bank Midwest.
Hardin Bancorp expects to complete the merger in the first quarter of
2000. However, Hardin Bancorp cannot guarantee when or if the required approvals
will be obtained. Furthermore, either party may terminate the merger agreement
if, among other reasons, the merger has not been completed on or before May 31,
2001, unless failure to complete the merger by that time is due to the material
breach of any representation, warranty or covenant by the party seeking to
terminate the merger agreement.
Conditions to the Merger
The obligations of Dickinson Financial and Hardin Bancorp to complete
the merger are conditioned on the following:
o approval of the merger agreement by Hardin Bancorp's
stockholders;
o receipt of all required regulatory approvals, consents and
waivers without any materially adverse conditions;
o no party to the merger being subject to any order, decree,
ruling or injunction that prohibits consummating the merger,
no governmental entity having instituted any proceeding for
the purpose of blocking the merger, and the absence of any
statute, rule or regulation that prohibits or restricts
completion of the merger; and
o the other party having performed in all material respects its
obligations under the merger agreement, and the other party's
representations and warranties being true and correct as of
the date of the merger agreement and as of the closing date.
The obligations of Dickinson Financial to complete the merger also are
conditioned on Hardin Bancorp having adjusted stockholders' equity of not less
than $12.0 million and Dickinson Financial having received customary legal
opinions from Hardin Bancorp's counsel in form and substance reasonably
acceptable to Dickinson Financial. The obligations of Hardin Bancorp also are
conditioned on Dickinson Financial having deposited with the paying agent
sufficient cash to pay the aggregate merger consideration.
We cannot guarantee whether all of the conditions to the merger will be
satisfied or waived by the party permitted to do so. If the merger is not
completed on or before May 31, 2001, either party may terminate the merger
agreement by a vote of a majority of its board of directors.
Conduct of Business Pending the Merger
Dickinson Financial and Hardin Bancorp have each agreed that, until the
completion of the merger, each of them will, and will cause its subsidiaries to,
use its commercially reasonable efforts to:
o conduct its business in the regular, ordinary and usual course
consistent with past practice;
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o maintain and preserve intact its business organization,
properties, leases, employees and advantageous business
relationships and retain the services of its officers and key
employees;
o take no action which would adversely affect or delay the
ability of Dickinson Financial or Hardin Bancorp to perform
their respective covenants and agreements on a timely basis
under the merger agreement; and
o take no action which would adversely affect or delay any
party's ability to obtain any necessary approvals, consents or
waivers of any governmental authority required for the
transactions contemplated by the merger agreement or which
would reasonably be expected to result in those approvals,
consents or waivers containing any material condition or
restriction.
Further, except as otherwise provided in the merger agreement, until
the completion of the merger, Hardin Bancorp has agreed that, unless permitted
to by Dickinson Financial, neither it nor its subsidiaries will:
o change its certificate of incorporation or bylaws;
o issue, deliver or sell any shares of its capital stock, or
securities or obligations convertible or exercisable for any
shares of its capital stock, other than shares issued upon the
exercise of outstanding stock options;
o issue, grant or sell any option, warrant, call, commitment,
stock appreciation right, right to purchase or agreement
relating to its authorized or issued capital stock, or change
the terms of any of its outstanding stock options or warrants;
o split, combine, reclassify or adjust any shares of its capital
stock or otherwise change its capitalization;
o make, declare or pay any cash or stock dividends or other
distributions on its capital stock, other than normal
quarterly cash dividends on its common stock of not more than
$0.20 per share;
o redeem, purchase or acquire any shares of its capital stock;
o sell, transfer, assign, mortgage, encumber or dispose of any
of its material assets or cancel, release or assign any
indebtedness, other than in the ordinary course of business
consistent with past practice;
o increase the compensation or fringe benefits of any of its
employees or directors, other than general increases in
compensation for non-executive officer employees in the
ordinary course of business consistent with past practice;
o pay any pension or retirement allowance not required by any
existing plan or agreement to any employees or directors;
o become a party to, amend or commit to fund or otherwise
establish any trust or account related to any employee benefit
plan with or for the benefit of any employee or director;
o grant or award any stock options, or make any discretionary
contribution to any employee benefit plan;
o hire any employee with an annual total compensation payment in
excess of $35,000 or enter into any employment contract with
any employee;
o change its method of accounting, except as required by changes
in generally accepted accounting principles or as contemplated
by the merger agreement;
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o settle any claim against it for money damages in excess of
$25,000 or agree to material restrictions on its operations;
o permit any lien, encumbrance or charge of any material effect
to attach to any assets of Hardin Bancorp or Hardin Federal,
other than in the ordinary course of business consistent with
past practice;
o acquire or agree to acquire any business or assets of another
business that would be material to it, except in satisfaction
of debts previously contracted;
o extend or renew loans, or advance additional sums to a
borrower whose loans, in whole or in part, have been
classified or listed as special mention by any regulatory
authority or included on Hardin Federal's watch list, except
as contemplated by the merger agreement;
o make, renegotiate, renew, increase, extend, modify or purchase
any loan, lease, advance, credit enhancement or other
extension of credit, or make any such commitment, except in
conformance with existing lending practice in amounts not to
exceed $100,000 secured or $25,000 unsecured with respect to
any individual borrower or conforming loans secured by single
family residential properties or loans as to which Hardin
Bancorp has a binding obligation to make such loans as of the
date of the merger agreement;
o establish or commit to establish any new branch or other
office facilities or file any application to relocate or
terminate the operations of any banking office;
o make any investment either by purchase of securities,
contributions to capital, property transfers, or purchase of
any property or assets of any other individual or entity,
other than investments for its portfolio made in accordance
with the merger agreement;
o make any investment in any debt security, including
mortgage-backed and mortgage-related securities, except for
short- to intermediate-term U.S. government and U.S.
government agency securities, or securities of the Federal
Home Loan Bank, or materially restructure or change its
investment securities portfolio, through purchases, sales or
otherwise;
o enter into, renew, amend or terminate any contract or
agreement, or make any change in any of its leases or
contracts, other than with respect to those involving
aggregate payments of less than $50,000 per year over a term
of up to three years;
o permit Hardin Federal to waive any material right or cancel
any material contract, lease, license, obligation or
commitment, other than in the ordinary course of business
consistent with past practice;
o incur any additional borrowings other than short-term Federal
Home Loan Bank borrowings and reverse repurchase agreements
consistent with past practice, or pledge any of its assets to
secure any borrowings other than in connection with such
borrowings and reverse repurchase agreement or as required
pursuant to the terms of borrowings of Hardin Bancorp or its
subsidiaries in effect as of the date of the merger agreement;
o make any capital expenditures in excess of $10,000 per
expenditure or $200,000 in the aggregate, other than pursuant
to prior binding commitments and other than expenditures
necessary to maintain existing assets in good repair or to
make payment of necessary taxes;
o elect any new executive officer or director;
o enter into any agreements or transactions with any officer,
director, stockholder or employee of Hardin Bancorp or its
affiliates and subsidiaries in an amount of more than $5,000
individually or $25,000 in the aggregate;
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o organize, capitalize, lend to or otherwise invest in any
subsidiary;
o accept any deposits from any person on terms materially more
favorable in any respect than those available to the general
public in Hardin Bancorp's market area, unless such deposits
are accepted in accordance with existing practice; and
o agree to take or make any commitment to take any of the
actions listed above.
See Article IV of the merger agreement, which is attached to this proxy
statement as Appendix A, for a more complete description of restrictions on the
conduct of business of Hardin Bancorp pending the merger.
Agreement Not to Solicit Other Offers
The merger agreement prohibits Hardin Bancorp and its officers,
directors, or other agents from initiating, soliciting, or encouraging any
acquisition proposal with a third party. An acquisition proposal is generally
defined to include any merger, business combination or other similar
transaction, or any purchase of 25% or more of the assets of Hardin Bancorp or
Hardin Federal of any tender offer or exchange offer for 25% or more of the
outstanding shares of capital stock of Hardin Bancorp
Despite the agreement of Hardin Bancorp not to solicit other
acquisition proposals, the board of directors of Hardin Bancorp generally may
furnish information to or enter into discussions or negotiations with anyone who
makes an unsolicited, written, bona fide acquisition proposal that is a
financially superior proposal to the merger. A proposal of this nature is one
about which Hardin Bancorp's board has concluded, after consulting with its
financial advisers and legal counsel, is superior to this merger from a
financial point of view. Before Hardin Bancorp enters into negotiations with a
third party regarding a superior proposal, it has to give reasonable notice to
Dickinson Financial and must obtain from the third party an executed
confidentiality agreement.
Employee Matters
Each person who is an employee of Hardin Bancorp or its subsidiaries as
of the closing of the merger and whose employment is not specifically terminated
at or prior to closing will become an employee of the surviving company or its
subsidiaries. Each of these continuing employees will be an employee at will.
All continuing employees who continue as employees of the combined
company after the merger will be eligible to participate in Dickinson
Financial's benefit plans on the same basis as a new employee of Dickinson
Financial. Service with Hardin Bancorp or its subsidiaries will be treated as
service with Dickinson Financial for purposes of satisfying any waiting periods,
evidence of insurability requirements or the application of any preexisting
condition limitation with respect to any Dickinson Financial welfare benefit
plan. Each continuing employee shall receive credit for service with Hardin
Bancorp or its subsidiaries for purposes of any employee benefit plans or
computing vacation pay benefits.
For information regarding the Hardin Federal ESOP, see the discussion
above under the caption "Interests of Certain Persons in the Merger--Employee
Stock Ownership Plan."
Certain Other Covenants
The merger agreement also contains other agreements relating to the
conduct of the parties before consummation of the merger, including the
following:
o After all required regulatory and stockholder approvals have
been received, Hardin Bancorp will cause Hardin Federal to
revise its loan, litigation and real estate valuation policies
and practices, and investment and asset/liability management
policies and practices, as requested by Dickinson Financial,
to conform to those of Bank Midwest. Dickinson Financial must
first confirm that all conditions to the closing of the merger
have been satisfied.
o Hardin Bancorp will give Dickinson Financial reasonable access
during normal business hours to its property, books, records
and personnel and furnish all information Dickinson Financial
may
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reasonably request. In addition, a representative of Dickinson
Financial will be permitted to observe the board of directors
meetings of Hardin Bancorp and Hardin Federal.
o Dickinson Financial, with the cooperation of Hardin Bancorp,
will submit all necessary filings and applications with any
governmental entity, the approval of which is required to
complete the merger and related transactions, and will obtain
any approval, consent or waiver of any third party that is
required in connection with this transaction.
o Dickinson Financial and Hardin Bancorp will use all reasonable
efforts to take promptly all actions necessary, proper or
advisable to consummate the merger.
o Dickinson Financial and Hardin Bancorp will consult with each
other regarding any public statements about the merger and any
filings with any governmental entity or with any national
securities exchange.
o Hardin Bancorp will take all actions necessary to convene a
meeting of its stockholders to vote on the merger agreement.
The Hardin Bancorp board will recommend at its stockholder
meeting that the stockholders vote to approve the merger and
will use its reasonable best efforts to solicit stockholder
approval.
o Dickinson Financial and Hardin Bancorp each will notify the
other of any contract defaults or other events which would
reasonably be likely to result in a material adverse effect on
it.
Representations and Warranties in the Merger Agreement
Both Dickinson Financial and Hardin Bancorp have made certain customary
representations and warranties to each other relating to their businesses in the
merger agreement. For information on these representations and warranties,
please refer to Article III of the merger agreement attached as Appendix A. The
representations and warranties must be true through the completion of the
merger. See "Conditions to the Merger" beginning on page ____.
Termination of the Merger Agreement
The merger agreement may be terminated at or prior to the completion of
the merger, either before or after any requisite stockholder approval by:
o the mutual consent of Dickinson Financial and Hardin Bancorp
in writing, if a majority of the board of directors of each so
determines;
o either party if a majority of its board of directors so
determines, in the event of a failure of the stockholders of
Hardin Bancorp to approve the merger agreement;
o either party if a required regulatory approval, consent or
waiver is denied or any governmental entity prohibits the
merger or the other related transactions;
o Dickinson Financial if a required regulatory approval, consent
or waiver is made subject to conditions reasonably
unacceptable to it;
o either party if a majority of its board of directors so
determines, in the event the merger is not consummated by May
31, 2001, unless the failure to so consummate by such time is
due to a breach caused by the party seeking to terminate;
o either party if the other party makes a misrepresentation,
breaches a warranty or fails to fulfill a covenant that is not
cured within a specified time and that would have a material
adverse effect on the party seeking to terminate;
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o Hardin Bancorp if its board of directors determines that it
must accept a superior offer from a third party in the
exercise of its fiduciary duties;
o Dickinson Financial, if Hardin Bancorp's stockholders have
exercised dissenters' or appraisal rights with respect to more
than 10% of the outstanding shares of Hardin Bancorp common
stock by delivering a written demand for appraisal of their
shares to Hardin Bancorp prior to the meeting; or
o Dickinson Financial, if there shall have been a material
adverse change in the condition of Hardin Bancorp between the
date of Dickinson Financial's initial due diligence and the
closing date and Hardin Bancorp fails to cure such change
within a specified time.
Expenses and Termination Fee
Each party will pay its own costs and expenses incurred in connection
with the merger. If Hardin Bancorp terminates the merger agreement in order to
accept a superior offer from a third party and within 12 months Hardin Bancorp
or Hardin Federal enters into an agreement with that party to effect a merger,
consolidation, share exchange or similar transaction, then Hardin Bancorp will
pay to Dickinson Financial a termination fee of $500,000.
Changing the Terms of the Merger Agreement
Before the completion of the merger, we may agree in writing to amend
or modify any provision of the merger agreement and any provision of the merger
agreement may be waived by the party benefited by the provision. However, after
the vote by the stockholders of Hardin Bancorp, no amendment or modification may
be made that would reduce the amount or change the kind of consideration to be
received by Hardin Bancorp's stockholders under the terms of the merger or
contravene any provision of applicable law or the federal banking laws, rules
and regulations.
Independent Public Accountants
KPMG, LLP serves as Hardin Bancorp's independent auditors. A
representative of KPMG is expected to be present at the meeting and will have an
opportunity to make a statement if he or she desires and will be available to
respond to appropriate questions.
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OWNERSHIP OF HARDIN BANCORP COMMON STOCK BY
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information regarding ownership of Hardin
Bancorp common stock as of December 26, 2000, by beneficial owners of more than
5% of the outstanding shares of Hardin Bancorp common stock, by each director
and each executive officer whose salary and bonus for the fiscal year ended
March 31, 2000 exceeded $100,000, and by all directors and executive officers of
Hardin Bancorp as a group. A person may be considered to own any shares of
common stock over which he or she has, directly or indirectly, sole or shared
voting or investing power.
Shares
Beneficially Percent
Name of Beneficial Owner Owned (2) of Class
------------------------ ------------ --------
Beneficial Owners of More than 5%:
----------------------------------
Hardin Bancorp, Inc.
Employee Stock Ownership Plan (1) 83,521 11.4%
201 Northeast Elm Street
Hardin, Missouri 64035
Robert W. King 55,908 7.6
201 Northeast Elm Street
Hardin, Missouri 64035
Directors and Executive Officers:
---------------------------------
Karen K. Blankenship 26,712(3) 3.7
David K. Hatfield 7,925(4) 1.1
Ivan R. Hogan 9,425(4) 1.3
William L. Homan 36,531(6) 5.0
Robert W. King 55,908(5) 7.6
David D. Lodwick 11,625(4) 1.6
W. Levan Thurman 8,425(4) 1.2
Directors and executive officers
of Hardin Bancorp and Hardin Federal
as a group (9 persons) 173,991(7) 23.9
--------------
(1) The amount reported represents shares held by the Employee Stock
Ownership Plan ("ESOP"), 55,835 shares of which have been allocated to
accounts of participants. First Bankers Trust of Quincy, Illinois, the
trustee of the ESOP, may be deemed to beneficially own the shares held
by the ESOP which have not been allocated to accounts of participants.
Participants in the ESOP are entitled to instruct the trustee as to the
voting of shares allocated to their accounts under the ESOP.
Unallocated shares held in the ESOP's suspense account are voted by the
trustee in the same proportion as allocated shares voted by
participants.
(2) Includes shares held directly, as well as shares held jointly with
family members, shares held in retirement accounts, shares held by
certain members of the named individuals' families, or held by trusts
of which the named individual is a trustee or substantial beneficiary,
with respect to which shares the named individuals may be deemed to
have sole or shared voting and/or investment power. Also includes
9,313, 5,021 and 5,399 shares allocated to the individual accounts of
Messrs. King and Homan and Mrs. Blankenship under Hardin Federal's
Employee Stock Ownership Plan. Does not include options to purchase
shares of common stock granted under Hardin Bancorp's Stock Option Plan
and shares of restricted common stock awarded under Hardin Bancorp's
Recognition and Retention Plan, which shares have not yet vested and as
to which the participants do not yet have voting rights.
(3) Includes 14,389 exercisable stock options, but excludes 1,481 unvested
RRP shares and 3,596 unvested stock options for Mrs. Blankenship.
(4) Includes 4,232 exercisable stock options, but excludes 423 unvested RRP
shares and 1,058 unvested stock options for director Hatfield, Hogan,
Lodwick and Thurman.
(5) Includes 21,160 exercisable stock options, but excludes 2,116 unvested
RRP shares and 5,290 unvested stock options for Mr. King.
(6) Includes 8,464 exercisable stock options, but excludes 846 unvested RRP
shares and 2,116 unvested stock options for Mr. Homan.
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(7) Includes 68,313 exercisable stock options, but excludes 7,369 unvested
RRP shares and 17,827 unvested stock options for all directors and
executive officers of Hardin Bancorp and Hardin Federal as a group. The
compensation committee of Hardin Bancorp consisting of directors
Hatfield, Hogan, Lodwick and Thurman, exercises voting power over the
7,369 unvested RRP shares.
OTHER MATTERS
The board of directors is not aware of any business to come before the
meeting other than those matters described above in this proxy statement.
However, if any other matters should properly come before the meeting, it is
intended that proxies will be voted in accordance with the judgment of the
person or persons voting the proxies.
STOCKHOLDER PROPOSALS
The merger is expected to be consummated prior to the next regularly
scheduled annual meeting of our stockholders, in which case the annual meeting
would not be convened. However, if the merger is not consummated prior to the
next regularly scheduled annual meeting of our stockholders, any proposal which
a stockholder wishes to have included in our proxy materials for the next annual
meeting of stockholders must have been received at our main office located at
201 Northeast Elm Street, Hardin, Missouri, not later than February 25, 2001.
Any such proposal shall be subject to the requirements of the proxy rules
adopted under the Securities Exchange Act of 1934. All stockholder proposals
must also comply with our bylaws and applicable federal law.
Under Hardin Bancorp's by-laws, certain procedures are provided which a
stockholder must follow to nominate persons for election as directors or to
introduce an item of business at an annual meeting of stockholders. These
procedures provide, generally, that stockholders desiring to make nominations
for directors, or to bring a proper subject of business before the meeting, must
do so by a written notice timely received (generally not later than 90 days in
advance of such meeting, subject to certain exceptions) by the Secretary of
Hardin Bancorp. The notice must include certain information as specified in
Hardin Bancorp 's bylaws.
WHERE YOU CAN FIND MORE INFORMATION
Hardin Bancorp is subject to the informational requirements of the
Securities Exchange Act of 1934 and files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy any
reports, statements or other information that Hardin Bancorp files at the SEC's
public reference room located at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the regional offices of the Commission located at Suite 1400,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and Suite
1300, 7 World Trade Center, New York, New York 10048. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. The public filings of Hardin Bancorp also are available to the public
from commercial document retrieval services and at the internet website
maintained by the SEC at "http://www.sec.gov."
Hardin Bancorp common stock is traded on the Nasdaq Small Cap market
under the symbol "HFSA." Documents filed by Hardin Bancorp can be inspected at
the office of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
27
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
Article I. The Merger....................................................................................1
Section 1.01 Structure of the Merger..................................................................1
Section 1.02 Status and Conversion of Shares in the Merger............................................1
Section 1.03 Exchange Procedures......................................................................2
Section 1.04 Stock Options; Restricted Stock..........................................................3
Section 1.05 Directors and Officers of the Surviving Corporation at Effective Time....................4
Section 1.06 Certificate of Incorporation and Bylaws of the Surviving Corporation.....................4
Section 1.07 Dissenters' Rights.......................................................................4
Section 1.08 Related Mergers..........................................................................4
Section 1.09 Alternate Structure......................................................................5
Article II. Stockholders' Equity at Closing...............................................................5
Section 2.01 Adjusted Stockholders' Equity............................................................5
Section 2.02 Valuation of Assets......................................................................5
Section 2.03 Valuation of Liabilities.................................................................6
Article III. Representations and Warranties................................................................6
Section 3.01 Disclosure Letters.......................................................................6
Section 3.02 Standards................................................................................7
Section 3.03 Representations and Warranties of Seller.................................................7
Section 3.04 Representations and Warranties of Buyer.................................................19
Article IV. Conduct Pending the Merger...................................................................22
Section 4.01 Conduct of Seller's Business Prior to the Effective Time................................22
Section 4.02 Forbearance by Seller...................................................................24
Section 4.03 Conduct of Buyer's Business Prior to the Effective Time.................................26
Article V. Covenants....................................................................................27
Section 5.01 Acquisition Proposals...................................................................27
Section 5.02 Certain Policies and Actions of Seller..................................................27
Section 5.03 Access and Information..................................................................28
Section 5.04 Certain Filings, Consents and Arrangements..............................................29
Section 5.05 Additional Actions......................................................................29
Section 5.06 Publicity...............................................................................29
Section 5.07 Stockholders Meeting....................................................................29
Section 5.08 Proxy Statement.........................................................................30
Section 5.09 Notification of Certain Matters.........................................................30
Section 5.10 Employees and Benefit Plans.............................................................30
Section 5.11 Indemnification.........................................................................32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.12 Acquisition Sub.........................................................................33
Article VI. Conditions to Consummation...................................................................33
Section 6.01 Conditions to Each Party's Obligations..................................................33
Section 6.02 Conditions to the Obligations of Buyer..................................................34
Section 6.03 Conditions to the Obligations of Seller.................................................34
Article VII. Data Processing...........................................................................35
Section 7.01 Sample Data.............................................................................35
Section 7.02 Information for Check Ordering..........................................................35
Section 7.03 Installation of Data Circuits...........................................................35
Article VIII. Termination...............................................................................35
Section 8.01 Termination.............................................................................35
Section 8.02 Termination Fee.........................................................................36
Section 8.03 Effect of Termination...................................................................36
Article IX. Closing and Effective Time...................................................................36
Section 9.01 Effective Time..........................................................................36
Section 9.02 Deliveries at the Closing...............................................................37
Article X. Certain Other Matters........................................................................37
Section 10.01 Certain Definitions; Interpretation.....................................................37
Section 10.02 Survival................................................................................37
Section 10.03 Waiver; Amendment.......................................................................37
Section 10.04 Counterparts............................................................................37
Section 10.05 Governing Law...........................................................................38
Section 10.06 Expenses................................................................................38
Section 10.07 Notices.................................................................................38
Section 10.08 Entire Agreement, Etc...................................................................38
Section 10.09 Specific Performance....................................................................38
Section 10.10 Successors and Assigns; Assignment......................................................39
</TABLE>
<PAGE>
APPENDIX A -- AGREEMENT AND PLAN OF MERGER
This is an Agreement and Plan of Merger, dated as of the 25th day of
October, 2000 ("Agreement"), by and among DICKINSON FINANCIAL CORPORATION, a
Missouri corporation ("Buyer"), and HARDIN BANCORP, INC., a Delaware corporation
("Seller").
Introductory Statement
The Board of Directors of each of Buyer and Seller (i) has determined
that this Agreement and the business combination and related transactions
contemplated hereby are in the best interests of Buyer and Seller, respectively,
and in the best interests of their respective stockholders and (ii) has
approved, at meetings of each of such Boards of Directors, this Agreement.
Buyer and Seller desire to make certain representations, warranties and
agreements in connection with the business combination and related transactions
provided for herein and to prescribe various conditions to such transactions.
Buyer will organize a new wholly-owned subsidiary of Buyer to
facilitate the business combination contemplated hereby.
In consideration of their mutual promises and obligations hereunder,
the parties hereto adopt and make this Agreement and prescribe the terms and
conditions hereof and the manner and basis of carrying it into effect, which
shall be as follows:
Article I. The Merger Section
Section 1.01 Structure of the Merger.
Prior to the Effective Time (as defined in Section 9.01), Buyer will
establish a new wholly-owned subsidiary ("Acquisition Sub"). At the Effective
Time, Acquisition Sub will merge with and into Seller ("Merger"), with Seller
being the surviving corporation of the Merger (the "Surviving Corporation"),
pursuant to the provisions of, and with the effect provided in, the Delaware
General Corporation Law ("DGCL"). Upon consummation of the Merger, the separate
corporate existence of Acquisition Sub shall cease. Seller, as the Surviving
Corporation, shall continue to be governed by the laws of the State of Delaware
and its separate corporate existence, with all of its rights, privileges,
immunities, powers and franchises, shall continue unaffected by the Merger. The
name of the Surviving Corporation shall be Hardin Bancorp, Inc. From and after
the Effective Time, the Surviving Corporation shall possess all of the
properties and rights and be subject to all of the liabilities and obligations
of Acquisition Sub, all as more fully described in the DGCL.
Section 1.02 Status and Conversion of Shares in the Merger.
a) Effect on Shares of Seller Common Stock. By virtue of the Merger,
automatically and without any action on the part of the holder thereof, each
share of common stock of Seller ("Seller Common Stock") that is issued and
outstanding at the Effective Time, other than Excluded Shares (as defined
below), shall be canceled and cease to be outstanding and shall be converted
into and become the right to receive $21.75 in cash (the "Merger
Consideration"). After the Effective Time, no dividends or other distributions
made or payable by Seller shall accrue for the benefit of, any Seller Common
Stock.
"Excluded Shares" shall consist of (i) shares of Seller Common Stock as
to which the respective holders thereof have properly demanded appraisal rights
and have not failed to perfect, have not effectively withdrawn and have not lost
their rights to appraisal and payment pursuant to any applicable law providing
for dissenters' or appraisal rights (the "Dissenters' Shares"), (ii) shares held
by Seller as treasury stock and (iii) shares held by Buyer. After the Effective
Time, no dividends or other distributions made or payable by Seller shall accrue
<PAGE>
for the benefit of, any Dissenters' Shares, and no interest shall accrue with
respect to payments due to the holders of Dissenters' Shares, unless such
accruals are required by the provisions of the DGCL. Each option to purchase
Seller Common Stock granted pursuant to the Seller's stock option plan,
outstanding immediately prior to the Effective Time, shall be cancelled in
exchange for the right to receive cash payments as set forth in Section 1.04.
b) As of the Effective Time, each Excluded Share, other than
Dissenters' Shares, shall be canceled and retired and shall cease to exist, and
no exchange or payment shall be made with respect thereto. In addition, no
Dissenters' Shares shall be converted into the Merger Consideration pursuant to
this Section 1.02 but instead shall be treated in accordance with the procedures
set forth in Section 1.07 of this Agreement.
c) At and as of the Effective Time of the Merger, each share of
Acquisition Sub shall be converted into one share of Common Stock , $.01 par
value, of the Surviving Corporation.
Section 1.03 Exchange Procedures.
a) Appropriate transmittal materials ("Letter of Transmittal") shall be
mailed by the Paying Agent (as defined in Section 1.03c)) as soon as reasonably
practicable after the Effective Time, and in no event later than five (5)
business days thereafter, to each holder of record of Seller Common Stock, other
than holders of Excluded Shares, as of the Effective Time. A Letter of
Transmittal will be deemed properly completed by holders of Seller Common Stock
only if accompanied by certificates representing all shares of Seller Common
Stock to be converted thereby, except as provided in Section 1.03h) below.
b) At and after the Effective Time, each certificate ("Seller
Certificate") previously representing shares of Seller Common Stock (except as
specifically set forth in Section 1.02) shall represent only the right to
receive the Merger Consideration multiplied by the number of shares of Seller
Common Stock previously represented by the Seller Certificate.
c) Prior to the Effective Time, Buyer shall select a bank or trust
company, which may be a Subsidiary of Buyer, acceptable to Seller (Seller's
approval shall not be required if Paying Agent is a Subsidiary of Buyer, which
shall act as Paying Agent ("Paying Agent") for the benefit of the holders of
shares of Seller Common Stock, for exchange in accordance with this Section
1.03. On or prior to the Effective Time, Buyer shall deposit or cause to be
deposited, in trust with the Paying Agent, an amount of cash equal to the
aggregate Merger Consideration that the holders of shares of Seller Common Stock
shall be entitled to receive at the Effective Time pursuant to Section 1.02
hereof.
d) The Letter of Transmittal (which shall be subject to the reasonable
approval of Seller and Buyer) shall (i) specify that delivery shall be effected,
and risk of loss of the Seller Certificates shall pass, only upon delivery of
the Seller Certificates to the Paying Agent, (ii) specify that the shares of
Seller Common Stock have been canceled, that the consideration to be paid for
such shares shall be paid only upon delivery and surrender of such Seller
Certificates (except as provided in Section 1.03h) below), and that neither
dividends nor interest shall accrue on the cash consideration payable after the
Effective Time of the Merger, (iii) be in a form and contain any other
provisions which are usual and customary in cash transactions of this nature, as
Buyer may reasonably determine, and (iv) include instructions for use in
effecting the surrender of the Seller Certificates in exchange for the Merger
Consideration. Upon the proper surrender of the Seller Certificates to the
Paying Agent together with a properly completed and duly executed Letter of
Transmittal, the holder of such Seller Certificates shall be entitled to receive
2
<PAGE>
in exchange therefor a check in the amount equal to the cash that such holder
has the right to receive pursuant to Section 1.02. As soon as practicable, but
no later than 5 business days following receipt of the properly completed letter
of Transmittal and any necessary accompanying documentation, the Paying Agent
shall make payment of the Merger Consideration as provided herein. If there is a
transfer of ownership of any shares of Seller Common Stock not registered in the
transfer records of Seller, the Merger Consideration shall be issued to the
transferee thereof if the Seller Certificates representing such Seller Common
Stock are presented to the Paying Agent, accompanied by all documents required,
in the reasonable judgment of Buyer and the Paying Agent, (x) to evidence and
effect such transfer and (y) to evidence that any applicable stock transfer
taxes have been paid.
e) From and after the Effective Time, there shall be no transfers on
the stock transfer records of Seller of any shares of Seller Common Stock. If,
after the Effective Time, Seller Certificates are presented to Buyer, they shall
be exchanged for the Merger Consideration deliverable in respect thereof
pursuant to this Agreement in accordance with the procedures set forth in this
Section 1.03.
f) Any portion of the aggregate amount of cash to be paid pursuant to
Section 1.02 that remains unclaimed by the stockholders of Seller for 12 months
after the Effective Time shall be repaid by the Paying Agent to Buyer upon the
written request of Buyer. After such request is made, any stockholders of Seller
who have not theretofore complied with this Section 1.03 shall look only to
Buyer for the Merger Consideration deliverable in respect of each share of
Seller Common Stock such stockholder holds, as determined pursuant to Section
1.02 of this Agreement, without any interest, and subject to applicable
abandoned property, escheat and similar laws. Notwithstanding the foregoing,
neither the Paying Agent nor any party to this Agreement (or any affiliate
thereof) shall be liable to any former holder of Seller Common Stock for any
amount delivered to a public official pursuant to applicable abandoned property,
escheat or similar laws.
g) Buyer and the Paying Agent shall be entitled to rely upon Seller's
stock transfer books to establish the identity of those persons entitled to
receive the Merger Consideration, which books shall be conclusive with respect
thereto. In the event of a dispute with respect to ownership of stock
represented by any Seller Certificate, Buyer and the Paying Agent shall be
entitled (i) to deposit any Merger Consideration represented thereby in escrow
with an independent third party and thereafter be relieved with respect to any
claims thereto, or at Buyer's option (ii) to file a suit in interpleader against
the competing parties, deposit the Merger Consideration due with respect to the
disputed Seller Certificate with a court of competent jursidiction, and
thereafter be discharged from any responsibility to the competing parties.
h) If any Seller Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person claiming such Seller
Certificate to be lost, stolen or destroyed and, if required by the Paying
Agent, the posting by such person of a bond in such amount as the Paying Agent
may direct as indemnity against any claim that may be made against it with
respect to such Seller Certificate, the Paying Agent will deliver in exchange
for such lost, stolen or destroyed Seller Certificate the Merger Consideration
deliverable in respect thereof pursuant to Section 1.02.
Section 1.04 Stock Options; Restricted Stock.
a) At the Effective Time, each option to acquire shares of Seller
Common Stock (a "Seller Option"), whether or not then vested or exercisable,
granted pursuant to the Seller's Stock Option Plan (the "Seller Option Plan")
that is then outstanding and unexercised shall be canceled and terminated and in
lieu thereof the holders of such options shall be paid by Seller in cash in an
amount equal to the product of (i) the number of shares of Seller Common Stock
subject to such option at the Effective Time and (ii) an amount by which the
Merger Consideration per share exceeds the exercise price per share of such
option net of any cash which must be withheld under federal and state income and
employment tax requirements. In the event that the exercise price of a Seller
3
<PAGE>
Option is greater than the Merger Consideration, then at the Effective Time such
Seller Option shall be canceled without any payment made in exchange therefore.
At the Effective Time, the Seller Option Plan shall be deemed terminated
b) At the Effective Time, each share of restricted Seller Common Stock (the
"Seller Restricted Stock"), whether or not then vested, granted pursuant to
Seller's Recognition and Retention Plan (the "Seller Recognition and Retention
Plan") that is then outstanding shall be canceled, and in lieu thereof the
holders of such shall be paid by Seller in cash in an amount equal to the
product of (i) the number of shares of Seller Restricted Stock outstanding at
the Effective Time and (ii) the Merger Consideration, net of any cash which must
be withheld under federal and state income and employment tax requirements. In
addition, each holder of Seller Restricted Stock shall receive such holder's
allocable share of dividends held by the Seller Recognition and Retention Plan
with respect to such Seller Restricted Stock. At the Effective Time, the Seller
Recognition and Retention Plan shall be deemed terminated.
Section 1.05 Directors and Officers of the Surviving Corporation at Effective
Time. At the Effective Time, the directors and officers of the Surviving
Corporation shall consist of the directors and officers of Acquisition Sub
serving immediately prior to the Effective Time (a list of which is attached
hereto as Exhibit A), each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
Section 1.06 Certificate of Incorporation and Bylaws of the Surviving
Corporation. The certificate of incorporation and bylaws of Seller in effect
immediately prior to the Effective Time shall be the certificate of
incorporation and bylaws of the Surviving Corporation from and after the
Effective Time until amended as provided by law.
Section 1.07 Dissenters' Rights.
a) Buyer shall pay for any Dissenters' Shares in accordance with
Section 262 of the DGCL providing for appraisal rights, and the holders thereof
shall not be entitled to receive any Merger Consideration; provided, that if
appraisal rights under such law with respect to any Dissenters' Shares shall
have been effectively withdrawn or lost, such shares will thereupon cease to be
treated as Dissenters' Shares and shall be converted into the right to receive
the Merger Consideration pursuant to Section 1.02.
b) Seller shall (i) give Buyer prompt written notice of the receipt of
any notice from a stockholder purporting to exercise any dissenters' rights,
(ii) not settle nor offer to settle any demand for payment without the prior
written consent of Buyer and (iii) not waive any failure to comply strictly with
any procedural requirements of Section 262 of the DGCL.
Section 1.08 Related Mergers. Immediately following the Effective Time, Buyer
anticipates that Buyer will cause Seller S&L (as defined in Section 3.03a)i) to
be merged into Buyer Bank (as defined in Section 3.04a)i)) (the "Bank Merger")
pursuant to a merger agreement substantially in the form attached as Exhibit C
with such changes as Buyer may reasonably suggest. Concurrently with or at
approximately the same time as Buyer files applications with the regulatory
authorities for the necessary approvals for the Merger, Buyer will file
applications for the necessary approvals for the Bank Merger so that it may
become effective shortly after the Effective Time. Buyer Bank and Seller S&L
shall enter into such Bank Merger Agreement and Seller agrees to cooperate with
Buyer, and to use its power as the sole stockholder of Seller S&L to cause
Seller S&L to cooperate with Buyer in any necessary preparations for the Bank
Merger. Seller's and Seller S&L's cooperation shall include but not be limited
to board approvals of the Bank Merger and the execution of merger documents;
provided, however, that (i) neither Seller nor Seller S&L shall be requested to
do any act in violation of any law or fiduciary duty; (ii) such Bank Merger
shall not become effective
4
<PAGE>
until after the Effective Time, (iii) there shall be no stockholder approval by
Seller or Seller S&L of the Related Mergers until after the Effective Time, and
(iv) such Bank Merger Agreement will automatically terminate in the event of the
termination of this Agreement prior to the Closing.
Section 1.09 Alternate Structure. Buyer reasonably believes that the structure
described in this Article I will result in Buyer preserving as part of its tax
basis any premium paid to the holders of Seller Common Stock and will not result
in any tax on gain being due upon the subsequent Bank Merger. If Buyer comes to
the reasonable conclusion that its expectations regarding the tax treatment of
this structure will not be fulfilled, Buyer 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, and the parties
shall enter into such alternative transactions so long as (i) there are no
adverse tax consequences to any of the stockholders, directors or officers of
Seller as a result of such modification, (ii) the Merger Consideration, the
treatment of stock options and restricted stock pursuant to Section 1.04, and
the obligations under Section 5.10 and Section 5.11 are not thereby changed or
reduced in amount because of such modification, (iii) such modification will not
be likely to materially delay or jeopardize receipt of any required regulatory
approvals, (iv) it does not result in any representation or warranty of any
party set forth in this Agreement becoming incorrect in any material respect,
and (v) it does not diminish the benefits of any officer, director or employee
of Seller pursuant to this Agreement or any separate agreement contemplated
hereby.
Article II. Stockholders' Equity at Closing
Section 2.01 Adjusted Stockholders' Equity. Seller warrants and represents that
the Adjusted Stockholders' Equity of Seller, consolidated with all of its
Subsidiaries (as defined in Section 3.03a)i)), at the close of business on the
day prior to the Effective Time shall be not less than $12,000,000. The Adjusted
Stockholders' Equity shall be determined according to generally accepted
accounting principles as they are applied to savings and loan associations and
savings and loan association holding companies, with assets and liabilities
valued, subject to the adjustments described below, as follows:
Section 2.02 Valuation of Assets. Seller's assets shall be valued in the
following manner:
a) Cash and Due. Cash items, cash-equivalent items, federal funds sold,
and items in the process of collection shall be valued at their book value on
Seller's books, including accrued interest not over 90 days past due;
b) Loans. Loans shall be valued at their book values, plus accrued but
unpaid interest which is not over 90 days past due, less any dealer reserve,
less any unearned discount, and less any contingency reserves including a loan
loss reserve greater than or equal to .40 % of gross loans;
c) Investment Securities. Investment securities classified by Seller
S&L as "Available for Sale" shall be valued at their fair market values,
determined by market quotations issued by a reputable source acceptable to both
parties no more than 10 days prior to the Effective Time, plus any accrued but
unpaid interest not over 90 days past due, and investment securities classified
by Seller S&L as "Held to Maturity" shall be valued at their book values on
Seller S&L's books, plus any accrued but unpaid interest not over 90 days past
due;
d) Fixed Assets. Real and personal property shall be valued at book
value on Seller S&L's books, net of all depreciation and any specific reserves;
and
e) Other Assets. Other assets shall be valued at their book values on
Seller S&L's books, less any applicable depreciation as shown on Seller S&L's
books, and less any contra-asset or liability accounts in the nature of
contingency reserves
5
<PAGE>
existing on Seller S&L's books with respect to any such assets.
Section 2.03 Valuation of Liabilities.
a) Deposit Liabilities. Deposit liabilities shall be valued at their
book values on Seller S&L's books, plus all accrued but unpaid interest;
b) Expense Items. Subject to subsections (d) and (e) below, all items
of expense shall be accrued through the banking business day next preceding the
Effective Time, based on the most recently available billing, or based on
estimates if no related prior billing is available, and any expense estimates
agreed between the parties shall be considered final between the parties,
regardless of the amount of the actual billings, except in the event of a breach
of a representation or warranty contained herein; and
c) Other Liabilities. Subject to subsection (e) below, other
liabilities shall be valued at their book value on Seller S&L's books, or in the
case of contingent or unliquidated liabilities, at their reasonably estimated
future cost, determined by agreement of Seller and Buyer, reduced to present
value using an 8% discount rate.
d) Fees. The fees due or paid to Seller's or Seller S&L's advisors,
agents, attorneys, accountants, brokers or finders regarding this transaction
(excluding any fee paid to Trident Securities for financial advisory services)
shall be shown as a liability or expense in computing Adjusted Stockholder's
Equity.
e) Other Adjustments. In determining the Adjusted Stockholders' Equity
of Seller, the following matters shall be disregarded: (i) any adjustments to
assets, liabilities, reserves or accruals made pursuant to Section 5.02 hereof
shall not be shown unless such requested adjustment is in Seller's ordinary or
usual course of business as it existed prior to the execution of this Agreement,
(ii) any expenses, or estimated expenses, resulting from the early termination
or cancellation of any agreements of the Seller that occur at the Effective Time
under the terms of the agreement or that are made at the request of Buyer in
anticipation of the Effective Time, and (iii) there shall be no accrual for
payments to be made pursuant to Section 1.04 hereof or by reason of payments to
be made pursuant to the severance benefits, Director Compensation Agreements,
Officers' Compensation Agreements and other benefits specified by Section 5.10
(g), (h) and (i) hereof, to the extent that such payments exceed the normal
accrual for past service.
Article III. Representations and Warranties
Section 3.01 Disclosure Letters. Prior to the execution and delivery of this
Agreement, Seller and Buyer each shall have delivered to the other a letter
(each, its "Disclosure Letter") setting forth, among other things, facts,
circumstances and events the disclosure of which is required or appropriate in
relation to any or all of their respective representations and warranties (and
making specific reference to the section or subsection, as the case may be, of
this Agreement to which they relate); provided, that (a) no such fact,
circumstance or event is required to be set forth in the Disclosure Letter as an
exception to a representation or warranty if its absence is not reasonably
likely to result in the related representation or warranty being deemed untrue
or incorrect under the standards established by Section 3.02 except that Seller
shall use its best efforts to set forth in the Disclosure Letter any fact,
circumstance or event the disclosure of which is required to be set forth in
Seller's Disclosure Letter having a negative financial impact of $25,000 or
greater regardless of whether or not the standards established by Section 3.02
have been met, and (b) the mere inclusion of a fact, circumstance or event in a
Disclosure Letter shall not be deemed an admission by a party that such item
represents a material
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exception or that such item is reasonably likely to result in a Material Adverse
Effect (as defined in Section 3.02b)).
Section 3.02 Standards.
a) No representation or warranty of Seller or Buyer contained in
Section 3.03 or Section 3.04, respectively, shall be deemed untrue or incorrect,
and no party hereto shall be deemed to have breached a representation or
warranty, on account of the existence of any fact, circumstance or event unless,
as a direct or indirect consequence of such fact, circumstance or event,
individually or taken together with all other facts, circumstances or events
inconsistent with any paragraph of Section 3.03 or Section 3.04, as applicable,
there is reasonably likely to exist a Material Adverse Effect. Seller's
representations, warranties and covenants contained in this Agreement shall not
be deemed to be untrue or breached as a result of effects arising solely from
actions taken pursuant to this Agreement or in compliance with a written request
of Buyer.
b) As used in this Agreement, the term "Material Adverse Effect" means
an effect which is material and adverse to the business, financial condition or
results of operations of Seller and its Subsidiaries (as defined in Section
3.03a)i)) or Buyer and its Subsidiaries, as the context may dictate, taken as a
whole (unless otherwise specifically stated in this Agreement); provided,
however, that any such effect resulting from any changes resulting from a change
in interest rates generally, any changes in laws, rules or regulations or GAAP
or regulatory accounting requirements or interpretations thereof that apply to
either Buyer and its Subsidiaries or Seller and its Subsidiaries, as the case
may be, or to similarly situated financial and/or depository institutions shall
not be considered in determining if a Material Adverse Effect has occurred.
c) For purposes of this Agreement, "knowledge" shall mean, with respect
to a party hereto, actual knowledge of any of the members of the Board of
Directors of that party, any officer of that party with the title ranking not
less than vice president, or any in-house general counsel of such party.
Section 3.03 Representations and Warranties of Seller.
Subject to Section 3.01 and Section 3.02, Seller represents and
warrants to Buyer that, except as disclosed in Seller's Disclosure Letter:
a) Organization.
i) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and is
registered as a savings and loan holding company under the Home
Owners' Loan Act, as amended ("HOLA"). Hardin Federal Savings
Bank ("Seller S&L") is a stock savings association duly
organized and validly existing under the laws of the United
States of America and is a wholly-owned Subsidiary (as defined
below) of Seller. Each Subsidiary of Seller, other than Seller
S&L, is a corporation, limited liability company or partnership
duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization. Each
of Seller and its Subsidiaries has all requisite corporate power
and authority to own, lease and operate its properties and to
carry on its business as now being conducted. As used in this
Agreement, unless the context requires otherwise, the term
"Subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or
unincorporated, which is consolidated with such party for
financial reporting purposes or which is owned or controlled,
directly or indirectly, by such party through a sufficient
number of shares or other evidence of ownership of such
corporation or other organization to have the power to elect a
majority of the board of directors or otherwise to control such
corporation or other organization.
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ii) Seller and each of its Subsidiaries has the requisite corporate
power and authority and is duly qualified to do business and is
in good standing in each jurisdiction in which the nature of its
organization, business or the ownership or leasing of its
properties makes such qualification necessary.
iii)Seller's Disclosure Letter sets forth all of Seller's
Subsidiaries and all entities (whether corporations,
partnerships or similar organizations), including the
corresponding percentage ownership, in which Seller owns,
directly or indirectly, 5% or more of the ownership interests as
of the date of this Agreement and indicates for each of Seller's
Subsidiaries, as of such date, its jurisdiction of organization
and the jurisdiction(s) wherein it is qualified to do business.
All such Subsidiaries and ownership interests are in compliance
with all applicable laws, rules and regulations relating to
direct investments in equity ownership interests. Seller owns,
either directly or indirectly through Seller S&L, both the legal
title to and all beneficial interests in all of the outstanding
capital stock of each of its Subsidiaries. No Subsidiary of
Seller other than Seller S&L is an "insured depository
institution" as defined in the Federal Deposit Insurance Act, as
amended ("FDIA"), and the applicable regulations thereunder. All
of the shares of capital stock of Seller's Subsidiaries,
including Seller S&L, are fully paid, nonassessable and not
subject to any preemptive rights and are owned by Seller or a
Subsidiary of Seller free and clear of any claims, liens,
encumbrances or restrictions (other than those imposed by
applicable federal and state securities laws), and there are no
agreements or understandings with respect to the voting or
disposition of any such shares.
iv) The deposits of Seller S&L are insured by the Savings
Association Insurance Fund of the Federal Deposit Insurance
Corporation ("FDIC") to the extent provided in the FDIA.
b) Capital Structure.
i) The authorized capital stock of Seller consists of 3,500,000
shares of Seller Common Stock, par value $.01 per share, and
500,000 shares of preferred stock, par value $.01 per share. As
of the date of this Agreement (A) 1,058,000 shares of Seller
Common Stock had been issued, of which 731,453 shares were
issued and outstanding, (B) no shares of Seller preferred stock
were issued and outstanding, and (C) 326,547 shares of Seller
Common Stock were held by Seller in its treasury or by its
Subsidiaries. The authorized capital stock of Seller S&L
consists of 3,500,000 shares of common stock, par value $.01 per
share, and 500,000 shares of preferred stock. As of the date of
this Agreement, 1,058,000 shares of such common stock were
outstanding, no shares of such preferred stock were outstanding
and all outstanding shares of such common stock were, and as of
the Effective Time will be, owned both legally and beneficially
by Seller. All outstanding shares of capital stock of Seller are
duly authorized and validly issued, fully paid and nonassessable
and not subject to any preemptive rights and, with respect to
shares of Seller held by Seller in its treasury or by its
Subsidiaries and shares of Seller S&L, are free and clear of all
liens, claims, encumbrances or restrictions (other than those
imposed by applicable federal and state securities laws), and
there are no agreements or understandings with respect to the
voting or disposition of any such shares. Seller's Disclosure
Letter sets forth a complete and accurate list of all
outstanding options to purchase Seller Common Stock that have
been granted pursuant to the Seller Option Plan, including the
names of the optionees, dates of grant, exercise prices, dates
of vesting, dates of termination and shares subject to each
grant.
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ii) No bonds, debentures, notes or other indebtedness having the
right to vote on any matters on which stockholders may vote of
Seller are issued or outstanding.
iii)As of the date of this Agreement, except for options granted
pursuant to the Seller Option Plan and shares of restricted
stock granted pursuant to the Seller Restricted Stock Plan,
neither Seller nor any of its Subsidiaries has or is bound by
any outstanding subscriptions, options, warrants, calls, rights,
convertible securities, commitments or agreements of any
character obligating Seller or any of its Subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, any
additional shares of capital stock of Seller or any of its
Subsidiaries or obligating Seller or any of its Subsidiaries to
grant, extend or enter into any such option, warrant, call,
right, convertible security, commitment or agreement. As of the
date hereof, there are no outstanding contractual obligations of
Seller or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of capital stock of Seller or any
of its Subsidiaries.
c) Authority. Seller has all requisite corporate power and authority to
enter into this Agreement, and, subject to approval of this Agreement by the
requisite vote of Seller's stockholders and receipt of all required regulatory
or governmental approvals, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and, subject to the approval of
this Agreement by Seller's stockholders, the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary corporate
actions on the part of Seller. This Agreement has been duly and validly executed
and delivered by Seller and assuming due execution and delivery by Buyer,
constitutes a valid and binding obligation of Seller, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, whether applied in a court of
law or a court of equity.
d) Stockholder Approval; Fairness Opinion. The affirmative vote of a
majority of the outstanding shares of Seller Common Stock entitled to vote on
this Agreement is the only vote of the stockholders of Seller required for
approval of this Agreement and the consummation of the Merger. Seller has
received the written opinion of Trident Securities to the effect that, as of the
date hereof, the Merger Consideration to be received by Seller's stockholders is
fair, from a financial point of view, to such stockholders.
e) No Violations; Consents. The execution, delivery and performance of
this Agreement by Seller does not, and the consummation of the transactions
contemplated hereby by the Seller will not, constitute (i) assuming receipt of
all Requisite Regulatory Approvals (as defined in Section 3.04d)) including the
consent of the Office of Thrift Supervision and requisite stockholder approvals,
a breach or violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license to which Seller or any
of its Subsidiaries (or any of their respective properties) is subject, (ii) a
breach or violation of, or a default under, the certificate of incorporation or
bylaws of Seller or the similar organizational documents of any of its
Subsidiaries or (iii) except as set forth in Seller's Disclosure Letter, a
breach or violation of, or a default under (or an event which, with due notice
or lapse of time or both, would constitute a default under), or result in the
termination of, accelerate the performance required by, or result in the
creation of any lien, pledge, security interest, charge or other encumbrance
upon any of the properties or assets of Seller or any of its Subsidiaries under,
any of the terms, conditions or provisions of any note, bond, indenture, deed of
trust, loan agreement or other agreement, instrument or obligation to which
Seller or any of its Subsidiaries is a party, or to which any of their
respective properties or assets may be subject. The consummation by Seller of
the transactions contemplated hereby will not require any approval, consent or
waiver under any such law, rule,
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regulation, judgment, decree, order, governmental permit or license or the
approval, consent or waiver of any other governmental party, other than (u) as
required under the Securities Exchange Act of 1934, (v) the approval of the
holders of a majority of the outstanding shares of Seller Common Stock entitled
to vote thereon, (w) the approval of Seller as the sole stockholder of Seller
S&L, (x) the consent of the Office of Thrift Supervision ("OTS") (y) the consent
of any regulatory agency having jurisdiction over Buyer and (z) the issuance of
a Certificate of Merger by the Secretary of State of the State of Delaware.
f) Reports and Financial Statements.
i) Seller and each of its Subsidiaries have each timely filed all
material reports, registrations and statements, together with
any amendments required to be made with respect thereto, that
they were required to file with (a) the FDIC, (b) the OTS, (c)
the National Association of Securities Dealers, Inc. ("NASD"),
(d) the Missouri Department of Insurance, and (e) the Securities
and Exchange Commission ("SEC") (collectively, "Seller's
Reports") and, to Seller's knowledge, have paid all fees and
assessments due and payable in connection therewith. As of their
respective dates, none of Seller's Reports contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under
which they were made, not misleading. All of Seller's Reports
filed with the SEC complied in all material respects with the
applicable requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations of
the SEC promulgated thereunder.
ii) Each of the financial statements of Seller included in Seller's
Reports complied as to form, as of their respective dates of
filing with the SEC, in all material respects with applicable
accounting requirements and with the published rules and
regulations of the SEC with respect thereto and have been
prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited financial
statements, as permitted by the SEC). Each of the consolidated
balance sheets contained or incorporated by reference in
Seller's Reports (including in each case any related notes and
schedules) and each of the consolidated statements of earnings,
consolidated statements of cash flows and consolidated
statements of changes in stockholders' equity, contained or
incorporated by reference in Seller's Reports (including in each
case any related notes and schedules) fairly presented (a) the
financial position of the entity or entities to which it relates
as of its date and (b) the results of operations, stockholders'
equity and cash flows, as the case may be, of the entity or
entities to which it relates for the periods set forth therein
(subject, in the case of unaudited interim statements, to normal
year-end adjustments that are not material in amount or effect).
g) Absence of Certain Changes or Events. Except as disclosed in
Seller's Reports filed on or prior to the date of this Agreement or in Seller's
Disclosure Letter, (i) Seller and its Subsidiaries have not incurred any
material liability, either accrued, alleged, contingent or disputed, except in
the ordinary course of their business consistent with past practice and except
for the engagement letter agreements with Trident Securities set forth in
Seller's Disclosure Letter, (ii) Seller and its Subsidiaries have conducted
their respective businesses only in the ordinary and usual course of such
businesses consistent with their past practices, (iii) to the knowledge of
Seller, there are no impending termination, expiration, or loss of contracts,
franchises, licenses, permits or other assets that, individually or in the
aggregate, are reasonably likely to have a Material Adverse Effect on Seller,
and (iv) there has not been any other event, change or
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occurrence which has had, or is reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect with respect to Seller and its
Subsidiaries.
h) Absence of Claims. Except as set forth in Seller's Disclosure
Letter, no litigation, controversy, claim, action, suit or other legal,
administrative or arbitration proceeding before any court, governmental agency
or arbitrator is pending against Seller or any of its Subsidiaries and, to the
knowledge of Seller, no such litigation, controversy, claim, action, suit or
proceeding has been threatened or asserted in either case which is reasonably
likely to have a Material Adverse Effect with respect to Seller or its
Subsidiaries, or the transactions contemplated by this Agreement, or upon the
ability of Seller to perform its obligations under this Agreement.
i) Absence of Regulatory Actions. Except as set forth in Seller's
Disclosure Letter, neither Seller nor any of its Subsidiaries has been a party
to any cease and desist order, written agreement or memorandum of understanding
with, or any commitment letter or similar undertaking to, or has been subject to
any action, proceeding, order or directive by, or has been a recipient of any
extraordinary supervisory letter from any federal or state governmental
authority charged with the supervision or regulation of depository institutions
or depository institution holding companies or engaged in the insurance of bank
and/or savings and loan deposits ("Government Regulators"), or has adopted any
board resolutions at the request of any Government Regulator, or has been
advised by any Government Regulator that it is contemplating issuing or
requesting (or is considering the appropriateness of issuing or requesting) any
such action, proceeding, order, directive, written agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter, board
resolutions or similar undertaking.
j) Taxes. All federal, state, local and foreign tax returns required to
be filed by or on behalf of Seller or any of its Subsidiaries have been timely
filed or requests for extensions have been timely filed and any such extension
shall have been granted and not have expired, and all such filed returns are
complete and accurate in all material respects. All taxes shown on such returns,
all taxes required to be shown on returns for which extensions have been granted
and all other taxes required to be paid by Seller or any of its Subsidiaries
have been paid in full or adequate provision has been made for any such taxes on
Seller's balance sheet (in accordance with GAAP). For purposes of this Section
3.03j), the term "taxes" shall include all income, franchise, gross receipts,
real and personal property, real property transfer and gains, wage and
employment taxes. As of the date of this Agreement, there is no audit
examination, deficiency assessment, tax investigation or refund litigation with
respect to any taxes of Seller or any of its Subsidiaries, and no claim has been
made by any authority in a jurisdiction where Seller or any of its Subsidiaries
do not file tax returns that Seller or any such Subsidiary is subject to
taxation in that jurisdiction. All taxes, interest, additions and penalties due
with respect to completed and settled examinations or concluded litigation
relating to Seller or any of its Subsidiaries have been paid in full or adequate
provision has been made for any such taxes on Seller's balance sheet (in
accordance with GAAP). Seller and each of its Subsidiaries have not executed an
extension or waiver of any statute of limitations on the assessment or
collection of any material tax due that is currently in effect. Seller and each
of its Subsidiaries has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party, and Seller
and each of its Subsidiaries has timely complied with all applicable information
reporting requirements under Part III, Subchapter A of Chapter 61 of the IRC and
similar applicable state and local information reporting requirements. Adequate
provision for any taxes due or to become due for Seller or any of its
Subsidiaries for the period or periods reflected on Seller's most recent
financial statements has been made and is reflected on such Seller financial
statements. Deferred Taxes of Seller and its Subsidiaries have been provided for
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in accordance with GAAP. To the knowledge of Seller, there is no item of
deferred taxable income which will become taxable due to the consummation of the
Merger or the Related Mergers that is reasonably likely to have a Material
Adverse Effect on Seller or its Subsidiaries, other than as disclosed in
Seller's Disclosure Letter.
k) Agreements.
i) Except (w) for arrangements made in the ordinary course of
business, (x) as set forth in Seller's Disclosure Letter, (y) as
disclosed in Seller's Reports filed on or prior to the date of
this Agreement, or (z) as contemplated by this Agreement, Seller
and its Subsidiaries are not bound by any material contract (as
defined in Item 601 (b)(10) of Regulation S-K promulgated by the
SEC) to be performed after the date hereof that has not been
filed with or incorporated by reference in Seller's Reports.
Except (x) as disclosed in Seller's Disclosure Letter, (y) as
disclosed in Seller's Reports filed on or prior to the date of
this Agreement, or (z) as contemplated by this Agreement,
neither Seller nor any of its Subsidiaries is a party to an oral
or written (A) consulting agreement (including data processing
and software programming contracts) not terminable on 60 days'
or less notice and providing for a payment or payments totaling
in excess of $5,000, (B) agreement with any present or former
director, officer or employee of Seller or any of its
Subsidiaries the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a
transaction involving Seller or any of its Subsidiaries of the
nature contemplated by this Agreement, (C) agreement with
respect to any employee or director of Seller or any of its
Subsidiaries providing any term of employment or compensation
guarantee extending for a period longer than 60 days, (D)
agreement or plan, including any stock option plan, phantom
stock or stock appreciation rights plan, restricted stock plan
or stock purchase plan, any of the benefits of which will be
increased, or the vesting or payment of the benefits of which
will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any
of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement or (E)
agreement containing covenants that limit the ability of Seller
or any of its Subsidiaries to compete in any line of business or
with any person, or that involve any restriction on the
geographic area in which, or method by which, Seller (including
any successor thereof) or any of its Subsidiaries may carry on
its business (other than as may be required by law or any
regulatory agency);
ii) Neither Seller nor any of its Subsidiaries is in default under
or is in violation of any provision of any note, bond,
indenture, mortgage, deed of trust, loan agreement, lease or
other agreement to which it is a party or by which it is bound
or to which any of its respective properties or assets is
subject; and,
iii)Seller and each of its Subsidiaries owns or possesses valid and
binding licenses and other rights to use without payment all
patents, copyrights, trade secrets, trade names, service marks
and trademarks used in its businesses, and neither Seller nor
any of its Subsidiaries has received any notice of conflict with
respect thereto that asserts the right of others. Each of Seller
and its Subsidiaries has performed all the obligations required
to be performed by it and are not in default under any contract,
agreement, arrangement or commitment relating to any of the
foregoing.
iv) Seller's Disclosure Letter contains a summary description of all
leases, commitments, contracts, licenses, maintenance agreements
and other agreements of Seller and its Subsidiaries involving a
liability or obligation of Seller in excess of $10,000 per
annum, and a true and complete list of all letters of credit,
guarantees, indemnity agreements and all commitments to loan or
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discount or issue a letter of credit which would aggregate in
excess of $10,000 to any person, firm or corporation.
l) Labor Matters. Neither Seller nor any of its Subsidiaries is or, to
Seller's knowledge, has ever been a party to, or is or, to Seller's knowledge,
has ever been bound by, any collective bargaining agreement, contract or other
agreement or understanding with a labor union or labor organization with respect
to its employees, nor is Seller or any of its Subsidiaries the subject of any
proceeding asserting that it has committed an unfair labor practice or seeking
to compel it or any such Subsidiary to bargain with any labor organization as to
wages and conditions of employment nor, to Seller's knowledge, has any such
proceeding been threatened, nor, to Seller's knowledge, is there any strike,
other labor dispute or organizational effort involving Seller or any of its
Subsidiaries pending or threatened.
m) Employee Benefit Plans. Seller's Disclosure Letter contains a
complete and accurate list of all written and, to Seller's knowledge, oral
pension, retirement, stock option, stock purchase, stock ownership, savings,
stock appreciation right, profit sharing, deferred compensation, consulting,
bonus, group insurance, severance and other benefit plans, funds, contracts,
agreements and arrangements, including, but not limited to, "employee benefit
plans," as defined in Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), incentive and welfare policies, contracts,
plans and arrangements and all trust agreements related thereto with respect to
any present or former directors, officers or other employees of Seller or any of
its Subsidiaries, and any cafeteria or section 125 plans, fringe benefit plans
including but not limited to automobiles, sabbaticals, clubs or any item
considered a fringe benefit within the meaning of IRC ss.32 (hereinafter
collectively referred to as the "Seller Employee Plans"). Seller warrants and
represents that Seller's Disclosure Letter sets forth a complete and accurate
list of all Seller Restricted Stock granted pursuant to the Seller Recognition
and Retention Plan, including the names of the grantees, dates of grant, dates
of vesting, and shares subject to each grant. All of the Seller Employee Plans
comply in all material respects with all applicable requirements of ERISA, the
IRC and other applicable laws; with respect to the Seller Employee Plans, to the
knowledge of Seller, no event has occurred that would subject Seller or any of
its Subsidiaries to a material liability under ERISA, the IRC or any other
applicable law; there has occurred no "prohibited transaction" (as defined in
Section 406 of ERISA or Section 4975 of the IRC) which is reasonably likely to
result in the imposition of any penalties or taxes under Section 502(i) of ERISA
or Section 4975 of the IRC upon Seller or any of its Subsidiaries; and all
required contributions to the Seller Employee Plans through the date hereof have
been made. Neither Seller nor any of its Subsidiaries has provided, or is
required to provide, security to any Seller pension plan or to any
single-employer plan of an ERISA Affiliate (as defined under Section 4001(b)(l)
of ERISA or Section 414 of the IRC) pursuant to Section 401(a)(29) of the IRC.
Except as disclosed on Seller's Disclosure Letter, neither Seller, its
Subsidiaries, nor any ERISA Affiliate has contributed to any "multiemployer
plan," as defined in Section 3(37) of ERISA, on or after September 26, 1980.
Since February 1, 2000, no contributions have been made to such multiemployer
plan and no additional contributions are due under any such plan. Neither Seller
nor its Subsidiaries maintains any plan that is subject to Title IV of ERISA,
and neither Seller nor its Subsidiaries has terminated any such plan within the
past five (5) years. Each Seller Employee Plan that is an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA) and which is intended to be
qualified under Section 401(a) of the IRC (a "Seller Qualified Plan") has
received a favorable determination letter from the Internal Revenue Service
("IRS"), and Seller and its Subsidiaries are not aware of any circumstances
likely to result in revocation of any such favorable determination letter. There
is no pending or, to Seller's knowledge, threatened litigation, administrative
action or proceeding relating to any Seller Employee Plan. There has been no
announcement or commitment by Seller or any of its Subsidiaries to create an
additional Seller Employee Plan, or to amend any Seller Employee Plan, except
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for amendments required by applicable law which do not materially increase the
cost of such Seller Employee Plan or as otherwise contemplated by this
Agreement; and, except as specifically identified in Seller's Disclosure Letter,
Seller and its Subsidiaries do not have any obligations for post-retirement or
post-employment benefits under any Seller Employee Plan that cannot be amended
or terminated upon 60 days' notice or less without incurring any liability
thereunder, except for coverage required by Part 6 of Title I of ERISA or
Section 4980B of the IRC, or similar state laws, the cost of which is borne by
the insured individuals. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not result in any
payment or series of payments by Buyer, Seller or any of their Subsidiaries to
any person which is an "excess parachute payment" (as defined in Section 280G of
the IRC). All payments made by Buyer, Seller or any of their Subsidiaries to any
employee under a Seller Employee Plan will be fully tax-deductible as employment
compensation to Buyer, Seller, or one of their Subsidiaries. To the best
knowledge of Seller, no breach of a fiduciary duty under ERISA ss.404 or ss.405
has occurred and with respect to which any outstanding liability to any
participant or excise tax or liability exists or will exist as of the Effective
Time with respect to any of the Seller Employee Plans. Each of the Seller
Employee Plans which is a group health plan within the meaning of IRC
ss.5000(b)(1) is in compliance with the continuation of health care coverage
requirements contained in IRC ss.4980B and ERISA ss.601 et seq. A list of
participants or beneficiaries who have elected continuation coverage in
accordance with such laws is provided in Seller's Disclosure Letter. With
respect to each Seller Employee Plan, Seller has supplied to Buyer a true and
correct copy of (A) the annual report on the applicable form of the Form 5500
series filed with the IRS for the three most recent plan years, if required to
be filed, (B) such Seller Employee Plan, including amendments thereto, (C) each
trust agreement, insurance contract or other funding arrangement relating to
such Seller Employee Plan, including amendments thereto, (D) the most recent
summary plan description and summary of material modifications thereto for such
Seller Employee Plan, if the Seller Employee Plan is subject to Title I of
ERISA, (E) the most recent actuarial report or valuation if such Seller Employee
Plan is a Seller pension plan and any subsequent changes to the actuarial
assumptions contained therein, and (F) the most recent determination letter
issued by the IRS if such Seller Employee Plan is a Seller Qualified Plan. With
respect to Seller's ESOP, Seller has supplied Buyer a true and correct copy of
(A) the latest financial statement of the ESOP including a list of assets, (B) a
schedule of stock purchases by the ESOP, including seller, valuation and number
of shares, (C) a schedule of stock contributions made to the ESOP, (D) a list of
the most recent ESOP distributions including participant name and amount and (E)
a schedule of the most recent contribution allocation including participant
name, compensation and share of contribution.
n) Title to Assets. Seller's Disclosure Letter contains a complete and
accurate list of all real property owned or leased by Seller or any of its
Subsidiaries, including all properties of Seller or any of its Subsidiaries
classified as "Real Estate Owned" or words of similar import (the "Real
Property") and except as disclosed in Seller's Disclosure Letter, title to all
of such real properties is insured for an amount not less than the book value of
all such real properties on Seller's or its Subsidiaries' books under an owner's
title insurance policy issued by a title insurance company authorized to do
business in the state where the property is located. Except as disclosed in
Seller's Disclosure Letter, Seller and each of its Subsidiaries have good and
marketable title to their respective properties and assets (including any
intellectual property asset such as any trademark, service mark, trade name or
copyright) and property acquired in a judicial foreclosure proceeding or by way
of a deed in lieu of foreclosure or similar transfer in each case free and clear
of any material liens, security interests, encumbrances, mortgages, pledges,
restrictions, charges or rights or interests of others, except pledges to secure
deposits or Federal Home Loan Bank advances and other liens incurred in the
ordinary course of business. Each lease for real
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or personal property pursuant to which Seller or any of its Subsidiaries is
lessee or lessor is valid and in full force and effect and neither Seller nor
any of its Subsidiaries, nor any other party to any such lease is in default or
in violation of any provisions of any such lease. All material tangible
properties of Seller and each of its Subsidiaries are in a good state of
maintenance and repair (normal wear and tear excepted), conform with all
applicable ordinances, regulations and zoning laws in all material respects, are
considered by Seller to be reasonably adequate for the current business of
Seller and its Subsidiaries and, except as disclosed in Seller's Disclosure
Letter, improvements on real property owned or leased by Seller are located
wholly within the boundaries of the property owned or leased by Seller or its
Subsidiaries. There are no unpaid charges, debts, liabilities, claims or
obligations arising from the construction, ownership or operation of the banking
premises of Seller S&L which would give rise to any mechanics' liens against any
such real estate or any part thereof, or for which Seller or Seller S&L would be
responsible, except for i) liens imposed by law and incurred in the ordinary
course of business for obligations not yet due to carriers, warehousemen,
laborers, materialmen and the like, but only to the extent the obligation giving
rise to the lien is included as a liability on Seller's books and records and
ii) such minor encumbrances, if any, as do not materially detract from the value
of, or materially interfere with the present use of, such properties, and which
minor encumbrances do not render the title to such property unmarketable.
o) Compliance with Laws. Seller and each of its Subsidiaries has all
permits, licenses, certificates of authority, orders and approvals of and has
made all filings, applications and registrations with, all federal, state, local
and foreign governmental or regulatory bodies (each, a "Governmental Entity")
that are required in order to operate its material assets and to permit it to
carry on its business as it is presently conducted; all such permits, licenses,
certificates of authority, orders and approvals are in full force and effect,
and, to the knowledge of Seller, no suspension or cancellation of any of them is
threatened. The corporate affairs of Seller are not being conducted in violation
of any law, ordinance, regulation, order, writ, rule, decree or approval of any
Governmental Entity. Neither Seller nor any of its Subsidiaries is in material
violation of, is, to the knowledge of Seller, under investigation with respect
to any material violation of, or has been given notice or been charged with any
material violation of, any law, ordinance, regulation, order, writ, rule, decree
or condition to approval of any Governmental Entity.
p) Fees. Other than financial advisory services performed for Seller by
Trident Securities, neither Seller nor any of its Subsidiaries, nor any 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 fees, and no broker or finder has acted directly
or indirectly for Seller or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby. Seller has provided Buyer
with a true and correct copy of the contract between Seller and Trident
Securities.
q) Environmental Matters. There is no suit, claim, action, demand,
executive or administrative order, directive, investigation or proceeding
pending or, to the knowledge of Seller, threatened before any court,
governmental agency or board or other forum against Seller or any of its
Subsidiaries for alleged noncompliance (including by any predecessor) with, or
liability under, any Environmental Law (as defined below) or relating to the
presence of or release into the environment of any Hazardous Material (as
defined below), whether or not occurring at or on a site owned, leased or
operated by it or any of its Subsidiaries. To Seller's knowledge, the properties
currently owned or operated by Seller or any of its Subsidiaries (including,
without limitation, soil, groundwater or surface water on, under or adjacent to
the properties, and buildings thereon) are not contaminated with and do not
otherwise contain any
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Hazardous Material other than as permitted under applicable Environmental Law.
Neither Seller nor any of its Subsidiaries has received any notice, demand
letter, executive or administrative order, directive, request or other
communication (written or oral) for information from any federal, state, local
or foreign governmental entity or any third party indicating that it may be in
violation of, or liable under, any Environmental Law. To Seller's knowledge,
there are no underground storage tanks on, in or under any properties owned or
operated by Seller or any of its Subsidiaries and no underground storage tanks
have been closed or removed from any properties owned or operated by Seller or
any of its Subsidiaries. To Seller's knowledge, during the period of Seller's or
any of its Subsidiaries' ownership or operation of any of their respective
current properties, there has been no contamination by or release of Hazardous
Materials in, on, under or affecting such properties. To Seller's knowledge,
prior to the period of Seller's or any of its Subsidiaries' ownership or
operation of any of their respective current properties, there was no
contamination by or release of Hazardous Material in, on, under or affecting
such properties.
"Environmental Law" means (i) any federal, state or local law, statute,
ordinance, rule, regulation, code, license, permit, authorization, approval,
consent, legal doctrine, order, directive, executive or administrative order,
judgment, decree, injunction, legal requirement or agreement with any
Governmental Entity relating to (A) the protection, preservation or restoration
of the environment (which includes, without limitation, air, water vapor,
surface water, groundwater, drinking water supply, structures, soil, surface
land, subsurface land, plant and animal life or any other natural resource), or
to human health or safety as it relates to Hazardous Materials, or (B) the
exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of, Hazardous Materials, in each case as amended and as now in effect,
including, without limitation, (i) the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Water Pollution Control Act of 1972,
the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource
Conservation and Recovery Act of 1976 (including, but not limited to, the
Hazardous and Solid Waste Amendments thereto and Subtitle I relating to
underground storage tanks), the Federal Solid Waste Disposal and the Federal
Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide
Act, the Federal Occupational Safety and Health Act of 1970 as it relates to
Hazardous Materials, the Federal Hazardous Substances Transportation Act, the
Emergency Planning and Community Right-To-Know Act, the Safe Drinking Water Act,
the Endangered Species Act, the National Environmental Policy Act, the Rivers
and Harbors Appropriation Act or any so-called "Superfund" or "Superlien" law,
each as amended and as now or hereafter in effect, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and 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 Hazardous Material.
"Hazardous Material" means any substance (whether solid, liquid or gas)
which is or could be detrimental to the environment, currently or hereafter
listed, defined, designated or classified as hazardous, toxic, radioactive or
dangerous, or otherwise regulated under any Environmental Law, whether by type
or by quantity, including any substance containing any such substance as a
component. Hazardous Material includes, without limitation, any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance, oil or petroleum, or any derivative or
by-product thereof, radon, radioactive material, asbestos, asbestos-containing
material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.
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r) Loan Documents; Collateral; Commitments. With respect to each loan
owned by Seller or its Subsidiaries in whole or in part, (A) the note and the
related security documents are each legal, valid and binding obligations of the
maker or obligor thereof, enforceable against such maker or obligor in
accordance with their terms, without valid set-offs or counterclaims and (B) the
note and the related security documents, copies of which are included in the
loan files, are true and correct copies of the documents they purport to be and
have not been suspended, amended, modified, canceled or otherwise changed except
as otherwise disclosed by documents in the applicable loan file. All notes,
evidences of indebtedness and agreements for the payment of money and all
related documents, instruments, papers and other security agreements of Seller
S&L applicable thereto, are bona fide, are genuine as to signatures of all
makers, endorsers and guarantors, and were given for valid consideration. All
collateral securing such indebtedness existed at the disbursement of the funds
which created the indebtedness. Except as may be disclosed in the books and
records of Seller S&L relating to its loans, Seller S&L has made no affirmative
or negative oral or written commitments which would materially impair the
enforcement of any of Seller S&L's loans.
s) Deposits. None of the deposits of Seller or any of its Subsidiaries
is a "brokered" deposit.
t) Anti-takeover Provisions Inapplicable. Seller and its Subsidiaries
have taken all actions required to exempt Seller, Buyer, Acquisition Sub, the
Agreement and the Merger from Section 203 of the DGCL.
u) Charter Provisions. Seller and its Subsidiaries have taken all
action so that the entering into of this Agreement and the consummation of the
Merger and the other transactions contemplated by this Agreement do not and will
not result in the grant of any rights to any person under the Certificate of
Incorporation, bylaws, or other governing instruments of Seller or any of its
Subsidiaries or restrict or impair the ability of Buyer or any of its
Subsidiaries or Affiliates to vote, or otherwise to exercise the rights of a
stockholder with respect to, shares of Seller or any of its Subsidiaries that
may be directly or indirectly acquired or controlled by it.
v) Material Interests of Certain Persons; Transactions with Insiders.
Except as set forth in Seller's Disclosure Letter, no officer or director of
Seller, or any "associate" (as such term is defined in Rule 12b-2 promulgated
under the Exchange Act) of any such officer or director, has any material
interest in any material contract or property (real or personal), tangible or
intangible, used in or pertaining to the business of Seller or any of its
Subsidiaries. Seller's Disclosure Letter describes all transactions since April
1, 1997 in which any officer, director, 5% stockholder or employee of Seller or
Seller S&L, or any Affiliate or Subsidiary thereof, directly or indirectly, has
borrowed from, loaned to, supplied or provided goods or services to, purchased
assets from, sold assets to, or done business in any manner with Seller or
Seller S&L or is a party to any agreement with Seller or Seller S&L provided
that with respect to employees, Seller shall not be required to disclose any
deposit relationships or loans that have paid off and are not currently
outstanding on the date hereof.
w) Insurance. Seller's Disclosure Letter contains a complete list of
all insurance policies of Seller and its Subsidiaries presently in effect. In
the opinion of Seller's management, Seller and its Subsidiaries are presently
insured for amounts deemed reasonable by management against such risks as
companies engaged in a similar business would, in accordance with good business
practice, customarily be insured. All of the insurance policies and bonds
maintained by Seller and its Subsidiaries are in full force and effect, Seller
and its Subsidiaries are not in default thereunder and all material claims
thereunder have been filed in due and timely fashion. Seller and its
Subsidiaries have received no notice from any insurance carrier that (i) any
insurance will be canceled or that coverage thereunder will be reduced or
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eliminated, or (ii) premium costs with respect to any policies of insurance will
be substantially increased.
x) Investment Securities; Derivatives.
i) Except for investments in Federal Home Loan Bank ("FHLB") Stock,
pledges to secure FHLB borrowings, and reverse repurchase
agreements entered into in arms-length transactions pursuant to
normal commercial terms and conditions and entered into in the
ordinary course of business and restrictions that exist for
securities to be classified as "held to maturity," none of the
investment securities held by Seller or any of its Subsidiaries
as of the date of this Agreement is, or will be at Closing,
subject to any restriction (contractual or statutory) other than
applicable securities laws, that would materially impair the
ability of the entity holding such investment freely to dispose
of such investment at any time.
ii) Except (x) as set forth in Seller's Disclosure Letter, (y) as
disclosed in Seller's Reports filed on or prior to the date of
this Agreement, or (z) for adjustable-rate mortgage loans and
adjustable-rate advances, neither Seller nor any of its
Subsidiaries is a party to or has agreed to enter into an
exchange-traded or over-the-counter equity, interest rate,
foreign exchange or other swap, forward, future, option, cap,
floor or collar or any other contract that is a derivative
contract (including various combinations thereof) or owns
securities that (A) are referred to generically as "structured
notes," "high risk mortgage derivatives," "capped floating rate
notes" or "capped floating rate mortgage derivatives" or (B) are
likely to have changes in value as a result of interest or
exchange rate changes that significantly exceed normal changes
in value attributable to interest or exchange rate changes.
y) Credit Card Issuing Agreement. Neither Seller nor Seller S&L has any
credit card agreement which would prevent Buyer from soliciting Seller S&L's
customers to accept a credit card issued by or on behalf of Buyer or an
Affiliate of Buyer.
z) Indemnification. Except (i) as provided in the certificate of
incorporation or bylaws of Seller and the similar governing documents of its
Subsidiaries, or (ii) as set forth in Seller's Disclosure Letter, neither Seller
nor any Subsidiary is a party to any indemnification agreement with any of its
present or former directors, officers, employees, agents or other persons who
serve or served in any other capacity with any other enterprise at the request
of Seller and, to the knowledge of Seller, there are no claims for which any
such person would be entitled to indemnification under the organization
certificate of incorporation or bylaws of Seller or the similar governing
documents of any of its Subsidiaries, under any applicable law or regulation or
under any indemnification agreement.
aa) Books and Records. The books and records of Seller and its
Subsidiaries on a consolidated basis have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect in all
material respects the substance of events and transactions that should be
included therein.
bb) Corporate Documents. Complete and correct copies of the certificate
of incorporation, bylaws and similar governing documents of Seller and each of
Seller's Subsidiaries, as in effect as of the date of this Agreement, have
previously been delivered to Buyer. The minute books of Seller and each of
Seller's Subsidiaries constitute a complete and correct record of all actions
taken by their respective boards of directors (and each committee thereof) and
their stockholders.
cc) Community Reinvestment Act Compliance. Seller S&L is in material
compliance with the applicable provisions of the Community Reinvestment Act, as
amended (the "CRA"), and the regulations promulgated thereunder, and, as of its
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most recent CRA examination, Seller S&L has a CRA rating of satisfactory or
better. To Seller's knowledge, there is no fact or circumstance or set of facts
or circumstances that would cause Seller S&L to fail to comply with such
provisions or cause the CRA rating of Seller S&L to fall below satisfactory.
dd) Conduct of Business Since Due Diligence. Except as set forth in
Seller's Disclosure Letter, since the date of information provided to Buyer
during Buyer's due diligence through the date of this Agreement:
i) Ordinary Course. The business and affairs of Seller and Seller
S&L have been conducted and carried on only in the ordinary and
regular course consistent with its past practices.
ii) Charter and Bylaws. There has been no change, amendment or other
modification made in the Certificate of Incorporation, Charter
or Bylaws of Seller or Seller S&L.
iii)Employment Benefits. There has been no increase or other change
made in the rate or nature of compensation, including wages,
salaries, bonuses and benefits under Seller's employee plans,
which has been paid, or will be paid or payable by Seller or
Seller S&L to any officer, employee, stockholder or director of
Seller S&L, other than customary year-end increases and bonuses
consistent with Seller or Seller S&L's past practices. No
additional stock options or rights to receive any stock have
been granted or allocated to any employees.
iv) Casualty Loss. Seller S&L has not sustained or incurred any loss
or damage, whether or not insured against, on account of fire,
flood, accident or other calamity which has materially
interfered with or affected, or may materially interfere with or
affect, the operation of its properties, assets or liabilities
of Seller S&L.
v) Accounting Methods. There has been no material change in any
method of accounting or accounting practice of Seller or Seller
S&L.
vi) Waiver of Rights. Seller S&L has not waived any rights, the
result of which, individually or in the aggregate, would have a
Material Adverse Effect on its financial condition.
Section 3.04 Representations and Warranties of Buyer. Subject to Section 3.01
and Section 3.02, Buyer represents and warrants to Seller that:
a) Organization.
i) Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Missouri and is
registered as a bank holding company under the Bank Holding
Company Act, as amended ("BHCA"). Bank Midwest, N.A. ("Buyer
Bank") is a bank duly organized, validly existing and in good
standing under the laws of the United States of America and is a
Subsidiary of Buyer. Each Subsidiary of Buyer other than Buyer
Bank is a national bank or corporation, duly organized, validly
existing and in good standing under the laws of its jurisdiction
of incorporation or organization. Each of Buyer and its
Subsidiaries has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its
business as now being conducted.
ii) Acquisition Sub will be a corporation, duly organized, validly
existing and in good standing under the laws of Delaware, all of
the outstanding capital stock of which will be prior to the
Effective Time, owned directly or indirectly by Buyer free and
clear of any lien, charge or other encumbrance. From and after
its incorporation, Acquisition Sub will not engage in any
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activities other than in connection with or as contemplated by
this Agreement.
iii)Buyer and each of its Subsidiaries has the requisite corporate
power and authority and is duly qualified to do business and is
in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes
such qualification necessary.
b) Authority. Buyer has all requisite corporate power and authority to
enter into this Agreement and, subject to receipt of all Requisite Regulatory
Approvals (as defined in Section 3.04d) below), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors of Buyer. Acquisition Sub will have prior to the
Effective Time, all corporate power and authority to consummate the transactions
contemplated hereunder and carry out all of its obligations with respect to such
transactions. The consummation of the transactions contemplated hereby will have
been prior to the Closing, duly and validly authorized by all necessary
corporate action in respect thereof on the part of Acquisition Sub. This
Agreement has been duly and validly executed and delivered by Buyer and
constitutes a valid and binding obligation of Buyer, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, whether applied in a court of
law or a court of equity.
c) Stockholder Approval. The execution, delivery and performance of
this Agreement and consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to complete the transactions
contemplated hereby. Buyer shall cause Acquisition Sub to take all necessary
corporate actions to complete the transactions contemplated hereby.
d) No Violations; Consents. The execution, delivery and performance of
this Agreement by Buyer or Acquisition Sub does not, and the consummation of the
transactions contemplated hereby will not, constitute (i) assuming receipt of
all Requisite Regulatory Approvals, a breach or violation of, or a default
under, any law, rule or regulation or any judgment, decree, order, governmental
permit or license to which Buyer or any of its Subsidiaries (or any of their
respective properties) is subject, (ii) a breach or violation of, or a default
under, the certificate of incorporation or bylaws of Buyer or the similar
organizational documents of any of its Subsidiaries or (iii) a breach or
violation of, or a default under (or an event which, with due notice or lapse of
time or both, would constitute a default under), or result in the termination
of, accelerate the performance required by, or result in the creation of any
lien, pledge, security interest, charge or other encumbrance upon any of the
properties or assets of Buyer or any of its Subsidiaries under, any of the
terms, conditions or provisions of any note, bond, indenture, deed of trust,
loan agreement or other agreement, instrument or obligation to which Buyer or
any of its Subsidiaries is a party, or to which any of their respective
properties or assets may be subject. The consummation by Buyer of the
transactions contemplated hereby will not require any approval, consent or
waiver under any such law, rule, regulation, judgment, decree, order,
governmental permit or license or the approval, consent or waiver of any other
party to any such agreement, or instrument, other than (x) the approval of Buyer
as the sole shareholder of Acquisition Sub and (y) the approval or waiver of the
Board of Governors of the Federal Reserve System ("FRB') under the BHCA and (z)
approval of the Office of the Comptroller of the Currency ("OCC") of the Related
Mergers (collectively, the "Requisite Regulatory Approvals") except that the
Merger shall not become effective until a Certificate of Merger has been filed
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with the Secretary of State of the State of Delaware in accordance with Section
9.01 of this Agreement.
e) Reports and Financial Statements.
i) Buyer and each of its Subsidiaries have each timely filed all
material reports and financial statements, together with any
amendments required to be made with respect thereto, that they
were required to file with (a) the FDIC, (b) the FRB, and (c)
the Comptroller of the Currency, (collectively, "Buyer's
Reports") and, to Buyer's knowledge, have paid all taxes and
assessments due and payable in connection therewith. As of their
respective dates, none of Buyer's Reports contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under
which they were made, not misleading.
ii) Each of the financial statements of Buyer included in Buyer's
Reports has been prepared in all material respects in accordance
with GAAP applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto or, in
the case of the unaudited financial statements, as permitted by
appropriate regulatory authorities). Each of the consolidated
statements of condition contained or incorporated by reference
in Buyer's Reports (including in each case any related notes and
schedules) and each of the consolidated statements of
operations, contained or incorporated by reference in Buyer's
Reports (including in each case any related notes and schedules)
fairly presented (A) the financial position of the entity or
entities to which it relates as of its date and (B) the results
of operations, stockholders' equity and cash flows, as the case
may be, of the entity or entities to which it relates for the
periods set forth therein (subject in the case of unaudited
interim statements, to normal year-end adjustments that are not
material in amount or effect), in each case in accordance with
GAAP, except as may be noted therein.
f) Absence of Certain Changes or Events. Except as disclosed in Buyer's
Reports filed on or prior to the date of this Agreement, no event has occurred
or circumstances arisen which has had or might reasonably be expected to have a
Material Adverse Effect with respect to Buyer and its Subsidiaries.
g) Absence of Claims. No litigation, proceeding, controversy, claim,
action or suit or other legal administrative or arbitration proceeding before
any court, governmental agency or arbitrator is pending or has been threatened
against Buyer or any of its Subsidiaries that would reasonably be expected to
prevent or adversely affect or which seeks to prohibit the consummation of the
transactions contemplated by this Agreement or which would have a Material
Adverse Effect with respect to Buyer and its Subsidiaries taken as a whole.
h) Absence of Regulatory Actions. Neither Buyer nor any of its
Subsidiaries is a party to any cease and desist order, written agreement or
memorandum of understanding with, or any commitment letter or similar written
undertaking to, or is subject to any action, proceeding, order or directive by,
or is a recipient of any extraordinary supervisory letter from any Government
Regulator, or has adopted any board resolutions at the request of any Government
Regulator, nor has it been advised by any Governmental Regulator that it is
contemplating issuing or requesting (or is considering the appropriateness of
issuing or requesting) any such action, proceeding, order, directive, written
agreement, memorandum of understanding, extraordinary supervisory letter,
commitment letter, board resolutions or similar written undertaking.
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i) Compliance with Laws. Buyer and each of its Subsidiaries have all
permits, licenses, certificates of authority, orders and approvals of, and have
made all filings, applications and registrations with, all Governmental Entities
that are required in order to permit them to carry on their business as it is
presently conducted; all such permits, licenses, certificates of authority,
orders and approvals are in full force and effect, and to the best knowledge of
Buyer no suspension or cancellation of any of them is threatened. The corporate
affairs of Buyer are not being conducted in violation of any law, ordinance,
regulation, order, writ, rule, decree or approval of any Governmental Entity.
Neither Buyer nor any of its Subsidiaries is in material violation of, is, to
the knowledge of Buyer, under investigation with respect to any material
violation of, or has been given notice or been charged with any material
violation of, any law, ordinance, regulation, order, writ, rule, decree or
condition to approval of any Governmental Entity.
j) Fees. Neither Buyer nor any of its Subsidiaries, nor any 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 fees, and no broker or finder has acted directly
or indirectly for Buyer or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated hereby.
k) Availability of Funds. Buyer on the date hereof and at the Effective
Time will have, all funds necessary to consummate the Merger and fulfill its
obligations under the terms of this Agreement, including without limitation, its
obligation to pay the aggregate Merger Consideration and to consummate in a
timely manner the transactions contemplated by this Agreement.
l) Certain Circumstances. Buyer knows of no facts or circumstances that
would delay, impede or otherwise adversely affect its ability to promptly secure
all necessary regulatory and other approvals and consents to the Merger and the
transactions contemplated by this Agreement and to consummate the Merger
promptly. As of the date of this Agreement, Buyer believes that, in light of its
financial condition, it should be able to obtain all such approvals, without the
imposition of any burdensome term or condition.
m) Community Reinvestment Act Compliance. Buyer and its banking Subsidiaries are
in material compliance with the applicable provisions of the CRA and the
regulations promulgated thereunder, and, as of their most recent CRA
examinations, Buyer and its banking Subsidiaries have a CRA rating of
satisfactory or better. To Buyer's knowledge, there is no fact or circumstance
or set of facts or circumstances that would cause Buyer and its banking
Subsidiaries to fall below satisfactory.
Article IV. Conduct Pending the Merger
Section 4.01 Conduct of Seller's Business Prior to the Effective Time. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Effective Time, Seller shall, and shall cause its Subsidiaries
to, use its commercially reasonable efforts to (i) conduct its business in the
regular, ordinary and usual course consistent with past practice and in
accordance with sound banking practices, (ii) maintain and preserve intact its
business organization, properties, leases, goodwill of its customers, and
advantageous business relationships and retain the services of its officers and
key employees, (iii) take no action which would adversely affect or delay the
ability of Seller or Buyer to perform their respective covenants and agreements
on a timely basis under this Agreement, and (iv) take no action that results in
or is reasonably likely to have a Material Adverse Effect on Seller. Without
limiting the foregoing covenants, unless the prior written consent of Buyer
shall have been obtained, which consent shall not be unreasonably withheld, and
except as otherwise expressly contemplated in this Agreement, from the date
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hereof until the Effective Time, Seller shall, and shall cause each of its
Subsidiaries to:
a) Board Observer. Permit, at any time after the execution of this
Agreement, a representative of Buyer to attend Seller's and Seller S&L's board
of directors' meetings and all committee meetings as an observer only and shall
give Buyer at least three days notice of all such meetings, provided that Buyer
shall not be entitled to have a representative at the portion of any such
meeting involving a discussion of this Agreement, the transactions contemplated
hereby (but Buyer shall not be excluded from discussions of ordinary course
banking business simply because such business is affected by representations,
warranties or covenants contained in this Agreement) and related matters.
b) Loan Policies. Reserve against, place on non-accrual, and charge off
loans and other assets as losses are recognized or future losses become
apparent, in accordance with GAAP and Seller S&L's past practices, which Seller
warrants and represents are in compliance in all material respects with all
applicable laws and regulations and have not been criticized in any examinations
or audits within the past three years;
c) Tax Returns. Prepare, execute and file, on or before the due date
thereof, all federal, state and local tax returns required to be filed by Seller
or Seller S&L with respect to its operations for any period ending before the
Effective Time and will pay the appropriate tax.
d) Customer Notice. Assist Buyer in drafting and preparing for mailing
a notice, the form and content of which shall be established by mutual agreement
of Buyer and Seller, to all Seller S&L's deposit and loan customers, notifying
them of the sale of Seller S&L to Buyer. The notice shall be mailed by Buyer
after all Requisite Regulatory Approvals and stockholder approvals have been
obtained but no later than the thirtieth day prior to the date agreed upon by
Buyer and Seller pursuant to Section 7.01 for the data processing conversion.
e) Liquidation Account. Cause Seller S&L to establish and maintain on
its books a true and complete record of those deposit accounts, including names
of depositors, which would have liquidation rights by reason of the conversion
of Seller S&L from mutual to stock form of organization.
f) Copies of Reports. Furnish to Buyer, until the Effective Time, true
and complete copies of the following information within five days after
preparation or receipt:
i) Monthly financial statements prepared with respect to Seller
and Seller S&L;
ii) Daily reports of Seller S&L beginning on the date of the final
regulatory approval of the transactions contemplated by this
Agreement and continuing through the Effective Time;
iii) Seller S&L's Reports of Condition and Income to regulatory
authorities at the close of business of each calendar quarter;
iv) Seller S&L's internal watch and problem loan reports;
v) Any and all board reports prepared for the use of Seller S&L's
board of directors or any board committee, excluding reports
which relate to this Agreement and the transactions
contemplated hereby and related matters, or to the
consideration of an Acquisition Proposal within the meaning of
Section 5.01 hereof;
vi) Any reports submitted to Seller S&L by independent certified
public accountants in connection with an examination of Seller
S&L's financial statements;
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vii) Notice of all actions, suits, and proceedings before any court
or governmental department, commission, board, bureau, agency,
or instrumentality affecting Seller or Seller S&L which, if
determined adversely, could have a Material Adverse Effect on
the financial condition, properties, or operations of Seller
or Seller S&L;
viii) Any notices or communications received from any savings and
loan regulatory body with respect to the affairs or operations
of Seller or Seller S&L; and
ix) Any additional information reasonably requested by Buyer for
completion of any applications for regulatory approval of the
transactions contemplated by this Agreement.
Section 4.02 Forbearance by Seller. Without limiting the covenants set forth in
Section 4.01 hereof, except as otherwise provided in this Agreement and except
to the extent required by law or regulation or any Governmental Entity, during
the period from the date of this Agreement to the Effective Time, Seller shall
not, and shall not permit any of its Subsidiaries to, without the prior consent
of Buyer, which consent shall not be unreasonably withheld:
a) unless required by applicable law or regulation or regulatory
directive, change any provisions of the certificate of incorporation or bylaws
of Seller or the similar governing documents of its Subsidiaries;
b) authorize, issue, deliver or sell any shares of its capital stock or
any securities or obligations convertible or exercisable for any shares of its
capital stock or change the terms of any of its outstanding stock options or
warrants or issue, grant or sell any option, warrant, call, commitment, stock
appreciation right, right to purchase or agreement of any character relating to
the authorized or issued capital stock of Seller except pursuant to the exercise
of stock options or warrants or restricted stock grants outstanding as of the
date of this Agreement, or split, combine, reclassify or adjust any shares of
its capital stock or otherwise change its capitalization;
c) make, declare or pay any cash or stock dividend or make any other
distribution on, or directly or indirectly 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, provided,
however, that Seller may pay normal quarterly cash dividends of not more than $
.20 per share of Seller Common Stock. Subject to applicable regulatory'
restrictions, if any, Seller S&L may pay a cash dividend that is, in the
aggregate, sufficient to fund any dividend by Seller permitted hereunder and to
fund the normal operations of Seller and the payment of reasonable expenses
relating to the Merger;
d) other than for fair value in the ordinary course of business
consistent with past practice, (i) acquire or sell, transfer, assign, mortgage,
encumber or otherwise dispose of any material properties, leases, assets or
other rights or agreements to any individual, corporation or other entity other
than a direct or indirect wholly owned Subsidiary of Seller or (ii) cancel,
release or assign any indebtedness of any such individual, corporation or other
entity or (iii) permit Seller S&L to waive any material right or cancel any
material contract, lease, license, obligation or commitment, or permit any lien,
encumbrance or charge of any material effect to attach to any of Seller's or
Seller S&L's assets;
e) except to the extent required by law or as specifically provided for
elsewhere herein, increase in any manner the compensation or fringe benefits of
any of its employees or directors, other than general increases in compensation
for non-executive officer employees in the ordinary course of business
consistent with past practice; pay any pension or retirement allowance not
required by any existing plan or agreement to any employees or directors,
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or become a party to, amend or commit itself to fund or otherwise establish any
trust or account related to any Seller Employee Plan (as defined in Section
3.03m)) with or for the benefit of any employee or director not required by any
existing plan or agreement; grant or award any stock options; make any
discretionary contribution to any Seller Employee Plan; hire any employee with
an annual total compensation payment in excess of $35,000; or enter into or
amend any employment contract with any employee;
f) except as contemplated by Section 5.02, change its methods of
accounting, tax or systems of internal accounting controls, as in effect at
September 30, 1999, except as required by changes in GAAP with the concurrence
of Seller's independent auditors;
g) commence any litigation other than in the ordinary course of
business, settle any claim, action or proceeding involving any liability of
Seller or any of its Subsidiaries for money damages in excess of $25,000 or
impose material restrictions upon the operations of Seller or any of its
Subsidiaries;
h) acquire or agree to acquire, by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, in each case which are material,
individually or in the aggregate, to Seller, except in satisfaction of debts
previously contracted;
i) establish or commit to the establishment of any new branch or other
office facilities or file any application to relocate or terminate the operation
of any banking office;
j) other than investments for Seller's portfolio made in accordance
with Section 4.02k), make any investment either by purchase of stock or
securities, contributions to capital, property transfers, or purchase of any
property or assets of any other individual, corporation or other entity;
k) make any investment in any debt security, including mortgage-backed
and mortgage-related securities, or materially restructure or change its
investment securities portfolio, through purchases, sales or otherwise;
provided, however, that Seller shall be permitted to invest in the following
securities with final maturities not greater than six months: U.S. government
and U.S. government agency securities, or securities of the FHLB;
l) enter into, renew, amend or terminate any contract or agreement, or
make any change in any of its leases or contracts, other than with respect to
those involving aggregate payments of less than, or the provision of goods or
services with a market value of less than, $50,000 per annum over a term not
exceeding three years and other than contracts or agreements covered by Section
4.02o);
m) make, renegotiate, renew, increase, extend, modify or purchase any
loan, lease (credit equivalent), advance, credit enhancement or other extension
of credit, or make any commitment in respect of any of the foregoing, or make
any loans to any borrower on terms materially more favorable than those
available to the general public in Seller S&L's market area, except (i) in
conformity with existing safe and sound lending practices in amounts not to
exceed an aggregate of $100,000 secured or $25,000 unsecured with respect to any
individual borrower or loans secured by first mortgages on single family
residential properties up to the limits on conforming loans imposed by Fannie
Mae or Freddie Mac; (ii) loans or advances as to which Seller has a binding
obligation to make such loan or advances as of the date hereof; provided,
however, that the requirements of this section shall be deemed met as to any
loan approved in a loan committee or Board meeting of which an authorized
representative of Buyer was given at least 24 hours written or oral notification
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and, if such representative attends such meeting, he or she shall have raised no
objection;
n) extend or renew loans or advance additional sums to a borrower whose
loans, in whole or in part, have been classified or listed as special mention by
any regulatory authority or included on Seller S&L's watch list unless such
extension, renewal or advance shall have been approved in advance by the Board
of Directors of Seller S&L or Seller S&L's Loan and Discount Committee, and only
if such extension, renewal or advance is necessary in order to protect Seller
S&L's interests and is in accordance with sound banking practices;
o) incur any additional borrowings other than purchases of Federal
Funds or short-term (six months or less) FHLB borrowings at market interest
rates and reverse repurchase agreements consistent with past practice, or pledge
any of its assets to secure any borrowings other than as required pursuant to
the terms of borrowings of Seller or any Subsidiary in effect at the date hereof
or in connection with borrowings or reverse repurchase agreements permitted
hereunder;
p) accept any deposits from any person on terms materially more
favorable in any respect than those available to the general public in Seller's
market area, unless such deposits are accepted in accordance with a safe and
sound program or practice in existence at Seller S&L prior to the date of this
Agreement;
q) establish or impose a schedule of service charges or fees which
applies charges either substantially more or substantially less than similar
service charges and fees charged by other banks in Seller's market areas;
r) make any capital expenditures in excess of $10,000 per expenditure,
or $200,000 in the aggregate, other than pursuant to binding commitments
existing on the date hereof disclosed in the Seller Disclosure Letter (or other
proposals included in Seller's Disclosure Letter and not objected to in writing
by Buyer within five days after receipt of Seller's Disclosure Letter) and other
than expenditures necessary to maintain existing assets in good repair or to
make payment of necessary taxes;
s) organize, capitalize, lend to or otherwise invest in any Subsidiary;
t) elect to any senior executive office any person who is not a member
of the senior executive officer team of Seller as of the date of this Agreement
or elect to the Board of Directors of Seller any person who is not a member of
the Board of Directors of Seller as of the date of this Agreement;
u) enter into any agreements or transactions after the date of this
Agreement with any officer, director, 5% stockholder or employee of Seller or
Seller S&L, or any Affiliate or Subsidiary thereof, directly or indirectly, in
an amount of $5,000 or more in each case or $25,000 in the aggregate; or
v) agree or make any commitment to take any action that is prohibited
by this Section 4.02.
Any request by Seller or response thereto by Buyer shall be made in
accordance with the notice provisions of Section 10.07 and shall note that it is
a request pursuant to this Section 4.02.
Section 4.03 Conduct of Buyer's Business Prior to the Effective Time. Except as
expressly provided in this Agreement, during the period from the date of this
Agreement to the Effective Time, Buyer shall, and shall cause its Subsidiaries
to, use its commercially reasonable efforts to (i) conduct its business in the
regular, ordinary and usual course consistent with past practice; (ii) maintain
and preserve intact its business organization, properties, leases, employees and
advantageous
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business relationships; and (iii) take no action which would materially
adversely affect or delay the ability of Seller or Buyer to perform their
respective covenants and agreements on a timely basis under this Agreement.
Article V. Covenants Section
5.01 Acquisition Proposals. From and after the date hereof until the termination
of this Agreement, neither Seller nor Seller S&L, nor any of their respective
officers, directors, employees, representatives, agents or affiliates
(including, without limitation, any investment banker, attorney or accountant
retained by Seller or any of its Subsidiaries), will, directly or indirectly,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or facilitate knowingly, any inquiries or
the making of any proposal that constitutes, or may reasonably be expected to
lead to, any Acquisition Proposal (as defined below), or enter into or maintain
or continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, or authorize or permit any of its officers, directors or
employees or any of its subsidiaries or any investment banker, financial
advisor, attorney, accountant or other representative retained by any of its
Subsidiaries to take any such action; provided, however, that nothing contained
in this Section 5.01 shall prohibit the Board of Directors of Seller from (i)
furnishing information to, or entering into discussions or negotiations with
any, person or entity that makes an unsolicited written, bona fide proposal to
acquire Seller pursuant to a merger, consolidation, share exchange, business
combination, tender or exchange offer or other similar transaction, if, and only
to the extent that the Board of Directors of Seller concludes in good faith,
after consultation with its financial advisors and legal counsel and taking into
account, among other things, all legal, financial, regulatory and other aspects
of such Acquisition Proposal, and the nature of the person making the
Acquisition Proposal, that such proposal, would, if consummated, result in a
transaction that is more favorable to its stockholders (in their capacities as
stockholders), from a financial point of view, than the transactions
contemplated by this Agreement and is reasonably capable of being completed (a
"Superior Proposal") and prior to furnishing such information to, or entering
into discussions or negotiations with, such person or entity, Seller (x)
provides reasonable notice to Buyer to the effect that it is furnishing
information to, or entering into discussions or negotiations with, such person
or entity and (y) receives from such person or entity an executed
confidentiality agreement in reasonably customary form; (ii) complying with Rule
14e-2 promulgated under the Exchange Act with regard to a tender or exchange
offer; or (iii) failing to make or withdrawing or modifying its recommendation,
or (iv) entering into an agreement with respect to a Superior Proposal. For
purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions contemplated hereunder) involving Seller
or any of its Subsidiaries: (i) any merger, consolidation, share exchange,
business combination, recapitalization, liquidation, dissolution, or other
similar transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 25% or more of the assets of Seller or Seller S&L, taken
as a whole, in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 25% or more of the outstanding shares of capital
stock of Seller or the filing of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), in connection therewith; or (iv)
any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
Section 5.02 Certain Policies and Actions of Seller.
a) At the request of Buyer, Seller shall cause Seller S&L to modify and
change its loan, litigation and real estate valuation policies and practices
(including loan classifications and levels of reserves) and investment and
asset/liability management policies and practices after the date on which all
Requisite Regulatory Approvals and stockholder approvals are received,
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provided however, that Seller shall not be required to take such action other
than actions specifically set forth in Section 4.01 or Section 4.02 of this
Agreement unless Buyer agrees in writing that (i) all conditions to Closing set
forth in Section 6.01 and Section 6.02 have been satisfied or waived (except for
the expiration of any applicable waiting periods) and that (ii) all rights of
Buyer to terminate this Agreement shall have lapsed, and prior to the Effective
Time so as to be consistent on a mutually satisfactory basis with those of Buyer
Bank; provided, however, that Seller shall not be required to take such action
more than 30 days prior to the Effective Time; and provided, further, that such
policies and procedures are not prohibited by GAAP or any applicable laws and
regulations or result in Seller S&L violating any regulatory requirements.
b) Seller's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 5.02. Buyer agrees to hold harmless, indemnify and
defend Seller and its Subsidiaries, and their respective directors, officers and
employees, for any loss, claim, liability or other damage caused by or resulting
from compliance with this Section 5.02.
Section 5.03 Access and Information. Upon reasonable notice, Seller shall (and
shall cause its Subsidiaries to) afford to Buyer and its representatives
(including, without limitation, directors, officers and employees of Buyer and
its affiliates and counsel, accountants and other professionals retained by
Buyer) such reasonable access during normal business hours throughout the period
prior to the Effective Time to the books, records (including, without
limitation, tax returns and work papers of independent auditors), contracts,
properties, personnel, advisors and to such other information relating to Seller
and its Subsidiaries as Buyer may reasonably request and shall permit Buyer and
its authorized representatives to make such copies thereof as they may
reasonably request; provided, however, that no investigation pursuant to this
Section 5.03 shall affect or be deemed to modify any representation or warranty
made herein. In furtherance, and not in limitation of the foregoing, Seller
shall make available to Buyer all information necessary or appropriate for the
preparation and filing of all real property and real estate transfer tax returns
and reports required by reason of the Merger. Upon reasonable notice, Buyer
shall (and shall cause its Subsidiaries to) provide to Seller and its
representatives (including, without limitation, directors, officers and
employees of Seller and its affiliates and counsel, accountants and other
professionals retained by Seller) such books, records and such other information
relating to Buyer and its Subsidiaries as Seller may reasonably request, but
only to the extent such access and information is reasonably required for the
preparation of Seller's Fairness Opinion, for Seller to determine Buyer's
ability to perform its obligations under this Agreement or for inclusion in the
Proxy Statement to be mailed to Seller's stockholders. Buyer and Seller will
not, and will cause their respective representatives not to, use any information
obtained pursuant to this Section 5.03 for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. Subject to the
requirements of applicable law, Buyer and Seller will keep confidential, and
will cause their respective representatives to keep confidential, all
information and documents obtained pursuant to this Section 5.03 unless such
information (i) was already known to such party or an affiliate of such party,
other than pursuant to a confidentiality agreement or other confidential
relationship, (ii) becomes available to such party or an affiliate of such party
from other sources not known by such party to be bound by a confidentiality
agreement or other obligation of secrecy, (iii) is disclosed with the prior
written approval of the other party or (iv) is or becomes readily ascertainable
from published information or trade sources. In the event that this Agreement is
terminated or the transactions contemplated by this Agreement shall otherwise
fail to be consummated, each party shall promptly cause all copies of documents
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or extracts thereof containing information and data as to another party hereto
(or an affiliate of any party hereto) to be returned to the party that furnished
the same.
Section 5.04 Certain Filings, Consents and Arrangements. Except as otherwise
specifically designated to Seller by this Section, Buyer shall as soon as
practicable and in cooperation with Seller (and in any event within 45 days
after the date hereof) make, or cause to be made, any filings and applications
and provide any notices required to be filed or provided in order to obtain all
approvals, consents and waivers of Governmental Entities necessary or
appropriate for the consummation of the transactions contemplated hereby. Buyer
shall provide Seller and its counsel with copies of the public portion of all
filings, applications and notices submitted to any Governmental Entity at the
time of filing, provided, however, that Buyer shall provide Seller with a
reasonable opportunity to review any such filings requiring the signature of
Seller or Seller S&L in advance of filing. Seller shall as soon as practicable
and in cooperation with Buyer (and in any event within 45 days after the date
hereof) make, or cause to be made, any filings and applications and provide any
notices required to be filed or provided in order to obtain all approvals,
consents and waivers of the Office of Thrift Supervision which are required to
effect the transactions contemplated by this Agreement, such applications to be
filed at Seller's expense. Seller shall provide Buyer with copies of any such
filings, applications and notices filed with the Office of Thrift Supervision at
the time of filing, provided, however, that Seller shall provide Buyer with a
reasonable opportunity to review any such filings requiring the signature of
Buyer or Buyer Bank in advance of filing.
Section 5.05 Additional Actions. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use all commercially reasonable
efforts to take promptly, or cause to be taken promptly, all actions and to do
promptly, or cause to be done promptly, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including the Merger, as
expeditiously as possible, including using efforts to obtain all necessary
actions or non-actions, extensions, waivers, consents and approvals from all
applicable Governmental Entities, effecting all necessary registrations,
applications and filings (including, without limitation, filings under any
applicable state securities laws) and obtaining any required contractual
consents and regulatory approvals.
Section 5.06 Publicity. Seller and Buyer shall consult with each other in
issuing any press releases or otherwise making public statements with respect to
the Merger and any other transaction contemplated hereby and in making any
filings with any Governmental Entity or with any national securities exchange or
the NASD with respect thereto; provided, however, that nothing contained in this
Section 5.06 shall prohibit any party, following notification to the other party
to this Agreement, from making any disclosure which, after consultation with
counsel, it deems necessary to comply with the requirements of applicable law
and regulation.
Section 5.07 Stockholders Meeting. Seller shall take all action necessary, in
accordance with applicable law and its Certificate of Incorporation and Bylaws,
to convene a meeting of its stockholders ("Stockholder Meeting") as promptly as
practicable for the purpose of considering and voting on approval and adoption
of this Agreement, the Merger and the other transactions provided for in this
Agreement. Except as otherwise provided in Section 5.01, the Board of Directors
of Seller shall (a) recommend at its Stockholder Meeting that the stockholders
vote in favor of and approve the transactions provided for in this Agreement and
(b) use its commercially reasonable efforts to solicit such approvals. Seller
may employ professional proxy solicitors to assist in contacting stockholders in
connection with soliciting favorable votes on the Merger.
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Section 5.08 Proxy Statement. For the purposes of holding the Seller
Stockholders Meeting, Seller shall prepare a proxy statement satisfying in all
material respects all applicable requirements of the Exchange Act, and the rules
and regulations thereunder. Seller shall provide Buyer with a reasonable
opportunity to review and comment on the proxy statement before it is mailed to
Seller's Stockholders. Buyer agrees to provide for inclusion in such proxy
statement all information reasonably necessary to satisfy the requirements of
the Exchange Act and the rules and regulations thereunder and such information
shall not contain any untrue statement of a material fact or omit to state any
material fact required to be stated in such proxy statement with respect to
Buyer or its Subsidiaries or to make the statements therein with respect to
Buyer or its Subsidiaries not misleading.
Section 5.09 Notification of Certain Matters. Each party shall give prompt
notice to the other of: (a) any event or notice of, or other communication
relating to, a default or event that, with notice or lapse of time or both,
would become a default, received by it or any of its Subsidiaries subsequent to
the date of this Agreement and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of each party and its Subsidiaries taken as a whole to which each
party or any Subsidiary is a party or is subject; and (b) any event, condition,
change or occurrence which individually or in the aggregate has, or which, so
far as reasonably can be foreseen at the time of its occurrence, is reasonably
likely to result in a Material Adverse Effect with respect to such party and its
Subsidiaries taken as a whole, each of Seller and Buyer shall give prompt notice
to the other party of any notice or other communication from any third party
alleging that the consent of such third party is or may be required in
connection with any of the transactions contemplated by this Agreement.
Section 5.10 Employees and Benefit Plans.
a) All persons who are employees of Seller or any of its Subsidiaries
immediately prior to the Effective Time and whose employment is not specifically
terminated at or prior to the Effective Time (a "Continuing Employee") shall, at
the Effective Time, remain employees of the Surviving Corporation or any of its
Subsidiaries. All of the Continuing Employees shall be employed at the will of
Buyer and no contractual right to employment shall inure to such employees
because of this Agreement. At any time after the receipt of the Requisite
Regulatory Approvals for the transactions contemplated by this Agreement, or by
mutual consent prior thereto, Seller shall allow Buyer to conduct interviews
with the existing employees of Seller and Seller S&L and to communicate with the
employees regarding the terms of their employment which will be in effect on or
after the Effective Time. At any time after the receipt of the Requisite
Regulatory Approvals for the transactions contemplated by this Agreement, Seller
shall allow Buyer to conduct training sessions for employees of Seller and its
Subsidiaries at Buyer's or Seller S&L's facilities. All such training sessions
shall be scheduled so as to have minimal impact upon the employees' performance
of their normal daily duties.
b) As of or after the Effective Time, and at Buyer's election and subject to the
requirements of the IRC and ERISA, the Seller Employee Plans may continue to be
maintained separately, consolidated or terminated. In the event of consolidation
or termination of all or any such plans, Continuing Employees shall receive
credit for service with Seller (for purposes of eligibility and vesting but not
for purposes of benefit accruals) under any existing Buyer Employee Plan or
under any Buyer Employee Plan in which such employee or such employee's
dependent would be eligible to enroll. Buyer Employee Plans shall be defined in
the same manner as to Buyer as Seller Employee Plan is defined as to Seller in
Section 3.03m) hereof. Continuing Employees shall receive credit for service
with Seller for all purposes under Buyer's vacation and sick leave plans.
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c) In the event of any termination or consolidation of any Seller S&L
health plan with any Buyer health plan, Buyer shall make available to Continuing
Employees and their dependents employer-provided health coverage on the same
basis as it provides such coverage to Buyer employees. Unless a Continuing
Employee affirmatively terminates coverage under a Seller health plan prior to
the time that such Continuing Employee becomes eligible to participate in the
Buyer health plan, no coverage of any of the Continuing Employees or their
dependents shall terminate under any of the Seller health plans prior to the
time such Continuing Employees and their dependents become eligible to
participate in the health plan, programs and benefits common to all employees of
Buyer and their dependents. In the event of any termination, or consolidation of
any Seller S&L health plan with any Buyer health plan, any pre-existing
condition, limitation or exclusion in the Buyer health plan shall not apply to
Continuing Employees or their covered dependents who have satisfied such
pre-existing condition exclusion waiting period under a Seller S&L health plan
with respect to such pre-existing condition at the Effective Time and who then
change that coverage to Buyer's health plan at the time such Continuing Employee
is first given the option to enroll in such Buyer health plan.
d) At or immediately prior to the Effective Time, Seller shall cash out
existing life insurance policies owned by Seller, other than any policies Buyer
shall request Seller to retain.
e) Prior to the Effective Time, Seller shall be entitled to make the
maximum contribution permitted by the provisions of IRC ss.404 and ss.415,
provided however, that (i) the amount of the contribution made shall be used by
the ESOP only to make payments on the then remaining loan balance owed by the
ESOP to Seller, and (ii) the amount of the foregoing contribution shall in no
event exceed the then remaining unpaid loan balance. Seller represents and
warrants that no contribution made pursuant to this paragraph will exceed the
limitations of Section 415 of the IRC.
f) Prior to the Effective Time, the Seller ESOP shall be amended to state that
any Merger Consideration remaining after repayment of the loan between Seller
and the ESOP shall be allocated as investment earnings of the ESOP to the ESOP
accounts of employees of Seller or any of its Subsidiaries who are ESOP
participants and beneficiaries (the "ESOP Participants") in accordance with the
terms of the ESOP as amended and as in effect at the Effective Time. All ESOP
Participants shall fully vest and have a nonforfeitable interest in their
accounts under the ESOP determined as of the Effective Time. As soon as
practicable after the Effective Time, any loan between Seller and the ESOP shall
be repaid in full from the Merger Consideration received by the ESOP for
unallocated shares of Seller Common Stock held by the ESOP upon the conversion
of such shares into cash pursuant to this Agreement. Seller's board of directors
shall take action prior to the Effective Time to terminate the ESOP on such
terms as Seller and Buyer may determine, provided that such termination shall
not become effective until after the Effective Time and after the ESOP loan has
been repaid. From and after the date of this Agreement, in anticipation of the
termination of the ESOP, Seller and its representatives, before the Effective
Time, and Buyer and its representatives, after the Effective Time, shall file an
application for determination with the Internal Revenue Service ("IRS") as to
the tax qualified status of the ESOP upon its termination under Section 401(a)
and 4975(e)(7) of the IRC (the "Determination Letter"). As soon as reasonably
practicable after the receipt of a favorable Determination Letter from the IRS,
Buyer shall instruct the ESOP Trustee to make distributions of the benefits
under the ESOP to the ESOP Participants in accordance with the provisions of the
ESOP. If Buyer and its representatives, after the Effective Time, reasonably
determine that the Seller S&L ESOP cannot obtain a favorable Final Determination
Letter, or that amounts held therein cannot be so applied, allocated or
distributed without causing Seller S&L ESOP to lose its tax qualified status,
Buyer shall take such action as it may reasonably determine with respect to the
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distribution of benefits to the Seller S&L ESOP Participants, provided that the
assets of the Seller S&L ESOP shall be held or paid only for the benefit of the
Seller S&L ESOP Participants and provided further that in no event shall any
portion of the amounts held in the Seller S&L ESOP revert, directly or
indirectly, to Seller S&L or any Seller Subsidiary, or to Buyer or any affiliate
thereof. At the time distribution of benefits is made under the Seller S&L ESOP
on or after the Effective Time, at the election of the Seller S&L ESOP
Participant, the amount thereof that constitutes an "eligible rollover
distribution" (as defined in Section 402(f)(2)(A) of the IRC) may be rolled over
by such Seller S&L ESOP Participant to any Buyer Qualified Plan that permits
rollover distributions or to any eligible individual retirement account.
g) At or prior to the Effective Time, Seller shall pay, in cash, the
severance benefit and, after the Effective Time, Buyer shall honor the employee
benefit obligations required by the employment and severance agreements listed
on Section 5.10i) of the Disclosure Letter.
h) At or prior to the Effective Time the Directors' Compensation
Agreements and Officer's Compensation Agreements listed on Section 5.10i) of the
Disclosure Letter shall be terminated and any benefits (or any remaining
benefits) to which the participants therein shall be entitled shall be paid by
Seller to such participants in a lump sum cash payment, reduced to present value
using an 8% discount rate.
i) Buyer agrees to continue Seller's employee policy regarding payment
of accumulated sick leave on termination for a period of six months following
the Effective Time.
j) Buyer agrees to honor the Management Agreement with Mike Schwarz
through March 31, 2001.
k) At the Effective Time, Buyer agrees to offer Robert W. King a
Consulting and Non-competition Agreement in the form heretofore agreed by the
parties.
l) Buyer will not be responsible for any employee benefits of Seller
except as expressly set forth in this Agreement.
Section 5.11 Indemnification.
a) From and after the Effective Time through the sixth anniversary
thereof, or until the final disposition of such claim (as herein defined) with
respect to any claim asserted on or before the sixth anniversary of the
Effective Time, and except as limited, conditioned or prohibited by laws, rules,
regulations or orders to which Buyer is subject at the time such payments are to
be made, Buyer agrees to indemnify, defend and hold harmless each present and
former director and officer of Seller and its Subsidiaries determined as of the
Closing Date (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including reasonable attorneys' fees and expenses),
liabilities, judgments or amounts paid in settlement (with the approval of
Buyer, which approval shall not be unreasonably withheld) or in connection with
any claim, action, suit, proceeding or investigation arising out of matters
existing or occurring at or prior to the Effective Time (a "Claim") in which an
Indemnified Party is, or is threatened to be made, a party or a witness based in
whole or in part on, or arising in whole or in part out of, the fact that such
person is or was a director or officer of Seller or any of its subsidiaries,
regardless of whether such Claim is asserted or claimed prior to, at or after
the Closing Date, to the fullest extent to which directors and officers of
Seller are entitled under Delaware law, Seller's certificate of incorporation
and bylaws, or other applicable law as in effect on the date hereof (and Buyer
shall pay expenses in advance of the final disposition of any such action or
proceeding to each Indemnified Party to the extent permissible to a Delaware
corporation under Delaware law and Seller's certificate of incorporation and
bylaws as in effect on the date hereof, except to the extent such advances are
limited, conditioned or prohibited by laws, rules, regulations or orders to
which Buyer is subject at
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the time such payments are to be made; provided, that the person to whom
expenses are advanced provides an undertaking to repay such expenses if it is
ultimately determined that such person is not entitled to indemnification). All
rights to indemnification in respect of a Claim asserted or made within the
period described in the preceding sentence shall continue until the final
non-appealable disposition of such Claim.
b) Any Indemnified Party wishing to claim indemnification under Section
5.11a), upon learning of any Claim, shall promptly notify Buyer, but the failure
to so notify shall not relieve Buyer of any liability it may have to such
Indemnified Party except to the extent that such failure materially prejudices
Buyer. Any Indemnified Party having actual knowledge of a Claim on or before the
Effective Date shall give notice to Buyer and to Seller's directors' and
officers' liability insurance carrier and shall take all actions necessary to
preserve rights to indemnification under such policy, but the failure to so
notify or pursue such claim shall not relieve Buyer of any liability it may have
to such Indemnified Party except to the extent that such failure materially
prejudices Buyer. In the event of any Claim, (1) Buyer shall have the right to
assume the defense thereof (with counsel reasonably satisfactory to the
Indemnified Party) and upon such assumption shall not be liable to such
Indemnified Parties for any legal expenses of other counsel or any other
expenses subsequently incurred by such Indemnified Parties in connection with
the defense thereof; except that, if Buyer elects not to assume such defense,
the Indemnified Parties may retain counsel satisfactory to them, or if counsel
for the Indemnified Parties also represents Buyer and advises that there are
issues which raise conflicts of interest between Buyer and the Indemnified
Parties which the parties cannot reasonably agree to waive, Buyer shall retain
independent counsel reasonably satisfactory to the Indemnified Parties, and
Buyer shall pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements therefor are received, provided
further that Buyer shall in all cases be obligated pursuant to this paragraph to
pay for only one firm of counsel for all Indemnified Parties, (2) the
Indemnified Parties will cooperate in the defense of any such Claim and (3)
Buyer shall not be liable for any settlement effected without its prior written
consent (which consent shall not unreasonably be withheld).
c) In the event Buyer or any of its successors or assigns (1)
consolidates with or merges into any other Person and shall not continue or
survive such consolidation or merger, or (2) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Buyer assume the obligations set forth in this Section
5.11. The term "Buyer" shall include such successors and assigns at each place
the term is used in these indemnification provisions.
d) The provisions of this Section 5.11 are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party and his or her
heirs, estate and personal representatives to the extent that each is liable or
alleged to be liable for a Claim as a successor to the Indemnified Party.
Section 5.12 Acquisition Sub.
Prior to the Effective Time, Buyer will take any and all necessary action to
cause (i) Acquisition Sub to become a direct wholly-owned subsidiary of Buyer
and (ii) the directors and the stockholder of Acquisition Sub to approve the
transactions contemplated by this Agreement.
Article VI. Conditions to Consummation
Section 6.01 Conditions to Each Party's Obligations.
The respective obligations of each party to effect the Merger and any other
transactions contemplated by this Agreement shall be subject to the satisfaction
of the following conditions:
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a) This Agreement shall have been approved by the requisite vote of
Seller's stockholders in accordance with applicable laws and regulations.
b) The Requisite Regulatory Approvals, the consent of the OTS and any
other required waivers of regulatory or governmental bodies with respect to this
Agreement and the transactions contemplated hereby shall have been obtained and
shall remain in full force and effect, and all statutory waiting periods shall
have expired; and all other consents, waivers and approvals of any third parties
which are necessary to permit the consummation of the Merger and the other
transactions contemplated hereby shall have been obtained or made except for
those the failure to obtain would not have a Material Adverse Effect (i) on
Seller and its Subsidiaries taken as a whole or (ii) on Buyer and its
Subsidiaries taken as a whole. No such approval or consent shall have imposed
any condition or requirement that would so materially and adversely impact the
economic or business benefits to Buyer or Seller of the transactions
contemplated hereby that, had such condition or requirement been known, such
party would not, in its reasonable judgment, have entered into this Agreement.
c) No party hereto shall be subject to any order, decree, ruling or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger or any other transactions contemplated
by this Agreement and no Governmental Entity shall have instituted any
proceeding for the purpose of enjoining or prohibiting the consummation of the
Merger or any transactions contemplated by this Agreement.
d) No statute, rule or regulation shall have been enacted, entered,
promulgated, interpreted, applied or enforced by any governmental authority
which prohibits, restricts or makes illegal consummation of the Merger or any
other transactions contemplated by this Agreement.
Section 6.02 Conditions to the Obligations of Buyer.
The obligations of Buyer to effect the Merger and any other transactions
contemplated by this Agreement shall be further subject to the satisfaction of
the following additional conditions, any one or more of which may be waived in
writing by Buyer:
a) The obligations of Seller required to be performed by it at or prior
to the Closing pursuant to the terms of this Agreement shall have been duly
performed and complied with in all respects, except as to the failure to perform
an obligation or obligations that would not result in a Material Adverse Effect
on Seller and its Subsidiaries taken as a whole, and the representations and
warranties of Seller contained in this Agreement shall be true and correct,
subject to Section 3.01 and Section 3.02, as of the date of this Agreement and
as of the Effective Time as though made at and as of the Effective Time (except
as to any representation or warranty which specifically relates to an earlier
date), and Buyer shall have received a certificate to the foregoing effect
signed by the president and the chief financial officer of Seller.
b) Buyer shall have received the opinion of counsel of Seller with
respect to those matters set forth on Exhibit B hereto in form and substance
reasonably satisfactory to Buyer.
Section 6.03 Conditions to the Obligations of Seller.
The obligations of Seller to effect the Merger, and any other transactions
contemplated by this Agreement shall be further subject to the satisfaction of
the following additional conditions, any one or more of which may be waived in
writing by Seller:
a) The obligations of Buyer required to be performed by it at or prior
to the Closing pursuant to the terms of this Agreement shall have been duly
performed and complied with in all respects, except as to the failure to perform
an obligation or obligations that would not result in a Material Adverse Effect
on Buyer and its Subsidiaries taken as a whole, and the representations and
warranties of Buyer contained in this Agreement shall be true and correct,
subject to
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Section 3.01 and Section 3.02, as of the date of this Agreement and as of the
Effective Time as though made at and as of the Effective Time (except as to any
representation or warranty which specifically relates to an earlier date), and
Seller shall have received a certificate to the foregoing effect signed by the
president and the chief financial officer of Buyer.
b) Buyer shall have deposited or caused to be deposited, in trust with
the Paying Agent, an amount of cash equal to the aggregate Merger Consideration
that the Seller stockholders shall be entitled to receive at the Effective Time
pursuant to Section 1.02 of the Agreement.
Article VII. Data Processing
Section 7.01 Sample Data. At a date prior to Closing agreed upon between Buyer
and Seller, Seller shall provide to Buyer, a machine-readable data tape of all
of Seller S&L's loan and deposit accounts, together with a written description
of the file, record, and field data types and formats, to allow Buyer to prepare
for a data processing conversion. The data tape shall include summary interest
accrual and payment information for the current year to date, except that the
name and address information may, at Seller's option, be encoded in such a way
that the actual identities of Seller S&L's customers cannot be determined.
Section 7.02 Information for Check Ordering. After receipt of the Requisite
Regulatory Approvals of the transactions contemplated by this Agreement, Seller
shall provide to Buyer a machine-readable data tape of all of Seller S&L's
deposits, including all customer name and address information, to enable Buyer
to begin ordering checks, deposit slips, and other transaction items for use by
its customers.
Section 7.03 Installation of Data Circuits. After the effective date of this
Agreement, Seller shall cause Seller S&L to give Buyer reasonable access to
Seller S&L's locations during normal business hours for the purposes of
installing and testing data circuits and data processing equipment, provided
that the location, installation, and testing of said circuits and equipment
shall not be permitted to disrupt Seller S&L's normal daily functions and
operation. In the event that this Agreement is terminated without consummation
of the planned transactions, Buyer shall remove its data processing equipment
and circuits within 30 days after the termination and shall repair promptly any
damage done to Seller S&L's property during the installation or removal, all at
Buyer's sole expense.
Article VIII. Termination
Section 8.01 Termination. This Agreement may be terminated, and the Merger
abandoned, at or prior to the Effective Time, either before or after any
requisite stockholder approval:
a) by the mutual consent of Buyer and Seller in a written instrument,
if the Board of Directors of each so determines by vote of a majority of the
members of its entire Board; or
b) by Buyer or Seller, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event of the failure of
the stockholders of Seller to approve the Agreement at the Stockholder Meeting;
or
c) by Buyer or Seller, by written notice to the other party, if either
(i) any approval, consent or waiver of a governmental agency required to permit
consummation of the transactions contemplated hereby shall have been
unappealably denied or (ii) any governmental authority of competent jurisdiction
shall have issued a final, unappealable order enjoining or otherwise prohibiting
consummation of the transactions contemplated by this Agreement; or
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d) by Buyer or Seller, if its Board of Directors so determines by vote
of a majority of the members of its entire Board, in the event that the Merger
is not consummated by May 31, 2001, unless the failure to so consummate by such
time is due to the material breach of any representation, warranty or covenant
contained in this Agreement by the party seeking to terminate; or
e) by Buyer or Seller (provided that the party seeking termination is
not then in material breach of any representation, warranty, covenant or other
agreement contained herein), in the event of (i) a failure to perform or comply
by the other party with any covenant or agreement of such other party contained
in this Agreement, which failure or non-compliance has a Material Adverse Effect
in the context of the transactions contemplated by this Agreement, or (ii)
subject to Section 3.02a), any inaccuracies, omissions or breach in the
representations, warranties, covenants or agreements of the other party
contained in this Agreement the circumstances as to which either individually or
in the aggregate have, or reasonably could be expected to have, a Material
Adverse Effect on such other party; in either case which has not been or cannot
be cured within 30 calendar days after written notice thereof is given by the
party seeking to terminate to such other party; or
f) by Seller, if the Board of Directors of Seller reasonably determines
by vote of a majority of the members of its entire Board that an Acquisition
Proposal is a Superior Proposal.
g) by Buyer, if more than 10% of Seller's stockholders exercise
dissenters' or appraisal rights under applicable law by delivering a written
demand for appraisal of their shares to Seller prior to the stockholders vote on
the Merger.
h) by Buyer, if there shall have been a change in the condition of
Seller between the date of Buyer's initial due diligence and the closing date
which constitutes a Material Adverse Effect and Buyer shall have given written
notice thereof to the Seller and within 30 days thereafter Seller shall have
failed to cure such change. Buyer shall be entitled to a final due diligence
review, on site, at Seller S&L's locations, during the last five (5) days prior
to the Effective Time, solely for the purpose of confirming that there have been
no changes since the date of Buyer's initial due diligence having a Material
Adverse Effect on the condition of Seller.
i) by Buyer, if the Requisite Regulatory Approvals are subject to
conditions reasonably unacceptable to Buyer, under the standards set forth in
Section 6.01b hereof.
Section 8.02 Termination Fee. In the event that Seller terminates this Agreement
pursuant to Section 8.01f) and, within 12 months after the termination of this
Agreement, Seller or Seller S&L enters into a definitive agreement with the
person that made the Superior Proposal then Seller shall, within 10 business
days following written demand by Buyer, pay to Buyer $500,000.
Section 8.03 Effect of Termination. In the event of termination of this
Agreement by either Buyer or Seller prior to the consummation of the Merger as
provided in Section 8.01, this Agreement shall forthwith become void and have no
effect, and there shall be no liability or obligation hereunder, except (i) the
obligations of the parties under Section 5.03 (with respect to confidentiality
and the return of information), Section 8.02 and Section 10.06 shall survive any
termination of this Agreement and (ii) that 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 willful breach of any
provision of this Agreement.
Article IX. Closing and Effective Time
Section 9.01 Effective Time. The closing of the transactions
contemplated hereby ("Closing") shall take place at the offices of Buyer, unless
another place is agreed to by Buyer and Seller, on a date agreed to by Buyer and
Seller ("Closing Date") that is no later than 30 days following the date on
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which the expiration of the last applicable waiting period in connection with
notices to and approvals of governmental authorities shall occur and all
conditions to the consummation of this Agreement are satisfied or waived, or on
such other date as may be agreed to by the parties. Prior to the Closing Date,
Acquisition Sub and Seller shall execute a Certificate of Merger in accordance
with all appropriate legal requirements, which shall be filed as required by law
on the Closing Date, and the Merger provided for therein shall become effective
on the date and at the time the Certificate of Merger reflecting the Merger
shall become effective with the Secretary of State of the State of Delaware (the
"Effective Time").
Section 9.02 Deliveries at the Closing. Subject to the provisions of Article VI
and Article VIII, on the Closing Date there shall be delivered to Buyer and
Seller the documents and instruments required to be delivered under Article VI.
Article X. Certain Other Matters
Section 10.01 Certain Definitions; Interpretation. As used in this Agreement,
the following terms shall have the meanings indicated:
a) "Affiliate" means any person (a) which directly or indirectly
controls, or is controlled by, or is under common control with any other person
or any Subsidiary of that other person; (b) which directly or beneficially owns
or controls 5% or more of any class of voting stock of another person or any
Subsidiary of that other person; or (c) of which 5% or more of any class of
voting stock is owned directly or beneficially by any other person or any
Subsidiary of that other person.
b) "person" includes an individual, corporation, limited liability
company, partnership, association, trust or unincorporated organization.
When a reference is made in this Agreement to Sections, Exhibits or
Schedules, such reference shall be to a Section of, Exhibit or Schedule to, this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for ease of reference only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
followed by the words "without limitation." Any singular term in this Agreement
shall be deemed to include the plural, and any plural term the singular. Any
reference to gender in this Agreement shall be deemed to include any other
gender.
Section 10.02 Survival. Only those agreements and covenants of the parties that
are by their terms applicable in whole or in part after the Effective Time,
including Section 5.03 of this Agreement, shall survive the Effective Time. All
other representations, warranties, agreements and covenants shall be deemed to
be conditions of the Agreement and shall not survive the Effective Time.
Section 10.03 Waiver; Amendment. Prior to the Effective Time, any provision of
this Agreement may be (i) waived in writing by the party benefited by the
provision or (ii) amended or modified at any time by an agreement in writing
between the parties hereto except that, after the vote by the stockholders of
Seller, no amendment or modification may be made that would reduce the amount or
alter or change the kind of consideration to be received by holders of Seller
Common Stock or contravene any provision of the DGCL or the federal banking
laws, rules and regulations.
Section 10.04 Counterparts. This Agreement may be executed in counterparts each
of which shall be deemed to constitute an original, but all of which together
shall constitute one and the same instrument.
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Section 10.05 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware, without
regard to conflicts of laws principles.
Section 10.06 Expenses. Each party hereto will bear all expenses incurred by it
in connection with this Agreement and the transactions contemplated hereby.
Section 10.07 Notices. All notices, requests, acknowledgments and other
communications hereunder to a party shall be in writing and shall be deemed to
have been duly given when delivered by hand, overnight courier or facsimile
transmission (confirmed in writing) to such party at its address or facsimile
number set forth below or such other address or facsimile transmission as such
party may specify by notice (in accordance with this provision) to the other
party hereto.
If to Seller, to:
Robert W. King, President and CEO
Hardin Bancorp, Inc.
201 Northeast Elm Street
Hardin, Missouri 64035
With copies to:
Robert I. Lipsher, Esq.
Luse Lehman Gorman Pomerenk & Schick, P.C.
5335 Wisconsin Avenue, N.W.
Suite 400
Washington, D.C. 20015
If to Buyer, to:
Rick L. Smalley, Co-CEO and President and
David M. Seymour, Co-CEO
Dickinson Financial Corporation
1100 Main Street, Suite 350
Kansas City, Missouri 64105
Fax (816) 472-5211
With copies to:
Amy Dickinson Holewinski, Esq.
Dickinson Financial Corporation
1100 Main Street, Suite 350
Kansas City, Missouri 64105
Fax (816) 472-5211
Section 10.08 Entire Agreement, Etc. This Agreement, together with the
Disclosure Letters, represents the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and supersedes any and
all other oral or written agreements heretofore made. All terms and provisions
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Except for Section
5.12 which confers rights on the parties described therein, nothing in this
Agreement is intended to confer upon any other person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
Section 10.09 Specific Performance. Buyer and Seller agree that the franchise
value of Seller S&L represents a unique asset and that the failure of either
party to perform the terms of this Agreement would cause irreparable harm for
which monetary damages would be totally
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inadequate. Therefore, either party shall be entitled to specific performance of
the terms of this Agreement. Nothing contained in this Agreement, however, shall
be deemed as granting to Buyer control over Seller or Seller S&L until such time
as the Requisite Regulatory Approvals have been granted. Until the Requisite
Regulatory Approvals have been received, a breach of this Agreement by either
party may be remedied only by an action for money damages.
Section 10.10 Successors and Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by either party hereto without the written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
DICKINSON FINANCIAL CORPORATION
By: /s/ Rick L. Smalley
----------------------------
Name: Rick L. Smalley
--------------------------
Title: President
-------------------------
HARDIN BANCORP, INC.
By: /s/ Robert King
--------------------------
Name: Robert King
-------------------------
President
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APPENDIX B--Opinion of trident securities, inc.
October 25, 2000
Board of Directors
Hardin Bancorp, Inc.
201 Northeast Elm St.
Hardin, MO 64035
Members of the Board:
You have requested our opinion as to the fairness, from a financial
point of view, to the holders of the issued and outstanding shares of common
stock (the "Hardin Bancorp Common Stock") of Hardin Bancorp, Inc. ("Hardin"), of
the consideration to be paid by Dickinson Financial Corporation ("Dickinson
Financial") pursuant to the Agreement and Plan of Merger, dated as of October
25, 2000 (the "Agreement") by and among Hardin and Dickinson Financial. Unless
otherwise noted, all terms used herein will have the same meaning as defined in
the Agreement.
The Agreement provides for the merger (the "Merger") of newly
established subsidiary of Dickinson Financial ("Acquisition Sub") with and into
Hardin, pursuant to which, among other things, at the Effective Time (as defined
in the Agreement), each outstanding share of Hardin Common Stock, other than any
Excluded Shares (as defined in the Agreement) of Hardin, will be exchanged for
the right to receive $21.75 in cash (the "Consideration"). The terms and
conditions of the Merger are more fully set forth in the Agreement.
Trident Securities ("Trident Securities"), a division of McDonald
Investments Inc., as part of its investment banking business, is customarily
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements
and valuations for estate, corporate and other purposes.
We have acted as Hardin's financial advisor in connection with, and
have participated in certain negotiations leading to, the Agreement. In
connection with rendering our opinion set forth herein, we have among other
things:
(i) Reviewed certain publicly available information concerning Hardin,
including the Annual Reports on Form 10-KSB of Hardin for each of the
years in the three-year period ended March 31, 2000 and the Quarterly
Report on Form 10-QSB of Hardin for the quarter ended June 30, 2000;
(ii) Reviewed certain other internal information, primarily financial in
nature relating to the respective businesses, earnings, assets and
prospects of Hardin and Dickinson Financial provided to us or
publicly available for purposes of our analysis;
(iii) Participated in meetings and telephone conferences with members of
senior management of Hardin concerning the financial condition,
business, assets, financial forecasts and prospects of the company,
as well as other matters we believed relevant to our inquiry;
(iv) Reviewed certain stock market information for Hardin Common Stock and
compared it with similar information for certain companies, the
securities of which are publicly traded;
(v) Compared the results of operations and financial condition of Hardin
with that of certain companies, which we deemed to be relevant for
purposes of this opinion;
(vi) Reviewed the financial terms, to the extent publicly available, of
certain acquisition transactions, which we deemed to be relevant for
purposes of this opinion;
(vii) Reviewed the Agreement and certain related documents; and
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(vii) Performed such other reviews and analyses as we have deemed
appropriate.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of all of the financial and other
information reviewed by us and have relied upon the accuracy and completeness of
the representations, warranties and covenants of Hardin and Dickinson Financial
contained in the Agreement. We have not been engaged to undertake, and have not
assumed any responsibility for, nor have we conducted, an independent
investigation or verification of such matters. We have not been engaged to and
we have not conducted a physical inspection of any of the assets, properties or
facilities of either Hardin or Dickinson Financial, nor have we made or obtained
or been furnished with any independent valuation or appraisal of any of such
assets, properties or facilities or any of the liabilities of either Hardin or
Dickinson Financial. With respect to financial forecasts used in our analysis,
we have assumed that such forecasts have been reasonably prepared by management
of Hardin on a basis reflecting the best currently available estimates and
judgments of the management of Hardin as to the future performance of Hardin. We
have not been engaged to and we have not assumed any responsibility for, nor
have we conducted any independent investigation or verification of such matters,
and we express no view as to such financial forecasts or the assumptions on
which they are based. We have also assumed that all of the conditions to the
consummation of the Merger, as set forth in the Agreement, would be satisfied
and that the Merger would be consummated on a timely basis in the manner
contemplated by the Agreement.
This opinion is based on economic and market conditions and other
circumstances existing on, and information made available as of, the date
hereof. In addition, our opinion is, in any event, limited to the fairness, as
of the date hereof, from a financial point of view, of the Consideration, to the
holders of Hardin Common Stock, and does not address the underlying business
decision by Hardin's Board of Directors to effect the Merger, does not compare
or discuss the relative merits of any competing proposal or any other terms of
the Merger, and does not constitute a recommendation to any Hardin shareholder
as to how such shareholder should vote with respect to the Merger. This opinion
does not represent an opinion as to what the value of Hardin Common Stock may be
at the Effective Time of the Merger or as to the prospects of Hardin's business
or Dickinson Financial's business.
We have acted as financial advisor to Hardin in connection with the
Merger and will receive from Hardin a fee for our services, a significant
portion of which is contingent upon the consummation of the Merger, as well as
Hardin's agreement to indemnify us under certain circumstances. We will also
receive a milestone fee in connection with the delivery of this opinion.
In the ordinary course of business, we may actively trade securities of
Hardin for our own account and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities.
It is understood that this opinion was prepared solely for the
confidential use of the Board of Directors and senior management of Hardin and
may not be disclosed, summarized, excerpted from or otherwise publicly referred
to without our prior written consent. Our opinion does not constitute a
recommendation to any stockholder of Hardin as to how such stockholder should
vote at the stockholders' meeting held in connection with the Merger. This
opinion does not represent an opinion as to what the value of Hardin Common
Stock may be at the Effective Time of the Merger or as to the prospects of
Hardin's business or Dickinson Financial's business. Notwithstanding the
foregoing, this opinion may be included in the proxy statement to be mailed to
the holders of Hardin Common Stock in connection with the Merger, provided that
this opinion will be reproduced in such proxy statement in full, and any
description of or reference to us or our actions, or any summary of the opinion
in such proxy statement, will be in a form reasonably acceptable to us and our
counsel.
Based upon and subject to the foregoing and such other matters, as we
consider relevant, it is our opinion that as of the date hereof, the
Consideration is fair, from a financial point of view, to the stockholders of
Hardin.
Very truly yours,
TRIDENT SECURITIES, a division of
McDonald Investments Inc.
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APPENDIX C--SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
TEXT OF SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS. - (a) Any stockholder of a corporation of this State who
holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to Section 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of
stock of a constituent corporation in a merger or consolidation to be effected
pursuant to Section 251 (other than a merger effected pursuant to Section 251(g)
of this title), Section 252, Section 254, Section 257, Section 258, Section 263
or Section 264 of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting of
stockholders to act upon the agreement of merger or consolidation, were either
(I) listed on a national securities exchange or designated as a national market
system security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders;
and further provided that no appraisal rights shall be available for any shares
of stock of the constituent corporation surviving a merger if the merger did not
require for its approval the vote of the stockholders of the surviving
corporation as provided in subsection (f) of Section 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under
this section shall be available for the shares of any class or series of stock
of a constituent corporation if the holders thereof are required by the terms of
an agreement of merger or consolidation pursuant to Sections 251, 252, 254, 257,
258, 263 and 264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof; b. Shares of stock of
any other corporation, or depository receipts in respect thereof, which shares
of stock (or depository receipts in respect thereof) or depository receipts at
the effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described
in the foregoing subparagraphs a. and b. of this paragraph; or
d. Any combination of the shares of stock, depository receipts and cash in lieu
of fractional shares or fractional depository receipts described in the
foregoing subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to
a merger effected under Section 253 of this title is not owned by the parent
corporation immediately prior to the merger, appraisal rights shall be available
for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
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the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting, shall
notify each of its stockholders who was such on the record date for such meeting
with respect to shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are available for any or all
of the shares of the constituent corporations, and shall include in such notice
a copy of this section. Each stockholder electing to demand the appraisal of his
shares shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to demand
the appraisal of his shares. A proxy or vote against the merger or consolidation
shall not constitute such a demand. A stockholder electing to take such action
must do so by a separate written demand as herein provided. Within 10 days after
the effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation who
has complied with this subsection and has not voted in favor of or consented to
the merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to Section 228 or
Section 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval of
the merger or consolidation and that appraisal rights are available for any or
all shares of such class or series of stock of such constituent corporation, and
shall include in such notice a copy of this section; provided that, if the
notice is given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to all such
holders of any class or series of stock of a constituent corporation that are
entitled to appraisal rights. Such notice may, and, if given on or after the
effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any
stockholder entitled to appraisal rights may, within 20 days after the date of
mailing of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of
such holder's shares. If such notice did not notify stockholders of the
effective date of the merger or consolidation, either (I) each such constituent
corporation shall send a second notice before the effective date of the merger
or consolidation notifying each of the holders of any class or series of stock
of such constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or within 10
days after such effective date; provided, however, that if such second notice is
sent more than 20 days following the sending of the first notice, such second
notice need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with this
subsection. An affidavit of the secretary or assistant secretary or of the
transfer agent of the corporation that is required to give either notice that
such notice has been given shall, in the absence of fraud, be prima facie
evidence of the facts stated therein. For purposes of determining the
stockholders entitled to receive either notice, each constituent corporation may
fix, in advance, a record date that shall be not more than 10 days prior to the
date the notice is given, provided, that if the notice is given on or after the
effective date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day next
preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the
surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d)
hereof, upon written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement setting
forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of
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holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after his written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under subsection
(d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to appraisal
rights. The Court may require the stockholders who have demanded an appraisal
for their shares and who hold stock represented by certificates to submit their
certificates of stock to the Register in Chancery for notation thereon of the
pendency of the appraisal proceedings; and if any stockholder fails to comply
with such direction, the Court may dismiss the proceedings as to such
stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court shall
appraise the shares, determining their fair value exclusive of any element of
value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together
with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon application
of a stockholder, the Court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorney's fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to
an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
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corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to the
merger or consolidation shall have the status of authorized and unissued shares
of the surviving or resulting corporation.
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HARDIN BANCORP, INC.
SPECIAL MEETING OF STOCKHOLDERS
February 2, 2001
The undersigned hereby appoints William L. Homan and W. Levan Thurman,
with full powers of substitution, to act as attorneys and proxies for the
undersigned to vote all shares of capital stock of Hardin Bancorp, Inc. (the
"Company") which the undersigned is entitled to vote at the Special Meeting of
Stockholders (the "Meeting") to be held at the Hardin United Methodist Church
Fellowship Hall located at 101 Northeast First Street, Hardin, Missouri, on
February 2, 2001 at 1:00 p.m., Hardin, Missouri time and at any and all
adjournments and postponements thereof.
1. To approve the adoption of the Agreement and Plan of Merger dated October
25, 2000 between Dickinson Financial Corporation and Hardin Bancorp, Inc.
[_] FOR [_] AGAINST [_] ABSTAIN
2. In their discretion, upon such other matters as may properly come before
the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL LISTED ABOVE. IF ANY OTHER BUSINESS IS
PRESENTED AT THE MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY
IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO
OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
The Board of Directors recommends a vote
"FOR" the proposal listed above.
(Continued and to be SIGNED on Reverse Side)
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Should the undersigned be present and choose to vote at the Meeting or at
any adjournments or postponements thereof, and after notification to the
Secretary of the Company at the Meeting of the stockholder's decision to
terminate this proxy, then the power of such attorneys or proxies shall be
deemed terminated and of no further force and effect. This proxy may also be
revoked by filing a written notice of revocation with the Secretary of the
Company or by duly executing a proxy bearing a later date.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the Meeting, and the Proxy Statement dated
______, 2001.
Dated: ___________, 2001 ____________________________________________
Signature of Stockholder
Please sign exactly as your name(s) appear(s)
to the left. When signing as attorney,
executor, administrator, trustee or guardian,
please give your full title. If shares are
held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE
