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EXHIBIT 99 (a)(1)
OFFER TO PURCHASE
CHESTER BANCORP, INC.
OFFER TO PURCHASE FOR CASH UP TO 250,000 SHARES OF COMMON STOCK OF
CHESTER BANCORP, INC. AT A PURCHASE PRICE OF $17.75.
THE PRO-RATION PERIOD AND YOUR RIGHT TO WITHDRAW SHARES YOU TENDER
WILL EXPIRE AT 5:00 P.M., CENTRAL DAYLIGHT TIME, ON AUGUST 15, 2001, UNLESS THE
OFFER IS EXTENDED. WE MAY EXTEND THE OFFER PERIOD AT ANY TIME.
Chester Bancorp, Inc. invites you to tender your shares of Common
Stock for purchase by the Company on the terms and conditions set forth in this
offer to purchase and the letter of transmittal and other accompanying
documents. We are offering:
o to purchase up to 250,000 shares of our Common Stock in this
tender offer at a price of $17.75 per share, net to the seller in
cash, without interest;
o if the number of shares tendered is less than 250,000, we will
purchase all of the shares tendered, and
o if the number of shares tendered is more than 250,000, we will
purchase shares first from holders of less than 100 shares who
tendered all of their shares then, on a pro rata basis from all
other shareholders who tendered shares.
If you want to tender your shares in our offer, you should:
o specify the number of shares you want to tender, and
o follow the instructions in this document and the related
documents, including the accompanying letter of transmittal, to
submit your shares.
Our offer is not conditioned on any minimum number of shares being
tendered. Our offer is, however, subject to certain other conditions, as
discussed in Section 13.
We reserve the right to increase the number of shares we purchase by
an amount which does not exceed 2% of the outstanding shares of our Common Stock
as of June 15, 2001.
Our board of directors has approved this offer. However, neither we
nor our board of directors, makes any recommendation to any shareholder as to
whether you should tender or not tender your shares. You must make your own
decision whether to tender your shares and, if so, how many shares to tender.
This document contains or incorporates important information about
our offer. We urge you to read it in its entirety and refer to the information
incorporated by reference.
The date of this Offer to Purchase is July 10, 2001.
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IMPORTANT PROCEDURES
If you want to tender all or part of your shares, you must do one of
the following before our offer expires:
o if your shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, contact the
nominee and have the nominee tender your shares for you, or
o if you hold certificates in your own name, complete and sign the
letter of transmittal according to its instructions, and deliver
it, together with any required signature guarantee, the
certificates for your shares and any other documents required by
the letter of transmittal, to Chester National Bank, the
depositary for this offer, or
If you want to tender your shares but:
o your certificates for the shares are not immediately available
or cannot be delivered to the depositary, or
o your other required documents cannot be delivered to the
depositary before the expiration of our offer, you can still
tender your shares if you comply with the guaranteed delivery
procedure described in Section 3.
TO TENDER YOUR SHARES YOU MUST CAREFULLY FOLLOW THE PROCEDURES
DESCRIBED IN THIS DOCUMENT, THE LETTER OF TRANSMITTAL AND THE OTHER DOCUMENTS
RELATED TO OUR OFFER.
If you have any questions or need assistance, you should contact
Chester National Bank, the information agent for our offer. You may request
additional copies of this document, the letter of transmittal or the notice of
guaranteed delivery from the information agent. Chester National Bank may be
reached at:
Chester National Bank
1112 State Street
Chester, IL 62233
Attn: Michael W. Welge
(800) 851-5371 - ext. 301 or 306
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SUMMARY TERM SHEET
This summary highlights the most material terms of our tender offer.
You should realize that it does not describe all of the details of our offer to
the same extent that they are described in the body of this document and the
letter of transmittal. We urge you to read the entire document and the related
letter of transmittal because they contain the full details of our offer. Where
helpful, we have included references to the sections in this document where you
will find a more complete discussion of the item referenced. A table of contents
immediately follows this summary.
WHO IS OFFERING TO PURCHASE MY SHARES? Chester Bancorp, Inc. is offering to
purchase up 250,000 shares of our
outstanding Common Stock. See Section
1.
WHAT IS THE PURCHASE PRICE? The purchase price for our offer is
$17.75 per share.
HOW AND WHEN WILL I BE PAID? If your shares are purchased in our
offer, you will be paid the purchase
price, in cash, without interest, as
soon as is practicable after the
expiration of the offer period and the
acceptance of the shares for payment.
See Section 4.
HOW MANY SHARES WILL CHESTER We will purchase up to 250,000 shares
BANCORP, INC. PURCHASE IN ALL? of our outstanding Common Stock in our
offer, approximately 20% of our
outstanding Common Stock. We reserve
the right to purchase additional shares
up to 2% of the outstanding shares of
Common Stock, subject to applicable
legal requirements. Our offer is not
conditioned on any minimum number of
shares being tendered.
IF I TENDER MY SHARES, HOW MANY OF MY All of the shares that you tender in
SHARES WILL CHESTER BANCORP, INC. our offer may not be purchased. If more
PURCHASE? than 250,000 shares are tendered, we
will purchase shares based on the
following order of priority:
o First, we will purchase shares from
all holders of "odd lots" of less
than 100 shares who properly tender
all of their shares.
o Second, we will purchase shares
from all other shareholders who
properly tender shares, on a pro
rata basis, subject to the
conditional tender provisions
described in Section 5. As a
result, we will purchase the same
percentage of shares tendered from
each tendering shareholder in this
second category. We will announce
this pro-ration percentage, if it
is necessary, after our offer
expires.
o Finally, if necessary to permit us
to purchase 250,000 shares, for
shares conditionally tendered (for
which the condition was not
initially satisfied) and not
properly withdrawn prior to the
expiration date, we may purchase
these
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conditionally tendered shares
selected by random lot in
accordance with Section 5. To be
eligible for purchase by random lot
shareholders whose shares are
conditionally tendered must have
tendered all of their shares.
As noted above, we may also choose to
purchase an additional 2% of the
outstanding shares of Common Stock
subject to applicable legal rules. See
Section 14.
HOW WILL CHESTER BANCORP, INC. PAY We would need a maximum of $4,437,500
FOR THE SHARES? to purchase 250,000 shares at the price
of $17.75 In addition, we expect to
incur fees and expenses in connection
with this offer of approximately
$50,000. We intend to fund the purchase
of shares with dividends we will
receive from our subsidiary, Chester
National Bank.
HOW LONG DO I HAVE TO TENDER MY You may tender your shares until our
SHARES TO CHESTER BANCORP, INC.? offer expires. The offer is scheduled
to expire on August 15, 2001, at 5:00
p.m., Central Daylight Time, but we may
choose to extend it at any time. We
cannot assure that we will extend our
offer or, if we extend it, for how long
it will be extended. See Sections 1 and
14.
HOW WILL I BE NOTIFIED IF CHESTER If our offer is extended, we will make
BANCORP, INC. EXTENDS THIS OFFER? a public announcement before 9:00 a.m.,
Central Daylight Time, on the first
business day after the offer was
scheduled to expire. See Section 14.
WHAT ARE THE CONDITIONS TO CHESTER Our obligation to accept and pay for
BANCORP, INC.'S OFFER? your tendered shares is conditioned on
the satisfaction or waiver of the
conditions described in Section 13. In
addition to customary conditions, these
conditions include the following:
(a). We will not be obligated to
purchase any shares if, in our
good faith reasonable judgment,
our purchase of shares in the
offer
o would result in our Common
Stock being held of record
by fewer than 300 persons,
or
o would result in our Common
Stock no longer being quoted
on the Nasdaq Small Cap
Market, or
o would otherwise constitute a
"going private transaction"
for purposes of Rule 13e-3
of the Securities and
Exchange Commission under
the Securities Exchange Act
of 1934; or
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(b). We will not be required to
proceed with the offer if we
experience a material adverse
change in our business conditions
or are prohibited from doing so
because of legal process, or if a
third party announces or makes a
tender or exchange offer, merger,
business combination or other
similar transaction involving us.
HOW DO I TENDER MY SHARES? To tender your shares, you must
complete one of the actions described
under "Important Procedures" on the
inside front cover of this document
before the offer expires. You may also
contact the information agent or your
broker for assistance. The contact
information for the information agent
appears on the inside front cover and
on the last page of this document. See
Section 3 and the instructions to the
letter of transmittal.
ONCE I HAVE TENDERED SHARES" IN THE If you tender your shares and change
OFFER, CAN I CHANGE MY MIND? your mind, you may withdraw your shares
at any time before our offer expires.
In addition, after our offer expires,
if we have not accepted for payment the
shares you have tendered to us, you may
withdraw your shares at any time after
August 22, 2001. See Section 6. To
properly withdraw your shares, you must
timely deliver a written notice of your
withdrawal to the depositary at the
address or facsimile number appearing
on the last page of this document. Your
notice must specify your name, address
and social security number, the number
of shares to be withdrawn, and, if the
certificates have been delivered or
otherwise identified, the certificate
number(s) for the shares and the name
of the registered holder(s) of the
shares. All signatures on the notice of
withdrawal must be guaranteed by an
eligible guarantor institution if
certificates have already been
delivered. Some additional requirements
apply if the certificates for shares to
be withdrawn have been delivered to the
depositary. See Section 6.
WHAT DO CHESTER BANCORP, INC. AND Our board of directors has approved
ITS BOARD OF DIRECTORS THINK ABOUT this offer. However, neither we nor our
THIS OFFER? board of directors is making any
recommendation regarding whether you
should tender or not tender your
shares. You must decide whether to
tender your shares. You should discuss
whether to tender your shares with your
broker or other financial or tax
advisor. Directors, and officers of
Chester Bancorp, Inc. have indicated to
us that they do not intend to tender
shares pursuant to this offer.
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WHAT IS A RECENT MARKET PRICE OF Our Common Stock is traded on the
CHESTER BANCORP, INC. COMMON STOCK? Nasdaq Small Cap Market under the
symbol "CNBA." On June 15, 2001, a date
close to the date of this document, the
last per share sales price of Chester
Bancorp, Inc. Common Stock as reported
on the Nasdaq Small Cap Market was
$16.75. We urge you to obtain more
current market quotations for your
shares. See Section 8.
WILL I HAVE TO PAY BROKERAGE If you are a registered shareholder and
COMMISSIONS OR STOCK TRANSFER TAX tender your shares directly to the
IF I TENDER MY SHARES TO CHESTER depositary, you will not need to pay
BANCORP, INC.? any brokerage commissions. If you hold
shares through a broker or bank,
however, you should ask your broker or
bank to see if you will be charged a
fee to tender your shares. Except as
otherwise set forth in the letter of
transmittal, transfer taxes on the
purchase of shares pursuant to this
offer will be paid by Chester Bancorp,
Inc. See Section 1.
WHAT ARE THE UNITED STATES FEDERAL Generally, you will be subject to
INCOME TAX CONSEQUENCES IF I United States Federal income taxation
TENDER MY SHARES TO CHESTER when you receive cash from us in
BANCORP, INC.? SEE SECTION 7. exchange for the shares you tender. The
cash you receive will be treated either
as:
o a sale or exchange eligible for
capital gains treatment; or
o a dividend subject to ordinary
income tax.
WHAT ARE THE EXPECTED BENEFITS, We are making this offer because we
POTENTIAL DISADVANTAGES, OF THE believe that, given the current market
OFFER FOR SHAREHOLDERS? price of the shares, the purchase of
the shares of Common Stock on the terms
and conditions outlined in this offer
is an attractive investment for Chester
Bancorp, Inc. This offer gives
shareholders an opportunity to sell all
or part of their investment in our
shares on potentially more favorable
terms than would otherwise be
available. Shareholders who choose not
to tender their shares will realize a
proportionate increase in their
relative equity interest in Chester
Bancorp, Inc. and in our future
earnings and assets. Our purchase of
shares in the offer will reduce the
"public float" in our Common Stock (the
number of shares owned by outside
shareholders and available for trading
in the securities markets). This could
result in lower stock prices or reduced
liquidity in the trading market for
Common Stock in the future. See
Sections 2 and 11.
WHOM DO I CONTACT IF I HAVE You can contact our Information Agent,
QUESTIONS ABOUT CHESTER BANCORP, Chester National Bank at 618-826-5038
INC.'S OFFER? or 800-851-5371 ext. 301 or 306 with
questions regarding this offer.
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TABLE OF CONTENTS
Page No.
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Forward Looking Statements................................................. viii
SECTION 1 Number of Shares; Priority of Purchases; Odd Lots;
Pro-ration.................................................... 1
SECTION 2 Purpose of the Offer; Certain Effects of the Offer.............. 2
SECTION 3 Procedure for Tendering Shares.................................. 4
SECTION 4 Purchase of Shares and Payment of the Purchase Price............ 6
SECTION 5 Conditional Tender of Shares.................................... 7
SECTION 6 Withdrawal Rights............................................... 8
SECTION 7 Material Federal Income Tax Consequences........................ 8
SECTION 8 Share, Trading Price and Dividend............................... 11
SECTION 9 Information About Us............................................ 11
SECTION 10 Information about our Directors, Executive Officers and
Controlling Shareholders...................................... 13
SECTION 11 Effect of Offer on Market for Shares; Registration under
the 1934 Act ................................................. 15
SECTION 12 Certain Legal Matters General................................... 15
SECTION 13 Certain Conditions of this Offer................................ 15
SECTION 14 Cancellation, Extension, Termination and Amendment.............. 17
SECTION 15 Fees and Expenses............................................... 19
SECTION 16 Source and Amount of Funds...................................... 19
SECTION 17 Recent Transactions in Our Shares............................... 19
SECTION 18 Miscellaneous................................................... 19
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As used in this document, the terms "the Company", "Chester Bancorp,
Inc.", "we," "our" and "us" refer to Chester Bancorp, Inc., a Delaware
corporation.
Forward-Looking Statements
This document contains a number of forward-looking statements
regarding the financial condition, results of operations and business of Chester
Bancorp, Inc. These statements may be made directly in this document or may be
incorporated in this document by reference to other documents. These statements
may also include references to periods following the completion of our offer.
You can find many of these statements by looking for words such as "believes,"
"expects," "anticipates," "estimates," "intends," "plans," "may," "will" and
"potential" and for similar expressions. Forward-looking statements involve
substantial risks and uncertainties. Some of the factors that may cause actual
results to differ materially from those contemplated by the forward-looking
statements include, but are not limited to, the following possibilities:
o the timing and occurrence or non-occurrence of events, including
the conditions to our offer, may be subject to circumstances
beyond our control;
o there may be increases in competitive pressure among financial
institutions or from non-financial institutions;
o changes in the interest rate environment may reduce interest
margins or may adversely affect mortgage banking operations;
o changes in deposit flows, loan demand or real estate values may
adversely affect our business;
o changes in accounting principles, policies or guidelines may
cause our financial condition to be perceived differently;
o general economic conditions, either nationally or locally in
some or areas in which we do business, or conditions in the
securities markets, the banking industry or the mortgage banking
industry, may be less favorable than we currently anticipate;
o legislation or regulatory changes may adversely affect our
business;
o technological changes may be more difficult or expensive than we
anticipate;
o success or consummation of new business initiatives may be more
difficult or expensive than we anticipate; or
o litigation or other matters before regulatory agencies, whether
currently existing or commencing in the future, may delay the
occurrence or non-occurrence of events longer than we
anticipate.
All subsequent written and oral forward-looking statements
concerning our offer or other matters addressed in this document and
attributable to us or any person acting on our behalf are qualified by these
cautionary statements. We do not undertake any obligation to release publicly
any revisions to such forward-looking statements to reflect events or
circumstances after the date of this document or to reflect the occurrence of
unanticipated events.
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CHESTER BANCORP, INC.'S OFFER
SECTION 1 NUMBER OF SHARES; PRIORITY OF PURCHASES; ODD LOTS; PRORATION
General. On the terms and subject to the conditions of our offer, as
set forth in this document and the related letter of transmittal, we are
offering to purchase up to 250,000 shares of our Common Stock for a purchase
price of $17.75 per share, net to the seller in cash, without interest, the
"Purchase Price."
The term "expiration date" means 5:00 p.m., Central Daylight Time,
on August 15, 2001, unless and until we, in our sole discretion, extend the
period of time for which our offer will remain open. If extended by us, the term
"expiration date" means the latest time and date at which our offer, as
extended, expires. See Section 14 for a description of our right to extend,
cancel, terminate or amend our offer.
Shares properly tendered and not withdrawn will be purchased at the
Purchase Price upon the terms and subject to the conditions of our offer,
including the odd lot, proration and conditional tender provisions described
below. In accordance with the rules of the Securities and Exchange Commission,
we may, and we reserve the right to, purchase in our offer an additional amount
of shares, not to exceed 2% of our outstanding Common Stock, without amending or
extending our offer. See Section 14.
All shares tendered and not purchased because of proration or the
conditional tender procedures, will be returned to you at our expense as soon as
practicable following the expiration date.
Tendering shareholders will not be obligated to pay any charges or
expenses of Chester National Bank, the depositary for our offer (the
"depositary"), or any brokerage commissions. Except as set forth in Instruction
6 of the letter of transmittal, transfer taxes on the purchase of shares
pursuant to this offer will be paid by Chester Bancorp, Inc.
This document and the related letter of transmittal will be mailed
to record holders of shares of our Common Stock and will be furnished to
brokers, banks and similar persons whose names or the names of whose nominees
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of our Common Stock.
Priority of Purchases. Upon the terms and subject to the conditions
of our offer, if 250,000 or fewer shares are properly tendered and not properly
withdrawn, we will purchase all properly tendered shares at the Purchase Price.
Upon the terms and subject to the conditions of our offer, if more
than 250,000 shares are validly tendered and not withdrawn, we will purchase
such validly tendered shares in the following order of priority:
o First, we will purchase shares properly tendered and not
properly withdrawn from any "odd lot" holder (as defined below)
who
o tenders all the shares owned (beneficially or of record) by the
odd lot holder; and
o completes the section entitled "Odd Lots" in the letter of
transmittal and, if applicable, in the notice of guaranteed
delivery; and
o Second, after the purchase of all the shares properly tendered
by odd lot holders, subject to the conditional tender provisions
described in Section 5, we will purchase shares from all other
shareholders who properly tender shares, on a pro rata basis
with appropriate adjustment to avoid fractional shares. As a
result, we will purchase the same percentage of shares tendered
from each tendering shareholder in this second category. We will
announce this proration percentage, if it is necessary, after
our offer expires.
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o Finally, if necessary to permit us to purchase 250,000 shares,
shares conditionally tendered (for which the condition was not
initially satisfied) and not properly withdrawn prior to the
expiration date, will, to the extent feasible, be selected for
purchase by random lot in accordance with Section 5. To be
eligible for purchase by random lot shareholders whose shares
are conditionally tendered must have tendered all of their
shares.
Odd Lot Holders. For purposes of our offer, the term "odd lot
holder" means any person who owns, beneficially or of record, a total of fewer
than 100 shares. As set forth above, shares of odd lot holders will be accepted
for payment before proration, if any, of the purchase of other tendered shares.
To qualify for this preference, an odd lot holder must tender all shares owned,
beneficially or of record, by the odd lot holder and must so indicate in the
letter of transmittal or, if applicable, the notice of guaranteed delivery. This
preference is not available to beneficial or record holders of a total of 100 or
more shares, even if these holders have separate accounts or certificates
representing fewer than 100 shares.
Proration. If proration of tendered shares is required, we will
determine the final proration factor as promptly as practicable after the
expiration date. Proration for each shareholder tendering shares, other than odd
lot holders, will be based on the ratio of the number of shares tendered by such
shareholder to the total number of shares tendered by all shareholders (other
than odd lot holders), subject to the conditional tender provisions described in
Section 5. This ratio will be applied to shareholders tendering shares to
determine the number of shares (rounded up to the nearest whole share) that will
be purchased from each such shareholder pursuant to our offer.
Because of the potential difficulty in determining the number of
shares properly tendered and not properly withdrawn, including shares tendered
by guaranteed delivery procedures as described in Section 3, and because of the
odd lot procedures described above and the conditional tender procedures
described in Section 5, we do not expect that we will be able to announce the
final proration percentage or commence payment for any shares purchased under
our offer until seven to ten business days after the expiration date. The
preliminary results of any proration will be announced by press release as soon
as practicable after the expiration date. Shareholders may obtain preliminary
proration information from the information agent and may be able to obtain this
information from their brokers.
As described in Section 7, the number of shares that we will
purchase from a shareholder under our offer may affect the United States federal
income tax consequences to that shareholder and, therefore, may be relevant to a
shareholder's decision whether or not to tender shares. The letter of
transmittal affords each shareholder the opportunity to designate the order of
priority in which shares are to be purchased in the event of proration, should a
shareholder decide to do so for federal income tax reasons. In addition,
shareholders may choose to submit a "conditional tender" under the procedures
discussed in Section 5 in order to structure their tender for federal income tax
reasons.
SECTION 2. PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER
From June 15, 1999 to June 15, 2001, we have repurchased
approximately 154,069 shares of our Common Stock in privately negotiated and
open market transactions. On June 12, 2001 our board of directors approved this
offer.
Purpose of the Offer. We are making this offer because our board of
directors believes that, given our business, assets and prospects and the
current market price of the shares, the purchase of the shares pursuant to the
offer is an attractive investment for Chester Bancorp, Inc. We have sufficient
resources, in available cash and dividends we will receive from our subsidiary,
Chester National Bank, to fund the amount required to purchase shares under the
offer and pay related expenses.
In addition, we believe the offer may be attractive from the
perspective of our shareholders:
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o The offer provides shareholders who are considering a sale of
all or a portion of their shares the opportunity to sell their
shares pursuant to the offer for cash without the usual
transaction costs associated with market sales.
o Any odd lot holders whose shares are purchased pursuant to the
offer not only will avoid the payment of brokerage commissions
for their sale of shares directly to Chester Bancorp, Inc., but
also will avoid any applicable odd lot discounts payable on
sales of odd lots.
o The offer also may give shareholders the opportunity to sell
their shares at the Purchase Price that may be greater than
market prices prevailing immediately prior to the announcement
of the offer.
o To the extent the purchase of shares in the offer results in a
reduction in the number of shareholders of record, the costs to
us for services to shareholders will be reduced.
o This offer allows shareholders to sell a portion of their shares
while retaining a continuing equity interest in Chester Bancorp,
Inc. Shareholders who determine not to accept the offer will
increase their proportionate interest in Chester Bancorp, Inc.'s
equity, and thus in Chester Bancorp, Inc.'s future earnings and
assets, subject to Chester Bancorp, Inc.'s right to issue
additional shares and other equity securities in the future.
The offer also presents some potential risks and disadvantages to
Chester Bancorp, Inc. and our continuing shareholders.
o The offer will result in a decrease in the amount of cash and
investments held by Chester Bancorp, Inc. However, after
completion of the offer, we will continue to maintain adequate
capital in line with government regulations for a "well
capitalized" financial institution. See Section 9.
o The offer will reduce the "public float" (the number of shares
owned by outside shareholders and available for trading in the
securities markets). This may result in lower stock prices or
reduced liquidity in the trading market for Common Stock in the
future.
We may in the future purchase additional shares on the open market,
in private transactions, through tender offers or otherwise, subject to the
approval of our board of directors. Future purchases by us may be on the same
terms or on terms that are more or less favorable to the shareholders than the
terms of our offer. Rule 13e-4 promulgated under the 1934 Act prohibits us and
our affiliates from purchasing any shares, other than pursuant to our offer,
until at least ten business days after the expiration date. Any possible future
purchases by us will depend on many factors, including market price of the
shares, the results of our offer, our business and financial position and
general economic and market conditions.
Shareholders who do not tender their shares pursuant to our offer
and shareholders who otherwise retain an equity interest in Chester Bancorp,
Inc. (including as a result of a partial tender of their shares, or a proration
pursuant to the offer or a conditional tender the condition for which was not
satisfied) will continue to be shareholders of Chester Bancorp, Inc. with the
attendant risks and rewards associated with owning the equity securities of
Chester Bancorp, Inc.
OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER. HOWEVER, NEITHER WE
NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER A SHAREHOLDER
SHOULD TENDER OR REFRAIN FROM TENDERING HIS OR HER SHARES, AND NEITHER WE NOR
OUR BOARD OF DIRECTORS HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION
CONTAINED IN THIS OFFER, CONSULT THEIR OWN INVESTMENT AND TAX
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ADVISORS AND MAKE THEIR OWN DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES TO TENDER. DIRECTORS AND OFFICERS OF CHESTER BANCORP, INC. HAVE
INDICATED TO US THAT THEY DO NOT INTEND TO TENDER SHARES PURSUANT TO THIS OFFER.
Section 10 provides information about their current share ownership.
Use of Shares Acquired. The shares we purchase pursuant to this
offer will become treasury stock and will be available for issuance by Chester
Bancorp, Inc. in the future without further shareholder action (except as may be
required by applicable law or the rules applicable to companies with shares
traded on the Nasdaq Small Cap Market or any other securities exchange on which
the shares may be listed) for purposes including, but not limited to, the
acquisition of other businesses, the raising of additional capital for use in
our businesses and the satisfaction of obligations under existing or future
employee benefit plans. We currently have no plans for the issuance of shares
purchased pursuant to our offer.
SECTION 3. PROCEDURE FOR TENDERING SHARES
To tender shares pursuant to our offer, a properly completed and
duly executed letter of transmittal (or facsimile thereof), together with the
certificates representing the tendered shares and any other required documents,
must be transmitted to and received by the depositary at its address set forth
on the last page of this document prior to the expiration date of the offer. The
method of delivery of all required documents is at the option and risk of the
tendering shareholder. If delivery is by mail, registered mail with return
receipt requested, properly insured, is recommended.
In the letter of transmittal, the tendering shareholder must: (i)
set forth his name and address; (ii) set forth the number of shares he is
tendering; and (iii) set forth the number of the stock certificate(s)
representing such shares.
In cases where shares are tendered by a registered holder of Chester
Bancorp, Inc. Common Stock who has completed either the box entitled "Special
Payment Instructions" or the box entitled "Special Delivery Instructions" on the
letter of transmittal, all signatures on the letters of transmittal must be
guaranteed by an "Eligible Institution." An "Eligible Institution" is a bank,
broker dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program or a
bank, broker, dealer, credit union, savings association or other entity which is
an "eligible guarantor institution," as that term is defined in Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended. If the
certificates are registered in the name of a person other than the signer of the
letter of transmittal, or if certificates for unpurchased shares are to be
issued to a person other than the registered holder(s), the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates, with the signature(s) on the certificates or stock powers
guaranteed as aforesaid.
A tender of shares pursuant to the procedures described below in
this Section will constitute a binding agreement between the tendering
shareholder and Chester Bancorp, Inc. upon the terms and subject to the
conditions of our offer.
THE METHOD OF DELIVERING ALL DOCUMENTS, INCLUDING CERTIFICATES FOR
SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT YOUR
ELECTION AND RISK. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
ALL DELIVERIES IN CONNECTION WITH OUR OFFER, INCLUDING A LETTER OF
TRANSMITTAL AND CERTIFICATES FOR SHARES, MUST BE MADE TO THE DEPOSITARY. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
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Guaranteed Delivery. If you want to tender your shares pursuant to
our offer but your share certificates are not immediately available, or if time
will not permit all required documents to reach the depositary prior to the
expiration date, you can still tender your shares if all the following
conditions are met:
o the tender is made by or through an Eligible Institution;
o the depositary receives by hand, mail, overnight courier or
facsimile transmission, prior to the expiration date, a properly
completed and duly executed notice of guaranteed delivery in the
form we have provided with this document (with signatures
guaranteed by an Eligible Institution);
o the depositary receives, within three business days after the
date of its receipt of the notice of guaranteed delivery;
o the certificates for all tendered shares, and
o a properly completed and duly executed letter of transmittal (or
facsimile thereof), and any other documents required by the
letter of transmittal.
In any event, the exchange of the Purchase Price for shares tendered
and accepted for purchase pursuant to our offer will be made only after timely
receipt by the depositary of certificates for the shares, properly completed,
duly executed letter(s) of transmittal and any other required documents.
To avoid backup federal income tax withholding with respect to the
Purchase Price received by a shareholder pursuant to our offer, the shareholder
must provide the depositary with a correct taxpayer identification number or
certify that he or she is not subject to backup Federal income tax withholding
by completing the Substitute Form W-9 included in the letter of transmittal.
Determination of Validity, Rejection of Shares, Waiver of Defects;
No Obligation to Give Notice of Defects. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of shares
will be determined by us in our sole discretion, and our determination will be
final and binding. We reserve the absolute right to reject any or all tenders
determined by us not to be in proper form or the acceptance or purchase for
which may, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive prior to the expiration date any condition (other than
the nonwaivable conditions) or any defect or irregularity in the tender of any
shares. No tender of shares will be deemed to have been validly made until all
defects and irregularities have been cured or waived. Our interpretation of the
terms and conditions of our offer (including this document, the letter of
transmittal and its instructions and other offer materials) will be final and
binding. Neither we, the depositary nor any other person will be under any duty
to give notification of any defects or irregularities in the tender of any
shares or will incur any liability for failure to give any such notification.
ESOP. As of December 31, 2000, Chester National Bank's Employee
Stock Ownership Plan (the "ESOP") held 173,770 shares, not all of which were
allocated to the individual accounts of the ESOP plan participants. Under the
terms of the ESOP, the Trustee, Chester National Bank, must consent to a tender
of shares pursuant to our offer. The Administrative Committee that advises the
Trustee on matters of this nature has recommended to the Trustee that the
Trustee: (i) not tender any of the unallocated ESOP shares pursuant to our
offer; and (ii) not consent to the tender of shares by participants in the ESOP
who have been allocated shares over which such participants have investment
discretion. The Trustee has decided to follow the recommendation of the
Administrative Committee. Further, the Trustee will not tender shares which have
been allocated to participants but for which such participants do not have
investment discretion. Therefore, no shares held by the ESOP, whether allocated
or unallocated, will be tendered pursuant to this offer.
Your Representations and Warranties; Our acceptance Constitutes an
Agreement. A tender of shares under any of the procedures described above will
constitute your acceptance of the terms and conditions of our offer, as well as
your representation and warranty to us that:
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o you have a "net long position" in the shares or equivalent
securities at least equal to the shares tendered within the
meaning of Rule 14e-4 promulgated by the SEC under the Exchange
Act; and
o the tender of shares complies with Rule 14e-4.
It is a violation of Rule 14e-4 for a person, directly or
indirectly, to tender shares for that person's own account
unless, at the time of tender and at the end of the proration
period, the person so tendering;
o has a "net long position" equal to or greater than the amount
tendered in the subject securities or securities immediately
convertible into, or exchangeable or exercisable for, the
subject securities, and
o will deliver or cause to be delivered the shares in accordance
with the terms of the tender offer.
Rule 14e-4 provides a similar restriction applicable to the tender
or guarantee of a tender on behalf of another person.
Our acceptance for payment of shares tendered under our offer will
constitute a binding agreement between you and us upon the terms and conditions
of our offer described in this and related documents.
Federal Backup Withholding Tax. Under the United States federal
backup withholding tax rules, 31% of the gross proceeds payable to a shareholder
or other payee in the tender offer must be withheld and remitted to the United
States Treasury, unless the shareholder or other payee provides such person's
taxpayer identification number (employer identification number or social
security number) to the depositary and certifies under penalties of perjury that
such number is correct or otherwise establishes an exemption. If the depositary
is not provided with the correct taxpayer identification number or another
adequate basis for exemption, the holder may be subject to certain penalties
imposed by the Internal Revenue Service. Therefore, each tendering shareholder
should complete and sign the substitute Form W-9 included as part of the letter
of transmittal in order to provide the information and certification necessary
to avoid backup withholding, unless such shareholder otherwise establishes to
the satisfaction of the depositary that the shareholder is not subject to backup
withholding.
Certain shareholders (including, among others, all corporations and
certain foreign shareholders (in addition to foreign corporations)) are not
subject to these backup withholding rules.
TO PREVENT FEDERAL BACKUP WITHHOLDING TAX EQUAL TO 31% OF THE GROSS
PAYMENTS MADE TO SHAREHOLDERS FOR SHARES PURCHASED UNDER OUR OFFER, EACH
SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING
MUST PROVIDE THE DEPOSITARY WITH THE SHAREHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND PROVIDE OTHER INFORMATION BY COMPLETING THE SUBSTITUTE
FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
For a discussion of United States federal income tax consequences to
tendering shareholders, See Section 7.
SECTION 4. PURCHASE OF SHARES AND PAYMENT OF THE PURCHASE PRICE
Acceptance. Upon the terms and conditions of our offer, as soon as
practicable following the expiration date, we will:
o pay for shares properly tendered and not properly withdrawn, and
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o accept for payment, pay for and thereby purchase, shares
properly tendered and not properly withdrawn. The acceptance for
purchase and the purchase of shares validly tendered and not
withdrawn will be made as soon as practicable after all the
conditions to our offer have been satisfied or waived. For
purposes of our offer, we will be deemed to have accepted for
purchase and thereby acquired tendered shares as, if and when we
give oral or written notice to the depositary of our acceptance
of the tenders of such shares (the "Acceptance Notice").
Upon the terms and conditions of our offer, as soon as practicable
after the expiration date, we will accept for payment and pay a single per share
purchase price for 250,000 shares, subject to increase or decrease as provided
in Sections 1 and 14, if properly tendered and not properly withdrawn, or such
lesser number of shares as are properly tendered and not properly withdrawn, at
the Purchase Price of $17.75.
Depositary. Delivery of the aggregate Purchase Price in exchange for
shares pursuant to our offer will be made by the depositary as soon as
practicable after receipt of the Acceptance Notice. The depositary will act as
agent for tendering shareholders for the purpose of receiving the Purchase Price
from us and remitting the same to tendering shareholders. Under no circumstances
will we pay interest by reason of any delay in making such payment.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE
FULLY, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE FORM W-9 INCLUDED WITH
THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO FEDERAL INCOME BACKUP WITHHOLDING
TAX OF 31% OF THE GROSS PROCEEDS PAID TO THE SHAREHOLDER OR OTHER PAYEE UNDER
OUR OFFER. SEE SECTION 3. ALSO SEE SECTION 7 REGARDING ADDITIONAL UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES.
Return of Certificates. If any tendered shares are not accepted for
purchase pursuant to the terms and conditions of our offer for any reason, or if
certificates are submitted for more shares than are tendered, or if we should
cancel the offer because any other condition of our offer is not satisfied or
waived, certificates for such unpurchased shares will be returned to the
tendering shareholder by the depositary as soon as practicable following
consummation, cancellation or termination of our offer.
SECTION 5. CONDITIONAL TENDER OF SHARES
Under the circumstances described above in Section 1, we may prorate
the number of shares purchased pursuant to our offer. Shareholders may wish to
tender their shares, but only on the condition that all or some other minimum
number of their shares are purchased. In addition, as discussed in Section 7,
the number of shares to be purchased from a particular shareholder may affect
the tax treatment of the purchase to the shareholder and the shareholder's
decision whether to tender and how many shares to tender. The conditional tender
alternative allows a shareholder to tender shares subject to the condition that
a specified minimum number of the shareholder's shares tendered pursuant to a
letter of transmittal - which may be all of the shares tendered - must be
purchased if any of the shareholder's tendered shares are purchased. The
conditional tender alternative is made available so that a shareholder may: (i)
know with certainty the number of his shares, if any, which will be purchased
pursuant to our offer (provided his shares are properly tendered and the
condition of his tender is otherwise satisfied); or (ii) seek to structure the
purchase of shares pursuant to our offer in such a manner that it will be
treated as a sale of such shares by the shareholder, rather than the payment of
a dividend to the shareholder, for federal income tax purposes. EACH SHAREHOLDER
IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR.
If you wish to make a conditional tender you must indicate this in
the box captioned "Conditional Tenders" in the letter of transmittal or, if
applicable, in the notice of guaranteed delivery. You also must calculate and
appropriately indicate the minimum number of shares that must be purchased if
any are to be purchased. After our offer expires, if more than 250,000 shares
have been properly tendered and not properly withdrawn and we must prorate our
acceptance of and payment for tendered shares, we will calculate a preliminary
proration percentage based upon all shares properly tendered, conditionally or
unconditionally. If the effect of this preliminary
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proration would be to reduce the number of shares to be purchased from any
shareholder below the minimum number specified by that shareholder, the
conditional tender will automatically be regarded as withdrawn, unless chosen by
lot for reinstatement as discussed in the next paragraph.
After giving effect to these withdrawals, we will accept the
remaining shares properly tendered, conditionally or unconditionally, on a pro
rata basis, if necessary. If we are able to purchase all of the remaining
tendered shares and the number that we would purchase would be below 250,000,
then, to the extent feasible, we will select enough of the conditional tenders
that would otherwise have been deemed withdrawn to permit us to purchase 250,000
shares. To be eligible for purchase by random lot, shareholders whose shares are
conditionally tendered must have tendered all of their shares.
All shares tendered by a shareholder subject to a conditional tender
pursuant to the letter of transmittal or notice of guaranteed delivery, regarded
as withdrawn as a result of proration and not eventually purchased, will be
returned as soon as practicable after the EXPIRATION DATE without any expense to
the shareholder.
SECTION 6. WITHDRAWAL RIGHTS
Shares tendered pursuant to our offer may be withdrawn at any time
prior to the time the offer expires on the Expiration Date. In addition, unless
earlier accepted for purchase in the offer, shares tendered may also be
withdrawn at any time after August 22, 2001. For a withdrawal to be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be received by the Expiration Date by the depositary at its address set forth on
the last page of this document and must specify the name of the person having
tendered the shares to be withdrawn and the number of shares to be withdrawn,
and, if certificates have been delivered or otherwise identified to the
depositary, the name of the registered holder and the serial numbers of the
particular certificates evidencing the shares withdrawn must also be furnished
to the depositary.
If certificates have already been delivered, the signature(s) on the
notice of withdrawal must be guaranteed by an Eligible Institution (i.e., a
bank, broker dealer, credit union, savings association or other entity that is a
member in good standing of the Securities Transfer Agents Medallion Program or a
bank, broker, dealer, credit union, savings association or other entity which is
an "eligible guarantor institution," as that term is defined in Rule 17Ad-15
promulgated under the Securities Exchange Act of 1934, as amended) unless such
shares have been tendered for the account of any Eligible Institution.
All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by us in our sole
discretion, and our determination will be final and binding. Neither we, the
depositary nor any other person will be under any duty to give notification of
any defects or irregularities in any notice of withdrawal or will incur any
liability for failure to give any such notification. Any shares properly
withdrawn will be deemed not to have been validly tendered for purposes of our
offer. However, withdrawn shares may be re-tendered by following one of the
procedures described under Section 3 at any time prior to the expiration date.
SECTION 7. MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain U.S. federal income tax
consequences to holders of shares relevant to our offer. The discussion
contained in this summary is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), temporary and final Treasury Regulations promulgated
thereunder, proposed Treasury Regulations, published rulings, notices and other
administrative pronouncements of the Internal Revenue Service ("IRS"), and
judicial decisions now in effect, all of which are subject to change at any time
by legislative, judicial or administrative action. Any such changes may be
applied retroactively in a manner that could materially affect the tax
consequences described herein.
This summary assumes that the shares are held as capital assets,
within the meaning of Section 1221 of the Code. This summary does not address
all of the tax consequences that may be relevant to particular
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shareholders in light of their personal circumstances, or to certain types of
shareholders including, without limitation, financial institutions, dealers in
securities or commodities, securities traders that elect to mark to market,
foreign persons, insurance companies, tax-exempt organizations, persons who hold
shares as a position in a straddle or as a part of a hedging or conversion
transaction, and persons who acquired shares pursuant to an exercise of employee
stock options or rights or otherwise as compensation. In particular, the
discussion of the consequences of an exchange of shares for cash pursuant to our
offer applies only to a United States holder. For purposes of this summary, a
"United States holder" is a holder of shares that is: (i) a citizen or resident
of the United States; (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States, any state or any political
subdivision thereof; (iii) an estate the income of which is subject to U.S.
federal income taxation regardless of its source; or (iv) a trust whose
administration is subject to the primary supervision of a U.S. court and the
trustees of which are one or more U.S. persons who have the authority to control
all substantial decisions of the trust.
The summary does not address the state, local or foreign tax
consequences of participating in our offer. Each shareholder should consult its
own tax advisor concerning the decision to participate in our offer as well as
the specific tax consequences (foreign, federal, state and local) applicable to
it.
An exchange of shares for cash pursuant to our offer by a United
States holder will be a taxable transaction for U.S. federal income tax
purposes. As a consequence of the exchange, a United States holder will,
depending on such holder's particular circumstances, be treated either as having
sold such holder's shares or as having received a dividend distribution from
Chester Bancorp, Inc., with the tax consequences described below.
Under the Code, a United States holder whose shares are exchanged
for cash pursuant to our offer will be treated as having sold such holder's
shares, rather than as having received a dividend, if the exchange: (i) results
in a "complete termination" of such holder's equity interest in Chester Bancorp,
Inc.; (ii) is "substantially disproportionate" with respect to such holder; or
(iii) is "not essentially equivalent to a dividend" with respect to the holder.
For purposes of this analysis, in addition to shares actually owned by a United
States holder, such holder will be deemed to constructively own certain shares.
For purposes of these constructive ownership rules, a holder is deemed to
constructively own shares which are owned by other persons, such as certain
family members, a trust or other entities. Because the constructive ownership
rules are complex, each United States holder should consult its own tax advisor
as to the applicability of these rules.
If a United States holder sells shares to persons other than Chester
Bancorp, Inc. at or about the time such holder also sells shares to Chester
Bancorp, Inc. pursuant to our offer and the various sales effected by the holder
are part of an overall plan to reduce or terminate such holder's proportionate
interest in Chester Bancorp, Inc., then the sales to persons other than Chester
Bancorp, Inc. may, for U.S. federal income tax purposes, be integrated with the
holder's sale of shares pursuant to our offer and, if integrated, should be
taken into account in determining whether the holder satisfies any of the three
tests described below.
A United States holder will satisfy the "complete termination" test
if all shares actually or constructively owned by such holder are exchanged for
cash pursuant to our offer.
A United States holder will satisfy the "substantially
disproportionate" test if immediately after the exchange such holder owns,
actually or constructively, less than 50% of the total combined voting power of
all classes of stock of Chester Bancorp, Inc. entitled to vote and such holder's
percentage interest in Chester Bancorp, Inc. (i.e., the number of voting shares
actually and constructively owned by such holder divided by the number of voting
shares outstanding) is less than 80% of such holder's percentage interest in
Chester Bancorp, Inc. prior to the exchange.
A United States holder will satisfy the "not essentially equivalent
to a dividend" test if the reduction in such holder's percentage interest in
Chester Bancorp, Inc., as described above, constitutes a "meaningful reduction
of the holder's proportionate interest" given such holder's particular facts and
circumstances. The IRS has indicated in published rulings that a minority
shareholder in a publicly traded corporation whose relative stock interest is
minimal (i.e., less than 1%) and who exercises no control with respect to
corporate affairs is
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considered to have a "meaningful reduction" generally if such shareholder has
some reduction in such shareholder's stock ownership percentage.
Chester Bancorp, Inc. cannot predict whether or to what extent our
offer will be oversubscribed. If our offer is oversubscribed, proration of
tenders pursuant to our offer will cause Chester Bancorp, Inc. to accept fewer
shares than are tendered. Therefore, a holder can be given no assurance that a
sufficient number of such holder's shares will be exchanged pursuant to our
offer to ensure that such exchange will be treated as a sale, rather than as a
dividend, for U.S. federal income tax purposes pursuant to the rules discussed
above. A holder may wish to condition his tender on a minimum number of shares
being redeemed as described in Section 5 above, so that none of such holder's
shares are redeemed unless Chester Bancorp, Inc. accepts a sufficient number of
his shares so that he satisfies one or more of the tests described above. While
such a conditional tender may ensure that a redemption of a holder's shares
would be treated as an exchange for federal income tax purposes, a conditional
tender may result in no shares being accepted by Chester Bancorp, Inc. In
determining the minimum number of shares to be accepted for purchase in such a
conditional tender, a holder should take into account shares constructively
owned by the holder pursuant to the rules discussed above. Shareholders
considering a conditional tender due to the foregoing reasons are urged to
consult with their tax advisors regarding the relative advantages and
disadvantages of such a tender.
If a United States holder's sale of its shares satisfies one of the
tests described above, such holder will recognize capital gain or loss equal to
the difference between the amount of cash received and such holder's tax basis
in the shares sold. Any capital gain or loss so recognized generally will
constitute long-term capital gain or loss if the holding period for the holder's
shares sold is greater than one year as of the date of the sale. In the case of
a United States holder that is an individual, estate or trust, such long-term
capital gain or loss generally will be taxed at a maximum rate of 20%. The
federal income tax rates applicable to capital gains for taxpayers other than
individuals, estates and trusts are currently the same as those applicable to
ordinary income. A United States holder's ability to deduct capital losses from
ordinary income is limited. Capital losses generally may be used by a corporate
taxpayer only to offset capital gains, and by a taxpayer other than a
corporation only to the extent of capital gains plus $3,000 of ordinary income
per year.
If a United States holder who sells shares pursuant to our offer
does not meet one of the tests described above and, thus, is not treated as
having exchanged such holder's shares for cash, the entire amount of cash
received by such holder will be treated as a dividend to the extent of Chester
Bancorp, Inc.'s current and accumulated earnings and profits, which Chester
Bancorp, Inc. anticipates will be sufficient to cover the amount of any such
dividend and will be includible in the holder's gross income as ordinary income
in its entirety, without reduction for the tax basis of the shares sold. No loss
will be recognized. As to an exchange which is treated as a dividend, a United
States holder's tax basis in the shares sold generally will be added to such
holder's tax basis in such holder's remaining shares. To the extent that cash
received in exchange for shares is treated as a dividend to a corporate United
States holder, such holder will be: (i) eligible for a dividends-received
deduction (subject to applicable limitations); and (ii) subject to the
"extraordinary dividend" provisions of the Code. To the extent, if any, that the
cash received by a United States holder exceeds Chester Bancorp, Inc.'s current
and accumulated earnings and profits, it will be treated first as a tax-free
return of such holder's tax basis in the shares and thereafter as capital gain.
Shareholders whose shares are not purchased pursuant to the offer
will not incur any tax liability as a result of the consummation of our offer.
CHESTER BANCORP, INC. SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS AS TO THE PRECISE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF THIS OFFER
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SECTION 8. SHARE, TRADING PRICE AND DIVIDEND
Information Shares Outstanding. As of June 15, 2001, we had
outstanding 1,271,584 shares of Common Stock, $1.00 par value. The 250,000
shares of Common Stock that we are offering to purchase represent approximately
20% of our issued and outstanding Common Stock as of June 15, 2001. Assuming
that we purchase all 250,000 shares of Common Stock that we are offering to
purchase, the number of our issued and outstanding shares of Common Stock would
be reduced to 1,021,584 shares immediately after the offer.
Share Prices. Our Common Stock is traded on the Nasdaq Small Cap
Market under the symbol "CNBA." The following table shows the high and low bid
prices for our Common Stock for each quarter since December 31, 1998, as well as
the cash dividends paid per share on the Common Stock during the past two years.
YEAR QUARTERLY
QUARTER DIVIDENDS LOW HIGH
------- --------- --- ----
2001
----
1st Quarter $ .13 $16.75 $17.50
2000
----
1st Quarter $ .10 16.62 17.18
2nd Quarter .10 16.62 17.50
3rd Quarter .11 16.62 17.00
4th Quarter .12 16.62 17.25
1999
----
1st Quarter $ .07 $16.75 $16.93
2nd Quarter .08 16.68 16.81
3rd Quarter .09 16.68 17.12
4th Quarter .09 16.25 16.75
On June 15, 2001, a date close to the date of this document, the
last per share sale price of Chester Bancorp, Inc. Common Stock as reported on
the Nasdaq Small Cap Market was $16.75. We urge you to obtain current quotations
of the market price of our Common Stock.
SECTION 9. INFORMATION ABOUT US
General. Chester Bancorp, Inc. is a Delaware corporation and a
financial holding company registered with the Board of Governors of the Federal
Reserve System under the Bank Holding Company Act of 1956, as amended. At
December 31, 2000, Chester Bancorp, Inc. had consolidated total assets,
deposits, and shareholders' equity of approximately $117,580,000, $96,991,000,
and $19,880,000, respectively.
Where You Can Find Additional Information. We are subject to the
information and reporting requirements of the Exchange Act, and in accordance
with such laws we file with the SEC periodic reports, proxy statements and other
information relating to our business, financial condition and other matters. We
are required to disclose in these proxy statements filed with the SEC certain
information, as of particular dates, concerning our directors and executive
officers, their compensation, stock options granted to them, the principal
holders of our securities and any material interest of such persons in
transactions with us. We have also filed with the SEC an Issuer Tender Offer
Statement on Schedule TO, which includes additional information with respect to
our offer. The reports, statements and other information (including any
exhibits, amendments or supplements to such documents) we file may be inspected
and copied at the public reference facilities maintained by the SEC at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549; and at the following
regional offices of the SEC: 7 World Trade Center, Suite 1300, New York, New
York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of this material can also be obtained by mail, upon
payment of the SEC's
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customary charges, by writing to the Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. 20549. The SEC also maintains a web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the SEC.
Incorporation By Reference. The rules of the SEC allow us to
"incorporate by reference" information into this document, which means that we
can disclose important information to you by referring you to another document
filed separately with the SEC. These documents contain important information
about us. We are incorporating by reference in this document the following
documents we have filed with the SEC:
o Our Annual Report on Form 10-K for the year ended December 31,
2000;
o Our Proxy Statement dated March 19, 2001, for our annual meeting
of shareholders on April 17, 2001; and
o Our Quarterly Report on Form 10-Q for the quarter ended March
31, 2001.
We incorporate by reference these documents and any additional
documents that we may file with the SEC between the date of this document and
the date of expiration of withdrawal rights by reference. Those documents
include periodic reports, such as annual reports on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K. Annual Report on Form 10-K for the
year ended December 31, 2000 and the consolidated financial statements for the
year ended December 31, 2000 have been audited and are incorporated herein by
reference.
You can obtain any of the documents incorporated by reference in this document
from us without charge, excluding any exhibits to those documents, by requesting
them in writing or by telephone from us. Please direct your written or oral
request to Michael W. Welge, Chief Financial Officer, Chester National Bank,
1112 State Street, Chester, Illinois 62233, (800) 851-5371 ext. 301 or 306.
Please be sure to include your complete name and address in your request. If you
request any incorporated documents, we will mail them to you by first class
mail, or another equally prompt means, within one business day after we receive
your request. In addition, you can obtain copies of these documents from the
SEC's website. Such documents may also be inspected at the locations described
above.
Plans or Proposals. Except as described in this document, we
currently have no plans, proposals or negotiations that relate to or would
result in:
o any extraordinary transaction (such as a merger, reorganization
or liquidation) involving Chester Bancorp, Inc. or any of its
subsidiaries;
o any purchase, sale or transfer of a material amount of the
assets of Chester Bancorp, Inc. or any of its subsidiaries;
o any material change in the present dividend rate or policy, or
indebtedness or capitalization of, Chester Bancorp, Inc.;
o any change in the present board of directors or management of
Chester Bancorp, Inc. (including any plans or proposals to
change the number or the term of directors or to fill any
existing vacancies on the board or to change any material term
of the employment contract of any executive officer);
o any other material change in Chester Bancorp, Inc.'s corporate
structure or business;
o Chester Bancorp, Inc.'s Common Stock to cease to be authorized
to be quoted on the Nasdaq Small Cap Market;
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o Chester Bancorp, Inc.'s Common Stock becoming eligible for
termination of registration under Section 12(g)(4) of the 1934
Act;
o the suspension of Chester Bancorp, Inc.'s obligation to file
reports under Section 15(d) of the 1934 Act;
o the acquisition by any person of additional securities of
Chester Bancorp, Inc., or the disposition of securities of
Chester Bancorp, Inc.; or
o any changes in Chester Bancorp, Inc.'s articles of incorporation
or bylaws or other actions that could impede the acquisition of
control of Chester Bancorp, Inc.
Past Contacts, Transactions, Negotiations and Agreements. Chester
Bancorp, Inc. is not aware of any agreement, arrangement or understanding,
whether or not legally enforceable, between Chester Bancorp, Inc. (or any
executive officer or director of Chester Bancorp, Inc.) and any other person
with respect to any securities of Chester Bancorp, Inc.
SECTION 10. INFORMATION ABOUT OUR DIRECTORS, EXECUTIVE OFFICERS AND CONTROLLING
SHAREHOLDERS
As of June 15, 2001, our executive officer was:
Edward K. Collins, Chief Executive Officer
As of June 15, 2001, our directors were:
Michael W. Welge
Edward K. Collins
John R. Beck, M.D.
Allen R. Verseman
Carl H. Welge
James C. McDonald
Thomas E. Welch, Jr.
To our knowledge, except as described in our Annual Report on Form
10-K, our Quarterly Reports on Form 10-Q or the portions of our proxy statement
incorporated in this document, none of our directors or executive officers has
entered into or proposed or received any proposed material agreements or
arrangements with respect to Chester Bancorp, Inc., and, except for their
interest in our securities, as described above, none of them is a party to any
contract, understanding, relationship or arrangement with respect to our
securities.
To our knowledge, none of our directors, executive officers or
controlling shareholders has engaged in any transaction within the past sixty
days with respect to any of our securities.
We have been advised by our officers and directors that they do not
intend to tender shares of Common Stock pursuant to this offer.
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Securities Ownership. The following table provides information about
the aggregate number and percentage of shares of our Common Stock that are
beneficially owned by our directors, executive officers and major shareholders,
as of June 15, 2001.
Number of Shares Percent of Shares
Name Beneficially Owned (1)(2) Outstanding
- ---- ------------------ --------------------
DIRECTORS AND BENEFICIAL
OWNERS OF MORE THAN 5%
Chester National Bank Employee Stock
Ownership Plan and Trust
1112 State Street
Chester, Illinois 62233 173,770(3) 13.66%
Gilster-Mary Lee Corporation
Employee Profit Sharing Plan 129,900 10.21%
1037 State Street
Chester, Illinois 62233
Michael W. Welge 286,489(3)(4) 22.53%
Allen R. Verseman 63,625(5) 5.00%
John R. Beck, M.D. 62,217 4.89%
James C. McDonald 31,671 2.49%
Thomas E. Welch, Jr. 26,637(3) 2.09%
Carl H. Welge 20,671 1.62%
NAMED EXECUTIVE OFFICERS(6)
Edward K. Collins 66,182(3) 5.20%
All Executive Officers and
Directors as a Group (7 persons) 557,492 43.84%
- ---------------
(1) In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if he or she has voting or investment power with respect to
such security. The table includes shares owned by spouses, other immediate
family members in trust, shares held in retirement accounts or funds for
the benefit of the named individuals, and other forms of ownership, over
which shares the persons named in the table may possess voting and/or
investment power.
(2) Includes the following shares which such persons have within 60 days after
June 15, 2001, the right to acquire upon exercise of employee stock options
or director non-qualified stock options: 37,096 shares for each of Mr. M.
Welge and Mr. Collins; 8,729 shares for each of Mr. Beck, Mr. Verseman,
Mr. McDonald and Mr. C. Welge, and 6,547 for Mr. Welch.
(3) Shares held in accounts under the Corporation's ESOP, as to which the
holders have voting power but not investment power, are included as
follows: Mr. Collins, 3,883 shares, Mr. M. Welge, 2,038 shares, and
Mr. Welch, 1,597 shares.
(4) Includes 93,855 shares over which Mr. M. Welge has sole voting and
investment power, 153,500 shares over which Mr. M. Welge has shared
investment and voting power, options to acquire 37,096 shares and 2,038
shares held in the ESOP.
(5) Includes 51,047 shares over which Mr. Verseman has sole voting and
investment power and 1,500 shares over which Mr. Verseman has shared
investment and voting power.
(6) Under SEC regulations, the term "named executive officer" is defined to
include the chief executive officer, regardless of compensation level, and
the four most highly compensated executive officers, other than the chief
executive officer, whose total annual salary and bonus for the last
completed fiscal year exceeded $100,000. Edward K. Collins was the
Corporation's only "named executive officer" for the fiscal year ended
December 31, 2000. He is also a director of the Corporation.
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SECTION 11. EFFECT OF OFFER ON MARKET FOR SHARES; REGISTRATION UNDER THE 1934
ACT EFFECT ON MARKET.
As of June 15, 2001, there were 1,271,584 shares of Common Stock
outstanding. The purchase of shares pursuant to our offer will reduce the number
of shares that might otherwise trade publicly and may reduce the number of
holders of Chester Bancorp, Inc. Common Stock. Nonetheless, we believe that
there will still be a sufficient number of shares outstanding and publicly
traded following our offer to ensure a continued trading market in the shares.
Based on the published guidelines of the Nasdaq Small Cap Market, we do not
believe that our purchase of shares pursuant to our offer will cause our
remaining shares of Common Stock to be delisted from the Nasdaq Small Cap
Market. We have conditioned our offer so that we may cancel the offer, and not
purchase any shares, if the offer would result our the Common Stock being
delisted from the Nasdaq Small Cap Market.
Registration Under the 1934 Act. The shares are registered under the
1934 Act, which requires, among other things, that Chester Bancorp, Inc. furnish
certain information to its shareholders and to the SEC and comply with the SEC's
proxy rules in connection with meetings of Chester Bancorp, Inc.'s shareholders.
Chester Bancorp, Inc. believes that its purchase of shares pursuant to our offer
will not result in the shares becoming eligible for deregistration or not
subject to the reporting obligations under the 1934 Act. We have conditioned our
offer so that we may cancel the offer, and not purchase any shares, if the offer
would result in the Common Stock being held of record by fewer than 300 persons.
SECTION 12. CERTAIN LEGAL MATTERS GENERAL.
We are not aware of any license or regulatory permit which appears
to be material to our business and which is likely to be adversely affected by
our acquisition of shares pursuant to our offer or, except as disclosed below,
of any approval or other action by any state, federal or foreign government or
governmental agency that would be required prior to or as a result of the
acquisition of shares pursuant to our offer. We expressly reserve the right to
challenge the validity and applicability of any state, foreign or other statutes
or regulations purporting to require approval of the commencement or
consummation of our offer.
There can be no assurance that any license, permit, approval or
other action, if needed, would be obtained and, if obtained, there can be no
assurance as to the date of any such license, permit or approval or the absence
of any litigation challenging any such license, permit or approval. Similarly,
there can be no assurance that adverse consequences might not result to Chester
Bancorp, Inc. or to its business in the event of adverse regulatory action or
inaction.
Bank Regulatory Matters. As a registered bank holding company,
Chester Bancorp, Inc. is subject to the supervision and regulation of the
Federal Reserve Board. Because we are (and upon completion of the offer will
remain) "well-capitalized" and "well-managed," as those terms are defined by the
Federal Reserve Board, and not subject to any unresolved supervisory issues, we
do not require the approval of the Federal Reserve Board in order to complete
the proposed tender offer.
The Bank Holding Company Act of 1956 and the Change in Bank Control
Act each govern acquisition of control of bank holding companies. As a general
matter, a person may not acquire control of a bank holding company such as
Chester Bancorp, Inc. without the prior approval of the Federal Reserve Board.
If, as a result of the offer, any shareholder becomes the beneficial owner of
more than 10% of our Common Stock, such shareholder may be required to reduce
its ownership interest in Chester Bancorp, Inc. or obtain regulatory approval to
continue to own more than 10%. Each shareholder whose ownership interest may be
so increased is urged to consult the shareholder's own legal counsel with
respect to the consequences to the shareholder of the tender offer.
SECTION 13. CERTAIN CONDITIONS OF THIS OFFER
Offer Subject to Conditions. Notwithstanding any other provisions of
our offer, we will not be required to accept for purchase or purchase any
shares, may postpone the acceptance for purchase of or the purchase
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of shares tendered and may cancel, terminate or amend our offer as provided
herein if any of the following conditions are not satisfied or waived on or
before the expiration date.
Avoidance of Rule 13e-3 Transaction Condition. Chester Bancorp, Inc.
may amend or terminate our offer, and shall not be required to accept for
purchase any shares tendered if, in our good faith reasonable judgment, any
purchase of shares under the offer could result in the offer being considered a
"going private transaction" under Rule 13e-3 of the Securities and Exchange
Commission, that is,
o if our purchase of shares pursuant to this offer would result in
our Common Stock being held of record by fewer than 300 persons;
or
o if our purchase of shares pursuant to this offer would result in
our Common Stock no longer being authorized for trading on the
Nasdaq Small Cap Market.
No Legal Prohibition Condition. Chester Bancorp, Inc. will not be
obligated to close our offer if a preliminary or permanent injunction, decree or
order has been entered by any governmental authority, or another legal restraint
or prohibition is in effect, which enjoins, restrains or prohibits our offer
(the "No Legal Prohibition Condition"). As of the date of this document, no such
injunction, decree, order, restraint or prohibition exists, nor to Chester
Bancorp, Inc.'s knowledge has any of the foregoing been threatened. However,
Chester Bancorp, Inc. can give no assurance that an injunction, decree, order,
restraint or prohibition will not exist in the future. In any event, the No
Legal Prohibition Condition is a nonwaivable condition to our offer.
Material Adverse Change Condition. Chester Bancorp, Inc. will not be
obligated to close our offer if, after the date of this document, there has
occurred: (i) the declaration of any banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not mandatory);
(ii) any general suspension of trading in, or limitation on prices for,
securities on any U.S. national securities exchange or in the over-the-counter
market; (iii) the commencement of war, armed hostilities or any other national
or international crisis directly or indirectly involving the United States; (iv)
any limitation (whether or not mandatory) by any governmental, regulatory or
administrative agency or authority on, or any event which, in the sole judgment
of Chester Bancorp, Inc. might materially affect, the extension of credit by
banks or other lending institutions in the United States; (v) any significant
decrease in the market price of the shares or in the market prices of equity
securities generally in the United States or any change in the general
political, market, economic or financial conditions in the United States or
abroad that could have in the sole judgment of Chester Bancorp, Inc. a material
adverse effect on the business, condition (financial or otherwise), income,
operations or prospects of Chester Bancorp, Inc. and its subsidiaries, taken as
a whole, or on the trading in the shares; (vi) in the case of any of the
foregoing existing at the time of the announcement of our offer, a material
acceleration or worsening thereof; (vii) any decline in the Dow Jones Industrial
Average or the S&P 500 Composite Index or the Nasdaq Composite Index by an
amount in excess of 10% measured from the close of business on June 15, 2001; or
(viii) any change in the business, condition (financial or otherwise), income,
operations or prospects of Chester Bancorp, Inc. and its subsidiaries, taken as
a whole which, in the sole judgment of Chester Bancorp, Inc., is or may be
materially adverse to Chester Bancorp, Inc. and its subsidiaries taken as a
whole (the "Material Adverse Change Condition"). Chester Bancorp, Inc. is not
aware of any of these events having occurred. In any event, Chester Bancorp,
Inc. reserves the right (but is not obligated), subject to the rules and
regulations of the SEC, to waive or amend on or before the expiration date the
Material Adverse Change Condition.
No Competing Offer Condition. Chester Bancorp, Inc. will not be
obligated to close our offer if, after the date of this document, a tender or
exchange offer with respect to some or all of the shares (other than our offer),
or merger or acquisition proposal for Chester Bancorp, Inc. has been proposed,
announced or made by another person or Chester Bancorp, Inc. has learned that:
(i) any person or "group" (within the meaning of Section 13(d)(3) of the 1934
Act) has acquired or proposes to acquire beneficial ownership of more than 5% of
the outstanding shares, whether through the acquisition of stock, the formation
of a group, the grant of any option or right or otherwise (other than as
disclosed in a Schedule 13D or 13G (or an amendment thereto) on file with the
SEC on the date of this document); or (ii) any such person or group that on or
prior to the date of this document had filed such a Schedule with the SEC
thereafter has acquired or has proposed to acquire, whether through the
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acquisition of stock, the formation of a group, the grant of any option or right
or otherwise, beneficial ownership of additional shares representing 2% or more
of the outstanding shares; or (iii) any person or group has filed a Notification
and Report Form under the Hart-Scott-Rodino Antitrust Improvement Act of 1976,
reflecting an intent to acquire Chester Bancorp, Inc. or any of the shares (the
"No Competing Offer Condition"). Chester Bancorp, Inc. is not aware of any such
event having occurred. In any event, Chester Bancorp, Inc. reserves the right
(but is not obligated), subject to the rules and regulations of the SEC, to
waive or amend prior to the expiration date the No Competing Offer Condition.
Waiver of Conditions. Chester Bancorp, Inc. reserves the absolute
right, prior to the expiration date, to waive these conditions (other than the
No Legal Prohibition Condition, which condition is not waivable). Waiver or
amendment of any of these conditions may require an extension of the expiration
date and our offer.
Effect of Failing to Satisfy Conditions. If any of the conditions
have not been satisfied or waived by the expiration date, we may elect either
to: (i) extend the expiration date and our offer and retain all shares tendered
until the expiration date of the offer as extended, subject to the right of a
tendering shareholder to withdraw his or her shares; (ii) waive the conditions
(other than the No Legal Prohibition Condition), extend our offer for a period
of ten business days if our offer is scheduled to expire prior thereto, if such
waiver constitutes a material change in our offer, and thereafter purchase all
properly tendered shares; or (iii) terminate our offer and purchase none of the
shares and return all tendered shares. Chester Bancorp, Inc. will not accept for
purchase any shares pursuant to our offer until such time as the conditions have
been satisfied or waived.
Tendering of Shares by Officers and Directors of Chester Bancorp,
Inc. We have been advised by our officers and directors that they do not intend
to tender shares of Common Stock pursuant to this offer.
SECTION 14. CANCELLATION, EXTENSION, TERMINATION AND AMENDMENT
We expressly reserve the right to cancel our offer if any of the
conditions to our offer are not satisfied by the time the offer period expires.
Those shareholders who tendered shares to Chester Bancorp, Inc., prior to the
expiration date, will receive prompt return of their share certificates and
other related documentation from the depositary as soon as practicable following
the cancellation of our offer.
We reserve the right, in our sole discretion, at any time and from
time to time, to extend the period of time during which our offer is open and to
delay acceptance for payment of, and payment for, any shares by giving oral or
written notice of such extension to the depositary and making a public
announcement of such extension. Our reservation of the right to delay acceptance
for payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act,
which requires that we must pay the consideration offered or return the shares
tendered promptly after termination or withdrawal of our offer.
We also reserve the right, in our sole discretion, to terminate our
offer and not accept for payment or pay for any shares not previously accepted
for payment or paid for or, subject to applicable law, to postpone payment for
shares if any conditions to our offer fail to be satisfied by giving oral or
written notice of such termination or postponement to the depositary and making
a public announcement of such termination or postponement. Our reservation of
the right to delay payment for shares which we have accepted for purchase is
limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires
that we must pay the consideration offered or return the shares tendered
promptly after termination or withdrawal of our offer.
Subject to compliance with applicable law, we further reserve the
right, in our sole discretion, and regardless of whether or not any of the
events or conditions described in Section 13 have occurred or are deemed by us
to have occurred, to amend our offer in any respect, including, without
limitation, by decreasing or increasing the consideration offered in our offer
to holders of shares or by decreasing or increasing the number of shares being
sought in our offer. Amendments to our offer may be made at any time and from
time to time by public announcement, such announcement, in the case of an
extension, to be issued no later than 9:00 a.m., Central Daylight Time, on the
next business day after the last previously scheduled or announced expiration
date.
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Without limiting the manner in which we may choose to make a public
announcement, except as required by applicable law, we have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release through Business Wire, Dow Jones News Service or
another comparable news service.
If we materially change the terms of our offer or the information
concerning our offer, we will extend our offer to the extent required by Rules
13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) promulgated under the Exchange Act.
These rules and certain related releases and interpretations of the SEC provide
that the minimum period during which a tender offer must remain open following
material changes in the terms of the tender offer or information concerning the
tender offer (other than a change in price or a change in percentage of
securities sought) will depend on the facts and circumstances, including the
relative materiality of such terms or information. If we take any of the
following actions:
o increase or decrease the price to be paid for the shares,
o increase the number of shares being sought in our offer by more
than 2% of our outstanding Common Stock,
o decrease the number of shares being sought in our offer, and our
offer is scheduled to expire within 10 business days from the
date notice of such increase or decrease is first published,
sent or given to security holders in the manner specified in
this Section 14, or
o then our offer will be extended until the expiration of such
period of 10 business days.
Chester Bancorp, Inc. also reserves the right to delay acceptance
for purchase of, or purchase of, any shares pursuant to our offer, regardless of
whether such shares were theretofore accepted for purchase, and to amend or
terminate our offer and not accept for purchase or purchase any shares not
theretofore accepted for purchase, or purchased, upon the failure of any of the
conditions of our offer to be satisfied or waived on or before the expiration
date.
Any cancellation, extension, termination, amendment or delay of our
offer will be followed as promptly as practicable by public announcement
thereof, such announcement in the case of an extension to be issued no later
than 9:00 a.m., Central Daylight Time, on the next business day after the
previously scheduled expiration date. Without limiting the manner in which we
may choose to make such public announcement, we will not, unless otherwise
required by rules of the SEC, have any obligation to make any such public
announcement other than by making a release to the Dow Jones News Service. If,
prior to the expiration date, we increase the Purchase Price offered to holders
of Chester Bancorp, Inc. Common Stock, such increase will be applicable to all
holders whose shares are accepted for purchase pursuant to our offer and if, at
the time notice of such increase is first published, sent or given to holders of
Chester Bancorp, Inc. Common Stock, our offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from
and including the date that such notice is first so published, sent or given,
our offer will be extended until the expiration of such period of ten business
days. For purposes of our offer, a "business day" means any day other than a
Saturday, Sunday or federal holiday and consists of the time period from 12:01
a.m. through 12:00 midnight, Central Daylight Time.
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SECTION 15. FEES AND EXPENSES
Chester Bancorp, Inc. has retained Chester National Bank to act as
the Information Agent in connection with our offer. Chester National Bank may
contact shareholders by mail, telephone, facsimile, telex, telegraph or other
electronic means, and may request brokers, dealers, commercial banks, trust
companies and other nominee shareholders to forward materials relating to the
offer to beneficial owners. Chester National Bank will receive reasonable and
customary compensation in connection with our offer. Chester Bancorp, Inc. will
pay the depositary, Chester National Bank, reasonable and customary compensation
for its services in connection with our offer, plus reimbursement for
out-of-pocket expenses, and will indemnify the depositary against certain
liabilities and expenses in connection therewith, including liabilities under
the federal securities laws. No fees or commissions will be payable by us to
brokers, dealers, commercial banks or trust companies (other than fees to the
parties described above) for soliciting tenders of shares under our offer.
Shareholders holding shares through brokers or banks are urged to consult the
brokers or banks to determine whether transaction costs are applicable if
shareholders tender shares through such brokers or banks and not directly to the
depositary. Brokers, dealers, commercials banks and trust companies will be
reimbursed by Chester Bancorp, Inc. for customary mailing and handling expenses
incurred by them in forwarding material to their customers.
SECTION 16. SOURCE AND AMOUNT OF FUNDS
The amount of funds required to purchase the maximum number of
shares pursuant to our offer is $4,437,500. We expect the fees and expenses
applicable to our offer to be approximately an additional $50,000. We anticipate
that all of the funds necessary to pay such amounts will be provided from
dividends paid to us by our subsidiary, Chester National Bank. The approximate
amount of dividends expected to be paid by the Bank for this tender is
$4,487,500. The Bank currently has the ability to pay these dividends to Chester
Bancorp, Inc.
SECTION 17. RECENT TRANSACTIONS IN OUR SHARES
Since June 15, 1999, we have repurchased approximately 154,069
shares of our Common Stock with price ranging from $16.62 to $17.00 in privately
negotiated and open market transactions. To our knowledge, there have been no
transactions in our Common Stock by any of our directors, executive officers or
controlling shareholders or by any executive officer or director of any of our
subsidiaries within the 60 day period preceding the date of this document except
as described in Section 10.
SECTION 18. MISCELLANEOUS
No person has been directly or indirectly employed or retained by,
or is to be compensated by, Chester Bancorp, Inc. to make solicitations or
recommendations in connection with our offer. We have not authorized anyone to
give any information or make any representation about our offer that is
different from, or in addition to, that contained, or incorporated, in this
document or in the related letter of transmittal. Therefore, if anyone does give
you information of this sort, you should not rely on it. If you are in a
jurisdiction where our offer to purchase shares of Common Stock is unlawful, or
if you are a person to whom it is unlawful to direct this type of offer, then
the offer presented in this document does not extend to you. The information
contained in this document speaks only as of the date of this document unless
the information specifically indicates that another date applies.
Chester Bancorp, Inc. is not aware of any jurisdiction where the
making of our offer is not in compliance with applicable law. If Chester
Bancorp, Inc. becomes aware of any jurisdiction where the making of our offer is
not in compliance with any valid applicable law, Chester Bancorp, Inc. will make
a good faith effort to comply with such law. If, after such good faith effort,
Chester Bancorp, Inc. cannot comply with such law, our offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of shares
residing in such jurisdiction.
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The depositary for our offer is: Chester National Bank.
BY MAIL, HAND OR OVERNIGHT DELIVERY:
Chester National Bank
Attention: Michael W. Welge
1112 State Street
Chester, IL 62233
BY FACSIMILE TRANSMISSION:
(618) 826-2142
Chester National Bank
Attention: Michael W. Welge
ANY QUESTIONS OR REQUESTS FOR ASSISTANCE MAY BE DIRECTED TO THE
DEPOSITARY AT THE ADDRESS AND PHONE NUMBER LISTED ABOVE. REQUESTS FOR ADDITIONAL
COPIES OF THE OFFER TO PURCHASE, THE LETTER OF TRANSMITTAL OR OTHER DOCUMENTS
RELATED TO THE OFFER MAY ALSO BE DIRECTED TO THE DEPOSITARY.
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