1
Filed Pursuant to Rule 424(B)(3)
Registration No. 333-65836
COLUMBIA FINANCIAL OF KENTUCKY, INC.
2497 DIXIE HIGHWAY
FT. MITCHELL, KENTUCKY 41017
(859) 331-2419
----------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 2001
Notice is hereby given that the special meeting of shareholders of Columbia
Financial of Kentucky, Inc., will be held on October 31, 2001, at 11:00 a.m.,
Eastern Standard Time, at the Holiday Inn, located at 2100 Dixie Highway, Ft.
Mitchell, Kentucky. A joint prospectus/proxy statement and proxy card for the
special meeting are enclosed. The special meeting will be held for the purpose
of considering and voting upon the following matters:
1. To adopt an amendment to the Articles of Incorporation of Columbia
Financial of Kentucky, Inc., to delete Article Seventh;
2. To approve and adopt an agreement and plan of reorganization, dated as
of June 4, 2001, by and among Columbia Financial of Kentucky, Inc.,
Columbia Federal Savings Bank, Camco Financial Corporation, Camco
Acquisition Corp. and Advantage Bank, and the transactions contemplated
by that agreement, including the merger of Camco Acquisition Corp. into
Columbia Financial, the merger of Columbia Financial into Camco
Financial and the merger of Columbia Federal into Advantage Bank, and
the exchange of each outstanding share of Columbia Financial, no par
value per share, into the right to receive $6.90 and .3681 share of
Camco common stock; and
3. Such other business incident to the conduct of the special meeting as
may properly come before the special meeting and any adjournment or
postponement of the special meeting, including adjournment of the
special meeting to allow for additional solicitation of shareholder
votes in order to obtain the required vote to adopt the amendment to the
articles of incorporation, to approve and adopt the merger agreement,
and to approve the transactions contemplated by the merger agreement.
The board of directors of Columbia Financial has established September 18,
2001, as the record date for the determination of shareholders entitled to
receive notice of and to vote at the special meeting and at any adjournment or
postponement of the special meeting. Only record holders of Columbia Financial
common shares as of the close of business on that date will be entitled to vote
at the special meeting or any adjournment or postponement of the special
meeting. IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN AND
PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE AS
SOON AS POSSIBLE.
THE COLUMBIA FINANCIAL BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
MATTERS PROPOSED.
By Order of the Board of Directors,
September 20, 2001 Robert V. Lynch, President
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PROSPECTUS PROXY STATEMENT
CAMCO FINANCIAL CORPORATION COLUMBIA FINANCIAL OF KENTUCKY, INC.
for the issuance of up to for the Special Meeting of Shareholders
966,613 Shares of Common Stock
On June 4, 2001, Camco Financial Corporation, Camco Acquisition Corp.,
Advantage Bank, Columbia Financial of Kentucky, Inc., and Columbia Federal
Savings Bank executed a merger agreement that provides for the acquisition of
Columbia Financial and Columbia Federal by Camco and Advantage Bank. For tax
reasons, the acquisition will involve the merger of Camco Acquisition Corp. into
Columbia Financial and the subsequent mergers of Columbia Financial into Camco
and Columbia Federal into Advantage Bank.
We cannot complete the merger unless the holders of at least 1,312,976
Columbia Financial shares, which is a majority of the issued and outstanding
Columbia Financial shares, adopt the merger agreement. The Columbia Financial
board of directors has scheduled a special meeting for Columbia Financial's
shareholders to vote on the merger agreement and a related amendment to Columbia
Financial's articles of incorporation. The date, time and place of the special
meeting are as follows:
OCTOBER 31, 2001
11:00 A.M., EASTERN STANDARD TIME
HOLIDAY INN
2100 DIXIE HIGHWAY
FT. MITCHELL, KENTUCKY
If we complete the merger, each Columbia Financial shareholder will receive
$6.90 in cash and .3681 share of Camco common stock, subject to possible
adjustment, in exchange for each Columbia Financial share owned immediately
before we complete the merger.
Camco shares are listed on The Nasdaq National Market under the symbol
"CAFI." On September 20, 2001, the date before we printed this prospectus/proxy
statement, Camco shares closed at $12.10. Based on that $12.10 price, .3681
share of Camco would be valued at $4.45, and the total value of the Camco stock
and cash a Columbia Financial shareholder would receive for each Columbia
Financial share would be $11.35.
This prospectus/proxy statement provides detailed information about the
merger. We encourage you to read this entire document carefully.
AN INVESTMENT IN THE COMMON STOCK OF CAMCO INVOLVES CERTAIN RISKS. FOR A
DISCUSSION OF THESE RISKS, SEE "RISK FACTORS" BEGINNING ON PAGE 14 OF THIS
DOCUMENT.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE CAMCO STOCK TO BE ISSUED IN THE MERGER OR DETERMINED
IF THIS PROSPECTUS/PROXY STATEMENT IS ACCURATE OR COMPLETE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE. THE CAMCO STOCK IS NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
This prospectus/proxy statement is dated September 20, 2001, and is first
being mailed to shareholders of Columbia Financial on or about September 28,
2001.
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REFERENCES TO ADDITIONAL INFORMATION
This document incorporates important business and financial information
about our companies from documents that we have filed with the Securities and
Exchange Commission but have not included in or delivered with this document. If
you write to us or call us, we will send you these documents, excluding
exhibits, without charge. You can contact us at:
Camco Financial Corporation Columbia Financial of Kentucky, Inc.
6901 Glenn Highway 2497 Dixie Highway
Cambridge, Ohio 43725 Ft. Mitchell, Kentucky 41017
Attention: Anita Frencik Attention: Robert V. Lynch
(740) 435-2020 (859) 331-2419
TO PERMIT TIMELY DELIVERY, WE SHOULD RECEIVE YOUR REQUEST FOR DOCUMENTS BY
OCTOBER 24, 2001. We will mail the documents you request by first class mail, by
the next business day after we receive your request.
See "Where you can find more information" on page 42 for more information
about the documents referred to in this prospectus/proxy statement.
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TABLE OF CONTENTS
Summary...................................................................................................................1
Comparative stock prices and dividends....................................................................................5
Selected consolidated financial data of Camco.............................................................................6
Selected consolidated financial data of Columbia Financial................................................................7
Selected consolidated pro forma data......................................................................................9
Comparative per share data...............................................................................................10
Pro forma unaudited condensed combined consolidated statements
of financial condition.................................... 11
Pro forma unaudited condensed combined consolidated statements
of earnings.........................................................................................................12
Sources of information...................................................................................................13
Risk factors.............................................................................................................14
Fluctuation in the market price of Camco stock will affect
the value of the .3681 share of Camco stock....................................................................14
Camco may fail to realize the anticipated benefits of the merger....................................................14
Changes in interest rates could reduce Camco's income...............................................................14
Forward looking statements...............................................................................................15
Regulatory approvals required............................................................................................15
The special meeting of Columbia Financial shareholders...................................................................16
Time, date and place..................................................................................................16
Purpose of the meeting................................................................................................16
Shares outstanding and entitled to vote; record date..................................................................16
Votes required........................................................................................................16
Voting and solicitation and revocation of proxies.....................................................................17
Dissenters' rights.......................................................................................................18
Proposed amendment to the Columbia Financial articles of incorporation...................................................19
The parties to the merger agreement......................................................................................21
Camco.................................................................................................................21
Columbia Financial....................................................................................................21
The merger...............................................................................................................21
Background and reasons for the merger.................................................................................22
Opinion of Keefe, Bruyette & Woods....................................................................................24
Recommendation of the board of directors of Columbia Financial........................................................27
Merger consideration..................................................................................................27
Exchange of certificates evidencing Columbia Financial shares.........................................................29
Employee matters......................................................................................................29
Representations, warranties and covenants.............................................................................30
Conduct of business pending the merger................................................................................31
Conditions............................................................................................................32
Effective time........................................................................................................33
Termination and amendment.............................................................................................33
Interests of directors and officers...................................................................................34
Resale of Camco common shares.........................................................................................35
Federal income tax consequences.......................................................................................35
Accounting treatment..................................................................................................36
Description of Camco shares..............................................................................................36
Authorized stock......................................................................................................36
Special meetings......................................................................................................36
Preemptive rights.....................................................................................................37
Voting rights.........................................................................................................37
Board of directors....................................................................................................37
Antitakeover provisions in the Camco's certificate of incorporation and bylaws........................................37
Comparison of rights of holders of Camco shares and holders of Columbia Financial shares.................................38
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Authorized stock......................................................................................................38
Director nominations..................................................................................................38
Indemnification of directors and officers.............................................................................39
Antitakeover provisions...............................................................................................39
Antitakeover statutes.................................................................................................40
Legal matters............................................................................................................41
Experts..................................................................................................................42
Proposals for the 2002 annual shareholders' meeting......................................................................42
Where you can find more information......................................................................................42
ANNEX A Agreement of Merger and Plan of Reorganization dated June 4, 2001, by
and among Camco Financial Corporation, Camco Acquisition Corp.,
Advantage Bank, Columbia Financial of Kentucky, Inc., and Columbia
Federal Savings Bank
ANNEX B Opinion of Keefe, Bruyette & Woods, Inc. dated September 20, 2001
ANNEX C Rights of dissenting shareholders, Ohio General Corporation Law Section
1701.85
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SUMMARY
This summary highlights selected information from this prospectus/proxy
statement. It does not contain all of the information that is important to you.
You should read carefully this entire document and the other documents referred
to in this document to fully understand the merger. To obtain more information,
see "Where you can find more information" on page 42. Page references are
included in this summary to direct you to a more complete description of topics
discussed in this document.
THE PARTIES (PAGE 21)
Camco Financial Corporation/Camco Acquisition Corp./Advantage Bank
6901 Glenn Highway
Cambridge, Ohio 43725
(740) 435-2020
Camco is a savings and loan holding company organized under Delaware law in
1970. Through its wholly-owned subsidiaries, Advantage Bank and Camco Title
Insurance Agency, Inc., Camco is engaged in the financial services business in
Ohio, Kentucky and West Virginia.
Camco Acquisition Corp. is a wholly-owned subsidiary of Camco that was
incorporated under Ohio law in May 2001 for the sole purpose of facilitating
this merger.
Advantage Bank is an Ohio savings bank. It was incorporated in 1885 as The
Cambridge Loan and Building Company, and renamed Advantage Bank in June 2001
when Camco consolidated its four other subsidiary banks into the renamed
Advantage Bank. Advantage Bank has its principal office in Cambridge, Ohio, and
20 branch offices located in Ohio, Kentucky and West Virginia.
Columbia Financial of Kentucky, Inc./Columbia Federal Savings Bank
2497 Dixie Highway
Ft. Mitchell, Kentucky 41017
(859) 331-2419
Columbia Financial is an Ohio corporation that was formed in 1997 in
connection with the conversion of Columbia Federal Savings Bank from a mutual
savings bank to a stock savings bank.
Columbia Federal Savings Bank, a federal savings bank, was formed in 1884
and conducts business in northern Kentucky. Columbia Federal Savings Bank is
principally engaged in the business of making first mortgage loans and accepting
deposits in its primary lending area.
THE MERGER (PAGE 21)
The merger agreement provides for the merger of Camco Acquisition Corp.
into Columbia Financial and the immediate subsequent mergers of Columbia
Financial into Camco and Columbia Federal into Advantage Bank. The mergers
cannot be completed unless the holders of at least 1,312,976 Columbia Financial
shares, which is a majority of the issued and outstanding shares, approve the
merger.
If the merger is completed, each Columbia Financial shareholder will
receive $6.90 and .3681 share of Camco common stock for each Columbia Financial
share owned. On September 20, 2001, the date before we printed this
prospectus/proxy statement, Camco stock closed at $12.10 on Nasdaq. Based on
such $12.10 price, .3681 share of Camco stock would be valued at $4.45, and the
total value of the Camco stock and cash a Columbia Financial shareholder would
receive for each Columbia Financial share would equal $11.35.
The total value of the merger consideration on the closing date will
depend, therefore, on the value of a share of Camco stock on such date. If the
market value of Camco stock on the closing date is $9.25, then the
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value of the stock component would be $3.40 (.3681 multiplied by $9.25) and the
total value of the per share merger consideration would be $10.30 ($3.40 in
Camco stock plus $6.90 in cash). If the market price of Camco stock falls below
$9.25 per share during a measuring period prior to closing, Camco will have the
right to increase the per share merger consideration to have a value equal to
$10.30. If Camco chooses not to make such an adjustment, Columbia Financial's
directors will evaluate the circumstances and, in the exercise of their
fiduciary duties, determine whether to terminate the merger agreement. The
Columbia Financial board of directors may, without obtaining approval of the
shareholders, proceed with the merger despite a reduction in value of the merger
consideration. Because the number of Camco shares you will receive is fixed and
the market price of Camco common stock will fluctuate, we cannot be sure of the
market value of the Camco stock you will receive in the merger. We urge you to
obtain current price quotations for the Camco stock before casting your vote
regarding the merger. You may obtain current stock quotations for Camco stock,
listed under the symbol "CAFI," from newspapers, the Internet or your broker.
We have attached the merger agreement to this document as Annex A and
incorporate it by reference into this prospectus/proxy statement. Please read
the merger agreement. It is the legal document that governs the merger.
BACKGROUND AND REASONS FOR THE MERGER (PAGE 22)
The Columbia Financial board of directors considered several alternatives
in an effort to increase shareholder value. After weighing the viable options
against expenses that would be incurred to effect them, the Columbia Financial
board of directors decided to pursue a merger. Columbia Financial engaged Keefe,
Bruyette & Woods to assist in the process. After extensive deliberations and the
review of several indications of interest, Columbia Financial's board of
directors determined that Camco's offer was in the best interests of Columbia
Financial's shareholders.
RISK FACTORS (PAGE 14)
There are several risks associated with an investment in Camco stock,
represented by the adoption of the merger agreement, including the fluctuation
of the value of the Camco stock you will receive and the potential that Camco
may not realize all of the anticipated benefits of the mergers. Please consider
these risks carefully before deciding how you will vote.
AMENDMENT TO THE ARTICLES OF INCORPORATION (PAGE 19)
Columbia Financial's articles of incorporation contain a provision that
prohibits the consummation of the merger. You will be asked to vote on an
amendment to the articles to remove this provision.
RECOMMENDATIONS TO SHAREHOLDERS (PAGE 27)
The board of directors of Columbia Financial believes that the merger is in
the best interests of Columbia Financial and its shareholders and unanimously
recommends that you vote "FOR" the proposal to adopt the merger agreement and
"FOR" the proposal to amend the articles of incorporation.
OPINION OF FINANCIAL ADVISORS (PAGE 24)
In deciding to approve the merger, the Columbia Financial board of
directors considered the opinion of its financial advisor, Keefe, Bruyette &
Woods, dated June 4, 2001, that the per share merger consideration was fair to
Columbia Financial shareholders from a financial point of view. The opinion,
updated as of September 20, 2001, is attached as Annex B to this
prospectus/proxy statement. We encourage you to read the opinion.
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FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER (PAGE 35)
Columbia Financial shareholders may recognize a gain or loss upon the
receipt of the cash and Camco stock to be received in the merger. The actual
income tax consequences for each Columbia Financial shareholder may be
different, and you should contact your tax advisor.
INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS (PAGE 34)
Some of the directors and executive officers of Columbia Financial and
Columbia Federal have interests in the merger that are different from, or in
addition to, their interests as shareholders of Columbia Financial. These
interests include the following:
- At the completion of the merger, any outstanding options under the
Columbia Financial 1999 Stock Option and Incentive Plan that have not
been exercised will be converted into the right to receive a cash payment
equal to the difference between the option exercise price per share and
the sum of the cash plus the market value of the Camco stock to be
received for each Columbia Financial share. The directors and executive
officers of Columbia Financial have, in the aggregate, options to acquire
144,600 Columbia Financial shares.
- At the time the merger agreement was signed, all of the recognition and
retention plan awards that were made to Columbia Federal or Columbia
Financial directors and executive officers and which were not yet earned,
totaling 46,751 shares of Columbia Financial and cash in the aggregate
amount of $18,093, became immediately vested and were distributed.
- Current employees of Columbia Financial or Columbia Federal who are
employed by Camco or Advantage Bank after the merger will be covered by
Camco's employee benefit plans. Camco may decide to continue Columbia
Financial's health insurance plan instead of extending coverage to former
Columbia Financial and Columbia Federal employees under Camco's insurance
plan.
- Each of Robert V. Lynch, George J. Raybourne, Edward J. Schwartz, Abijah
Adams and Carol S. Margrave has an agreement with Columbia Federal that
provides for payments to be made to the employee if his or her employment
is terminated in connection with a change in control. As a result, if the
employment of any of these individuals is terminated without cause by
Columbia Federal or Advantage Bank within six months before or one year
after the merger, the individual will be entitled to a payment of up to
three times his or her salary, together with benefits, subject to certain
limits. Each of these individuals is also entitled to this payment,
including benefits, if the individual terminates his or her employment
under certain conditions.
- For a period of three years after the merger is completed, Camco and
Advantage Bank will indemnify current and former officers and directors
of Columbia Financial and Columbia Federal for their acts and omissions
occurring prior to the completion of the merger.
TERMINATION AND AMENDMENT OF THE MERGER AGREEMENT (PAGE 33)
Camco and Columbia Financial may agree to terminate the merger at any time
before the consummation of the merger, even if the Columbia Financial
shareholders have voted to approve the merger. The merger agreement allows Camco
or Columbia Financial to terminate the merger if:
- We do not complete the merger by February 28, 2002;
- We have not satisfied, or have not agreed to waive, conditions listed in
the merger agreement; or
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- The representations, warranties or obligations of the other party under
the merger agreement cannot be satisfied.
We may amend the merger agreement in writing at any time before or after
the Columbia Financial shareholders adopt the merger agreement. If the
shareholders have already adopted the merger agreement, however, we will not
amend the merger agreement without their approval if the amendment would
materially adversely affect the shareholders.
SPECIAL MEETING OF SHAREHOLDERS (PAGE 16)
The Columbia Financial special meeting of shareholders will take place at
the Holiday Inn, 2100 Dixie Highway, Ft. Mitchell, Kentucky, on October 31,
2001. If you owned Columbia Financial common shares on September 18, 2001, you
are entitled to vote at the special meeting. The holders of at least 1,312,976
shares, which is a majority of the outstanding Columbia Financial common shares,
must vote in favor of the resolution to adopt the merger agreement. The holders
of at least 1,312,976 common shares must also vote in favor of the amendment to
the articles of incorporation to adopt the amendment.
Each of the directors and executive officers of Columbia Financial has
agreed to vote all of his or her Columbia Financial common shares for the
adoption of the merger agreement. As of September 18, 2001, the directors and
executive officers of Columbia Financial, in the aggregate, owned or had voting
power with respect to 199,272 Columbia Financial shares, or 7.59% of the
outstanding shares, other than shares held in a fiduciary capacity.
DISSENTERS' RIGHTS (PAGE 18)
Ohio law provides Columbia Financial shareholders with dissenters' rights
in the merger. This means that if you strictly comply with the procedures under
Ohio law, you have the right to receive payment for your shares of Columbia
Financial based upon an independent determination of their fair cash value. In
addition to the summary of dissenters' rights beginning on page 18, a copy of
the provisions of Ohio law regarding dissenters' rights is attached to this
prospectus/proxy statement as Annex C.
PER SHARE MARKET PRICE INFORMATION (PAGE 5)
Camco common stock is listed on the Nasdaq National Market System. On June
4, 2001, the last full trading day before the public announcement of the
proposed merger, Camco stock closed at $12.43. On September 20, 2001, the day
before we printed this prospectus/proxy statement, Camco stock closed at $12.10.
Columbia Financial common shares are listed on the Nasdaq National Market
System. On June 4, 2001, the last full trading day before the public
announcement of the proposed merger, Columbia Financial shares closed at $8.25.
On September 20, 2001, the day before we printed this prospectus/proxy
statement, Columbia Financial shares closed at $10.47.
The market value of .3681 share of Camco stock would be approximately $4.58
based on Camco's June 4, 2001, closing price and $4.45 based on Camco's
September 20, 2001 closing price. Because the number of shares of Camco stock
you will receive is fixed and the market price of Camco stock will fluctuate, we
cannot be certain of the market value of the Camco stock you will receive in the
merger. You may obtain current stock quotations for Camco stock from a
newspaper, the Internet or your broker.
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COMPARATIVE STOCK PRICES AND DIVIDENDS
Camco common stock is listed on the Nasdaq National Market System under the
symbol "CAFI." Columbia Financial shares are listed on the Nasdaq National
Market System under the symbol "CFKY."
As of September 18, 2001, there were 7,035,823.50 shares of Camco stock
outstanding and held by approximately 1,154 holders of record. As of September
18, 2001, there were 2,625,950 Columbia Financial shares outstanding and held by
approximately 1,251 holders of record. The following table shows the high and
low bid prices for Camco stock and Columbia Financial shares on Nasdaq for the
first two quarters of 2001, and for each quarter of 2000 and 1999, and the cash
dividends per share declared during each of these periods.
Camco Columbia Financial
----------------------------------------- --------------------------------------------
Market price Market price
--------------- Cash dividends ---------------- Cash dividends
Quarter ended High Low declared per share High Low declared per share
------------- ---- --- ------------------ ---- --- ------------------
June 30, 2001 $12.58 $10.60 $.12 $11.05 $ 7.76 $.07
March 31, 2001 11.375 9.438 .12 9.125 7.75 .07
December 31, 2000 10.62 8.52 .12 8.625 7.50 .07
September 30, 2000 10.38 8.18 .12 9.50 8.00 .07
June 30, 2000 9.64 8.31 .12 10.25 7.75 .07
March 31, 2000 9.51 7.67 .12 14.50 9.75 .07
December 31, 1999 12.38 9.56 .12 15.50 10.25 .07
September 30, 1999 13.50 10.31 .12 13.25 13.25 .07
June 30, 1999 13.33 12.43 .1143 11.50 11.50 3.07
March 31, 1999 14.88 13.10 .1071 12.75 12.25 .07
The following table shows the last reported sales prices as of June 4,
2001, the last trading day before the public announcement of the signing of the
merger agreement, and as of September 20, 2001, the last trading day before the
date of this prospectus/proxy statement, for Camco stock and the Columbia
Financial shares. The table also shows the equivalent pro forma price of
Columbia Financial shares, determined by adding $6.90 to the market value of
.3681 share of Camco stock on each date.
Price per Price per Equivalent pro forma price per
Camco share Columbia Financial share Columbia Financial share
June 4, 2001 $12.43 $8.25 $11.48
September 20, 2001 $12.10 $10.47 $11.35
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SELECTED CONSOLIDATED FINANCIAL DATA OF CAMCO
The tables below contain information regarding the financial condition and
earnings of Camco for the five years ended December 31, 2000, based on the
audited consolidated financial statements of Camco which are incorporated into
this document by reference, and the six months ended June 30, 2001 and 2000,
based on its unaudited consolidated financial statements for those periods which
are incorporated into this document by reference. In the opinion of Camco
management, Camco has made all adjustments in the unaudited financial statements
necessary for a fair presentation of consolidated financial condition and
results of operations.
CAMCO CONSOLIDATED At June 30, At December 31,
STATEMENT OF FINANCIAL CONDITION DATA: ----------------- --------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands)
Total amount of:
Assets $1,025,532 $1,031,771 $1,037,856 $813,482 $637,135 $570,170 $517,488
Interest-bearing deposits in other
financial institutions 39,014 2,982 4,916 247 22,609 10,473 10,875
Investment securities available for
sale - at market 309 261 309 273 1,307 3,572 7,177
Investment securities held to
maturity - at cost 6,938 17,436 16,672 16,864 10,962 17,489 21,844
Mortgage-backed securities available
for sale - at market 8,552 10,745 9,850 6,475 3,476 8,447 10,148
Mortgage-backed securities held to
maturity - at cost 6,923 5,560 5,273 5,944 5,019 8,207 10,700
Loans receivable - net (1) 891,042 930,345 930,672 726,225 548,669 481,501 420,818
Deposits 661,185 589,671 632,288 461,787 443,227 422,368 398,161
FHLB advances and other borrowings 271,696 357,410 313,471 279,125 125,483 82,319 58,354
Stockholders' equity - substantially
restricted 80,990 76,196 78,750 62,609 60,139 55,331 51,391
--------------------------
(1) Includes loans held for sale.
CAMCO CONSOLIDATED Six months ended
STATEMENT OF EARNINGS DATA: June 30, Year ended December
----------------- --------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands, except per share data)
Total interest income $38,470 $36,623 $75,671 $51,093 $44,283 $41,217 $32,812
Total interest expense 25,199 23,324 49,609 29,907 24,852 22,778 17,811
-------- -------- ------- -------- -------- -------- --------
Net interest income 13,271 13,299 26,062 21,186 19,431 18,439 15,001
Provision for losses on loans 306 292 568 247 250 385 141
---------- ---------- --------- ---------- ---------- ---------- ----------
Net interest income after provision
for losses on loans 12,965 13,007 25,494 20,939 19,181 18,054 14,860
Other income 2,903 2,421 5,536 5,190 7,552 3,945 3,700
General, administrative and other
expense 10,515 10,024 19,530 17,113 16,319 13,733 13,762
-------- -------- -------- -------- -------- -------- --------
Earnings before federal income taxes 5,353 5,404 11,500 9,016 10,414 8,266 4,798
Federal income taxes 1,683 1,845 3,848 3,076 3,410 2,922 1,588
-------- --------- -------- --------- -------- --------- ---------
Net earnings $ 3,670 $ 3,559 $ 7,652 $ 5,940 $ 7,004 $ 5,344 $ 3,210
======= ======== ======== ======== ======== ======== =========
Earnings per share:
Basic $0.53 $0.52 $1.11 $1.04 $1.22 $0.93 $0.71
Number of shares used to calculate
basic earnings per share 6,947,792 6,898,226 6,915,154 5,730,829 5,751,918 5,736,121 4,492,268
Diluted $0.52 $0.51 $1.10 $1.02 $1.19 $0.91 $0.70
Number of shares used to calculate
diluted earnings per share 7,034,435 6,933,320 6,957,431 5,834,391 5,903,078 5,861,649 4,577,418
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At or for the six months
ended June 30, (1) Year ended December 31,
------------------------ --------------------------------------------------------
OTHER DATA: 2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
Return on average assets (2) 0.71% 0.77% 0.83% 0.82% 1.16% 0.98% 0.70%
Return on average equity (2) 9.19 10.26 10.83 9.68 12.13 10.01 7.52
Average equity to average assets (2) 7.74 7.52 7.64 8.46 9.56 9.81 9.36
Dividend payout ratio (3) 45.28 46.15 43.24 44.37 31.23 51.34 56.47
--------------------------
(1) Annualized where applicable.
(2) Ratios are based upon the mathematical average of the balances at the
beginning and the end of the year.
(3) Represents dividends per share divided by basic earnings per share.
SELECTED CONSOLIDATED FINANCIAL DATA OF COLUMBIA FINANCIAL
The tables below contain information regarding the financial condition and
earnings of Columbia Financial for the five years ended September 30, 2000,
based on the audited consolidated financial statements of Columbia Financial
which are incorporated into this document by reference, and the nine months
ended June 30, 2001 and 2000, based on its unaudited consolidated financial
statements. In the opinion of Columbia Financial management, Columbia Financial
has made all adjustments in the unaudited financial statements necessary for a
fair presentation of consolidated financial condition and results of operations.
COLUMBIA FINANCIAL CONSOLIDATED At June 30, At September 30,
STATEMENT OF FINANCIAL CONDITION DATA: ----------------- -----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands)
Total amount of:
Assets $109,255 $112,093 $111,523 $113,421 $117,800 $104,006 $108,098
Interest-bearing deposits in other
financial institutions 10,061 2,802 4,385 2,504 5,629 6,215 2,498
Investment securities available for
sale - at market - - - - 4,091 1,003 1,002
Investment securities held to
maturity - at cost 11,822 15,866 14,842 16,999 18,980 13,069 13,995
Mortgage-backed securities held to
maturity-at cost 13,214 17,391 16,637 19,968 22,352 17,862 18,751
Loans receivable - net 69,406 71,366 70,682 69,089 62,161 61,578 67,741
Deposits 79,075 75,332 75,462 81,654 79,484 90,195 94,657
FHLB advances and other borrowings - 7,000 6,000 1,000 - - -
Shareholders' equity - substantially
restricted 29,457 29,037 29,111 30,179 37,718 13,090 12,537
-7-
13
Nine months ended
COLUMBIA FINANCIAL CONSOLIDATED June 30, Year ended September 30,
STATEMENT OF EARNINGS DATA: ------------------- ----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
(Unaudited) (In thousands, except per share data)
Total interest income $5,942 $6,097 $8,141 $8,380 $8,275 $7,996 $8,198
Total interest expense 2,973 2,815 3,830 3,667 4,191 4,451 4,578
------- ------- ------ ------ ------ ------ ------
Net interest income 2,969 3,282 4,311 4,713 4,084 3,545 3,620
Provision for loan losses - - - 8 74 113 8
---------- ---------- --------- -------- -------- ------- ---------
Net interest income after provision for
loan losses 2,969 3,282 4,311 4,705 4,010 3,432 3,612
Non-interest income 74 96 121 117 111 88 96
Non-interest expense 2,999 2,588 3,417 3,324 2,997 2,667 3,120
------- ------- ------- ------ ------ ------ ------
Earnings before federal income taxes 44 790 1,015 1,498 1,124 853 588
Federal income taxes 268 345 509 380 300 200
-------- -------- ------- ------- ------- ------ -------
(4)
Net earnings $ 48 $ 522 $ 670 $ 989 $ 744 $ 553 $ 388
========= ======== ======= ======= ======= ====== =======
Earnings per share:
Basic $0.02 $0.21 $0.27 $0.40 $0.22 N/A(5) N/A(5)
Diluted $0.02 $0.21 $0.27 $0.40 $0.22 N/A(5) N/A(5)
Number of shares used to calculate
basic and diluted earnings per share 2,464,328 2,446,431 2,448,000 2,458,000 2,458,000 N/A N/A
Nine months ended
June 30, Year ended September 30,
OTHER DATA: ------------------- ----------------------------------------------------------
2001 2000 2000 1999 1998 1997 1996
---- ---- ---- ---- ---- ---- ----
Return on average assets (2) 0.06% 0.62% 0.59% 0.84% 0.66% 0.53% 0.36%
Return on average equity (2) 0.22 2.35 2.17 2.81 3.61 4.30 3.10
Average equity to average assets (2) 26.53 26.26 27.25 30.00 18.25 12.22 11.50
Dividend payout ratio (3) 1050.00 100.00 103.70 820.00(4) 63.64 N/A(5) N/A(5)
--------------------------
(1) Annualized where applicable.
(2) Ratios are based upon the mathematical average of the balances at the
beginning and the end of the year.
(3) Represents dividends per share divided by basic earnings per share.
(4) Includes $3.20 return of capital distribution.
(5) Not applicable as Columbia Financial converted from the mutual form of
ownership to the stock form of ownership on April 15, 1998.
-8-
14
SELECTED CONSOLIDATED PRO FORMA DATA
The following table presents selected financial data for Camco and Columbia
Financial combined on a pro forma basis for the year ended December 31, 2000,
and for the six months ended June 30, 2001, as if the merger had been effective
on January 1, 2000. The companies derived the data for the year ended December
31, 2000, based on their audited consolidated financial statements and Columbia
Financial's unaudited consolidated financial statements for the three months
ended December 31, 2000, which are incorporated into this document by reference,
and derived the data for the six months ended June 30, 2001, from their
unaudited consolidated financial statements for those periods, which are
incorporated into this document by reference. In the opinion of the managements
of the companies, all adjustments necessary for a fair presentation have been
made.
Six months ended Year ended
June 30, 2001 December 31, 2000
---------------- -----------------
(Dollars in thousands)
COMBINED CONSOLIDATED
STATEMENT OF FINANCIAL CONDITION DATA (PERIOD END):
Assets $1,117,365 $1,130,883
Deposits 740,260 708,934
Loans receivable-net 960,448 997,608
Stockholders' equity - substantially restricted 91,902 89,325
STATEMENT OF EARNINGS DATA:
Net interest income 15,804 $29,502
Provision for loan losses 306 568
Net earnings 3,922 8,731
Stockholders' equity to total assets 8.22% 7.90%
-9-
15
COMPARATIVE PER SHARE DATA
Presented below are the book value per share and net earnings per share of
(a) Camco on a historical basis, (b) Columbia Financial on a historical basis,
(c) Camco on a pro forma basis and (d) Columbia Financial on an equivalent pro
forma basis adjusted to reflect the completion of the merger as of the beginning
of each of the periods indicated. See "Pro forma unaudited condensed combined
consolidated statements of financial condition" on page 11 and "Pro forma
unaudited condensed combined statements of earnings" on pages 12 and 13. The
information in the following table is not necessarily indicative of the results
which actually would have been obtained if we had completed the merger before
the periods indicated.
Six months ended Year ended
June 30, 2001 December 31, 2000 (1)
----------------- ---------------------
CAMCO HISTORICAL
Earnings per share:
Basic $ 0.53 $ 1.11
Diluted 0.52 1.10
Book value per share 11.65 11.36
Cash dividends paid per share 0.24 0.48
COLUMBIA FINANCIAL HISTORICAL (2)
Earnings per share:
Basic $ 0.02 $ 0.27
Diluted 0.02 0.27
Book value per share 11.22 11.09
Cash dividends paid per share 0.21 0.28
CAMCO PRO FORMA
Earnings per share:
Basic $ 0.50 $ 1.11
Diluted 0.49 1.11
Book value per share 11.66 11.39
Cash dividends paid per share 0.21 0.42
COLUMBIA FINANCIAL PRO FORMA EQUIVALENT (3)
Earnings per share:
Basic $ 0.18 $ 0.41
Diluted 0.18 0.41
Book value per share 4.29 4.19
Cash dividends paid per share 0.08 0.15
--------------------------------
(1) Columbia Financial earnings per share and dividends are for the fiscal year
ended September 30, 2000.
(2) Columbia Financial earnings per share and dividends are for the nine months
ended June 30, 2001.
(3) The pro forma equivalent items are calculated by multiplying the Camco pro
forma amounts by the exchange ratio. These numbers do not reflect the cash
payment of $6.90 per share or any effect on Camco's earnings therefrom.
-10-
16
PRO FORMA UNAUDITED CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
The following statement of financial condition is presented for Camco and
Columbia Financial on a combined, pro forma basis as of June 30, 2001, as if the
merger had been effective on January 1, 2001. The companies derived the data as
of June 30, 2001, from their unaudited consolidated financial statements for
those periods, which are incorporated into this document by reference. In the
opinion of the managements of the companies, all adjustments necessary for a
fair presentation have been made.
At June 30, 2001
-----------------------------------------------------
Columbia Purchase Pro forma
Camco Financial adjustments combined
----- --------- ----------- --------
(Dollars in thousands)
Assets
Cash and cash equivalents $ 59,275 $ 10,653 $(17,422)(1) $ 52,506
Investments designated as available for sale - at market 309 - - 309
Investment securities held to maturity - at cost 6,938 11,822 - 18,760
Mortgage-backed securities designated as available for sale - at
market 8,552 - - 8,552
Mortgage-backed securities held to maturity - at cost 1,923 13,214 - 20,137
Loans receivable - net 891,042 69,406 - 960,448
Loans held for sale - at lower of cost or market - - - -
Office premises and equipment - net 13,360 1,425 - 14,785
Real estate acquired through foreclosure 1,115 - - 1,115
Federal Home Loan Bank stock - at cost 20,143 1,646 - 21,789
Goodwill-net of accumulated amortization 3,028 - - 3,028
Other assets 14,847 1,089 - 15,936
---------- -------- -------- ----------
Total assets $1,025,532 $109,255 $(17,422) $1,117,365
========== ======== ======== ==========
Liabilities
Deposits 661,185 $ 79,075 $ - $ 740,260
Advances from Federal Home Loan Bank 271,696 - - 271,696
Other liabilities 11,661 723 (1,123)(4) 13,507
---------- -------- -------- ----------
Total liabilities 944,542 79,798 (1,123) 1,025,463
Stockholders' equity
Common stock 7,081 - (929)(2) 8,010
Additional paid-in capital 41,733 17,890 (9,983)(2) 51,716
16,767 (3)
1,123 (4)
Employee benefit plans - (1,258) (1,258)(5) -
Retained earnings - substantially restricted 33,553 13,314 13,314 (3) 33,553
Treasury stock (1,416) (489) (489)(3) (1,416)
Accumulated comprehensive income, unrealized gain on securities
designated as available for sale 39 - - 39
---------- -------- -------- ----------
Total stockholders' equity 80,990 29,457 18,545 91,902
---------- -------- -------- ----------
Total liabilities and stockholders' equity $1,025,532 $109,255 $ 17,422 $1,117,365
========== ======== ======== ==========
---------------------------
(1) Cash consideration paid by Camco at $6.90 per share.
(2) Common stock issued at fair value.
(3) Elimination of Columbia Financial's capital.
(4) Reduction of shareholders' equity for net transaction costs of $500,000 and
employment contract and net benefit buy-outs of $623,000.
(5) Elimination of employee benefit plans.
-11-
17
PRO FORMA UNAUDITED CONDENSED COMBINED CONSOLIDATED
STATEMENTS OF EARNINGS
The following statements of earnings are for Camco and Columbia Financial
on a combined, pro forma basis for the year ended December 31, 2000, and for the
six months ended June 30, 2001, as if the merger had been effective on January
1, 2000. The companies derived the data for the year ended December 31, 2000,
based on their audited consolidated financial statements and Columbia
Financial's unaudited consolidated financial statements for the three months
ended December 31, 2000, which are incorporated into this document by reference,
and derived the data for the six months ended June 30, 2001, from their
unaudited consolidated financial statements for that period, which are
incorporated into this document by reference. In the opinion of the managements
of the companies, all adjustments necessary for a fair presentation have been
made.
Six months ended June 30, 2001
----------------------------------------------------------
Columbia Acquisition Pro forma
Camco Financial (4) adjustments combined
----- ------------- ----------- --------
(Dollars in thousands, except per share data)
Interest income:
Loans $36,188 $4,310 $ - $40,498
Other interest-earning assets 2,282 1,632 436 (1) 3,478
-------- ------ ----- --------
Total interest income 38,470 5,942 436 43,976
Interest expense:
Deposits 16,189 2,864 - 19,053
Borrowings 9,010 109 - 9,119
-------- ------- -------- --------
Total interest expense 25,199 2,973 - 28,172
------- ------ -------- -------
Net interest income 13,271 2,969 436 15,804
Provision for losses on loans 306 - - 306
--------- ---------- -------- ----------
Net interest income after provision for loan
losses 12,965 2,969 436 15,498
Other income 2,903 74 - 2,977
General, administrative and other expense 10,515 2,999 (750)(2) 12,764
------- ------ ----- --------
Earnings before income taxes 5,353 44 (314) 5,711
Income taxes 1,683 (4) 110 (3) 1,789
-------- ---------- ------ ---------
Net earnings $ 3,670 $ 48 $(1,204) $ 3,922
======= ======== ======= ========
Earnings per common share
Basic $0.53 $0.02 $0.50
Number of shares used to calculate basic
earnings per share 6,947,792 2,464,328 7,876,972
Diluted $0.52 $0.02 $0.49
Number of shares used to calculate
diluted earnings per share 7,034,435 2,464,431 7,963,435
---------------------------
(1) Loss of revenue on interest-earning assets totaling $17,422 for six months
at an assumed yield of 5%.
(2) Expense reductions directly attributable to the merger, consisting of salary
and benefit reductions of $625,000 and $125,000 in reduced costs related to
maintaining Columbia Financial as a separate entity with registered shares.
(3) Tax effects on assumed net earnings improvement at 35%.
(4) All amounts are for the nine months ended June 30, 2001.
-12-
18
For the year ended December 31, 2000
------------------------------------------------------
Columbia Acquisition Pro forma
Camco Financial(1) adjustments Combined
----- --------- ----------- --------
(Dollars in thousands, except per share data)
Interest income:
Loans $71,524 $5,780 $ - $77,304
Other interest-earning assets 4,147 2,361 871(2) 5,637
-------- ------ ----- --------
Total interest income 75,671 8,141 871 82,941
Interest expense:
Deposits 28,869 3,478 - 32,347
Interest on borrowings 20,740 352 - 21,092
-------- -------- -------- --------
Total interest expense 49,609 3,830 - 53,439
-------- ------- -------- --------
Net interest income 26,062 4,311 871 29,502
Provision for losses on loans 568 - - 568
---------- ----------- ---------- ---------
Net interest income after provision for loan
losses 25,494 4,311 871 28,934
Other income 5,536 121 - 5,657
General, administrative and other expense 19,530 3,417 (1,500)(3) 21,447
-------- ------- ------ --------
Earnings before income taxes 11,500 1,015 (629) 13,144
Income taxes 3,848 345 220(4) 4,413
--------- -------- -------- ---------
Net earnings $ 7,652 $ 670 $ (409) $ 8,731
======== ======= ======= ========
Earnings per common share
Basic $ 1.11 $ 0.27 $ 1.11
========= ======= =========
Number of shares used to calculate basic
earnings per share 6,915,154 2,448,000 7,844,553
Diluted $ 1.10 $ 0.27 $ 1.11
========= ======== =========
Number of shares used to calculate diluted
earnings per share 6,957,431 2,448,000 7,886,830
---------------------------
(1) The historical audited financial statements for Columbia Financial are for
the year ended September 30, 2000.
(2) Loss of revenue on interest-earning assets totaling $17,422,000 for one year
at an assumed yield of 5%.
(3) Expense reductions directly attributable to the merger consisting of salary
and benefit reductions of $1.3 million and $250,000 in reduced costs related
to maintaining Columbia Financial as a registrant.
(4) Tax effects on assumed net earnings improvement at 35%.
SOURCES OF INFORMATION
Camco, Camco Acquisition Corp. and Advantage Bank provided all information
in this prospectus/proxy statement relating to them, and Columbia Financial and
Columbia Federal provided all information in this prospectus/proxy statement
relating to them. Each party is responsible for the accuracy of its information.
YOU SHOULD RELY ONLY ON THE INFORMATION WHICH IS CONTAINED IN THIS DOCUMENT
OR TO WHICH WE HAVE REFERRED IN THIS DOCUMENT. WE HAVE NOT AUTHORIZED ANYONE TO
PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT.
-13-
19
RISK FACTORS
In considering how to vote on the merger agreement, you should consider
carefully all of the information contained in this document, especially the
following factors.
FLUCTUATION IN THE MARKET PRICE OF CAMCO STOCK WILL AFFECT THE VALUE OF THE
.3681 SHARE OF CAMCO STOCK.
If the merger is completed, each outstanding common share of Columbia
Financial will be cancelled on the day of the closing in exchange for $6.90 in
cash and .3681 share of Camco common stock, subject to possible adjustment. The
total value of the consideration you receive will depend on the market value of
a share of Camco on the day of the closing. On September 20, 2001, the date
before we printed this prospectus/proxy statement, Camco stock closed at $12.10
on Nasdaq. Based on such $12.10 price, .3681 share of Camco stock would be
valued at $4.45, and the total value of the Camco stock and cash a Columbia
Financial shareholder would receive for each Columbia Financial share would
equal $11.35.
On the day the merger closes, the market price of a share of Camco stock
may be higher or lower than the market price on the date the merger agreement
was signed, on the date this document was mailed to you or on the date of the
special meeting of shareholders of Columbia Financial. Therefore, you cannot be
assured of receiving any specific market value of Camco stock on the date of the
closing of the merger.
The consideration you receive may be adjusted if the market value of a
share of Camco stock is less than $9.25 based on the average closing prices of
Camco stock for the ten trading days ending five calendar days prior to the date
the merger is completed. If the market value of a share of Camco stock on the
closing date equals $9.25, then the value of the stock component would be $3.40
(.3681 multiplied by $9.25) and the total value of the per share merger
consideration would be $10.30 ($3.40 in Camco stock plus $6.90 in cash). If the
average market value is less than $9.25, Camco may increase either the cash
portion or the stock portion of the per share merger consideration so that the
total value of the per share merger consideration that you will receive is not
less than $10.30.
If the average market value of Camco stock is less than $9.25 per share and
Camco chooses not to increase the per share merger consideration so that the
total value of the per share merger consideration that you will receive is at
least $10.30, the board of directors of Columbia Financial has the right to
terminate the merger agreement and abandon the merger. There is no assurance,
however, that the board of directors will exercise such right by terminating the
merger agreement. If the average market value of Camco stock falls below $9.25
per share and Camco chooses not to increase the per share merger consideration,
the board of directors will evaluate the circumstances existing at the time and,
in the exercise of the directors' fiduciary duties, determine whether a
termination is in the best interests of the Columbia Financial shareholders.
CAMCO MAY FAIL TO REALIZE THE ANTICIPATED BENEFITS OF THE MERGER.
Camco and Columbia Financial may not be able to integrate their operations
without encountering difficulties, including the loss of key employees and
customers, the disruption of ongoing business or possible inconsistencies in
standards, controls, procedures and policies. Additionally, in determining that
the merger is in the best interests of Camco and Columbia Financial, each of the
Camco and the Columbia Financial boards of directors considered enhanced
earnings opportunities. There can be no assurance, however, that any enhanced
earnings will result from the merger.
CHANGES IN INTEREST RATES COULD REDUCE CAMCO'S INCOME.
Camco's net income depends to a great extent on the difference between the
interest rates earned on interest-earning assets, such as loans and investment
securities, and the interest rates paid on interest-bearing liabilities, such as
deposits and borrowings. These rates are highly sensitive to many factors that
are beyond Camco's control, including general economic conditions and the
policies of various governmental and regulatory agencies. Changes in interest
rates influence the volume of loan originations, the generation of deposits, the
yield
-14-
20
on loans and investment securities and the cost of deposits and borrowings.
Fluctuations in these areas may adversely affect Camco.
FORWARD LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a safe harbor
from civil litigation for forward-looking statements. Forward-looking statements
include the information concerning future results of operations, cost savings
and synergies of Camco and Columbia Financial after the merger and those
statements proceeded by, followed by or that otherwise include the terms
"should," "believe," "expect," "anticipate," "intend," "may," "will,"
"continue," "estimate" and other expressions that indicate future events and
trends. Although Camco and Columbia Financial believe, in making such
statements, that their expectations are based on reasonable assumptions, these
statements may be influenced by risks and uncertainties which could cause actual
results and trends to be substantially different from historical results or
those anticipated depending on a variety of factors. These risks and
uncertainties include, without limitation:
- expected cost savings from the merger are not fully realized or realized
within the expected time frame;
- revenues following the merger are lower than expected or deposit
withdrawals, operating costs or customer loss and business disruption
following the merger are greater than expected;
- competition among depository and other financial services companies
increases significantly;
- costs or difficulties related to the integration of Camco and Columbia
Financial are greater than expected;
- general economic or business conditions are less favorable than expected;
- adverse changes occur in the securities market; and
- legislation or regulatory requirements or changes adversely affect the
businesses in which Camco is engaged.
You should understand that these factors, in addition to those discussed
elsewhere in this document and in documents that have been incorporated by
reference, could affect the future results of Camco and Columbia Financial, and
could cause those results to be substantially different from those expressed in
any forward-looking statements. Camco and Columbia Financial do not undertake
any obligation to update any forward-looking statement to reflect events or
circumstances arising after the date of this document.
REGULATORY APPROVALS REQUIRED
Camco has submitted applications to the Federal Deposit Insurance
Corporation, the Ohio Division of Financial Institutions and the Office of
Thrift Supervision seeking approval of the merger. We anticipate that those
regulatory authorities will approve the merger. Camco and Columbia Financial are
not aware of any basis for disapproving the merger, but there can be no
assurance that all requisite approvals will be obtained, that such approvals
will be received on a timely basis or that such approvals will not impose
conditions or requirements that, individually or in the aggregate, would so
materially reduce the economic or business benefits of the transactions
contemplated by the merger to Camco and Columbia Financial that, had such
condition or requirement been known, neither Camco nor Columbia Financial, in
its reasonable judgment, would have entered into the merger agreement.
-15-
21
THE SPECIAL MEETING OF COLUMBIA FINANCIAL SHAREHOLDERS
TIME, DATE AND PLACE
The Columbia Financial special meeting of shareholders will be held at
11:00 a.m., Eastern Standard Time, on October 31, 2001, at the Holiday Inn, 2100
Dixie Highway, Ft. Mitchell, Kentucky.
PURPOSE OF THE MEETING
At the special meeting of shareholders, you will be asked to consider and
vote upon:
- The following resolution:
RESOLVED, that the articles of incorporation of Columbia Financial of
Kentucky, Inc., as amended, be amended by deleting Article SEVENTH in its
entirety and substituting therefor the following:
SEVENTH: Deleted
- The following resolution:
RESOLVED, that the Agreement of Merger and Plan of Reorganization, dated
June 4, 2001, by and among Camco Financial Corporation, Camco Acquisition
Corp., Advantage Bank, Columbia Financial of Kentucky, Inc., and Columbia
Federal Savings Bank, a copy of which is attached to the prospectus/proxy
statement of Columbia Financial of Kentucky, Inc., and Camco Financial
Corporation dated September 20, 2001, and the transactions contemplated
thereby, including the merger of Columbia Financial of Kentucky, Inc.,
into Camco Financial Corporation, be, and they hereby are, approved and
adopted.
- Any other matters that are properly brought before the special meeting,
including adjournment of the special meeting to allow for additional
solicitation of shareholder votes in order to obtain the required vote to
adopt the merger agreement and to approve the transactions contemplated
by the merger agreement. As of the date hereof, the Columbia Financial
board of directors knows of no business that will be presented for
consideration at the special meeting, other than matters described in
this document.
SHARES OUTSTANDING AND ENTITLED TO VOTE; RECORD DATE
Only shareholders of record on September 18, 2001, will be entitled to
notice of and to vote at the special meeting of shareholders. At the close of
business on September 18, 2001, there were 2,625,950 Columbia Financial shares
issued and outstanding and entitled to vote. The Columbia Financial shares were
held of record by approximately 1,251 shareholders. Each Columbia Financial
share entitles the holder to one vote on all matters properly presented at the
special meeting of shareholders.
VOTES REQUIRED
The holders of a majority of the outstanding Columbia Financial shares, or
1,312,976 shares, must vote in favor of the merger agreement and the amendment
to the articles of incorporation. As of September 18, 2001, the directors and
executive officers of Columbia Financial owned or had voting power, in the
aggregate, with respect to 199,272 Columbia Financial common shares, or 7.59% of
the outstanding Columbia Financial shares, not including shares held by the
directors and executive officers in a fiduciary capacity. The directors and
executive
-16-
22
officers of Columbia Financial have agreed to vote all of their Columbia
Financial shares for the adoption of the merger agreement and the amendment to
the articles of incorporation.
A quorum, consisting of the holders of over 50% of the outstanding Columbia
Financial common shares, must be present in person or by proxy at the special
meeting before any action can be taken.
Each share of Columbia Financial is entitled to one vote on each of the
proposals. The affirmative vote of at least a majority of the shares entitled to
vote at the special meeting is required in order to adopt the merger agreement
and the amendment to the articles of incorporation. Under Ohio law, only votes
cast in favor of a proposal count as being voted for the proposal. Therefore,
abstentions and broker non-votes will have the effect of a vote against the
amendment to the articles of incorporation and the merger agreement.
If any other matters incident to the conduct of the special meeting are
properly brought before the special meeting for consideration, including a
motion to adjourn the special meeting to another time or place for the purpose
of soliciting additional proxies or otherwise, shares represented by properly
executed proxies will be voted in the discretion of the persons named in the
proxy card enclosed herewith in accordance with their best judgment. However, no
proxy that is voted against the proposal to approve the merger agreement will be
voted in favor of any adjournment of the special meeting to solicit further
proxies for such proposal.
VOTING AND SOLICITATION AND REVOCATION OF PROXIES
Each copy of this prospectus/proxy statement mailed to Columbia Financial
shareholders was accompanied by a form of proxy for use at the special meeting
of shareholders. This proxy is solicited by the Columbia Financial board of
directors. Whether or not you attend the special meeting, the Columbia Financial
board of directors urges you to use the enclosed proxy. If you have executed a
proxy, you may revoke it at any time before the special meeting by:
- filing a written notice of revocation with the Secretary of Columbia
Financial, at 2497 Dixie Highway, Ft. Mitchell, Kentucky 41017;
- executing and returning a later-dated proxy received by Columbia
Financial prior to a vote being taken at the special meeting; or
- attending the special meeting and giving notice of revocation in person.
Your attendance at the special meeting will not, by itself, serve as a
revocation of a proxy.
If you are a Columbia Financial shareholder whose shares are not registered
in your own name, you will need additional documentation from your record holder
in order to vote your shares at the special meeting in person.
We do not expect any matter other than the merger agreement and the
amendment to the articles of incorporation to be brought before the Columbia
Financial special meeting of shareholders. The persons named as proxies will act
at the direction of the Columbia Financial board of directors in voting on any
other matters that properly come before the special meeting.
Columbia Financial will pay its expenses incurred in connection with
preparing and mailing this prospectus/proxy statement, the accompanying proxy
and any other related materials and all other costs incurred in connection with
the solicitation of proxies on behalf of the Columbia Financial board of
directors. Proxies will be solicited by mail and may be further solicited, for
no additional compensation, by officers, directors or employees of Columbia
Financial. Columbia Financial will also pay the standard charges and expenses of
brokerage houses, voting trustees, banks, associations and other custodians,
nominees and fiduciaries, who are record holders of Columbia Financial common
shares not beneficially owned by them, for forwarding the proxy
-17-
23
materials to, and obtaining proxies from, the beneficial owners of Columbia
Financial common shares entitled to vote at the special meeting of shareholders.
DISSENTERS' RIGHTS
The following is a summary of the steps that you must take if you wish to
exercise dissenters' rights with respect to the merger. This description is not
complete. You should read Section 1701.85 of the Ohio General Corporation Law
for a more complete discussion of the procedures. That section is attached as
Annex C to this document. IF YOU FAIL TO TAKE ANY ONE OF THE REQUIRED STEPS,
YOUR DISSENTERS' RIGHTS MAY BE TERMINATED UNDER OHIO LAW. If you are considering
dissenting, you should consult your own legal advisor.
To exercise dissenters' rights, you must satisfy five conditions:
- you must be a Columbia Financial shareholder of record on September 18,
2001;
- you must not vote your Columbia Financial shares in favor of the merger;
- you must deliver a written demand for the fair cash value of the
dissenting shares within 10 days of the date on which the vote is taken;
- if Columbia Financial requests, you must send your stock certificates to
Columbia Financial within 15 days of the request so that a legend may be
added stating that a demand for fair cash value has been made; and
- if you do not reach an agreement as to the fair cash value of your shares
with Columbia Financial, you must file a complaint in court for
determination of the fair cash value.
All demands should be sent to Columbia Financial, 2497 Dixie Highway, Ft.
Mitchell, Kentucky 41017, Attention: Secretary.
"Fair cash value" is the amount that a willing seller, under no compulsion
to sell, would be willing to accept, and that a willing buyer, under no
compulsion to purchase, would be willing to pay. Fair cash value is determined
as of the day before the special meeting, excluding any appreciation or
depreciation in market value of your shares resulting from the merger. The fair
cash value of your shares may be higher, the same as, or lower than the market
value of Columbia Financial shares on the date of the merger. In no event will
the fair cash value be in excess of the amounts specified in the dissenting
shareholder's demand.
The following is a more detailed description of the conditions you must
satisfy to perfect your dissenters' rights:
- You must be the record holder of the dissenting shares as of September
18, 2001. If you have a beneficial interest in Columbia Financial shares
that are held of record in the name of another person, you must cause the
shareholder of record to follow the required procedures.
- You must not vote in favor of the merger agreement. This requirement is
satisfied if:
- you submit a properly executed proxy with instructions to vote
"against" the adoption of the merger agreement or to "abstain" from the
vote; or
- you do not return a proxy or you revoke a proxy and you do not cast a
vote at the special meeting in favor of the adoption of the merger
agreement.
IF YOU VOTE IN FAVOR OF THE MERGER AGREEMENT, YOU WILL LOSE YOUR
DISSENTERS' RIGHTS. IF YOU SIGN A PROXY AND RETURN IT BUT DO NOT INDICATE
A VOTING PREFERENCE ON THE PROXY, THE PROXY
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WILL BE VOTED IN FAVOR OF THE ADOPTION OF THE MERGER AGREEMENT AND WILL
CONSTITUTE A WAIVER OF DISSENTERS' RIGHTS.
- You must file a written demand with Columbia Financial on or before the
10th day after the day on which the Columbia Financial shareholders
approved the merger. Columbia Financial will not inform you of the
expiration of the 10-day period. The written demand must include your
name and address, the number of dissenting shares and the amount you
claim as the fair cash value of those shares. Voting against the merger
does not constitute a written demand as required under Ohio law.
- If Columbia Financial requests, you must submit your certificates for
dissenting shares to Columbia Financial within 15 days after it sends its
request so that a legend may be placed on the certificates, indicating
that demand for cash value was made. The certificates will be returned to
you by Columbia Financial. Columbia Financial intends to make this
request to dissenting shareholders.
- You must file a petition with the court if you do not reach an agreement
with Columbia Financial as to the fair cash value of your shares. You
must file the petition with the Court of Common Pleas of Hamilton County,
Ohio, for a determination of the fair cash value of the dissenting shares
within three months after service of your demand to Columbia Financial
for fair cash value. The court will determine the fair cash value per
share. The costs of the proceeding, including reasonable compensation to
appraisers, will be assessed as the court considers equitable.
Your right to receive the fair cash value of your dissenting shares will
terminate if:
- the merger does not become effective;
- you fail to make a timely written demand on Columbia Financial;
- you do not, upon request of Columbia Financial, surrender your Columbia
Financial certificates in a timely manner;
- you withdraw your demand, with the consent of Columbia Financial; or
- Columbia Financial and you have not come to an agreement as to the fair
cash value of the dissenting shares and you have not timely filed a
complaint.
Camco will not be required to complete the merger if the holders of more
than 10% of the outstanding Columbia Financial shares exercise dissenters'
rights.
PROPOSED AMENDMENT TO THE COLUMBIA FINANCIAL ARTICLES OF INCORPORATION
Article SEVENTH of the articles of incorporation of Columbia Financial
provides as follows:
SEVENTH: Until the expiration of five years from the date of the
acquisition by the corporation of the capital stock of Columbia Federal
Savings Bank (the "Bank") to be issued in connection with the conversion
of the Bank from mutual to stock form, no Person (hereinafter defined)
shall directly or indirectly Offer (hereinafter defined) to Acquire
(hereinafter defined) or Acquire the Beneficial Ownership (hereinafter
defined) of more than 10% of any class of any equity security of the
corporation; provided, however, that such prohibition shall not apply to
the purchase of shares by underwriters in connection with a public
offering or the power of trustees to
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vote shares of the corporation held by an employee stock ownership plan
for the benefit of employees of the Bank or the corporation. In the event
that any shares of the corporation are Acquired in violation of this
Article Seventh, all shares Beneficially Owned by any Person in excess of
10% of any class of equity security of the corporation shall not be
counted as shares entitled to vote, shall not be voted by any Person and
shall not be counted as voting shares in connection with any matter
submitted to the shareholders for a vote. For purposes of this Article
Seventh, the following terms shall have the meanings set forth below:
(A) "Person" includes an individual, a group acting in concert, a
corporation, a partnership, an association, a joint-stock company, a
trust, an unincorporated organization or similar company, a syndicate
or any other group formed for the purpose of acquiring or disposing
of the equity securities of the corporation, but does not include an
employee stock ownership plan for the benefit of employees of the
Bank or the corporation.
(B) "Offer" includes every offer to buy or otherwise acquire,
solicitation of an offer to sell, tender offer for, or request or
invitation for tenders of, a security or interest in a security for
value.
(C) "Acquire" includes every type of acquisition, whether effected by
purchase, exchange, operation of law or otherwise.
(D) "Acting in concert" means (i) knowing participation in a joint
activity or conscious parallel action toward a common goal, whether
or not pursuant to an express agreement, or (ii) a combination or
pooling of voting or other interests in the securities of an issuer
for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or
otherwise.
(E) "Beneficial Ownership" shall include, without limitation, (i) all
shares directly or indirectly owned by a Person, by an Affiliate
(hereinafter defined) of such Person or by an Associate (hereinafter
defined) of such Person or such Affiliate, (ii) all shares which such
Person, Affiliate or Associate has the right to acquire through the
exercise of any option, warrant or right (whether or not currently
exercisable), through the conversion of a security, pursuant to the
power to revoke a trust, discretionary account or similar
arrangement, or pursuant to the automatic termination of a trust,
discretionary account or similar arrangement, and (iii) all shares as
to which such Person, Affiliate or Associate directly or indirectly
through any contract, arrangement, understanding, relationship or
otherwise (including, without limitation, any written or unwritten
agreement to act in concert) has or shares voting power (which
includes the power to dispose or to direct the disposition of such
shares) or both.
(F) "Affiliate" shall mean a Person that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under
common control with, another Person.
(G) "Associate" of a Person shall mean (i) any corporation or
organization (other than the corporation or a subsidiary of the
corporation) of which the Person is an officer or partner or is,
directly or indirectly, the beneficial owner of ten percent or more
of any class of equity securities, (ii) any trust or other estate in
which the Person has a substantial beneficial interest or as to which
the Person serves as trustee or in a similar fiduciary capacity,
except a tax-qualified employee stock benefit plan in which the
Person has a substantial beneficial interest or serves as a trustee
or in a similar fiduciary capacity or a tax-qualified employee stock
benefit plan, and (iii) any relative or spouse of the Person, or any
relative of such spouse, who has the same home as the Person or is a
director or officer of the corporation or any of its parents or
subsidiaries.
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The purpose of Article SEVENTH is to discourage changes in control that are
deemed by the board of directors of Columbia Financial not to be in the best
interests of Columbia Financial or its shareholders. Because the board of
directors of Columbia Financial has determined that the adoption of the merger
agreement would be in the best interests of the shareholders of Columbia
Financial, the board of directors of Columbia Financial unanimously recommends
that the Columbia Financial shareholders vote to adopt an amendment to the
Columbia Financial articles of incorporation to delete Article SEVENTH in its
entirety, thereby removing the prohibition against the offer to acquire or the
acquisition of 10% or more of the outstanding Columbia Financial common shares.
THE PARTIES TO THE MERGER AGREEMENT
CAMCO
Camco is a savings and loan holding company that was organized under
Delaware law in 1970. Camco owns all of the issued and outstanding shares of
Advantage Bank, Camco Title Insurance Agency, Inc. and Camco Acquisition Corp.,
the entity incorporated to facilitate this merger. Camco has grown from $22.4
million in consolidated assets in 1970 to $1.03 billion in consolidated assets
at June 30, 2001. This rate of growth is largely attributable to the
acquisitions of Marietta Savings Bank in 1973, First Federal Savings Bank of
Washington Court House in 1988, First Federal Bank for Savings in 1996,
Germantown Federal Savings Bank in 1998 and Westwood Homestead Savings Bank in
2000.
In June 2001, Camco completed a restructuring through which all of Camco's
five separate bank charters merged into Cambridge Savings Bank, which was
renamed Advantage Bank. Advantage Bank is a full-service provider of financial
products with 21 offices throughout central and southern Ohio, northeastern
Kentucky and northwestern West Virginia. Advantage Bank's primary lending
activities include the origination of conventional fixed-rate and variable-rate
mortgage loans for the acquisition, construction or refinancing of single-family
homes located in Advantage Bank's primary market areas. Advantage Bank also
originates mortgage loans on multifamily properties and nonresidential
properties, and originates a variety of consumer loans and commercial loans.
COLUMBIA FINANCIAL
Columbia Financial was incorporated under the laws of the State of Ohio in
1997 as a unitary savings and loan holding company and now owns all of the
issued and outstanding shares of Columbia Federal.
Through its wholly-owned subsidiary, Columbia Federal, Columbia Financial
is principally engaged in the business of making permanent first mortgage loans
secured by one- to four-family residential real estate located in Columbia
Federal's primary lending area. Columbia Federal also originates loans for the
construction of residential real estate and loans secured by multifamily real
estate (over four units) and nonresidential real estate.
Columbia Federal conducts business from its main office located in Ft.
Mitchell, Kentucky, a branch office in each of the municipalities of Covington,
Crescent Springs and Erlanger, which are located in Kenton County, Kentucky, and
a branch office in Florence, which is located in Boone County, Kentucky.
Columbia Federal's primary market area consists of Boone County and Kenton
County, Kentucky.
THE MERGER
If the holders of at least a majority of the Columbia Financial shares
adopt the merger agreement, if all necessary regulatory approvals are received
and if all conditions to the completion of the merger are satisfied or
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waived, the acquisition of Columbia Financial and Columbia Federal will be
accomplished through a three-step process. First, Camco Acquisition Corp., a
wholly-owned subsidiary of Camco that was created for this merger, will merge
into Columbia Financial. As a result of the merger, Columbia Financial will be a
wholly-owned subsidiary of Camco. Second, Columbia Financial will merge into
Camco, with Camco being the surviving holding company. Finally, Columbia Federal
will merge into Advantage Bank, with Advantage Bank being the surviving bank.
BACKGROUND AND REASONS FOR THE MERGER
CAMCO. Camco's strategic plan is to deliver a wide array of financial
products and services through its divisions, which operate under the direction
of management personnel who maintain close ties to the communities they serve.
Since adopting the holding company structure in 1970, Camco has expanded over
the years through several acquisitions of financial institutions.
In pursuing growth, Camco has paid particular attention to opportunities in
geographic areas contiguous to its existing markets, which include portions of
central, southwestern and southeastern Ohio, and the corridor from Marietta to
Canton, Ohio, which runs along I-77. Camco also has banking locations in
northeastern Kentucky and loan production offices in western West Virginia.
The merger provides Camco the opportunity to strengthen its presence in the
Greater Cincinnati-Northern Kentucky market, expanding the presence it
established in 2000 with the acquisition of Westwood Homestead Savings Bank.
Camco management believes that the economic diversity of the Greater
Cincinnati-Northern Kentucky market will lessen the impact on Camco's net
earnings in the event of an economic downturn in any individual industry or
market.
With the recent consolidation of Camco's five bank charters into Advantage
Bank, Camco's integrated "Advantage Banking" program offers an additional
opportunity to expand the lending and deposit relationships Columbia Financial
has obtained with its existing customer base and to attract new customers. Camco
believes it will be able to maintain and strengthen the relationships that
Columbia Financial has fostered with the local community while providing the
additional management and administrative support necessary to expand the range
of products and services that Columbia Financial branches currently offer.
COLUMBIA FINANCIAL. In 1998, Columbia Federal converted from a federal
mutual savings bank to a federal stock savings bank. In connection with the
conversion, Columbia Financial was formed as a savings and loan holding company
and issued 2,671,450 common shares to depositors of Columbia Federal. The
prospectus dated February 11, 1998, of Columbia Financial used in connection
with the conversion offering disclosed as an investment risk factor that the
returns on assets and equity of Columbia Federal had historically been low.
Following the completion of the conversion, the board of directors of
Columbia Financial attempted to find ways to increase the returns on both equity
and assets. For example, in an effort to reduce excess capital, Columbia
Financial purchased a total of 45,500 shares of Columbia Financial in open
market transactions in fiscal years 1999 and 2000. In addition, Columbia
Financial made distributions in 1999 of $3.28 per share to its shareholders,
$3.20 of which constituted a "tax free" return of capital. Despite such efforts,
Columbia Financial's returns on assets and equity remained well below levels
considered by the board of directors and management to be satisfactory.
In their long-range planning, the directors considered whether Columbia
Financial could increase shareholder value to an adequate level while the
industry was becoming more competitive due to significant technological changes,
the proliferation of alternative deposit products, increasing competition from
independent mortgage lenders and an increased array of financial services
permitted to be sold by financial institutions under recent legislation. The
addition of various products and services was considered and discussed in
relation to such competition, but the directors determined that many were too
expensive to implement effectively. Columbia Financial also considered such
possibilities as the opening of additional branches and the diversification of
the loan portfolio into higher yielding loans. Such possibilities were rejected,
however, on the basis that the
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substantial expense of implementation and the additional credit risk could not
be justified as a material increase in shareholder value was unlikely in the
foreseeable future.
In November 2000, the Board of Directors decided that Columbia Financial
should retain a financial advisor to advise the directors on methods of
enhancing shareholder value. On November 27, 2000, representatives of Keefe,
Bruyette & Woods presented to the directors an analysis of potential
alternatives to remaining independent, including merger possibilities. Following
the consideration of such analysis, as well as the various other matters
previously considered by the directors, the Board of Directors decided to engage
Keefe, Bruyette & Woods as a financial advisor to help the Board of Directors
consider a merger with another financial institution.
At a meeting of the Board of Directors in February 2001, Keefe, Bruyette &
Woods reviewed with the directors information on 30 companies that might be
interested in a merger with Columbia Financial. After such review, the directors
authorized Keefe, Bruyette & Woods to contact 22 of such companies. Of the
companies contacted, 12 expressed an interest in considering a possible merger,
signed confidentiality agreements and received books of information about
Columbia Financial as prepared by Keefe, Bruyette & Woods. Of the companies
receiving the books, four submitted non-binding indications of interest,
including Camco.
On March 28 and March 30, 2001, the Board of Directors met with Keefe,
Bruyette and Woods representatives to discuss the four indications. Keefe,
Bruyette & Woods provided the directors with information on the proposals,
including financial and market analyses and additional relevant information. The
information and analyses revealed that the value of Camco's part cash, part
stock proposal based on current market values, was substantially higher than the
other three proposals. In addition, the Board of Directors noted that one of the
three other proposals provided for an all cash transaction at a price less than
the Camco proposal and would probably be subject to a substantial risk of
non-completion for regulatory and financing reasons. The second of the three
other proposals called for a cash acquisition of only some of the assets and the
assumption of only some of the liabilities of Columbia Financial, as a result of
which Columbia Financial would have to continue to exist in the future to
conduct a liquidation of the company. The ultimate proceeds from the liquidation
could not be determined until the final winding up of the liquidation, a process
which could take years. The third proposal, with a price less than the Camco
proposal, was made by an institution that had undergone a substantial
reorganization in the recent past, followed by a merger with another
institution.
Following the deliberations on March 28 and 30 over the four proposals, the
Board of Directors concluded that the differences between the nominal value of
the Camco proposal and the nominal value of the three other proposals, combined
with the different uncertainties of the three other proposals, clearly made the
Camco proposal the most attractive of the four. Accordingly, the directors
decided to invite Camco to perform a due diligence examination of Columbia
Financial, including a review of Columbia Financial's books and records, and the
Board of Directors of Columbia Financial reviewed publicly available and other
information about Camco.
Upon its completion of due diligence in April 2001, Camco presented a final
non-binding proposal. The Camco proposal provided for an exchange of Columbia
Financial common shares for a purchase price to be paid in a combination of cash
and common shares of Camco. The amount of cash would be fixed at the time an
agreement was executed, as would the number of shares of Camco to be received
for each share of Columbia Financial. The total value of the purchase price
would, therefore, be subject to the movement of the Camco stock price until the
closing, but the fixed cash component would limit the extent of the volatility
of the purchase price.
Columbia Financial and Camco negotiated the terms and conditions of the
merger agreement and its exhibits between April 30 and June 4, 2001. After
discussing a draft of the agreement on May 22, 2001, the Boards of Directors of
Columbia Financial and Columbia Federal met on June 4, 2001, with Keefe,
Bruyette & Woods and legal counsel to discuss the final agreement, its exhibits
and the contemplated transaction. Included in the review was a detailed analysis
by Keefe, Bruyette & Woods of the financial terms of the agreement. Following
extensive discussion, Keefe, Bruyette & Woods stated that, as of June 4, 2001,
the financial consideration provided in the merger agreement was fair to the
shareholders of Columbia Financial from a
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financial point of view. The directors then unanimously agreed that the
transaction negotiated with Camco would be in the best interests of the Columbia
Financial shareholders and voted unanimously to approve the merger agreement.
The foregoing discussion of the information and factors considered by the
Board of Directors is not exhaustive but constitutes the material factors
considered by the Board of Directors. In reaching its determination to approve
and recommend the merger agreement, the directors did not assign any relative or
specific weight to the foregoing factors, and individual directors may have
weighed factors differently. The terms of the merger agreement were the product
of arm's length negotiations between representatives of Columbia Financial and
Camco.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ADOPTION OF THE MERGER AGREEMENT.
OPINION OF KEEFE, BRUYETTE & WOODS
On January 29, 2001, Columbia Financial retained Keefe, Bruyette & Woods to
evaluate Columbia Financial's strategic alternatives as part of a stockholder
enhancement program and to review and evaluate any specific proposals that might
be received regarding a strategic alliance with Columbia Financial. Keefe,
Bruyette & Woods, as part of its investment banking business, is regularly
engaged in the evaluation of businesses and securities in connection with
mergers and acquisitions, negotiated underwritings and distributions of listed
and unlisted securities. Keefe, Bruyette & Woods is familiar with the market for
common stocks of publicly traded banks, thrifts and bank holding companies. The
Columbia Financial board selected Keefe, Bruyette & Woods on the basis of the
firm's reputation and its experience and expertise in transactions similar to
the merger, and its previous relationship with Keefe, Bruyette & Woods, who
managed its conversion from the mutual form of ownership to the stock form of
ownership in 1998.
In connection with its engagement, Keefe, Bruyette & Woods was asked to
render an opinion as to the fairness, from a financial point of view, of the
merger consideration to stockholders of Columbia Financial. Keefe, Bruyette &
Woods delivered its opinion to the board of directors of Columbia Financial
that, as of June 4, 2001, the merger consideration is fair from a financial
point of view to the stockholders of Columbia Financial. No limitations were
imposed by Columbia Financial upon Keefe, Bruyette & Woods with respect to the
investigations made or procedures followed by it in rendering its opinion.
Keefe, Bruyette & Woods updated its opinion as of September 20, 2001, and has
consented to the inclusion in this prospectus/proxy statement of the summary of
its opinion to the Columbia Financial board of directors and to the reference to
the entire opinion attached hereto as Annex B.
THE FULL TEXT OF THE OPINION OF KEEFE, BRUYETTE & WOODS, WHICH IS ATTACHED
AS ANNEX B TO THIS PROSPECTUS/PROXY STATEMENT, INCLUDES CERTAIN ASSUMPTIONS
MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY KEEFE,
BRUYETTE & WOODS, AND SHOULD BE READ IN ITS ENTIRETY. THE SUMMARY OF THE OPINION
OF KEEFE, BRUYETTE & WOODS IN THIS PROSPECTUS/PROXY STATEMENT IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE OPINION.
In rendering its opinion, Keefe, Bruyette & Woods:
- reviewed the merger agreement;
- reviewed Columbia Financial's Annual Reports to Shareholders and Proxy
Statements for the fiscal years ended September 30, 1999 and 2000;
unaudited financial statements for the six months ended March 31, 2001;
Camco's Annual Reports for the fiscal years ended December 31, 1999 and
2000; Camco's unaudited financial statements for the three months ended
March 31, 2001, and certain other information considered relevant;
- discussed with senior management and the boards of directors of Columbia
Financial and Columbia Federal the current position and prospective
outlook for Columbia Financial;
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- considered historical quotations, levels of activity and prices of
reported transactions in Columbia Financial's common stock;
- reviewed financial and stock market data of other thrifts in a comparable
asset range and asset composition as Columbia Financial;
- reviewed certain recent business combinations with thrifts as the
acquired company, which Keefe, Bruyette & Woods deemed comparable in
whole or in part; and
- performed other analyses that Keefe, Bruyette & Woods considered
appropriate.
In rendering its opinion, Keefe, Bruyette & Woods assumed and relied upon
the accuracy and completeness of the financial information provided to it by
Columbia Financial and Camco. In its review, with the consent of the Columbia
Financial board, Keefe, Bruyette & Woods did not undertake any independent
verification of the assets or liabilities of Columbia Financial or Camco, or the
potential or contingent liabilities of Columbia Financial or Camco.
In rendering its opinion, Keefe, Bruyette & Woods analyzed the
consideration offered by Camco in relation to the following:
- the results of the marketing efforts to solicit a potential acquirer for
Columbia Financial (22 potential acquirers contacted; 12 reviewed
confidential information; four preliminary proposals; one final
proposal); and
- certain comparable pending thrift merger and acquisition transactions,
comparing merger consideration relative to tangible book value, last 12
months earnings, total assets, total deposits and premium to core
deposits. Keefe, Bruyette & Woods analyzed this data in conjunction with
the composition of Columbia Financial's earnings. Pending thrift merger
and acquisition transactions consist of all transactions announced but
not yet closed, as of May 14, 2001.
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The information in the following table summarizes the comparable group
results analyzed by Keefe, Bruyette & Woods with respect to the merger. The
summary does not purport to be a complete description of the analysis performed
by Keefe, Bruyette & Woods and should not be construed independently of the
other information considered by Keefe, Bruyette & Woods in rendering its
opinion. Selecting portions of Keefe, Bruyette & Woods' analysis or isolating
certain aspects of the comparable transactions without considering all analysis
and factors could create an incomplete or potentially misleading view of the
evaluation process.
Price to
-----------------------------------------------------------------
Core deposit
Tang. Book LTM EPS Deposits Assets premium
Number (%) (x) (%) (%) (%)
Consideration to Columbia
Financial: $11.48(3): 104.2 (1) 54.2 (2) 38.6 28.0 1.7
Median of pending transactions: 23 138.0 19.7 23.7 18.9 6.9
Median of completed
transactions: 34 132.1 17.6 23.9 15.9 6.5
Median of pending transactions
with a total value
between $10 and $50 million: 8 123.0 21.1 19.2 25.0 6.9
Median of completed
transactions with a total
value between $10 and $50 million: 14 113.6 18.5 16.0 22.6 4.4
Median of pending transactions
with seller's equity to assets
between 15% and 30%: 6 117.3 28.1 24.25 32.5 6.5
Median of completed
transactions with seller's
equity to assets between 15%
and 30%: 7 121.2 23.6 21.8 32.9 6.5
Median of pending transactions
with seller's return on equity
between 1% and 5% : 6 107.2 29.7 24.2 32.7 5.1
Median of completed
transactions with seller's
return on equity between 1%
and 5% : 8 124.4 42.5 18.2 28.5 6.1
Median of pending transactions
in the Midwest region 11 133.5 19.8 20.8 28.2 7.3
Median of completed
transactions in the Midwest
region 12 113.6 17.2 13.8 24.6 4.4
-------------------------
(footnotes on next page)
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32
(1) Assumes Columbia Financial tangible book value of $11.08.
(2) Last twelve months (LTM) ended March 31, 2001, earnings per share of $.21.
(3) Consideration composed of $6.90 and .3681 shares of Camco stock, which had a
market value of $4.58 based on the closing price of the Camco stock on June
3, 2001.
Based on the above information and analysis, Keefe, Bruyette & Woods
concluded that the implied purchase price of $11.48, which represents a 39%
price premium over the $8.25 closing price of Columbia Financial common stock on
the day the transaction was announced, is fair from a financial point of view to
the shareholders of Columbia Financial.
In preparing its analysis, Keefe, Bruyette & Woods made numerous
assumptions with respect to industry performance, business and economic
conditions and other matters, many of which are beyond the control of Keefe,
Bruyette & Woods and Columbia Financial. The analyses performed by Keefe,
Bruyette & Woods are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
those analyses, and do not purport to be appraisals or reflect the prices at
which a business may be sold.
Keefe, Bruyette & Woods will receive a fee of approximately $303,000 for
services rendered in connection with advising and issuing a fairness opinion
regarding this matter. As of the date of the prospectus/proxy statement, Keefe,
Bruyette & Woods has received $100,000 of its fee, and the remainder of the fee
is due upon the closing of the merger.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF COLUMBIA FINANCIAL
The board of directors of Columbia Financial unanimously recommends that
the Columbia Financial shareholders vote FOR the adoption of the merger
agreement. The board of directors believes that the terms of the merger are fair
to, and in the best interests of, Columbia Financial's shareholders.
MERGER CONSIDERATION
At the effective time of the merger, each outstanding Columbia Financial
share will be converted into the right to receive $6.90 in cash and .3681 share
of Camco stock, subject to possible adjustment as discussed below, and all
Columbia Financial shares will be cancelled and extinguished. Based on the
2,625,950 Columbia Financial common shares issued and outstanding on September
18, 2001, the total number of shares of Camco stock to be issued to Columbia
Financial shareholders would be approximately 966,613 and the total amount of
cash to be distributed to Columbia Financial shareholders would be $18,119,055
(prior to the repayment of the loan from Columbia Financial to Columbia
Financial's ESOP, see "Employee benefit plans" on page 34). Based on the number
of shares of Camco stock issued and outstanding on September 18, 2001, the total
number of outstanding shares of Camco stock after the merger would be
8,002,436.50, of which 12.08% would be held by the former Columbia Financial
shareholders.
Camco will not issue fractional shares in the merger. Each Columbia
Financial shareholder who otherwise would be entitled to receive a fraction of a
share of Camco stock will receive cash, based on the average of the bid and
asked price quotes of Camco stock on Nasdaq on the last day of trading before
the completion of the merger.
The value of the total consideration that you will receive in exchange for
each Columbia Financial common share will depend on the market value of a share
of Camco stock on Nasdaq on the day of the closing. On June 4, 2001, the last
day before the announcement of the execution of the merger agreement, the
closing price of a common share of Camco stock on Nasdaq was $12.43. On
September 20, the closing price of a common share of Camco stock on Nasdaq was
$12.10.
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On the day the merger closes, the market price of Camco stock may be higher
or lower than the price on the date the merger agreement was signed, on the date
this document was mailed to you or on the date of the special meeting.
Therefore, you cannot be assured of receiving any specific market value of Camco
stock on the date of the closing of the merger.
If the market value of a share of Camco stock on the closing date equals
$9.25, then the value of the stock component would be $3.40 (.3681 multiplied by
$9.25) and the total value of the per share merger consideration would be $10.30
($3.40 in Camco stock plus $6.90 in cash). If the market price of a share of
Camco stock falls below $9.25 based on the average closing prices of Camco stock
for the ten trading days ending five calendar days prior to the date the merger
is completed, Camco may choose to increase either the cash portion or the stock
portion of the per share merger consideration so that the total value of the per
share merger consideration that you will receive is not less than $10.30. Camco
may choose, however, not to increase the per share merger consideration. If it
chooses not to increase the per share merger consideration, then the board of
directors of Columbia Financial has the right to terminate the merger agreement
and abandon the merger. There is no assurance, however, that the board of
directors will exercise such right by terminating the merger agreement. If the
average market value of Camco stock falls below $9.25 per share and Camco
chooses not to increase the per share merger consideration, the board of
directors will evaluate the circumstances existing at the time and, in the
exercise of the directors' fiduciary duties, determine whether a termination is
in the best interests of the Columbia Financial shareholders.
In order to provide you with a range of possible values for the total
consideration you will receive from Camco for each of your Columbia Financial
shares if the merger closes, we have set forth the following table. The
following is an explanation of each of the columns in the table:
COLUMN A
We have set forth a range of possible market prices of Camco on Nasdaq,
starting below the $9.25 per share price at which a price adjustment may
occur and ending at a price in excess of the $14.59 highest price for Camco
shares during the last 52 weeks.
COLUMN B
We have calculated the value of .3681 share of Camco stock based on the
corresponding market price set forth in Column A.
COLUMN C
We have set forth in each line the constant $6.90 cash that will be paid by
Camco for each share of Columbia Financial, regardless of the market price
of Camco stock.
COLUMN D
We have set forth the total value of the sum of the $6.90 cash (Column C),
plus the value of .3681 share of Camco stock (Column B) based upon the
specific closing price of a share of Camco stock on Nasdaq (Column A).
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A B C D
Closing price of Market value Total value of the
a share of Camco of .3681 share of Add $6.90 sum of .3681 share of Camco stock
stock on Nasdaq Camco stock cash value plus $6.90 cash
----------------- ----------- ---------- ---------------
$ 8.25 $ 3.04 $ 6.90 $ 9.94
8.75 3.22 6.90 10.12
9.25 3.40 6.90 10.30
9.75 3.59 6.90 10.49
10.25 3.77 6.90 10.67
10.75 3.96 6.90 10.86
11.25 4.14 6.90 11.04
11.75 4.33 6.90 11.23
12.25 4.51 6.90 11.41
12.75 4.69 6.90 11.59
13.25 4.88 6.90 11.78
13.75 5.06 6.90 11.96
14.25 5.25 6.90 12.15
14.75 5.43 6.90 12.33
The merger agreement contains provisions for certain additional possible
reductions in the per share merger consideration based on the results of
environmental testing to be conducted after the agreement was signed and
possible penalties with respect to certain Columbia Financial benefit plans.
Those provisions required that any adjustments be determined prior to the
mailing of this prospectus/proxy statement. It has been determined by Columbia
Financial and Camco that no adjustments for those reasons were required.
EXCHANGE OF CERTIFICATES EVIDENCING COLUMBIA FINANCIAL SHARES
After the merger is effective, Camco or its exchange agent will mail to you
a form letter of transmittal containing instructions for surrendering your
Columbia Financial stock certificates. When you surrender your certificates for
cancellation, together with a properly executed letter of transmittal, you will
be entitled to receive cash in the amount of $6.90 per share and a certificate
for the number of Camco shares to which you are entitled under the merger
agreement. Until you surrender your certificates, Camco will not pay you any
cash consideration or any dividends or other distributions and your rights as a
shareholder of Camco will be suspended. No interest will be paid or accrued on
any cash constituting merger consideration (including the cash in lieu of
fractional shares) and unpaid dividends and distributions, if any, payable to
holders of certificates for Columbia Financial shares.
If you have lost or misplaced your Columbia Financial stock certificate,
you should immediately call Corporate Trust Services of Fifth Third Bank at
(800) 837-2755. Corporate Trust Services will mail to you instructions for
replacing the lost certificate.
EMPLOYEE MATTERS
Each Columbia Financial or Columbia Federal employee whose employment is
not specifically terminated will become an employee of Camco or Advantage Bank.
Each Columbia Financial employee who becomes an employee of Camco or Advantage
Bank will be eligible to participate in Camco or Advantage Bank employee plans,
on the same basis as any newly-hired employee of Camco or Advantage Bank.
Service with Columbia Financial or Columbia Federal will be treated as service
with Camco or Advantage Bank to determine eligibility to participate, vesting
and entitlement to benefits, but not for purposes of benefit accrual under each
Camco or Advantage Bank employee plan. Each employee of Columbia Federal who
does not have an employment agreement or severance agreement with Columbia
Federal and who Camco or its subsidiaries elect not to hire or who is terminated
within one year after the merger will be paid a severance payment equal to the
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product of two weeks of the employee's salary multiplied by the number of years
of that employee's service to Columbia Federal, with a minimum payment equal to
four weeks' salary and a maximum payment equal to 26 weeks' salary.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Camco, Camco Acquisition Corp., Advantage Bank, Columbia Financial and
Columbia Federal have each made representations and warranties in the merger
agreement regarding:
- corporate organization,
- authority and capitalization,
- regulatory reports and filings,
- financial condition,
- past conduct of business,
- taxes,
- legal proceedings,
- employment matters, and
- environmental matters.
In addition, Columbia Financial and Columbia Federal have made
representations and warranties regarding:
- investments,
- properties,
- material contracts,
- insurance,
- permits and licenses,
- employee benefit plans, and
- other matters.
Columbia Financial may not solicit or initiate any proposals or offers from
any person, or discuss or negotiate with any person or entity, regarding any
acquisition or purchase of all or a material amount of the assets of, any equity
securities of, or any merger, consolidation or business combination with,
Columbia Financial or Columbia Federal, except as required by the good faith
exercise of the fiduciary duties of the board of directors of Columbia
Financial. If Columbia Financial or Columbia Federal accepts an acquisition
transaction prior to the earlier of the termination of the merger agreement or
August 31, 2002, Columbia Financial must pay $1,250,000 to Camco.
Columbia Financial and Columbia Federal have also agreed to do the
following immediately before completion of the merger to the extent such actions
are permitted by law and are consistent with generally accepted accounting
principles:
- establish and take such reserves and accruals to conform Columbia
Federal's loan, accrual and reserve policies to Camco's policies;
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- implement policies regarding excess facilities and equipment capacity,
severance costs, litigation matters, write-off or write-down of various
assets and other appropriate accounting adjustments; and
- recognize for financial accounting purposes the expenses of the merger
and any restructuring charges related to or to be incurred in connection
with the merger.
CONDUCT OF BUSINESS PENDING THE MERGER
During the period between June 4, 2001, and the completion of the merger,
Columbia Financial and Columbia Federal have agreed to conduct their business
only in the ordinary and usual course, unless Camco agrees otherwise in writing.
In addition, without the prior written consent of Camco, which consent shall not
be unreasonably withheld, Columbia Financial and Columbia Federal have agreed
not to:
- issue, sell or dispose of any stock or other securities issued by
Columbia Financial or Columbia Federal, other than Columbia Financial
shares that are issued in connection with the exercise of outstanding
Columbia Financial options;
- declare or pay any dividends on Columbia Financial shares, other than
quarterly cash dividends not in excess of $.07 per share;
- make any stock split, recapitalization, combination, exchange of shares,
readjustment or other reclassification of shares;
- amend their articles of incorporation, code of regulations, charter or
bylaws, except the amendment to Columbia Financial's articles of
incorporation to eliminate Article Seventh and to amend the charter of
Columbia Federal to eliminate a similar provision;
- purchase, sell, assign or transfer any material tangible asset or any
material patent, trademark, trade name, copyright, license, franchise,
design or other intangible assets or properties;
- mortgage, pledge, grant or permit to exist any lien or other encumbrance
on any assets or properties, except in the ordinary course of business;
- waive any rights of material value or cancel any material debts or
claims;
- incur or pay any material obligation or liability, other than liabilities
and obligations incurred in the ordinary course of business and
borrowings from the Federal Home Loan Bank;
- except as otherwise provided in the merger agreement, enter into or amend
any employment contract with any of their employees, increase the
compensation payable to any employee or director, or any relative of an
employee or director, or become obligated to increase such compensation;
- except as provided in the merger agreement, adopt or amend in any
material respect any employee or director benefit plan, severance plan or
collective bargaining agreement or make any contributions, awards or
distributions under any employee benefit plan that is not consistent with
past practice;
- acquire any stock or other equity interest in any corporation,
partnership, trust, joint venture or other entity;
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- make any material capital expenditure or commitment for any material
addition to property, plant or equipment;
- originate or issue a commitment to originate any loan secured by one- to
four-family residential real estate or nonresidential real estate in an
amount of $250,000 or more;
- except for Federal Home Loan Bank advances, which will not exceed an
aggregate amount of $7.0 million, plus any additional amount that may be
obtained with the right of prepayment at any time without penalty or
premium, and deposit taking in the ordinary course of business, borrow or
agree to borrow any funds or directly guarantee or agree to guarantee any
obligations of others;
- establish any new lending programs or make any policy changes concerning
who may approve loans;
- enter into any securities transactions for their own account or purchase
or otherwise acquire any investment security for their own account other
than U.S. Government and agency obligations and deposits in an overnight
account at the Federal Home Loan Bank;
- increase or decrease the rate of interest paid on time deposits or
certificates of deposits, except in a manner consistent with past
practices and prevailing rates in Columbia Federal's market;
- foreclose upon or otherwise take title or possession of any real property
without first obtaining a Phase I Environmental Report that indicates
that the property is free of pollutants, contaminants or hazardous or
toxic materials; provided, however, that Columbia Federal will not be
required to obtain such a report with respect to single-family,
non-agriculture residential property of one acre or less to be foreclosed
upon unless it has reason to believe such property may contain
pollutants, contaminants or other waste materials; or
- agree to take any of the actions described above.
CONDITIONS
Camco, Camco Acquisition Corp., Advantage Bank, Columbia Financial and
Columbia Federal may complete the merger only if the merger agreement is adopted
by the holders of a majority of the outstanding Columbia Financial shares and
the parties receive regulatory approvals from the Federal Deposit Insurance
Corporation, the Ohio Division of Financial Institutions and the Office of
Thrift Supervision. In addition, Camco, Camco Acquisition Corp. and Advantage
Bank will not be required to complete the merger unless the following conditions
are satisfied:
- all of Columbia Financial and Columbia Federal's representations and
warranties in the merger agreement are true in all material respects;
- Columbia Financial and Columbia Federal have satisfied, in all material
respects, their obligations in the merger agreement;
- there have been no material adverse changes with respect to Columbia
Financial or Columbia Federal since June 4, 2001, except changes
resulting from the expenses of the merger and certain changes applicable
to all financial institutions;
- Columbia Financial's shareholders' equity at the time of the merger is at
least $29 million, exclusive of expenses related to the merger and
reserves, accruals and charges taken or established by Columbia Financial
or Columbia Federal at the request of Camco, realized or unrealized gains
or losses on securities classified as available for sale in Columbia
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Financial's audited financial statements, dividends paid in accordance
with the merger agreement and expenses incurred to terminate Columbia
Financial's recognition and retention plan; and
- the holders of 10% or less of the outstanding Columbia Financial shares
have dissented.
Columbia Financial and Columbia Federal will not be required to complete
the merger unless the following conditions are satisfied:
- all of Camco, Camco Acquisition Corp. and Advantage Bank's
representations and warranties in the merger agreement are true in all
material respects;
- Camco, Camco Acquisition Corp. and Advantage Bank have satisfied, in all
material respects, their obligations in the merger agreement;
- there have been no material adverse changes with respect to Camco since
June 4, 2001; and
- the market value of a Camco share is at least $9.25 based on the average
closing price of Camco for the ten trading days ending five calendar days
before the merger closes, except that this condition will be deemed
satisfied if, in the event that the market value is less than $9.25,
Camco elects to increase the amount of cash or shares given in exchange
for Columbia Financial shares so that the total amount of the per share
consideration to be paid for each Columbia Financial share is at least
$10.30.
Camco and Columbia Financial may waive any of the conditions unless the
waiver is prohibited by law. In particular, you should be aware that, even after
adoption of the merger agreement by the Columbia Financial shareholders, the
board of directors may agree to waive the condition with respect to the market
value of Camco shares and close the merger if it deems it to be in the best
interests of the shareholders of Columbia Financial.
EFFECTIVE TIME
Following the satisfaction or waiver of all conditions in the merger
agreement, we will file Certificates of Merger as soon as practicable with the
Secretary of State of the State of Ohio and the State of Delaware in order to
complete the merger. We anticipate that we will complete the merger in November
2001.
TERMINATION AND AMENDMENT
Either Camco or Columbia Financial may terminate the merger agreement under
the circumstances described below, whether or not the shareholders already have
voted to adopt the merger agreement. Termination may occur by the mutual
agreement of Camco and Columbia Financial, or by either party if:
- the merger is not consummated by February 28, 2002;
- the conditions listed in the merger agreement have not been satisfied or
waived; or
- an event occurs that would prevent the satisfaction of or compliance with
any of the conditions in the merger agreement.
In the event that the merger agreement is terminated, the merger agreement
will become void and have no effect, except that the provisions of the merger
agreement relating to confidentiality of information and payment of expenses
will survive the termination. Notwithstanding the foregoing, no
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party to the merger agreement will be released from any liabilities or damages
arising out of its breach of any provision of the merger agreement.
The merger agreement may be amended at any time before or after the special
meeting of shareholders. An amendment of the merger agreement that materially
and adversely affects the rights of the shareholders of Columbia Financial and
which takes place after the special meeting of shareholders, however, will not
be made without further approval of the Columbia Financial shareholders. If
necessary, Columbia Financial will seek approval at a subsequent meeting of
shareholders.
INTERESTS OF DIRECTORS AND OFFICERS
Directors and officers of Columbia Financial and Columbia Federal have
interests in the merger in addition to their interests solely as Columbia
Financial shareholders.
PAYMENT FOR STOCK OPTIONS. At the completion of the merger, each
outstanding option to purchase Columbia Financial shares will be converted
automatically into the right to receive a cash payment from Camco that is equal
to the difference between the value of the per share merger consideration at the
effective time of the merger and the exercise price per share of the option.
ACCELERATION OF RECOGNITION AND RETENTION PLAN AWARDS. The Columbia
Financial recognition and retention plan that was adopted by Columbia
Financial's shareholders on July 15, 1999, included a provision that accelerated
the vesting of all awards upon a change in control of Columbia Financial. A
change in control is defined under the recognition and retention plan to include
the execution of a merger agreement. As a result, on June 4, 2001, the date the
merger agreement was executed, the unvested shares of Columbia Financial that
were being held in the recognition and retention plan trust vested and the
shares, together with the dividends paid on the shares and the earnings on the
dividends, have been distributed to the award recipients, including directors
and executive officers of Columbia Financial.
EMPLOYEE BENEFIT PLANS. All employees of Columbia Financial or Columbia
Federal immediately prior to completion of the merger who are employed by Camco
or Advantage Bank immediately following the merger ("transferred employees")
will be covered by Camco's employee benefit plans. Camco may determine, though,
to continue Columbia Financial's health insurance plan for transferred employees
in lieu of offering participation in Camco's health insurance plans.
Before the completion of the merger, Columbia Financial will terminate the
Columbia Financial employee stock ownership plan. All amounts accrued on the
financial statements of Columbia Financial as ESOP expense will be paid by the
ESOP trustee to Columbia Financial to reduce the outstanding balance of the
current exempt loan from Columbia Financial to the ESOP. All Columbia Financial
shares held by the ESOP trustee at the completion of the merger will be
exchanged by the ESOP trustee for the per share merger consideration. The
trustee will dispose of shares held in the suspense account of the ESOP for the
purpose of retiring the ESOP loan. Any shares and other assets remaining in the
suspense account following the repayment of the loan in full will be allocated
as promptly as possible by the ESOP trustee to participants in accordance with
the allocation provisions of the ESOP and applicable law. It is the intent of
Columbia Financial and Camco that the ESOP be terminated concurrently with the
completion of the merger and that the distribution be made as soon after
completion of the merger as possible. No distribution will be made until a final
determination letter is received from the IRS.
CHANGE IN CONTROL PAYMENTS. Each of Messrs. Lynch, Raybourne, Schwartz and
Adams and Ms. Margrave has an agreement with Columbia Federal that entitles the
officer to payments if his or her employment is terminated in connection with a
change in control. Therefore, if one of these officers is terminated without
cause by Columbia Federal or Advantage Bank within six months prior to or one
year after the merger, the officer will be entitled to a payment of up to three
times the officer's salary and continued coverage under all benefit plans,
subject to downward adjustments as necessary to comply with Section 280G of the
Internal Revenue Code. Each of these officers will also receive these payments
and benefits if the officer decides to terminate his or her
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employment with Advantage Bank within one year after the merger if there is a
material change in the officer's employment.
INDEMNIFICATION AND INSURANCE. For a period of three years after the merger
is completed, Camco will indemnify the current and former officers and directors
of Columbia Financial for their acts and omissions occurring prior to the
completion of the merger to the extent permitted by Camco's certificate of
incorporation and bylaws or the articles of incorporation and code of
regulations of Columbia Financial. Similarly, for three years after the merger,
Advantage Bank will indemnify Columbia Federal's current and former officers and
directors to the extent permitted under Advantage Bank's articles of
incorporation and constitution or Columbia Federal's charter and bylaws. There
will be no indemnification for claims against Camco, its subsidiaries, Columbia
Financial or Columbia Federal arising out of or in connection with the merger.
Camco has also agreed to either (i) extend its directors' and officers'
liability insurance to cover the directors and officers of Columbia Financial
and Columbia Federal for three years following the completion of the merger or
(ii) add a rider to its existing directors' and officers' liability insurance
policy to cover the acts and omissions of Columbia Financial and Columbia
Federal's officers and directors and to continue the rider for three years.
RESALE OF CAMCO COMMON SHARES
Camco has registered the Camco stock to be issued in the merger with the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
The Camco shares will be freely transferable, except for Camco common stock
received by persons who may be deemed to be affiliates of Columbia Financial.
The term "affiliate" is defined in Rule 145 under the Securities Act and
generally includes executive officers and directors. Columbia Financial
affiliates may not sell their Camco common stock, except (a) in compliance with
Rule 145 or another applicable exemption from the registration requirements of
the Securities Act or (b) pursuant to an effective registration statement under
the Securities Act covering their Camco common stock.
FEDERAL INCOME TAX CONSEQUENCES
Camco and Columbia Financial have received an opinion of Vorys, Sater,
Seymour and Pease LLP regarding the material federal income tax consequences of
the merger. The opinion is based on factors and assumptions set forth in the
opinion. An opinion of counsel represents only counsel's best legal judgment on
the matters addressed in the opinion and has no binding effect on the Internal
Revenue Service or any court, and no assurance can be given that contrary
positions may not be taken by the Internal Revenue Service or a court
considering the legal issues.
The opinion provides that the merger will produce the following material
federal income tax consequences:
- The merger of Camco Acquisition Corp. with Columbia Financial will be
treated as if the shareholders of Columbia Financial had sold each
Columbia Financial share to Camco for $6.90 cash and .3681 shares of
Camco common stock (or for the adjusted per share consideration totaling
$10.30, if applicable).
- Columbia Financial shareholders will recognize a gain or loss on the
difference between (i) the value of the per share merger consideration
(based on the average of the bid and asked prices of Camco shares on
Nasdaq on the last day of trading before the completion of the merger)
and (ii) the basis in their shares of Columbia Financial surrendered in
the merger. The gain or loss will be long term if the Columbia Financial
shares were held for more than twelve months.
- The basis of the Camco common stock received by the Columbia Financial
shareholders will be the fair market value of the Camco common stock on
the effective date of the merger.
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- Neither Camco nor Columbia Financial will recognize any gain or loss
resulting from the merger of Camco Acquisition Corp. into Columbia
Financial.
- The merger of Columbia Financial into Camco will be treated as a tax free
liquidation under Section 332 of the Internal Revenue Code. Camco will
recognize no gain or loss on the receipt of property received in
connection with the liquidation of Columbia Financial. Columbia Financial
will recognize no gain or loss on the distribution of any property in
complete liquidation.
- The tax basis of the assets of Columbia Financial in the hands of Camco
will be the same as the basis of the assets in the hands of Columbia
Financial immediately prior to the merger.
- The merger of Columbia Federal into Advantage Bank will constitute a
reorganization under Section 368 (a)(1)(A) of the Internal Revenue Code.
No gain or loss will be recognized to either Columbia Federal or
Advantage Bank.
- The basis of the assets of Columbia Federal in the hands of Advantage
Bank will the same as the basis of the assets in the hands of Columbia
Federal immediately prior to the merger.
- Any shareholder who perfects dissenters rights and receives the fair cash
value of the shares of Columbia Financial will recognize gain or loss on
the difference between the fair cash value and the shareholder's basis in
the shares of Columbia Financial.
ACCOUNTING TREATMENT
The merger will be treated as a purchase for accounting purposes.
Accordingly, Camco will record the assets and liabilities of Columbia Financial
on its books at fair value. The excess, if any, of the fair value of the assets
received over the fair value of the liabilities assumed and consideration paid
will be assigned to specific and unidentified intangible assets. The resulting
intangible assets will not be amortized after December 31, 2001, but will be
tested for impairment as prescribed under SFAS No. 142, "Goodwill and Intangible
Assets."
DESCRIPTION OF CAMCO SHARES
AUTHORIZED STOCK
Camco's authorized capital stock consists of 14,900,000 shares of common
stock, par value $1.00 per share, and 100,000 shares of preferred stock, par
value $1.00 share.
The Camco board of directors is authorized to issue, without stockholder
approval, the preferred shares and to fix the designations, preferences or other
special rights of such shares and the qualifications, limitations and
restrictions thereof. The issuance of preferred shares and any conversion rights
that may be specified by the board of directors for the preferred shares could
adversely affect the voting power of holders of the common shares. In addition,
if the purchase price of the preferred shares is less than the book value of the
common shares, the book value of the common shares could be adversely affected.
No preferred shares will be issued in connection with the merger, and the board
of directors has no present intention to issue any preferred shares.
SPECIAL MEETINGS
Special meetings of stockholders of Camco may be called only by the
president or by a majority of the board of directors of Camco.
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PREEMPTIVE RIGHTS
The Camco certificate of incorporation does not grant preemptive rights to
the holders of Camco stock. Under Delaware law, preemptive rights do not exist
unless they are specifically granted by the corporation's certificate of
incorporation.
VOTING RIGHTS
Camco stockholders are entitled to cast one vote per Camco share held on
all matters submitted to stockholders for their approval. The certificate of
incorporation does not provide for cumulative voting in the election of
directors.
BOARD OF DIRECTORS
Camco's bylaws provide for a classified board of directors divided into
three classes and elected for three-year terms. Pursuant to the bylaws, the
number of directors is currently fixed at eleven. Therefore, it would take two
annual elections to replace a majority of the board. The bylaws require that any
shareholder nomination for the election of directors must be submitted in
writing, containing specific information regarding the nominee, by the later of
the March 31st immediately preceding the annual meeting of stockholders or the
sixtieth day before the first anniversary of the most recent annual meeting.
Vacancies on Camco's board may be filled by a majority of the directors
then in office. If a majority of the directors then in office constitutes less
than a majority of the board, any stockholders holding at least 10% of Camco's
stock may ask the Delaware Court to order an election to fill the vacancy and
replace directors selected by those directors in office.
Camco's certificate of incorporation authorizes the removal of a director
for cause by a vote of not less than 80% of Camco's shares.
ANTITAKEOVER PROVISIONS IN CAMCO'S CERTIFICATE OF INCORPORATION AND BYLAWS
The Camco certificate of incorporation and the Camco bylaws contain
provisions that could deter or prohibit non-negotiated changes in the control of
Camco. The Camco certificate of incorporation requires the approval of the
holders of (i) at least 80% of Camco's outstanding shares of voting stock, and
(ii) at least a majority of Camco's outstanding shares of voting stock, not
including shares held by a "Substantial Shareholder," to approve certain
"Business Combinations" as defined below, and related transactions. Under
Delaware law, absent this provision, Business Combinations, including mergers,
consolidations and sales of substantially all of the assets of Camco must,
subject to certain exceptions, be approved by the vote of the holders of a
majority of Camco's outstanding voting shares. The increased voting requirements
in the Camco certificate of incorporation apply in connection with Business
Combinations involving a "Substantial Shareholder," except in cases where the
proposed transaction has been approved in advance by three-fourths of the
members of Camco's board of directors, provided that a majority of the members
on the board are continuing directors (a continuing director being defined as a
person who was (i) a member of the board on May 26, 1987, (ii) elected by the
shareholders or appointed by the board after May 26, 1987, and prior to the date
as of which the Substantial Shareholder in question became a Substantial
Shareholder, or (iii) appointed as a director by three-fourths of the board if
and only if a majority of the board at the time of appointment consisted of
continuing directors).
The term "Substantial Shareholder" is defined to include any individual,
corporation, partnership or other entity, except for Camco or a subsidiary of
Camco, that owns beneficially or controls, directly or indirectly, 15% or more
of the outstanding voting shares of Camco. A "Business Combination" is defined
to include:
- any merger or consolidation of Camco or a subsidiary of Camco with or
into any Substantial Shareholder or with or into any other corporation
which, after such merger or consolidation,
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would be an Affiliate of a Substantial Shareholder, as defined in Camco's
certificate of incorporation;
- any sale, lease, exchange, mortgage, transfer, pledge or other
disposition of all or a substantial part of the assets of Camco, or of a
subsidiary of Camco, to any Substantial Shareholder (the term
"substantial part" is defined to include more than 10% of Camco's total
assets);
- the adoption of any plan or proposal for the liquidation or dissolution
of Camco, if, as of the record date for the determination of shareholders
who are entitled to vote on the plan or proposal, any person is a
Substantial Shareholder;
- the issuance or transfer of Camco Equity Securities, as defined in
Camco's certificate of incorporation, that have an aggregate value
equaling or exceeding 60% of Camco's shareholders' equity to a
Substantial Shareholder in exchange for cash, securities or other
property; or
- any reclassification of the securities of Camco, any recapitalization
involving the securities of Camco or any reorganization, merger, or
consolidation of Camco that has the effect of increasing, directly or
indirectly, a Substantial Shareholder's proportionate share of
outstanding shares of any class of equity securities of Camco or a
subsidiary of Camco.
In view of the various provisions of the Camco certificate of
incorporation, the aggregate share ownership by the directors and officers of
Camco may have the effect of facilitating the perpetuation of current management
and discouraging proxy contests and takeover attempts. Officers and directors
will have a significant influence over the vote on such a transaction and may be
able to defeat it. The board of directors of Camco believes that these
provisions are in the best interests of the shareholders because they encourage
prospective acquirers to negotiate a proposed acquisition with the directors.
These provisions could, however, adversely affect the market value of Camco's
shares or deprive shareholders of the opportunity to sell their shares for
premium prices.
COMPARISON OF RIGHTS OF HOLDERS OF CAMCO SHARES
AND HOLDERS OF COLUMBIA FINANCIAL SHARES
As a result of the merger, the shareholders of Columbia Financial at the
effective time of the merger will become stockholders of Camco. There are
certain differences between the rights of Camco stockholders and the rights of
Columbia Financial shareholders arising from the distinctions between the Camco
certificate of incorporation and bylaws and the Columbia Financial articles of
incorporation and code of regulations and the differences between Delaware and
Ohio law. However, the rights of the holders of Camco stock and those of holders
of Columbia Financial shares are similar in most material aspects. The
differences are described below.
AUTHORIZED STOCK
The Camco certificate of incorporation authorizes 14,900,000 shares of
common stock and 100,000 shares of preferred stock. The Columbia Financial
articles of incorporation authorize 7,000,000 common shares and 1,000,000
preferred shares.
DIRECTOR NOMINATIONS
Camco stockholders generally must submit director nominations by the March
31st preceding the annual meeting, which is scheduled for the fourth Tuesday in
May. Columbia Financial shareholders generally must submit director nominations
not less than 60 days prior to the first anniversary of the most recent annual
meeting of shareholders.
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
Both the bylaws of Camco and the code of regulations of Columbia Financial
provide for the indemnification of directors and officers under certain
circumstances. The indemnification provisions of Camco and Columbia Financial
are substantially similar.
ANTITAKEOVER PROVISIONS
Certain provisions of the Camco certificate of incorporation and Camco
bylaws, which we have outlined above, could deter or prohibit changes in
majority control of the board of directors or non-negotiated acquisitions of
control of Camco.
The following is a discussion of provisions of the Columbia Financial
articles of incorporation and code of regulations that could deter or prohibit
changes in majority control of the board of directors or non-negotiated
acquisitions of control of Columbia Financial.
BOARD OF DIRECTORS. Certain provisions of Columbia Financial's articles of
incorporation and code of regulations will impede changes in control of the
board of directors of Columbia Financial. The regulations provide that the board
of directors is to be divided into two classes, as nearly equal in number as
possible, which shall be elected for staggered two-year terms.
Columbia Financial's regulations provide that a director may be removed
with or without cause by the affirmative vote of a majority of the shares
entitled to elect directors in place of the director being removed, provided
that, unless all directors, or all directors of a class, are removed, no
director may be removed if votes cast against the removal, if cumulatively
voted, would be sufficient to elect one director. The regulations further
provide that any vacancy occurring in the board of directors, including a
vacancy created by an increase in the number of directors, shall be filled for
the remainder of the unexpired term by a majority vote of the directors then in
office.
Neither Camco nor Columbia Financial permit cumulative voting in the
election of directors.
LIMITATIONS ON CALL OF MEETINGS OF SHAREHOLDERS. Columbia Financial's
regulations provide that meetings of shareholders may only be called by Columbia
Financial's Chairman of the board or President or by the holders of 25% of all
outstanding shares.
RESTRICTIONS ON ACQUISITIONS OF SECURITIES. The articles of incorporation
provide that for a period of five years from the effective date of the
conversion of Columbia Federal from mutual form to stock form, no person may
acquire or offer to acquire, directly or indirectly, the beneficial ownership of
more than 10% of any class of equity security of Columbia Financial. This
provision does not apply to any employee stock benefit plan of Columbia
Financial. In addition, during such five-year period, no shares beneficially
owned in violation of the percentage limitation, as determined by Columbia
Financial's board of directors, are entitled to vote in connection with any
matter submitted to shareholders for a vote. If a majority of the shares present
in person or by proxy at the special meeting vote in favor of the amendment to
the articles of incorporation, this provision will be eliminated.
AUTHORIZATION OF PREFERRED STOCK. Columbia Financial's articles of
incorporation authorize the issuance of up to 1,000,000 shares of preferred
stock, which conceivably would represent an additional class of stock required
to approve any proposed acquisition. Columbia Financial is authorized to issue
preferred stock from time to time in one or more series subject to applicable
provisions of law, and the board of directors is authorized to fix the dividend
rates, liquidation price, redemption rights, conversion rights and other special
rights of the shares. Issuance of the preferred shares could adversely affect
the relative voting rights of holders of the common shares. In the event of a
proposed merger, tender offer or other attempt to gain control of Columbia
Financial that the board of directors does not approve, it might be possible for
the board of directors to authorize the issuance
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of a series of preferred stock with rights and preferences that would impede the
completion of the transaction. An effect of the possible issuance of preferred
shares, therefore, may be to deter a future takeover attempt. The preferred
shares, none of which have been issued by Columbia Financial, together with
authorized but unissued common shares (the articles of incorporation authorizes
the issuance of up to 7,000,000 shares of common stock), also could represent
additional capital required to be purchased by the acquiror.
INCREASED VOTING REQUIREMENT FOR CERTAIN MATTERS. Columbia Financial's
articles of incorporation provide that the affirmative vote of holders of 75% of
the voting power will be required to adopt any of the following matters if the
board of directors recommends against it:
- an amendment to the articles of incorporation of Columbia Financial;
- an amendment to the code of regulations of Columbia Financial;
- a change in the number of directors by action of the shareholders;
- an agreement of merger or consolidation that provides for the merger or
consolidation of Columbia Financial with or into one or more other
corporations;
- a combination or majority share acquisition that involves the issuance of
shares of Columbia Financial and requires shareholder approval;
- the sale, exchange, transfer or other disposition of all, or
substantially all, of the assets of Columbia Financial; or
- the dissolution of Columbia Financial.
ANTITAKEOVER STATUTES
Certain state laws make a change in control of Camco and Columbia Financial
more difficult, even if desired by the holders of the majority of the Camco or
Columbia Financial shares. The Delaware antitakeover statutes that govern Camco
differ substantially from the Ohio statutes that govern Columbia Financial.
DELAWARE ANTI-TAKEOVER STATUTE. The Delaware General Corporation Law
imposes limits on liability of persons who acquire more than 15% of the
outstanding stock of a Delaware corporation, such as Camco, to effect a merger
with or acquisition of such corporation for three years after the person's
acquisition of stock of the corporation. Such a transaction may be effected,
generally, if
- the buyer, while acquiring the 15% interest, acquires at least 85% of the
corporation's outstanding stock (the 85% requirement excludes shares held
by directors who are also officers and certain shares held under employee
stock plans);
- the Board of Directors of the corporation pre-approves the transaction;
or
- the transaction is subsequently approved by the target corporation's
Board of Directors and two-thirds of the shares of outstanding stock of
the corporation (excluding shares held by the bidder).
However, these provisions of the Delaware General Corporation Law do not
apply to Delaware corporations with less than 2,000 shareholders or which do not
have voting stock listed on a national exchange or listed for quotation with a
registered national securities association. Camco has more than 2,000
shareholders and Camco stock is traded on a registered securities association.
Camco could otherwise exempt itself from the requirements of the statute by
adopting an amendment to its certificate of incorporation or bylaws electing not
to be governed by this provision. At the present time, Camco has not adopted any
such amendment.
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OHIO CONTROL SHARE ACQUISITION STATUTE. The Ohio Revised Code provides in
Section 1701.831 that specified notice and informational filings and special
shareholder meetings and voting procedures must occur before consummation of a
proposed "control share acquisition." A control share acquisition is defined as
any acquisition of an issuer's shares that would entitle the acquirer to
exercise or direct the voting power of the issuer in the election of directors
within any of the following ranges:
- one-fifth or more, but less than one-third of the voting power;
- one-third or more, but less than a majority of the voting power; or
- a majority or more of the voting power.
Assuming compliance with the notice and information filing requirements,
the proposed control share acquisition may take place only if, at a duly
convened special meeting of shareholders, the acquisition is approved by both a
majority of the voting power of the issuer represented at the meeting and a
majority of the voting power remaining after excluding the combined voting power
of the intended acquirer and the directors and officers of the issuer. The
control share acquisition statute does not apply to a corporation whose articles
of incorporation or regulations so provide. Columbia Financial has not opted out
of the application of the control share acquisition statute.
OHIO MERGER MORATORIUM STATUTE. Chapter 1704 of the Ohio Revised Code
prohibits specified business combinations and transactions between an "issuing
public corporation" and an "interested shareholder" for at least three years
after the interested shareholder attains 10% ownership, unless the board of
directors of the issuing public corporation approves the transaction before the
interested shareholder attains 10% ownership. An interested shareholder is a
person who owns 10% or more of the shares of the corporation. An issuing public
corporation is defined as an Ohio corporation with 50 or more shareholders that
has its principal place of business, principal executive offices, or substantial
assets within the State of Ohio, and as to which no close corporation agreement
exists. Examples of transactions regulated by the merger moratorium provisions
include mergers, consolidations, voluntary dissolutions, the disposition of
assets and the transfer of shares. After the three-year period, a moratorium
transaction may take place provided that certain conditions are satisfied,
including that:
- the board of directors approves the transaction;
- the transaction is approved by the holders of shares with at least
two-thirds of the voting power of the corporation (or a different
proportion set forth in the articles of incorporation), including at
least a majority of the outstanding shares after excluding shares
controlled by the interested shareholder; or
- the business combination results in shareholders, other than the
interested shareholder, receiving a fair price plus interest for their
shares.
Although the merger moratorium provisions may apply, a corporation may
elect not to be covered by the merger moratorium provisions, or subsequently
elect to be covered, with an appropriate amendment to its articles of
incorporation. Columbia Financial has not taken any corporate action to opt out
of the Ohio merger moratorium statute.
LEGAL MATTERS
Vorys, Sater, Seymour and Pease LLP has rendered an opinion that the shares
of Camco common stock to be issued to the Columbia Financial shareholders in
connection with the merger have been duly authorized and, if issued pursuant to
the merger agreement, will be validly issued, fully paid and non-assessable
under the laws of the State of Ohio. Vorys, Sater, Seymour and Pease LLP has
also passed upon the federal income tax consequences of the merger to Camco and
Columbia Financial. Attorneys with the firm of Vorys, Sater, Seymour and Pease
LLP hold, in the aggregate, approximately 11,911 shares of Camco stock.
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EXPERTS
The consolidated financial statements of Camco at December 31, 2000, that
are incorporated by reference in this prospectus/proxy statement have been
audited by Grant Thornton LLP, independent certified public accountants, as
stated in their report appearing in Camco's 2000 Annual Report to shareholders.
The financial statements have been incorporated in reliance upon the report of
Grant Thornton LLP and given upon their authority as experts in accounting and
auditing.
The financial statements of Columbia Financial at September 30, 2000, that
are incorporated by reference in this prospectus/proxy statement have been
audited by Von Lehman & Company Inc., independent certified public accountants,
as stated in their report appearing in Columbia Financial's 2000 Annual Report
to Shareholders. The financial statements have been incorporated in reliance
upon the report and given upon their authority as experts in accounting and
auditing.
PROPOSALS FOR THE 2002 ANNUAL SHAREHOLDERS' MEETING
Columbia Financial will only hold an annual meeting in 2002 if the merger
has not been completed by February 28, 2002. If you intend to present a proposal
at the 2002 annual meeting of shareholders, and if the proposal is not received
by November 7, 2001, then the proxies designated by the board of directors of
Columbia Financial for the 2002 annual meeting may vote in their discretion on
any such proposal any shares for which they have been appointed proxies without
mention of such matter in the proxy statement or on the proxy card for such
meeting.
Shareholder proposals, other than those submitted pursuant to the Exchange
Act, must be submitted in writing, delivered or mailed by first class United
States mail, postage prepaid, to the Secretary of Columbia Financial not fewer
than 30 days nor more than 60 days prior to any such meeting; provided, however,
that if notice or public disclosure of the meeting is given fewer than 31 days
before the meeting, such written notice shall be delivered or mailed to the
Secretary of Columbia Financial not later than the close of the 10th day
following the day on which notice of the meeting was mailed to shareholders.
WHERE YOU CAN FIND MORE INFORMATION
Camco has filed with the Securities and Exchange Commission a Registration
Statement on Form S-4 under the Securities Act for the Camco shares to be issued
to Columbia Financial shareholders in the merger. This prospectus/proxy
statement is a part of the Registration Statement on Form S-4. The rules and
regulations of the Securities and Exchange Commission permit us to omit from
this document information, exhibits and undertakings that are contained in the
Registration Statement on Form S-4.
In addition, Camco and Columbia Financial file reports, proxy statements
and other information with the Securities and Exchange Commission under the
Exchange Act. You can read and copy the Registration Statement and its exhibits,
as well as the reports, proxy statements and other information filed with the
Securities and Exchange Commission by Camco and Columbia Financial, at the
following location:
Securities and Exchange Commission's Public Reference Room
450 Fifth Street, N.W.
Washington, D.C. 20549
Please call the Securities and Exchange Commission for more information on
the operation of the Public Reference Room at 1-800-SEC-0330. CAMCO AND COLUMBIA
FINANCIAL ARE ELECTRONIC FILERS, AND THE SECURITIES AND EXCHANGE COMMISSION
MAINTAINS A WEB SITE THAT CONTAINS REPORTS, PROXY AND INFORMATION STATEMENTS
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AND OTHER INFORMATION REGARDING REGISTRANTS THAT FILE ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION AT THE FOLLOWING WEB ADDRESS:
(HTTP://WWW.SEC.GOV).
The Securities and Exchange Commission allows us to "incorporate by
reference" into this prospectus/proxy statement, which means that the companies
can disclose important information to you by referring you to another document
filed separately with the Securities and Exchange Commission. The information
incorporated by reference is considered to be part of this prospectus/proxy
statement, except for any information superseded by information contained in
later-filed documents incorporated by reference in this prospectus/proxy
statement. You should read the information relating to the companies contained
in this prospectus/proxy statement and the information in the documents
incorporated by reference.
This document incorporates by reference the documents listed below that we
have previously filed with the Securities and Exchange Commission and any future
filings made by it with the Securities and Exchange Commission before the
special meeting of shareholders under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended.
CAMCO
Commission Filings
(File No. 0-25196) Period/Date
------------------------------ -----------------------------------------
Annual Report on Form 10-K Year ended December 31, 2000
Quarterly Reports on Form 10-Q Quarters ended March 31 and June 30, 2001
Current Reports on Form 8-K Filed on February 1 and June 5, 2001
COLUMBIA FINANCIAL
Commission Filings
(File No. 0-21385) Period/Date
------------------------------ -----------------------------------------
Annual Report on Form 10-K Year ended September 30, 2000
Quarterly Reports on Form 10-Q Quarters ended December 31, 2000,
March 31, 2001, and June 30, 2001
Current Report on Form 8-K Filed on June 5, 2001
We have included copies of the Annual Report on Form 10-K for the year
ended September 30, 2000, of Columbia Financial and the Quarterly Report on Form
10-Q for the quarter ended June 30, 2001, of Columbia Financial, with this
document.
YOU CAN RECEIVE THE DOCUMENTS INCORPORATED BY REFERENCE (WITHOUT EXHIBITS,
UNLESS THE EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS/PROXY STATEMENT) WITHOUT CHARGE BY CALLING OR WRITING THE FOLLOWING
PERSONS:
Camco Financial Corporation Columbia Financial of Kentucky, Inc.
6901 Glenn Highway 2497 Dixie Highway
Cambridge, Ohio 43725 Ft. Mitchell, Kentucky 41017
Attention: Anita Frencik Attention: Carol S. Margrave
(740) 435-2020 (859) 331-2419
PLEASE REQUEST DOCUMENTS BY OCTOBER 24, 2001. YOU MAY ALSO OBTAIN COPIES OF
THE DOCUMENTS FROM THE SECURITIES AND EXCHANGE COMMISSION THROUGH ITS WEBSITE AT
THE ADDRESS PROVIDED ABOVE.
Following the merger, Camco will continue to be regulated by the
information, reporting and proxy statement requirements of the Securities
Exchange Act of 1934, as amended.
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Annex A
AGREEMENT OF MERGER AND PLAN OF REORGANIZATION
THIS AGREEMENT OF MERGER AND PLAN OF REORGANIZATION (this
"Agreement") is made and entered into this 4th day of June, 2001, by and among
Camco Financial Corporation, a Delaware corporation ("Camco"), Camco Acquisition
Corp., an Ohio corporation formed by Camco for the purpose of facilitating the
business combination ("Merger Sub"), Advantage Bank, a savings bank organized
under Chapter 1161 of the Ohio Revised Code ("Advantage"), Columbia Financial of
Kentucky, Inc., an Ohio corporation ("CFKY"), and Columbia Federal Savings Bank,
a federal savings bank organized under the laws of the United States of America
(the "Bank");
WITNESSETH:
WHEREAS, the Boards of Directors of Camco, Advantage, CFKY and
the Bank have determined that it is in the best interests of their respective
companies and their respective shareholders to enter into certain business
combination transactions in which Merger Sub will merge with and into CFKY (the
"Corporate Merger") followed by the merger of CFKY, as the surviving
corporation, with and into Camco (the "Holding Company Merger"), and the Bank
will merge with and into Advantage (the "Bank Merger");
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, Camco, Merger Sub,
Advantage, CFKY and the Bank, each intending to be legally bound, hereby agree
as follows:
ARTICLE ONE
THE MERGERS
SECTION 1.01. THE MERGERS. (a) Subject to the terms and
conditions of this Agreement, and pursuant to the provisions of the Ohio General
Corporation Law (the "OGCL") and applicable federal laws and regulations, Merger
Sub shall merge with and into CFKY (the "Corporate Merger") in accordance with
the provisions of Section 1701.78 of the OGCL and the separate corporate
existence of Merger Sub shall cease at the Effective Time (hereinafter defined).
CFKY shall be the surviving corporation of the Corporate Merger (the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Ohio. From and after the Effective Time, the Surviving Corporation
shall possess all assets and property of every description, and every interest
in the assets and property, wherever located, and the rights, privileges,
immunities, powers, franchises and authority, of a public as well as a private
nature, of Merger Sub and CFKY and all obligations belonging or due to each of
them.
(b) Immediately following the Corporate Merger, Camco shall
cause the Holding Company Merger to be completed.
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(c) Immediately following the Holding Company Merger, Camco
shall cause the Bank Merger to be completed in accordance with the Agreement of
Merger attached hereto as Exhibit "A" (the "Bank Merger Agreement").
(d) With the consent of CFKY, which consent shall not be
unreasonably withheld, Camco, Merger Sub and Advantage may at any time change
the method of effecting the combinations with CFKY and the Bank (including,
without limitation, the provisions of this Article One) if and to the extent
Camco deems such change to be desirable; provided, however, that no such change
shall (i) alter or change the amount or composition of the Per Share Merger
Consideration, or (ii) be likely to materially delay or jeopardize receipt of
any required regulatory approvals or materially delay or prevent the
satisfaction of any conditions to the Closing. CFKY and the Bank shall, if
requested by Camco, enter into one or more amendments to this Agreement prior to
the Effective Time in order to effect any such change.
SECTION 1.02. CONVERSION AND CANCELLATION OF CFKY SHARES. At
the Effective Time and as a result of the Corporate Merger, automatically and
without further act of Camco, Merger Sub, Advantage, CFKY, the Bank or the
holders of CFKY Shares (hereinafter defined), the following shall occur:
(a) Subject to adjustment as set forth in this Section
1.02(a), each CFKY Share issued and outstanding shall be cancelled and
extinguished and, in substitution and exchange therefor, the holders thereof
shall be entitled, subject to and upon compliance with Article Two of this
Agreement, to receive from Camco Six and 90/100 Dollars ($6.90) and .3681 share
of common stock of Camco (the "Per Share Merger Consideration") without any
interest thereon from the Effective Time until the time of payment.
(i) The Camco common share portion of the Per Share
Merger Consideration (the "Camco Share
Consideration") shall be adjusted to reflect any
stock split, stock dividend or distributions in, or
combinations or subdivisions of, Camco common shares,
which is paid, or for which a record date occurs,
between the date hereof and the Effective Time. The
Camco Share Consideration may be adjusted, in the
discretion of Camco, pursuant to Section 7.03(d) of
this Agreement.
(ii) No fractional shares will be issued, and cash
will be paid in lieu of fractional shares based on
the average of the bid and asked price quotes of the
Camco common shares as reported on The Nasdaq
National Market System ("Nasdaq") by a mutually
agreed upon authoritative source on the last day of
trading of Camco common shares prior to the Effective
Time ("the Camco Market Value").
(iii) Subject to Section 8.01(d)(ii), if the
Environmental Costs Estimate (hereinafter defined)
exceeds $150,000, the Per Share Merger Consideration
shall be reduced by an amount equal to the quotient
of (x) the amount by which the Environmental Costs
Estimate exceeds $150,000,
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divided by (y) the number of issued and outstanding
CFKY Shares on a fully-diluted basis, giving effect
to the exercise of all outstanding options under the
CFKY Option Plan (hereinafter defined).
(iv) Subject to Section 8.01(d)(ii), if the Benefit
Plan Cost (hereinafter defined) exceeds $25,000 in
the aggregate, the Per Share Merger Consideration
shall be adjusted by an amount equal to the quotient
of (x) the amount by which the Benefit Plan Cost
exceeds $25,000, divided by (y) the number of issued
and outstanding CFKY Shares on a fully-diluted
basis, giving effect to the exercise of all
outstanding options under the CFKY Option Plan.
(v) The adjustments to the Per Share Merger
Consideration pursuant to clauses (iii) and (iv)
above shall be made only to the extent that the
Environmental Costs Estimate and the Benefit Plan
Cost are identified prior to the earlier of (A)
September 15, 2001, or (B) the effective date of the
Registration Statement (hereinafter defined).
(b) Shares of Merger Sub issued and outstanding before the
Effective Time shall remain issued and outstanding after the Effective Time and
shall automatically be converted into common shares of the Surviving
Corporation.
(c) Any treasury shares held by CFKY and any CFKY shares owned
by Camco for its own account shall be cancelled and retired at the Effective
Time and no consideration shall be issued in exchange therefor.
SECTION 1.03. CFKY OPTIONS. At the Effective Time, each
outstanding option under the Columbia Financial of Kentucky, Inc. 1999 Stock
Option and Incentive Plan (the "CFKY Option Plan") shall be converted into the
right to receive a cash payment from Camco equal to the difference between (a)
the value of the Per Share Merger Consideration based on the Camco Market Value
at the Effective Time and (b) the exercise price per share of such option then
exercisable. Any payments made to option holders in accordance with the
foregoing shall be subject to applicable federal and state tax withholding
obligations.
SECTION 1.04. CLOSING AND EFFECTIVE TIME. The closing of the
Corporate Merger pursuant to this Agreement (the "Closing") shall take place at
a date and time agreed upon by Camco and CFKY as soon as practicable after the
satisfaction or waiver of the last of the conditions to the Corporate Merger set
forth in Article Seven of this Agreement to be satisfied. On the day of the
Closing, Camco, Merger Sub and CFKY shall cause a Certificate of Merger in
respect of the Corporate Merger to be filed in the Office of the Ohio Secretary
of State. The Corporate Merger shall become effective at the date and time
indicated on such filing (the "Effective Time").
SECTION 1.05. ADOPTION BY SHAREHOLDERS. This Agreement shall
be submitted for adoption by the shareholders of CFKY entitled to vote at a
meeting of shareholders called for
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such purpose to be held at a time, date and place to be determined by the board
of directors of CFKY, subject to applicable laws and regulations (the "CFKY
Shareholders Meeting").
SECTION 1.06. REGULATORY FILINGS. (a) Camco shall prepare and
cause to be filed with the Office of Thrift Supervision (the "OTS"), the
Superintendent of the Division of Financial Institutions of the Ohio Department
of Commerce (the "Division") and the Federal Deposit Insurance Corporation (the
"FDIC") such applications, notices or other instruments as may be required for
approval of the Corporate Merger (collectively, the "Regulatory Applications").
(b) Camco shall prepare and cause to be filed with the
Securities and Exchange Commission (the "SEC") a registration statement on Form
S-4, or such other form as may be required by the SEC (the "Registration
Statement"), to register under the Securities Act of 1933 the Camco Shares to be
issued to shareholders of CFKY in the Corporate Merger and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as possible. The Registration Statement shall include a combined
proxy statement/prospectus serving as a prospectus of Camco for the Camco Shares
to be issued in the Corporate Merger (the "Prospectus") and the proxy statement
of CFKY for the CFKY Shareholders Meeting (the "Proxy Statement"). Camco and
CFKY shall cooperate in the preparation of the Proxy Statement and the
Prospectus and shall timely provide all information required to be included
therein.
(c) Camco shall provide copies of the Registration Statement
and all amendments to CFKY upon filing, keep CFKY reasonably informed as to the
status of the Registration Statement and provide CFKY with copies of all
comments from and responses to the SEC.
SECTION 1.07. ARTICLES OF INCORPORATION, CODE OF REGULATIONS
AND DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The Articles of
Incorporation and Code of Regulations of Merger Sub as in effect immediately
prior to the Effective Time shall be the Articles of Incorporation and Code of
Regulations of the Surviving Corporation. The directors and officers of Merger
Sub immediately prior to the Effective Time shall be the directors and officers
of the Surviving Corporation.
SECTION 1.08 NAME OF SURVIVING CORPORATION. The name of the
Surviving Corporation shall be Camco Acquisition Corp.
ARTICLE TWO
EXCHANGE OF CFKY SHARE CERTIFICATES
SECTION 2.01. SHARE CERTIFICATES IN THE MERGER. (a) As soon as
practicable after the Effective Time, Camco shall mail to each holder of record
of CFKY Shares a form letter of transmittal (the "Transmittal Letter") including
instructions for use in effecting the surrender for
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exchange of the certificates formerly evidencing the CFKY Shares cancelled and
extinguished as a result of the Corporate Merger (collectively, the
"Certificates" and individually, the "Certificate"). The Transmittal Letter
shall specify that the risk of loss and title to Certificates shall pass only
upon delivery of the Certificates as specified in the Transmittal Letter. Upon
surrender of a Certificate for cancellation, together with such Transmittal
Letter, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor the Per Share Merger Consideration, and the
Certificate so surrendered shall thereafter be cancelled forthwith. Camco may,
at its election, designate an exchange agent to discharge its duties pursuant to
this Section 2.01.
(b) In the event that any holder of CFKY Shares is unable to
deliver the Certificate, Camco, in the absence of actual notice that any CFKY
Shares theretofore represented by any such Certificate have been acquired by a
bona fide purchaser, shall deliver to such holder the Per Share Merger
Consideration to which such holder is entitled in accordance with the provisions
of this Agreement upon the presentation of all of the following:
(i) Evidence to the reasonable satisfaction of Camco that
any such Certificate has been lost, wrongfully taken or
destroyed;
(ii) Such security or indemnity as may be reasonably
requested by Camco to indemnify and hold Camco and the
exchange agent harmless; and
(iii) Evidence to the reasonable satisfaction of Camco that
such person is the owner of the CFKY Shares theretofore
represented by each Certificate claimed by him to be lost,
wrongfully taken or destroyed and that he is the person who
would be entitled to present each such Certificate for
exchange pursuant to this Agreement.
(c) In the event that delivery of the Per Share Merger
Consideration provided for herein is to be made to a person other than the
person in whose name the Certificate surrendered is registered, the Certificate
so surrendered shall be properly endorsed or otherwise in proper form for
transfer and the person requesting such issuance or payment shall pay any
transfer or other taxes required by reason of the issuance or payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of Camco that such tax has been paid or is not
applicable. Until surrendered in accordance with the provisions of this Section
2.01, each Certificate shall represent for all purposes only the right to
receive the Per Share Merger Consideration.
(d) No dividends or other distributions declared after the
Effective Time with respect to Camco shares and payable to the holders of record
thereof after the Effective Time shall be paid to the holder of any
unsurrendered Certificate until the holder thereof shall surrender such
Certificate. After the subsequent surrender and exchange of a Certificate, the
record holder thereof shall be entitled to receive any such dividends or other
distributions,
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without any interest thereon, which theretofore had become payable with respect
to the Camco Shares represented by such Certificate.
(e) No consideration provided for herein shall be delivered by
Camco to any former holder of CFKY Shares in accordance with this Agreement
until such holder shall have complied with this Section 2.01.
(f) Any portion of the cash delivered to the exchange agent by
Camco for payment of the Per Share Merger Consideration that remains unclaimed
by the shareholders of CFKY for one year after the Effective Time shall be
returned to Camco. Any shareholders of CFKY who have not theretofore complied
with this Section 2.01 shall thereafter look only to Camco for the Per Share
Merger Consideration. If outstanding Certificates are not surrendered or the
payment for them is not claimed prior to the date on which such payment would
otherwise escheat to or become the property of any governmental entity, the
unclaimed items shall, to the extent permitted by abandoned property and any
other applicable law, become the property of Camco (and to the extent not in its
possession shall be delivered to it), free and clear of all claims or interest
of any person previously entitled to such property. Neither the exchange agent
nor any party to this Agreement shall be liable to any holder of any Certificate
for any consideration paid to a public official pursuant to applicable abandoned
property, escheat or similar laws. Camco and the exchange agent shall be
entitled to rely upon the stock transfer books of CFKY to establish the identity
of those persons entitled to receive the Per Share Merger Consideration, which
books shall be conclusive with respect thereto. In the event of a dispute with
respect to ownership of CKFY Shares, Camco and the exchange agent shall be
entitled to deposit any Per Share Merger Consideration represented thereby in
escrow with an independent third party and thereafter be relieved with respect
to any claims thereto.
SECTION 2.02. PAYMENT IN SATISFACTION OF RIGHTS. All payments
made upon the surrender of Certificates pursuant to this Article Two shall be
deemed to have been made in full satisfaction of all rights pertaining to the
CFKY shares theretofore evidenced by such Certificates.
SECTION 2.03. NO FURTHER REGISTRATION OR TRANSFER. After the
Effective Time, there shall be no further registration or transfer of CFKY
shares on the stock transfer books of CFKY. In the event that, after the
Effective Time, Certificates evidencing such CFKY shares are presented for
transfer, they shall be cancelled and exchanged as provided in this Article Two.
SECTION 2.04 DISSENTING CFKY SHARES. (a) Any holder of CFKY
Shares who seeks relief as a dissenting shareholder under Section 1701.85 of the
OGCL (a "Dissenting Shareholder") shall be entitled to payment for such CFKY
Shares only to the extent permitted by and in accordance with the provisions of
the OGCL; provided, however, that if, in accordance with the OGCL, any
Dissenting Shareholder shall forfeit such right to payment of the fair value of
the CFKY Shares held by such Dissenting Shareholder, such CFKY Shares shall
thereupon be deemed to have been converted into and to have become exchangeable
for, as of the Effective Time, the right to receive the Per Share Merger
Consideration. Dissenting Shareholders shall
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not, after the Effective Time, be entitled to vote for any purpose or receive
any dividends or other distributions and shall be entitled only to such rights
as are afforded pursuant to the OGCL.
(b) CFKY shall give Camco (i) prompt notice of any written
objections to the Corporate Merger and any written demands for the payment of
the fair value of any shares, withdrawals of such demands, and any other
instruments served pursuant to the OGCL received by CFKY and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such demands under the OGCL. CFKY shall not voluntarily make any payment with
respect to any demands for payment of fair value and shall not, except with the
prior written consent of Camco, settle or offer to settle any such demands.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF CFKY AND THE BANK
CFKY and the Bank represent and warrant to Camco, Merger Sub
and Advantage that each of the following statements is true and accurate in all
material respects, except as otherwise disclosed in a schedule provided by CFKY
and the Bank to Camco prior to the execution of this Agreement (the "CFKY
Disclosure Schedule"):
SECTION 3.01. ORGANIZATION AND STANDING. (a) CFKY is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Ohio and has the corporate power and authority to own or hold
under lease all of its properties and assets and to conduct its business and
operations as presently conducted. CFKY is registered as a savings and loan
holding company under the Home Owners' Loan Act (the "HOLA"). CFKY is in
compliance in all material respects with all applicable local, state or federal
laws and regulations.
(b) The Bank is a federal savings bank duly organized and
validly existing under the HOLA and has the corporate power and authority to own
or hold under lease all of its properties and assets and to conduct its business
and operations as presently conducted. The Bank is a member of the Federal Home
Loan Bank of Cincinnati (the "FHLB"). The deposit accounts of the Bank are
insured up to applicable limits by the Savings Association Insurance Fund
administered by the FDIC (the "SAIF"). The Bank is in compliance in all material
respects with all applicable local, state or federal laws and regulations.
SECTION 3.02. QUALIFICATION. CFKY and the Bank are each either
duly qualified to do business and in good standing in each jurisdiction in which
such qualification is required or the failure to so qualify would not have a
material adverse effect on the business of CFKY or the Bank.
SECTION 3.03. AUTHORITY. (a) This Agreement has been (i) duly
executed and delivered by CFKY and the Bank, (ii) approved by the boards of
directors of CFKY and the Bank, and (iii) adopted by CFKY as the sole
shareholder of the Bank.
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(b) The Bank Merger Agreement has been (i) duly executed and
delivered by the Bank, (ii) approved by the board of directors of the Bank, and
(iii) adopted by CFKY as the sole shareholder of the Bank.
(c) Subject to the adoption of this Agreement by the CFKY
shareholders and to the filing of all requisite Regulatory Applications and the
receipt of all requisite regulatory approvals, (i) subject to the amendment of
the Articles of Incorporation of CFKY and the Charter of the Bank with respect
to acquisitions of more than 10% of the outstanding common shares of CFKY, CFKY
has all requisite corporate power and authority to enter into this Agreement
and, to perform all of its obligations hereunder; (ii) subject to the amendment
of the Articles of Incorporation of CFKY and the Charter of the Bank with
respect to acquisitions of more than 10% of the outstanding common shares of
CFKY, the Bank has all requisite corporate power and authority to enter into
this Agreement and the Bank Merger Agreement and, to perform all of its
obligations hereunder and thereunder; (iii) the execution and delivery of this
Agreement and the Bank Merger Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action by CFKY and the Bank; and (iv) subject to applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws of
general applicability affecting the enforcement of creditors' rights generally,
and the effect of rules of law governing specific performance, injunctive relief
and other equitable remedies on the enforceability of such documents, and except
to the extent such enforceability may be limited by laws relating to safety and
soundness of insured depository institutions as set forth in 12 U.S.C.
ss.1818(b) or by the appointment of a conservator by the FDIC, (A) this
Agreement is the valid and binding agreement of CFKY, enforceable against CFKY
in accordance with its terms, and (B) this Agreement and the Bank Merger
Agreement are the valid and binding agreements of the Bank, enforceable against
the Bank in accordance with their terms.
SECTION 3.04. GOVERNING DOCUMENTS. (a) CFKY has made available,
or will promptly make available, to Camco true and accurate copies of its
Articles of Incorporation and Code of Regulations and has granted Camco access
to all records of all meetings and other corporate actions occurring before the
Effective Time by the shareholders, board of directors and committees of the
board of directors of CFKY, except those portions of the records of various
meetings that relate specifically to the consideration of the transactions
contemplated by this Agreement.
(b) The Bank has made available, or will promptly make
available, to Camco true and accurate copies of its Charter and Bylaws and has
granted or will grant to Camco access to all records of all meetings and other
corporate actions occurring before the Effective Time by the shareholders, board
of directors and committees of the board of directors of the Bank.
(c) The minute books of CFKY and the Bank contain, in all
material respects, complete and accurate records of all meetings and other
corporate actions of their shareholders, boards of directors and committees of
the boards of directors through May 15, 2001.
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SECTION 3.05. NO CONFLICTS. The execution and delivery of this
Agreement and, subject to the adoption of this Agreement by the shareholders of
CFKY, and subject to the regulatory filings and approvals referenced in Section
1.06 of this Agreement, the consummation of the transactions contemplated hereby
will not (a) subject to the amendment of the Articles of Incorporation of CFKY
and the Charter of the Bank with respect to acquisitions of more than 10% of the
outstanding common shares of CFKY and the Bank, conflict with or violate any
provision of or result in the breach of any provision of the Articles of
Incorporation or Code of Regulations of CFKY or the Charter or Bylaws of the
Bank; (b) conflict with or violate any provision of or result in the breach or
the acceleration of or entitle any party to accelerate (whether upon or after
the giving of notice or lapse of time or both) any obligation under, or
otherwise materially affect the terms of, any mortgage, lien, lease, agreement,
license, instrument, order, arbitration award, judgment or decree to which CFKY
or the Bank is a party or by which CFKY or the Bank or their property or assets
is bound; (c) require the consent of any party to any agreement or commitment to
which CFKY or the Bank is a party or by which CFKY or the Bank or their property
or assets is bound, the failure to obtain which could, individually or in the
aggregate with all the other failures to obtain required consents, have a
material adverse effect on the business, operations, condition (financial or
otherwise) or prospects of CFKY or the Bank; (d) result in the creation or
imposition of any lien, charge, pledge, security interest or other encumbrance
upon any property or assets of CFKY or the Bank; or (e) violate or conflict with
any applicable law, ordinance, rule or regulation, including, without
limitation, the rules and regulations of, or conditions of approval of
applications or notices to, the OTS, the Division or the FDIC.
SECTION 3.06. CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required in connection with the execution and delivery of this
Agreement by CFKY or the Bank or the consummation by CFKY or the Bank of the
transactions contemplated hereby, except for the filings, authorizations
consents or approvals referenced in Sections 1.05 and 1.06 of this Agreement.
SECTION 3.07. CAPITALIZATION. (a) The authorized capital of
CFKY consists solely of (i) 6,000,000 common shares, without par value (the
"CFKY Shares"), 2,625,950 of which are issued and outstanding and held of record
by approximately 1,900 shareholders, 45,500 of which are held in CFKY's treasury
and 252,600 of which are reserved for issuance upon the exercise of CFKY
options, and (ii) 1,000,000 preferred shares, without par value, none of which
is issued or outstanding. All of the outstanding CFKY Shares are duly
authorized, validly issued, fully paid and nonassessable, were issued in full
compliance with all applicable laws and regulations, and were not issued in
violation of the preemptive right of any shareholder of CFKY. Upon the exercise
of the CFKY options prior to the date of the Closing, the CFKY Shares to be
issued in connection with the exercise of such CFKY options will be duly
authorized, validly issued, fully paid and nonassessable, will be issued in full
compliance with all applicable laws and regulations, and will not be issued in
violation of the preemptive right of any shareholder of CFKY. Except for options
awarded under the CFKY Option Plan (the "CFKY Options"), there are no
outstanding subscription rights, options, conversion rights, warrants or other
agreements or commitments of any nature whatsoever (either firm or conditional)
obligating CFKY to issue, deliver or sell, cause to be issued, delivered or
sold, or restricting CFKY from selling any
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additional CFKY Shares, or obligating CFKY to grant, extend or enter into any
such agreement or commitment.
(b) The authorized capital of the Bank consists solely of
10,000,000 common shares without par value, 100 of which are issued and
outstanding and held of record by CFKY. All of the outstanding common shares of
the Bank are duly authorized, validly issued, fully paid and nonassessable, were
issued in full compliance with all applicable laws and regulations, and were not
issued in violation of the preemptive right of any other person or entity. There
are no outstanding subscription rights, options, conversion rights, warrants or
other agreements or commitments of any nature whatsoever (either firm or
conditional) obligating the Bank to issue, deliver or sell, or to cause to be
issued, delivered or sold, any additional common shares of the Bank.
SECTION 3.08. SEC DOCUMENTS AND REGULATORY REPORTS. (a) CFKY
has delivered or made available to Camco a complete copy of all reports,
prospectuses, proxy statements, registration statements and all similar
documents filed, or required to be filed, pursuant to the Securities Act of 1933
(the "1933 Act"), as amended, and the Securities Act of 1934 (the "1934 Act"),
as amended, and regulations issued pursuant thereto or mailed by CFKY or the
Bank to the respective members or shareholders (the "CFKY SEC Documents"). The
CFKY SEC Documents were timely filed and did not, as of the dates on which such
reports were filed with the SEC, contain any untrue statement of a material fact
or omit any material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading.
(b) CFKY and the Bank has each duly filed with the OTS and the
FDIC, as the case may be, in correct form the reports required to be filed under
applicable law and regulations and such reports were in all material respects
complete and accurate and in compliance with the requirements of applicable law
and regulation, and CFKY has previously delivered or made available to Camco
accurate and complete copies of all such reports. In connection with the most
recent examination of CFKY or the Bank by the OTS or the FDIC, neither CFKY nor
the Bank was required to correct or change any action, procedure or proceeding
which has not been corrected or changed as required.
SECTION 3.09. FINANCIAL STATEMENTS. (a) The consolidated
statements of financial condition of CFKY and its subsidiaries as of September
30, 2000 and 1999, and the related consolidated statements of income, statements
of shareholders' equity and statements of cash flows for each of the three
fiscal years ended September 30, 2000, 1999 and 1998, together with the notes
thereto, examined and reported upon by VonLehman & Company Inc., independent
certified public accountants, complete copies of which have previously been
delivered to Camco (the "CFKY Audited Financials"), have been prepared in
conformity with generally accepted accounting principles ("GAAP") applied on a
consistent basis and fairly present the consolidated financial position of CFKY
at such date and the consolidated results of its operations and cash flows for
such periods.
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(b) The unaudited consolidated statements of financial
condition of CFKY as of March 31, 2001, and the related unaudited consolidated
statements of income, shareholders' equity and cash flows for each of the six
months ended March 31, 2001 and March 31, 2000, included in the CFKY quarterly
report on Form 10-Q for the quarter ended March 31, 2001, as currently on file
with the SEC and previously delivered to Camco (the "CFKY Interim Financials"),
fairly present the consolidated financial position of CFKY at such date and the
consolidated results of its operations and cash flows for such periods and have
been prepared in accordance with GAAP applied on a consistent basis.
(c) The books and records of CFKY and the Bank are being
maintained in material compliance with applicable legal and accounting
requirements, and such books and records accurately reflect in all material
respects all dealings and transactions in respect of the business, assets,
liabilities and affairs of CFKY and the Bank.
(d) Except as disclosed in the CFKY Interim Financials, as of
March 31, 2001, CFKY had no liabilities or obligations material to the business
operations, condition (financial or otherwise) or prospects of CFKY and its
consolidated subsidiaries taken as a whole, whether accrued, absolute,
contingent or otherwise, and whether due or to become due.
(e) The CFKY Audited Financials and CFKY Interim Financials did
not, as of the dates thereof, contain any untrue statement of a material fact or
omit to state any material fact necessary to make the information contained
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.10. ABSENCE OF MATERIAL ADVERSE CHANGE; CONDUCT OF
BUSINESS. Since March 31, 2001: there have been no material adverse changes in
the assets, liabilities, business, operations, condition (financial or
otherwise) or prospects of CFKY or the Bank, taken as a whole; CFKY and the Bank
have conducted business only in the ordinary and usual course; and CFKY and the
Bank have not:
(a) Authorized the creation or issuance of, issued, sold or
disposed of, or created any obligation to issue, sell or
dispose of, any stock, notes, bonds or other securities, or any
obligation convertible into or exchangeable for, any shares of
their capital stock;
(b) Declared, set aside, paid or made any dividend or other
distributions on their capital stock or directly or indirectly
redeemed, purchased or acquired any shares thereof or entered
into any agreement in respect of the foregoing, except a cash
dividend paid by CFKY on May 11, 2001 in the amount of $.07 per
share;
(c) Effected any stock split, recapitalization, combination,
exchange of shares, readjustment or other reclassification;
(d) Amended their Articles of Incorporation, Code of
Regulations, Charter or Bylaws;
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(e) Purchased, sold, assigned or transferred any material
tangible asset or any material patent, trademark, trade name,
copyright, license, franchise, design or other intangible asset
or property;
(f) Mortgaged, pledged or granted or suffered to exist any lien
or other encumbrance or charge on any assets or properties,
tangible or intangible, except for liens for taxes not yet due
and payable and such other liens, encumbrances or charges which
do not materially adversely affect their financial position;
(g) Cancelled any material debts or waived any material claims
other than for adequate consideration;
(h) Incurred any material obligation or liability (absolute or
contingent), including, without limitation, any tax liability
or any liability for borrowings from the FHLB, or paid any
material liability or obligation (absolute or contingent) other
than liabilities and obligations incurred or paid in the
ordinary course of business and consistent with past practice;
(i) Experienced any material change in the amount or general
composition of the Bank's deposit liabilities;
(j) Entered into or amended any employment contract with any of
their employees, increased the compensation payable to any
officer or director or any relative of any such employee or
director, or become obligated to increase any such
compensation;
(k) Except as set forth in Section 3.10(k) of the CFKY
Disclosure Schedule, adopted or amended in any material respect
any employee benefit plan, severance plan or collective
bargaining agreement, made any awards or distributions under
any employee benefit plan or made any contributions to any
employee benefit plan not consistent with past practice or
custom;
(l) Incurred any damage, destruction or similar loss, whether
or not covered by insurance, materially affecting their
businesses or properties;
(m) Acquired any stock or other equity interest in any
corporation, partnership, trust, joint venture or other entity;
(n) Made any material investment (except investments made in
the ordinary course of business and consistent with past
practice);
(o) Made any material capital expenditure or commitment for any
material addition to property, plant or equipment; or
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(p) Agreed, whether in writing or otherwise, to take any action
described in this Section 3.10.
SECTION 3.11. PROPERTIES. (a) A list and brief description of
all material fixed assets owned by CFKY or the Bank (the "Personal Property")
carried on the books of CFKY or the Bank as of the date hereof, is set forth in
Section 3.11(a) of the CFKY Disclosure Schedule. All Personal Property has been
maintained in good working order, ordinary wear and tear excepted. CFKY or the
Bank owns and has good title to all of the Personal Property, free and clear of
any mortgage, lien, pledge, charge, claim, conditional sales or other agreement,
lease, right or encumbrance, except (i) to the extent stated or reserved against
in the CFKY Audited Financials and (ii) such other exceptions which are not
material in character, amount or extent and do not materially detract from the
value of or interfere with the use of the Personal Properties subject thereto or
affected thereby.
(b) The documentation governing or relating to the loan and
credit-related assets representing the loan portfolio of the Bank ("Loan
Documentation") is legally sufficient in all material respects for the purposes
intended thereby and creates enforceable rights of the Bank in accordance with
the terms of such Loan Documentation, subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
applicability affecting the enforcement of creditors' rights generally, and the
effect of rules of law governing specific performance, injunctive relief and
other equitable remedies on the enforceability of such documents. To the
knowledge of the Bank, no debtor under any of the Loan Documentation has
asserted any claim or defense with respect to the subject matter thereof.
(c) A description of each parcel of real property owned by
CFKY or the Bank (the "Real Properties") is set forth in Section 3.11(c) of the
CFKY Disclosure Schedule. CFKY or the Bank is the owner of the Real Properties
in fee simple and has good and marketable title to the Real Properties free of
any liens, claims, charges, encumbrances or security interests of any kind,
except (i) liens for real estate taxes and assessments not yet delinquent and
(ii) utility, access and other easements, rights of way, restrictions and
exceptions which do not impair the Real Properties for the use and business
being conducted thereon. No party leases any of the Real Properties from CFKY or
the Bank.
(d) Neither CFKY nor the Bank has received notification from
any governmental entity of contemplated improvements to the Real Properties or
surrounding area or community by a public authority, the costs of which are to
be assessed as special taxes against the Real Properties in the future.
(e) A description of all real property leased by CFKY or the
Bank from a third party (the "Leased Real Property") is set forth in Section
3.11(e) of the CFKY Disclosure Schedule. True and correct copies of all leases
pertaining to the Leased Real Property (the "Real Property Leases") and all
attachments, amendments and addenda thereto have been delivered by CFKY and the
Bank to Camco. The Real Property Leases create, in accordance with their terms,
valid, binding leasehold interests of CFKY or the Bank in all of the Leased Real
Property, free and clear of all liens, claims, charges, encumbrances or security
interests of any kind. CFKY and
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the Bank have complied in all material respects with all of the provisions of
the Real Property Leases required on their part to be complied with and are not
in default with respect to any of their obligations (including payment
obligations) under any of the Real Property Leases.
(f) A description of all personal property leased by CFKY or
the Bank from a third party (the "Leased Personal Property") is set forth in
Section 3.11(f) of the CFKY Disclosure Schedule. The Personal Property Leases
create, in accordance with their terms, valid and binding leasehold interests of
CFKY or the Bank in all of the Leased Personal Property, free and clear of all
liens, claims, charges, encumbrances or security interests of any kind. CFKY and
the Bank have complied in all material respects with all of the provisions under
the Personal Property Leases required on their part to be complied with and are
not in default with respect to any of their obligations (including payment
obligations) under any of the Personal Property Leases.
SECTION 3.12. ALLOWANCE FOR LOAN LOSSES. The allowance for
loan losses reflected on the CFKY Audited Financials is adequate as of the date
hereof in all material respects under the requirements of GAAP to provide for
reasonably anticipated losses on outstanding loans.
SECTION 3.13. INVESTMENTS. Section 3.13 of the CFKY Disclosure
Schedule sets forth (a) a true, accurate and complete list of all investments,
other than investments in the Personal Property, loans receivable of the Bank
(the "Loan Assets") and the Real Properties, owned by CFKY or the Bank (the
"Investments") as of the date hereof, the name of the registered holder thereof,
the location of the certificates therefor or other evidence thereof and any
stock powers or other authority for transfer granted with respect thereto, and
(b) a true, accurate and complete list of the names of each bank or other
depository in which either CFKY or the Bank has an account or safe deposit box,
including, without limitation, accounts with the FHLB, and the names of all
persons authorized to draw thereon or to have access thereto. The Investments
are owned by CFKY or the Bank free and clear of all liens, pledges, claims,
security interests, encumbrances, charges or restrictions of any kind and may be
freely disposed of by CFKY or the Bank at any time. There are no outstanding
letters of credit issued by the Bank.
SECTION 3.14. DERIVATIVE TRANSACTIONS. Neither CFKY nor the
Bank is a party to any futures contract, option contract, interest rate caps,
interest rate floors, interest rate exchange agreements, repurchase agreements
or reverse repurchase agreements or other derivative instruments.
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SECTION 3.15. TAXES. (a) CFKY and the Bank have timely filed
all federal, state, county and local income, profits, franchise, excise, sales,
customs, property, use, occupation, withholding, social security and other tax
and information returns and reports required to have been filed by them through
the date hereof, and have paid or accrued all taxes and duties (and all interest
and penalties with respect thereto) due or claimed to be due by CFKY or the
Bank. Neither CFKY nor the Bank has, to their knowledge, any liability for any
taxes or duties (or interest or penalties with respect thereto) of any nature
whatsoever in excess of those that have already been paid or accrued, and there
is no basis for any additional material claims or assessments. True copies of
the federal, state and local income tax returns of CFKY or the Bank for each of
the three tax years ended September 30, 2000, 1999 and 1998, have been delivered
to Camco.
(b) Section 3.15(b) of the CFKY Disclosure Schedule lists the
type of return and applicable due date for each federal, state or local tax
returns for which an extension of time has been granted to CFKY or the Bank.
Except as set forth in Section 3.15(b) of the CFKY Disclosure Schedule, there
are no federal, state or local tax returns or reports not filed which would be
due but for an extension of time for filing having been granted. Neither CFKY
nor the Bank has executed or filed with the Internal Revenue Service (the "IRS")
or any state or local tax authority any agreement extending the period for
assessment and collection of any tax, nor is CFKY or the Bank a party to any
action or proceeding of any governmental authority for assessment or collection
of taxes, except tax liens or levies against customers of the Bank. There is no
outstanding assessment or claim for collection of taxes against CFKY or the
Bank. Neither CFKY nor the Bank has received any notice of deficiency, proposed
deficiency or assessment from the IRS or any other governmental agency with
respect to any federal, state or local taxes. No tax return of CFKY or the Bank
is currently the subject of any audit by the IRS or any other governmental
agency. No material deficiencies have been asserted in connection with the tax
returns of CFKY or the Bank, and CFKY and the Bank have no reason to believe
that any deficiency would be asserted relating thereto. Except as disclosed in
Section 3.15(b) of the CFKY Disclosure Schedule: (i) neither CFKY nor the Bank
has ever been a member of an "affiliated group of corporations" (within the
meaning of Section 1504(a) of the Code) filing consolidated returns, other than
the affiliated group of which CFKY is the parent; and (ii) neither CFKY nor the
Bank is a party to any tax sharing agreement, except the Tax Allocation
Agreement dated January 11, 2001, between CFKY and the Bank.
SECTION 3.16. MATERIAL CONTRACTS. (a) Except as set forth in
Section 3.16(a) of the CFKY Disclosure Schedule, neither CFKY nor the Bank is a
party to or bound by any written or oral (i) contract or commitment for capital
expenditures in excess of $15,000 for any one project or $30,000 in the
aggregate; (ii) contract or commitment made in the ordinary course of business
for the purchase of materials or supplies or for the performance of services
involving payments to or by CFKY or the Bank of an amount exceeding $15,000 in
the aggregate or extending for more than six months from the date hereof; (iii)
contract or option for the purchase of any property, real or personal, for an
amount exceeding $15,000; (iv) letter of credit or indemnity calling for payment
of more than $15,000; (v) guarantee agreement; (vi) instrument granting any
person authority to transact business on behalf of CFKY or the Bank; (vii)
contracts or commitments to make loans (including unfunded commitments and lines
of credit) to any one
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person (together with "affiliates" of that person) in excess of $100,000 in the
aggregate, except for contracts or commitments entered into in the ordinary
course of business; (viii) employment, management, consulting, deferred
compensation, severance or other similar contract with any current or former
director, officer or employee of CFKY or the Bank; (ix) note, debenture or loan
agreement pursuant to which CFKY or the Bank has incurred indebtedness other
than deposit liabilities and advances from the FHLB; (x) loan participation
agreement; (xi) loan servicing agreement; (xii) contract or commitment relating
to a real estate development project consisting of the development of more than
one single family dwelling; (xiii) commitment to make any acquisition,
development and construction loan; (xiv) commitment or agreement to do any of
the foregoing; or (xv) other contract, agreement or commitment made outside the
ordinary course of business. (The contracts, agreements, commitments and other
arrangements described in clauses (i) through (xv) of this Section 3.16(a) are
collectively referred to as the "Contracts").
(b) CFKY or the Bank has previously delivered or will make
available to Camco upon request (i) copies of all of the Contracts and (ii) all
form lending agreements and deposit forms used by the Bank in the ordinary
course of business.
(c) Neither CFKY nor the Bank is in material default under any
Contract, and no claim of such default by any party has been made or is now, to
the knowledge of CFKY or the Bank, threatened, except to the extent such a
default would not have a material adverse effect on CFKY and the Bank taken as a
whole. There does not exist any event which, with notice or lapse of time or
both, would constitute a material default by CFKY or the Bank under, or would
excuse performance by any party thereto from, any Contract, except to the extent
such a default would not have a material adverse effect on CFKY and the Bank
taken as a whole.
SECTION 3.17. INSURANCE. All material properties and
operations of CFKY and the Bank are insured in amounts and types as are
customary for holding companies and savings banks similarly situated. The
performance by the officers and employees of CFKY and the Bank of their duties
is bonded in such amounts and against such risks as are usually insured against
or bonded by entities similarly situated, under valid and enforceable policies
of insurance or bonds issued by insurers or bonding companies of recognized
responsibility, financial or otherwise. Section 3.17 of the CFKY Disclosure
Schedule sets forth a true and complete list of all insurance coverages
maintained by CFKY or the Bank.
SECTION 3.18. LITIGATION. Except as set forth in Section 3.18
of the CFKY Disclosure Schedule, (a) there are no material actions, suits,
proceedings or investigations pending or threatened against or affecting the
business, operations or financial condition of CFKY or the Bank in any court or
before any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, (b) neither the management
of CFKY nor the Bank has any knowledge of any basis for any such action, suit,
proceeding or investigation, and (c) neither CFKY nor the Bank is in default in
respect of any judgment, order, writ, injunction or decree of any court or any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality.
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SECTION 3.19. PERMITS AND LICENSES. CFKY and the Bank each has
all material permits, licenses, orders and approvals of all federal, state or
local governmental or regulatory bodies required for it to conduct its business
as presently conducted, and all such material permits, licenses, orders and
approvals are in full force and effect, without the threat of suspension or
cancellation. None of such permits, licenses, orders or approvals will be
adversely affected by the consummation of the transactions contemplated by this
Agreement.
SECTION 3.20. BENEFIT PLANS; ERISA. (a) Section 3.20(a) of the
CFKY Disclosure Schedule sets forth a true and complete list of all pension or
profit-sharing plans, deferred compensation, consulting, bonus, group insurance
plans or agreements and all other incentive, welfare or employee benefit plans
or agreements maintained for the benefit of employees, former employees,
directors or former directors of CFKY or the Bank. Copies of such plans and
agreements, together with, when applicable, (i) the most recent actuarial and
financial reports prepared with respect to any such plan, (ii) the three most
recent annual reports filed with any governmental agency, and (iii) all rulings
and determination letters received from governmental agencies and any open
requests for rulings or letters that pertain to any such plan, have been
delivered to Camco.
(b) Except as set forth in Section 3.20(b) of the CFKY
Disclosure Schedule, CFKY and the Bank do not currently maintain any "employee
pension benefit plan," as defined in Section 3(2) of ERISA (each such plan,
together with any related trust or other funding mechanism, as maintained by
CFKY or the Bank, a "Pension Benefit Plan"), which is intended to be qualified
under Section 401(a) of the Code.
(c) Except as set forth in Section 3.20(c) of the CFKY
Disclosure Schedule, neither CFKY nor the Bank currently maintains, nor have
they ever maintained, any Pension Benefit Plan subject to the provisions of
Title IV of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). With respect to any Pension Benefit Plan that is subject to Title IV
of ERISA ("DB Plan"), CFKY and the Bank, in addition to meeting the standards
described in Section 3.20(e), have complied with all minimum funding and
contribution requirements and obligations imposed by the Code or ERISA and all
applicable reporting, disclosure and Pension Benefit Guaranty Corporation
("PBGC") premium obligations imposed by the Code and ERISA. There are no
outstanding waivers of any minimum funding standard (or open applications for a
waiver of any minimum funding standard) and each DB Plan either has sufficient
assets to meet all benefit liabilities or will be revised, as of or before the
Effective Time, to eliminate any unfunded benefit liabilities under any DB Plan.
(d) CFKY and the Bank do not currently participate in, nor
have they ever participated in, any multiemployer plan, as such term is defined
in Section 3(37) of ERISA.
(e) Each Pension Benefit Plan has complied and complies
currently in all material respects, both as to form and operation, with the
provisions of ERISA and the Code, where required in order to be tax-qualified
under Section 401(a) of the Code, and all other applicable laws, rules and
regulations. Neither CFKY nor the Bank is aware of any event which might
jeopardize the tax qualified status of any Pension Benefit Plan. Except as set
forth in
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Section 3.20(e) of the CFKY Disclosure Schedule, each Pension Benefit Plan which
is intended to be qualified under Section 401(a) of the Code (i) has received a
determination letter from the IRS which considers amendments made to the Code by
the Tax Reform Act of 1986, or (ii) is maintained as part of a prototype or
similar plan ("Prototype Plan") which has received a form of approval letter
("Approval Letter") from the IRS, which has been adopted by completion of an
adoption (or similar form of) agreement subject to the Approval Letter and in a
manner that entitles CFKY to rely on the Approval Letter, and which has not been
subsequently amended in a manner that would affect CFKY's ability to rely on the
Approval Letter. All reports required by any governmental agency with respect to
each Pension Benefit Plan have been timely filed with such agency and, where
required, distributed to participants and beneficiaries of such Pension Benefit
Plan within the time required by law.
(f) Each "employee welfare benefit plan," as defined in
Section 3(1) of ERISA (each such plan together with any related trust or other
funding mechanism, as maintained by CFKY or the Bank, a "Welfare Benefit Plan")
has been administered in all material respects in compliance with the
requirements of the Code and ERISA, and, where applicable, all state insurance
laws, and all reports required by any governmental agency with respect to each
Welfare Benefit Plan have been timely filed with such agency and, where
required, distributed to participants and beneficiaries of such Welfare Benefit
Plan within the time required by law. Each Plan which constitutes a "group
health plan", as defined in Section 5000(b)(1) of the Code, is and has been
administered in material compliance with the continuation of coverage provisions
contained in Section 4980B of the Code.
(g) Neither CFKY nor the Bank nor, to the knowledge of CFKY or
the Bank, any plan fiduciary of any Welfare Benefit Plan or Pension Benefit Plan
has engaged in any transaction in violation of Section 406(a) or (b) of ERISA
(for which no statutory, class or administrative exemption exists, or has been
granted, under Section 408 of ERISA) or any "prohibited transaction" (as defined
in Section 4975(c)(1) of the Code) for which no statutory, class or
administrative exemption exists or has been granted, under Section 4975(c)(1) of
the Code.
(h) Each Pension Benefit Plan which is intended to be an
employee stock ownership plan ("ESOP"), as defined in Section 4975(e)(7) of the
Code, is and has been administered in substantial compliance with the applicable
provisions of Sections 4975 and 409 of the Code and the regulations thereunder.
Any outstanding loan to which any such ESOP is a party constitutes an "exempt
loan" as described in Section 54.4975-7 of the IRS regulations.
SECTION 3.21. ENVIRONMENTAL MATTERS. (a) CFKY and the Bank are
in full compliance with all applicable Environmental Requirements (hereinafter
defined). CFKY and the Bank have not received any written or oral communication
from any organization, person or otherwise, which alleges that either (i) CFKY
or the Bank is not in compliance with all applicable Environmental Requirements,
or (ii) any properties or assets of CFKY or the Bank may have been affected by
any Hazardous Substances (hereinafter defined). CFKY and the Bank possess all
permits, registrations and other governmental authorizations required under any
Environmental Requirements for the operation of the business of CFKY and the
Bank.
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(b) There is no Environmental Claim (hereinafter defined),
investigation or inquiry pending or, to the knowledge of CFKY or the Bank,
threatened against (i) CFKY or the Bank, (ii) any person or entity whose
liability for any Environmental Claim has or may have been retained or assumed
by CFKY or the Bank either contractually or by operation of law, or (iii) any
real or personal property which CFKY or the Bank owns, leases, manages,
supervises or participates in the management of, or, to the knowledge of CFKY or
the Bank, in which CFKY or the Bank holds a security interest in connection with
a loan or loan participation.
(c) To the knowledge of CFKY and the Bank, there are no
present or past activities, conditions, or incidents, including, without
limitation, the release or disposal of any Hazardous Substances, that could
reasonably form the basis of any Environmental Claim against CFKY or the Bank or
against any person or entity whose liability for any Environmental Claim has or
may have been retained or assumed by CFKY or the Bank, either contractually or
by operation of law. To the knowledge of CFKY and the Bank, none of the Real
Properties or Leased Real Properties has been, or is (i) the site of the
production, storage, use, release, disposal or treatment of Hazardous
Substances, (ii) contaminated by Hazardous Substances, (iii) the site of any
underground or aboveground storage tanks, or (iv) subject to any lien or claim
which might give rise to a lien as a result of any release of Hazardous
Substances or operation of any Environmental Requirement. To the knowledge of
CFKY and the Bank, no Hazardous Substances have been integrated into any of the
Real Properties or Leased Real Properties or any component thereof in such
quantities and manner as may or do pose a threat to human health, violate any
Environmental Requirement, or require abatement now or in connection with any
renovation or demolition of such properties.
(d) Except as set forth in Section 3.21(d) of the CFKY
Disclosure Schedule, none of CFKY, the Bank, their respective agents,
representatives, or employees, any governmental entity, or any other person has
conducted any environmental studies, site assessments, audits, or inspections of
the Real Properties, Leased Real Properties or real property previously owned or
leased by CFKY or the Bank. Section 3.21(d) of the CFKY Disclosure Schedule sets
forth an accurate and complete list of outstanding loans of the Bank as to which
the borrower has submitted (or is required to submit) to the Bank any
environmental audits or reports regarding any real property securing such loan
and a brief description of the environmental audit or report, to the extent
applicable.
(e) As used in this Agreement:
(i) "Environmental Requirements" means all federal, state,
local and other statutes, common law, regulations, rules, standards, ordinances,
orders, decrees, and judgments relating to pollution, the environment, Hazardous
Substances, occupational health and safety, or the protection of human health or
the environment, all as may be from time to time modified;
(ii) "Hazardous Substances" means any and all substances
or materials which are classified or considered to be hazardous or toxic to
human health or the environment
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under any applicable Environmental Requirements and shall include, without
limitation, any "Hazardous Substances" as defined in Section 101(14) of CERCLA
(42 USC Section 9601(14)) or regulations promulgated thereunder, "solid waste",
"hazardous waste", or "infectious waste" as such terms are defined in any
Environmental Requirement, any "toxic and hazardous substances" as defined in 29
CFR Part 1910, petroleum and its products and byproducts, asbestos,
polychlorinated biphenyls, nuclear fuel or materials, radioactive material, lead
and lead-containing substances, molds and other infectious materials, and
urea-formaldehyde; and
(iii) "Environmental Claim" means any claim, cause of
action or notice (written or oral) by any person or entity alleging potential
liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries or penalties) arising out of, based on or
resulting from (A) the presence, or release into the environment, of any
Hazardous Substance at any location, whether leased or owned, or (B)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Requirement.
SECTION 3.22. EMPLOYMENT MATTERS. CFKY and the Bank are in
compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours and have not and are not engaged in any unfair labor practice,
except where such failure to comply or such practice would not have a material
adverse effect on the financial condition, results of operations, business or
prospects of CFKY and the Bank taken as a whole. No unfair labor practice
complaint against CFKY or the Bank is pending before any governmental agency or
court and there is no labor strike, dispute, slowdown or stoppage actually
pending or threatened against or involving CFKY or the Bank. No representation
question exists in respect of the employees of CFKY or the Bank and no labor
grievance which might have a material adverse effect upon CFKY or the Bank or
the conduct of their businesses is pending or, to the knowledge of CFKY or the
Bank, threatened. Neither CFKY nor the Bank has entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of CFKY or the Bank, and, to the knowledge of CFKY and the Bank, there
is no present effort nor existing proposal to attempt to unionize any group of
employees of CFKY or the Bank.
SECTION 3.23. UNTRUE STATEMENTS AND OMISSIONS. The
certificates, statements and other information furnished to Camco in writing by
or on behalf of CFKY and the Bank in connection with the transactions
contemplated hereby, including, but not limited to, disclosures and information
set forth in the CFKY Disclosure Schedule, but excluding statements or
information pertaining to parties unrelated to CFKY or the Bank, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SECTION 3.24. PROXY MATERIALS. None of the information relating
to CFKY or the Bank included in the Proxy Statement which is to be mailed to the
shareholders of CFKY in connection with the CFKY Shareholders Meeting will, at
the time the Proxy Statement is mailed or at the time of the meeting to which
the Proxy Statement relates, contain any untrue statement of a material fact, or
omit to state any material fact necessary in order to make the statements
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therein, in light of the circumstances under which they were made, not false or
misleading, except to the extent it contains information about Camco provided in
writing to CFKY or the Bank by Camco.
SECTION 3.25. BROKERS. Except for amounts payable to Keefe,
Bruyette & Wood, Inc. ("KBW"), as disclosed in Section 3.25 of the CFKY
Disclosure Schedule, there are no claims or agreements for brokerage commission,
finder's fees, or similar compensation in connection with the transactions
contemplated by this Agreement payable by CFKY or the Bank.
SECTION 3.26. REGULATORY ENFORCEMENT. Neither CFKY nor the Bank
is subject to, or has received any notice or advice that it is or may become
subject to, any order, agreement or memorandum of understanding of any federal
or state agency charged with the supervision or regulation of banks or savings
banks or engaged in the insurance of deposits or any other governmental agency
having supervisory or regulatory authority with respect to CFKY or the Bank.
Neither CFKY nor the Bank has received any notice or advice that it is not in
substantial compliance with any statute or regulation, except as set forth in
Section 3.26 of the CFKY Disclosure Schedule.
SECTION 3.27. SUBSIDIARIES; EQUITY INTEREST. The term
"Subsidiary" means an organization or entity which is consolidated or is
eligible to be consolidated with a party to this Agreement for financial
reporting purposes. Except for the Bank, CFKY has no Subsidiaries. The Bank has
no Subsidiaries. Except for shares of the Bank owned by CFKY and shares of the
FHLB of Cincinnati owned by the Bank or as set forth in Section 3.27 of the CFKY
Disclosure Schedule, neither CFKY nor the Bank owns, beneficially or otherwise,
any shares of Equity Securities (as defined below) or similar interest of any
corporation, bank, business trust, association or similar organization. "Equity
Securities" of an issuer means capital stock or other equity securities of such
issuer, options, warrants, scrip, rights to subscribe to, calls or commitments
of any character whatsoever relating to, or securities or rights convertible
into, shares of any capital stock or other equity securities of any issuer, or
contracts, commitments, understandings or arrangements by which such issuer is
or may become bound to issue additional shares of its capital stock or other
equity securities of such issuer, or options, warrants, scrip or rights to
purchase, acquire, subscribe to, calls on or commitments for any shares of its
capital stock or other equity securities. Neither CFKY nor the Bank is a party
to any partnership or joint venture.
SECTION 3.28. CFKY OPTIONS AND RRP AWARDS. (a) Section 3.28(a)
of the CFKY Disclosure Schedule lists the names of the holders, award dates,
vesting dates, expiration dates, number of shares and exercise price (as such
price may have been adjusted) of all unexercised CFKY Options.
(b) The CFKY Disclosure Schedule lists the names of the
recipients, award dates, forfeitures, distribution dates and number of shares
awarded and unawarded relating to and arising out of the RRP.
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SECTION 3.29. FAIRNESS OPINION. CFKY has received an opinion of
KBW to the effect that, as of the date hereof, the Per Share Merger
Consideration is fair from a financial point of view to the shareholders of
CFKY.
SECTION 3.30. REQUIRED VOTE; ANTI-TAKEOVER PROVISIONS. The
affirmative vote of the holders of a majority of the issued and outstanding CFKY
Shares is the only vote of shareholders of CFKY required to approve this
Agreement and the transactions contemplated hereby on behalf of CFKY.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF
CAMCO, MERGER SUB AND ADVANTAGE
Camco, Merger Sub and Advantage represent and warrant to CFKY
and the Bank that each of the following statements is true and accurate in all
material respects:
SECTION 4.01. ORGANIZATION AND STANDING. (a) Camco is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the corporate power and authority to own or
hold under lease all of its properties and assets and to conduct its business
and operations as presently conducted. Camco is registered as a savings and loan
holding company under the HOLA. Camco is in compliance in all material respects
with all applicable local, state and federal laws and regulations.
(b) Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
Merger Sub is in compliance in all material respects with all applicable local,
state and federal laws and regulations.
(c) Advantage is a savings bank duly organized, validly
existing and in good standing under the laws of the State of Ohio and has the
corporate power and authority to own or hold under lease all of its properties
and assets and to conduct its business and operations as presently conducted.
Advantage is in compliance in all material respects with all applicable local,
state and federal laws and regulations.
SECTION 4.02. QUALIFICATION. Camco, Merger Sub and Advantage
are each either duly qualified to do business and in good standing in each
jurisdiction in which such qualification is required or the failure to so
qualify would not have a material adverse effect on the business of Camco,
Merger Sub and Advantage taken as a whole.
SECTION 4.03. AUTHORITY. (a) This Agreement has been (i) duly
executed and delivered by Camco, Merger Sub and Advantage, (ii) approved by the
boards of directors of
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Camco, Merger Sub and Advantage, and (iii) adopted by Camco as the sole
shareholder of Merger Sub and Advantage.
(b) The Bank Merger Agreement has been (i) duly executed and
delivered by Advantage, (ii) approved by the board of directors of Advantage,
and (iii) adopted by Camco as the sole shareholder of Advantage.
(c) Subject to the filing of all requisite regulatory notices
and the receipt of all requisite regulatory approvals, (i) Camco, Merger Sub and
Advantage have all requisite corporate power and authority to enter into this
Agreement and to perform their obligations hereunder; (ii) the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary corporate action by Camco,
Merger Sub and Advantage; and (iii) subject to applicable bankruptcy,
insolvency, reorganization and moratorium laws and other laws of general
applicability affecting the enforcement of creditors' rights generally, and the
effect of rules of law governing specific performance, injunctive relief and
other equitable remedies on the enforceability of such documents, and except to
the extent such enforceability may be limited by laws relating to safety and
soundness of insured depository institutions as set forth in 12 U.S.C.
ss.1818(b) or by the appointment of a conservator by the FDIC, this Agreement is
the valid and binding agreement of Camco, Merger Sub and Advantage enforceable
against them in accordance with its terms.
(d) No vote or action by the stockholders of Camco is required by
applicable law, the Certificate of Incorporation of Camco or the Bylaws of Camco
to consummate the transactions contemplated by this Agreement.
SECTION 4.04. GOVERNING DOCUMENTS. Camco has made available, or
will promptly make available, to CFKY true and accurate copies of the Camco
certificate of incorporation and bylaws, the Merger Sub articles of
incorporation and code of regulations and Advantage articles of incorporation
and constitution.
SECTION 4.05. NO CONFLICTS. The execution and delivery of this
Agreement and, subject to regulatory filings and approvals referenced in Section
1.06 of this Agreement, the consummation of the transactions contemplated hereby
will not (a) conflict with or violate any provision of or result in the breach
of any provision of the Certificate of Incorporation or Bylaws of Camco, the
Articles of Incorporation and Code of Regulations of Merger Sub or the Articles
of Incorporation and Constitution of Advantage; (b) conflict with or violate any
provision of or result in the breach or the acceleration of or entitle any party
to accelerate (whether upon or after the giving of notice or lapse of time or
both) any obligation under, or otherwise materially affect the terms of, any
mortgage, lien, lease, agreement, license, instrument, order, arbitration award,
judgment or decree to which Camco or Advantage is a party or by which Camco or
Advantage or its property or assets is bound; (c) require the consent of any
party to any agreement or commitment to which Camco or Advantage is a party or
by which Camco or Advantage or its property or assets is bound, the failure to
obtain which could, individually or in the aggregate with all the other failures
to obtain required consents, have a material adverse effect on the business,
operations, condition (financial or otherwise) or prospects of Camco or
Advantage; (d)
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result in the creation or imposition of any lien, charge, pledge, security
interest or other encumbrance upon any property or assets of Camco or Advantage;
or (e) violate or conflict with any applicable law, ordinance, rule or
regulation, including, without limitation, the rules and regulations of or
conditions of approval of applications or notices to the OTS or the FDIC.
SECTION 4.06. CONSENTS. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
authority is required in connection with the execution and delivery of this
Agreement by Camco, Merger Sub or Advantage or the consummation by Camco, Merger
Sub or Advantage of the transactions contemplated hereby, except for filings,
authorizations, consents or approvals referenced in Section 1.06 of this
Agreement.
SECTION 4.07. CAPITALIZATION. The authorized capital of Camco
consists solely of (i) 14,900,000 shares of common stock, par value One Dollar
($1.00) per share (the "Camco Shares"), 6,952,927 of which are issued and
outstanding, 126,019 of which are held in Camco's treasury, and 688,655 of which
are reserved for issuance upon the exercise of outstanding stock options (the
"Camco Options"), and (ii) 100,000 preferred shares, One Dollar ($1.00) par
value per share, none of which is issued or outstanding. All of the outstanding
Camco shares are, and, when issued in accordance with this Agreement, the Camco
Shares to be issued upon exchange for the CFKY Shares shall be, duly authorized,
validly issued, fully paid and nonassessable, issued in full compliance with all
applicable laws, and not issued in violation of the preemptive right of any
person. Except for the Camco Options, there are no outstanding subscription
rights, options, conversion rights, warrants or other agreements or commitments
of any nature whatsoever (either firm or conditional) obligating Camco to issue,
deliver or sell, cause to be issued, delivered or sold, or restricting Camco
from selling any additional Camco shares, or obligating Camco to grant, extend
or enter into any such agreement or commitment.
SECTION 4.08. SEC DOCUMENTS. (a) Camco has delivered or made
available to CFKY a complete copy of all reports, prospectuses, proxy
statements, registration statements and all similar documents filed, or required
to be filed pursuant to the 1933 Act or the 1934 Act (the "Camco SEC
Documents"). The Camco SEC Documents were timely filed and did not, as of the
dates on which such reports were filed with the SEC, contain any untrue
statement of a material fact or omit any material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) Camco and Advantage have filed all reports and maintained
all records required to be filed or maintained by them under various rules and
regulations of the SEC, the OTS or the FDIC. All such documents and reports
complied in all material respects with applicable requirements of laws and
regulations in effect at the time of the filing of such documents and contained
in all material respects the information required to be stated therein. None of
such documents, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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SECTION 4.09. FINANCIAL STATEMENTS. (a) The consolidated
statements of financial condition of Camco as of December 31, 2000 and 1999, and
the related consolidated statements of earnings, stockholders' equity and cash
flows for each of the three years ended December 31, 2000, 1999 and 1998,
together with notes thereto, examined and reported upon by Grant Thornton,
L.L.P. (the "Camco Audited Financials"), have been prepared in conformity with
GAAP applied on a consistent basis and fairly present the financial position of
Camco at such dates and the results of its operations and cash flows for such
periods.
(b) The unaudited consolidated statements of financial
condition of Camco as of March 31, 2001, and the related unaudited consolidated
statements of earnings, stockholders' equity and cash flows for each of the
three months ended March 31, 2001 and 2000 included in the Camco quarterly
report on Form 10-Q for the quarter ended March 31, 2001, as currently on file
with the SEC and previously delivered to CFKY (the "Camco Interim Financials"),
fairly present the consolidated financial position of Camco at such date and the
consolidated results of its operations and cash flows for such periods and have
been prepared in accordance with GAAP applied on a consistent basis.
(c) The books and records of Camco are being maintained in
material compliance with applicable legal and accounting requirements and such
books and records accurately reflect in all material respects all dealings and
transactions in respect of the business, assets, liabilities and affairs of
Camco.
(d) Except as disclosed in the Camco Interim Financials, as of
March 31, 2001, Camco had no liabilities or obligations material to the business
condition (financial or otherwise) of Camco taken as a whole, whether accrued,
absolute, contingent or otherwise, and whether due or to become due.
(e) The Camco Audited Financials and the Camco Interim
Financials did not, as of the dates thereof, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
information contained therein, in light of the circumstances under which they
were made, not misleading.
SECTION 4.10. ABSENCE OF MATERIAL ADVERSE CHANGE. Since March
31, 2001, there have been no material adverse changes in the financial
condition, assets, liabilities, obligations, properties, business or prospects
of Camco and its consolidated subsidiaries, taken as a whole.
SECTION 4.11. ALLOWANCE FOR LOAN LOSSES. The allowance for loan
losses reflected on the Camco Audited Financials is adequate as of the date
hereof in all material respects under the requirements of GAAP to provide for
reasonably anticipated losses on outstanding loans.
SECTION 4.12. TAXES. Camco has timely filed all federal, state,
county and local income, profits, franchise, excise, sales, customs, property,
use, occupation, withholding, social security and other tax and information
returns and reports required to have been filed by it
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through the date hereof, and has paid or accrued all taxes and duties (and all
interest and penalties with respect thereto) due or claimed to be due by Camco.
Camco has no liability for any taxes or duties (or interest or penalties with
respect thereto) of any nature whatsoever in excess of those that have already
been paid or accrued, and there is no basis for any additional material claims
or assessments, other than with respect to liabilities for taxes and duties
which may have accrued since December 31, 2000, in the ordinary course of
business. No proposed additional taxes, interest or penalties have been asserted
by applicable taxing authorities.
SECTION 4.13. LITIGATION. Except as disclosed in the Camco SEC
Documents, (a) there are no material actions, suits, proceedings or
investigations pending or threatened against or affecting the business,
operations or financial condition of Camco in any court or before any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, (b) the management of Camco has no knowledge of any
basis for any such action, suit, proceeding or investigation, and (c) Camco is
not in default in respect of any judgment, order, writ, injunction or decree of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality.
SECTION 4.14. UNTRUE STATEMENTS AND OMISSIONS. The
certificates, statements and other information furnished to CFKY in writing by
or on behalf of Camco in connection with the transactions contemplated hereby do
not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
SECTION 4.15. PROSPECTUS. None of the information relating to
Camco in the Prospectus will, at the time the Prospectus is mailed to the CFKY
shareholders or at the time of the CFKY Shareholders Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not false or misleading.
SECTION 4.16 REGULATORY ENFORCEMENT. Camco is not subject to,
nor has it received any notice or advice that it is not in substantial
compliance with any statute or regulation, or that it is or may become subject
to, any order, agreement or memorandum of understanding of any federal or state
agency charged with the supervision or regulation of savings banks, savings
associations or holding companies of savings banks or savings associations or
engaged in the insurance of deposits or any other governmental agency having
supervisory or regulatory authority with respect to Camco, and Camco has
received no notice from any governmental agency threatening to revoke any
license, franchise, permit or governmental authority.
SECTION 4.17. EMPLOYMENT MATTERS. Camco and Advantage are in
compliance with all federal, state or other applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours and have not and are not engaged in any unfair labor practice,
except where such failure to comply or such practice would not have a material
adverse effect on the financial condition, results of operations, business or
prospects of Camco and Advantage taken as a whole. No unfair labor practice
complaint against Camco or
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Advantage is pending before any governmental agency or court and there is no
labor strike, dispute, slowdown or stoppage actually pending or threatened
against or involving Camco or Advantage. No representation question exists in
respect of the employees of Camco or Advantage and no labor grievance which
might have a material adverse effect upon Camco or Advantage or the conduct of
their businesses is pending or, to the knowledge of Camco or Advantage,
threatened. Neither Camco nor Advantage has entered into any collective
bargaining agreement with any labor organization with respect to any group of
employees of Camco or Advantage, and, to the knowledge of Camco and Advantage,
there is no present effort nor existing proposal to attempt to unionize any
group of employees of Camco or Advantage.
SECTION 4.18. ENVIRONMENTAL MATTERS. (a) Camco and Advantage
are in full compliance with all applicable Environmental Laws. Camco and
Advantage have not received any written or oral communication from any
organization, person or otherwise, which alleges that either (i) Camco or
Advantage is not in compliance with all applicable Environmental Requirements,
or (ii) any properties or assets of Camco or Advantage may have been affected by
any Hazardous Substances. Camco and Advantage possess all permits, registrations
and other governmental authorizations required under any Environmental
Requirements for the operation of the business of Camco and Advantage.
(b) There is no Environmental Claim, investigation or inquiry
pending or, to the knowledge of Camco or Advantage, threatened against (i) Camco
or Advantage, (ii) any person or entity whose liability for any Environmental
Claim has or may have been retained or assumed by Camco or Advantage either
contractually or by operation of law, or (iii) any real or personal property
which Camco or Advantage owns, leases, manages, supervises or participates in
the management of, or, to the knowledge of Camco or Advantage, in which Camco or
Advantage holds a security interest in connection with a loan or loan
participation.
(c) To the knowledge of Camco and Advantage, there are no
present or past activities, conditions, or incidents, including, without
limitation, the release or disposal of any Material of Environmental Concern,
that could reasonably form the basis of any Environmental Claim against Camco or
Advantage or against any person or entity whose liability for any Environmental
Claim has or may have been retained or assumed by Camco or Advantage, either
contractually or by operation of law.
SECTION 4.19. STOCK OWNERSHIP. Neither Camco nor any of its
"affiliates" or "associates," as the terms "affiliates" and "associates" are
defined in ss. 1704.01(C)(1) of the OGCL, are "beneficial owners," as the term
"beneficial owners" is defined in ss. 1704.01(C)(4) of the OGCL, of any of the
outstanding common shares of CFKY.
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ARTICLE FIVE
COVENANTS
SECTION 5.01. CONDUCT OF CFKY'S AND THE BANK'S BUSINESS. From
the date of this Agreement until the Effective Time, CFKY and the Bank, except
with the prior written consent of Camco, which shall not be unreasonably
withheld, will each conduct its business only in the ordinary course, in
accordance with past practices and policies and in compliance with all
applicable statutes, rules and regulations. Notwithstanding the foregoing,
without the prior written consent of Camco, which shall not be unreasonably
withheld, neither CFKY nor the Bank will:
(a) Authorize or agree to authorize the creation or
issuance of, or issue, sell or dispose of, or create
any obligation to issue, sell or dispose of, any
stock, notes, bonds or other securities of which CFKY
or the Bank is the issuer, or any obligations
convertible into or exchangeable for any shares of
its capital stock, other than CFKY shares issued in
connection with the exercise of CFKY options;
(b) Declare, set aside, pay or make any dividend or other
distribution on its capital stock, or directly or
indirectly redeem, purchase or otherwise acquire any
shares thereof or enter into any agreement with
respect to the foregoing, except for quarterly cash
dividends which may be declared and paid in
accordance with Section 5.04 of this Agreement;
(c) Effect any stock split, recapitalization,
combination, exchange of shares, readjustment or
other reclassification;
(d) Amend their articles of incorporation, code of
regulations, charter or bylaws, except to amend the
Articles of Incorporation of CFKY to eliminate
Article Seventh and to amend the Charter of the Bank
to eliminate Section 8.A.;
(e) Purchase, sell, assign or transfer any material
tangible asset or any material patent, trademark,
trade name, copyright, license, franchise, design or
other intangible assets or property;
(f) Mortgage, pledge, grant or suffer to exist any lien
or other encumbrance or charge on any assets or
properties, tangible or intangible, except for liens
for taxes not yet delinquent, assets pledged as
collateral to secure borrowings from the FHLB or to
secure public deposits and such other liens,
encumbrances or charges which do not materially or
adversely affect its financial position;
(g) Waive any rights of material value or cancel any
material debts or claims;
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(h) Incur any material obligation or liability (absolute
or contingent), including, without limitation, any
tax liability, or pay any material liability or
obligation (absolute or contingent), other than
liabilities and obligations incurred in the ordinary
course of business and borrowings from the FHLB;
(i) [Reserved];
(j) Except as specifically provided herein, enter into or
amend any employment contract with any of its
employees, increase the compensation payable to any
employee or director or any relative of any such
employee or director or become obligated to increase
any such compensation;
(k) Except as specifically provided herein (or as
required by applicable law), adopt or amend in any
material respect any employee or director benefit
plan, severance plan or collective bargaining
agreement or make any contributions to or awards or
distributions under any employee benefit plan not
consistent with past practice or custom;
(l) Acquire any stock or other equity interest in any
corporation, partnership, trust, joint venture or
other entity;
(m) Make any material capital expenditure or commitment
for any material addition to property, plant, or
equipment;
(n) Originate or issue a commitment to originate any loan
secured by one- to four-family residential real
estate in a principal amount of $250,000 or more or
any loan secured by nonresidential real estate in a
principal amount of $250,000 or more;
(o) Except for FHLB advances, the aggregate amount of
which at any time shall not exceed Seven Million
Dollars ($7,000,000), plus such additional amount as
may be obtained with the right of prepayment at any
time without penalty or premium, and deposit taking
in the ordinary course of its business, borrow or
agree to borrow any funds, including but not limited
to repurchase transactions, or indirectly guarantee
or agree to guarantee any obligations of others;
(p) Establish any new lending programs or make any
changes in its policies concerning which persons may
approve loans;
(q) Enter into any securities transactions for its own
account or purchase or otherwise acquire any
investment security for its own account other than
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U.S. Government and U.S. agency obligations and
deposits in an overnight account at the FHLB;
(r) Increase or decrease the rate of interest paid on
time deposits or certificates of deposits, except in
a manner and pursuant to policies consistent with
past practices in relation to rates prevailing in the
Bank's market;
(s) Foreclose upon or otherwise take title to or
possession or control of any real property without
first obtaining a Phase I Environmental Report
thereon which indicates that the property is free of
pollutants, contaminants or hazardous or toxic waste
materials including asbestos and petroleum products;
provided, however, that the Bank shall not be
required to obtain such a report with respect to
single-family, non-agriculture residential property
of one acre or less to be foreclosed upon unless it
has reason to believe such property may contain any
such pollutants, contaminants, waste materials
including asbestos or petroleum products; or
(t) Agree, whether in writing or otherwise, to take any
action described in this Section 5.01.
SECTION 5.02. ACQUISITION TRANSACTIONS. CFKY and the Bank
shall (i) not, directly or indirectly, solicit or initiate any proposals or
offers from any person or entity, or discuss or negotiate with any such person
or entity, regarding any acquisition or purchase of all or a material amount of
the assets of, any equity securities of, or any merger, consolidation or
business combination with, CFKY or the Bank (collectively, "Acquisition
Transactions"), (ii) not disclose to any person any information not customarily
disclosed publicly or provide access to its properties, books or records or
otherwise assist or encourage any person in connection with any of the
foregoing, and (iii) give Camco prompt notice of any such inquiries, offers or
proposals. The foregoing sentence shall not apply however to the consideration,
negotiation and consummation of an Acquisition Transaction not solicited by CFKY
or the Bank or any of their respective officers, directors, agents or affiliates
if and to the extent that the board of directors of CFKY reasonably determines
in good faith after consultation with KBW and upon written advice of counsel to
CFKY that failure to consider such Acquisition Transaction could reasonably be
expected to constitute a breach of its fiduciary duties to the shareholders of
CFKY; provided, however, that CFKY shall give Camco prompt notice of any such
proposal of an Acquisition Transaction and keep Camco promptly informed
regarding the substance thereof and the response of the board of directors of
CFKY thereto.
SECTION 5.03. ACCOUNTING POLICIES. Before the Effective Time
and at the request of Camco, CFKY or the Bank shall promptly (a) establish and
take such reserves and accruals to conform the Bank's loan, accrual and reserve
policies to Camco's policies; (b) establish and take such accruals, reserves and
charges in order to implement such policies in respect of excess facilities and
equipment capacity, severance costs, litigation matters, write-off or write-down
of
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various assets and other appropriate accounting adjustments; and (c) recognize
for financial accounting purposes such expenses of the Merger and restructuring
charges related to or to be incurred in connection with the Merger, to the
extent permitted by law and consistent with GAAP; provided, however, that
neither CFKY nor the Bank shall be obligated to make any such changes or
adjustments until the satisfaction of all conditions set forth in Sections
7.01(a) through (e), and further provided that no basis for termination of this
Agreement by any party pursuant to Article Eight is then extant.
SECTION 5.04 CFKY DIVIDENDS. Prior to the Effective Time, the
board of directors of CFKY may continue to declare and pay cash dividends on the
CFKY Shares in an amount not to exceed $.07 per quarter at such times as are
consistent with past practice; provided, however, that CFKY shall coordinate the
declaration of any dividends with Camco for the quarter in which the Closing is
expected to occur such that the CFKY Shareholders shall not receive a dividend
for such quarter from both CFKY before the Effective Time and from Camco after
the Effective Time.
ARTICLE SIX
FURTHER AGREEMENTS
SECTION 6.01. REGULATORY APPROVALS; COOPERATION. (a) Camco,
Merger Sub and Advantage shall use their best efforts to file within 60 days of
the date hereof all Regulatory Applications required in order to consummate the
Merger. Camco shall keep CFKY reasonably informed as to the status of the
Regulatory Applications and make available to CFKY copies of the Regulatory
Applications as filed and any supplementary filed materials and all responses
from the regulatory authorities.
(b) CFKY and the Bank will cooperate and will cause their
respective directors, officers, employees, agents and advisors to cooperate, to
the extent reasonable or necessary, with Camco in connection with the
preparation of the Regulatory Applications and the Registration Statement.
(c) Camco will cooperate and will cause its directors,
officers, employees, agents and advisors to cooperate, to the extent reasonable
or necessary, with CFKY in connection with the preparation of the Proxy
Statement.
SECTION 6.02. SPECIAL MEETING OF SHAREHOLDERS OF CFKY. CFKY
shall take all steps necessary to duly call, give notice of, convene and hold a
meeting of its shareholders for the purpose of voting upon this Agreement as
required by applicable law. CFKY shall use its reasonable efforts to hold such
meeting as soon as practicable following the date of this Agreement. The board
of directors of CFKY shall (i) to the extent consistent with their fiduciary
duties, recommend to its shareholders the adoption of this Agreement, the
approval of the amendment to the Articles of Incorporation of CFKY to eliminate
Article Seventh and the approval of the transactions contemplated hereby and any
other matters to be submitted to the shareholders in connection therewith, and
(ii) use their reasonable efforts to obtain the necessary
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adoption by the shareholders of this Agreement and any amendments hereto, the
amendment to the Articles of Incorporation of CFKY to eliminate Article Seventh
and the transactions contemplated hereby. Notwithstanding the foregoing, if the
board of directors of CFKY shall have reasonably determined in good faith in
accordance with the provisions of Section 5.02 of this Agreement that such
recommendation is reasonably likely to constitute a breach of its fiduciary
duties to the shareholders of CFKY, then the board of directors of CFKY shall
not be obligated to recommend to its shareholders adoption of this Agreement or
to present this Agreement to the shareholders of CFKY for their adoption at the
CFKY Shareholders Meeting or to hold the CFKY Shareholders Meeting for such
purpose.
SECTION 6.03. AFFILIATES COMPLIANCE WITH THE 1933 ACT. (a)
Section 6.03 of the CFKY Disclosure Schedule identified all persons who CFKY
reasonably believes to be "affiliates," as defined in paragraphs (c) and (d) of
Rule 145 under the 1933 Act (the "Affiliates"). Until the Effective Time, CFKY
shall identify to Camco each additional person whom it reasonably believes to
have hereafter become its Affiliate.
(b) CFKY shall use its best efforts to obtain from each person
who is identified as an Affiliate for delivery to Camco before the Effective
Time a written agreement in which such Affiliate confirms that the Camco Shares
received by such Affiliate in the Merger shall be transferable only in
accordance with Rule 145 of the 1933 Act.
SECTION 6.04. EMPLOYEES. (a) All employees of the Bank as of
the date of this Agreement who are actively employed at the Effective Time
shall, upon satisfactory review of employment files and subject to Camco
employee standards of performance, continue as employees of Advantage at the
Effective Time and, with respect to employees who are not currently covered by a
written employment or severance agreement with the Bank, shall be employed as at
will employees at the same base compensation they are receiving from the Bank.
Each Bank employee immediately before the Effective Time who is not currently
covered by a written employment or severance agreement with the Bank and who
Camco or Advantage elects not to employ after the Effective Time or whose
employment is involuntarily terminated by Camco or one or more of its
subsidiaries without cause within one year after the Effective Time shall
receive an employment severance payment equal to the product of two weeks of the
employee's then current salary multiplied by the number of total years of
service as a Bank employee; provided, however, that the minimum severance
payment shall equal four weeks' salary and the maximum severance payment shall
equal twenty-six weeks' salary.
(b) Any employee who is currently covered by a written
employment or severance agreement will continue his employment in accordance
with the terms of such written agreement.
SECTION 6.05. EMPLOYEE BENEFITS. (a) On and after the
Effective Time, Camco may, in its discretion, continue the health insurance plan
currently sponsored by the Bank for the benefit of its employees or provide
coverage under the health insurance plan maintained by Camco for the benefit of
the employees of Camco and its subsidiaries; provided, however, that if Camco
elects to provide coverage under the Camco health plan as of the Effective Time,
any
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waiting periods or pre-existing condition limitations shall be waived for
employees of the Bank who continue as employees of Advantage.
(b) CFKY and the Bank shall take all steps necessary to cease
benefit accruals under the DB Plan and shall take all steps necessary to
terminate CFKY's 401(k) Plan at or prior to the Effective Time (or, if the
multiple employer plan through which it is maintained does not permit
termination, to take all steps to ensure that no additional contributions are
required or permitted after the Effective Time and that no additional benefits
accrue after the Effective Time) and to liquidate the 401(k) Plan assets as soon
as possible after the Effective Time. Subject to applicable law and regulation,
employees of the Bank who become employees of Advantage shall become
participants in the Camco 401(k) Plan as of the Effective Time, in accordance
with the terms and conditions of such Plan as then in effect, with prior service
credit given for their years of employment by the Bank for eligibility and
vesting purposes.
(c) The CFKY ESOP shall be terminated and the net assets
thereof shall be distributed as described in Section 6.06 as expeditiously as
possible after the Effective Time.
(d) No additional contribution shall be made to the CFKY ESOP
or CFKY's 401(k) Plan by Camco, Advantage, CFKY or the Bank except as necessary
to make the minimum required payment under the current exempt loan (the "ESOP
Loan") between CFKY and the CFKY ESOP or to satisfy any matching contribution
required under the terms of CFKY's 401(k) Plan; provided, however, that all such
contributions shall be deductible by CFKY and the Bank under Section 404 of the
Code and the allocations of such contributions shall otherwise be in compliance
with Section 415 of the Code.
(e) CFKY and the Bank have delivered true and complete copies
of the DB Plan and the 401(k) Plan to Camco. CFKY and the Bank shall (i) use
their reasonable best efforts to cause Pentegra to promptly file with the IRS an
application for determination letters to the effect that the DB Plan and the
401(k) Plan each complies with all applicable provisions of the Code and that
the trust associated with each such plan is exempt from taxes under Code Section
501, and (ii) promptly notify Camco of the amount of any fines, penalties or
other costs that are assessed or threatened against CFKY or the Bank as a result
of the failure to have previously obtained determination letters for the DB Plan
and the 401(k) Plan (the "Benefit Plan Cost").
SECTION 6.06. TERMINATION OF CFKY ESOP. (a) Subject to the
Code and relevant regulations, as soon as practicable following the date of this
Agreement, CFKY and the Bank will (i) amend the ESOP to incorporate any
additional provisions required by law and (ii) submit an application to the IRS
requesting a determination letter to the effect that the CFKY ESOP, as initially
established and as subsequently amended to comply with laws enacted after the
CFKY ESOP was established, complies with Section 401(a) of the Code.
(b) Prior to the Effective Time, CKFY shall continue to accrue
compensation expense with respect to the CFKY ESOP only to the extent necessary
to make any principal and interest payments required to be made on the current
exempt loan from CFKY to the CFKY
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ESOP (the "ESOP Loan") between the date of this Agreement and the Effective
Time. At the Effective Time, any amounts so accrued shall be applied toward
repayment of the ESOP Loan, after which an appropriate number of CFKY shares
shall be allocated as promptly as possible by the CFKY ESOP trustee to the
accounts of CFKY ESOP participants, as defined in the CFKY ESOP (the "ESOP
Participants") in accordance with the allocation provisions of the CFKY ESOP and
applicable law; provided, however, that any such contribution shall be
deductible by CFKY and the Bank under Section 404 of the Code and the
allocations of such contribution shall otherwise be in compliance with Section
415 of the Code.
(c) All CFKY shares held by the trustee of the CFKY ESOP at
the Effective Time shall be exchanged by the CFKY ESOP trustee for the Per Share
Merger Consideration. The trustee of the CFKY ESOP shall surrender to Camco a
number of shares held in the suspense account of the CFKY ESOP or pay cash, at
the election of Camco, for the purpose of retiring the ESOP Loan. The number of
Camco shares to be surrendered, if any, shall be based upon the fair market
value of such shares at the time of surrender. Any Camco shares and other assets
remaining in the suspense account following the repayment of the ESOP Loan in
full shall be allocated as promptly as possible by the CFKY ESOP trustee to ESOP
Participants in accordance with the allocation provisions of the CFKY ESOP and
applicable law. It is the intent of the parties that the CFKY ESOP be terminated
concurrently with the Effective Time and that the distributions be made as soon
thereafter as possible, provided that no distribution shall be made until a
final determination letter is received from the IRS.
(d) After the Effective Time, and while the determination
letter application described in Section 6.06(a) is pending, the current
administrator of the CFKY ESOP, or another administrator selected by Camco
(subject to consultation with the then current trustee), shall continue to
administer the CFKY ESOP subsequent to the Effective Time, and the current
trustee of the CFKY ESOP, or such other trustee(s) selected by Camco (subject to
consultation with the then current trustee) or the administrators, shall
continue to be the Trustee subsequent to the Effective Time.
(e) Camco and CFKY agree that the CFKY ESOP shall be amended
to the extent necessary to receive a favorable determination letter from the IRS
as to the tax qualified status of the CFKY ESOP upon its termination under
Section 401(a) and 4975(e)(7) of the Code (the "Final Determination Letter").
Following the receipt of the Final Determination Letter, distributions of the
account balances under the CFKY ESOP shall be made to the ESOP Participants.
From and after the date hereof, in anticipation of such termination and
distribution, CFKY and the Bank prior to the Effective Time, and Camco after the
Effective Time, shall use their best efforts to obtain the favorable Final
Determination Letter. In the event that CFKY and the Bank, prior to the
Effective Time, and Camco after the Effective Time, reasonably determine that
the CFKY ESOP cannot obtain a favorable Final Determination Letter, or that the
amounts held therein cannot be applied, allocated or distributed without causing
the CFKY ESOP to lose its tax qualified status, CFKY and the Bank prior to the
Effective Time and Camco after the Effective Time shall take such action as they
may reasonably determine is necessary to preserve, to the extent possible, the
tax status of the CFKY ESOP and its trust, the tax characterization of
distributions to ESOP Participants, the allocation of the Per Share Merger
Consideration as
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described in Section 6.06(c) to those employees who are ESOP Participants as of
the Effective Time and the liquidation of the CFKY ESOP trust. All CFKY ESOP
Participants shall fully vest and have a nonforfeitable interest in their
accounts under the CFKY ESOP determined as of the termination date.
SECTION 6.07. RECOGNITION AND RETENTION PLAN. The existing RRP
awards listed in Section 3.28(a) of the CFKY Disclosure Schedule will become
earned and nonforfeitable upon the execution of this Agreement. No other awards
shall be made under the RRP after the date of this Agreement. Prior to the
Effective Time, CFKY shall terminate the RRP and shall direct the RRP committee
and/or the trustee, if appropriate, to return any unawarded or forfeited CFKY
Shares to CFKY and the committee and/or the trustee shall promptly effect such
directive.
SECTION 6.08. ACCESS. Until the Effective Time, CFKY and the
Bank shall afford to Camco, and Camco shall afford to CFKY and the Bank, and to
their respective officers and representatives (including, without limitation,
counsel, financial advisers and independent accountants), reasonable access to
their properties, personnel, books, records and affairs. Such access shall
include, but shall not be limited to, (i) permitting verification, by audit or
otherwise, of any representation or warranty made hereunder; (ii) authorizing
release of any information (including the work papers of such independent
auditors and financial consultants); (iii) consistent with applicable
regulations or procedures, furnishing regular and special examination reports
since the date of this Agreement; and (iv) delivering copies of all documents or
reports or correspondence filed and any correspondence with any federal
regulatory or supervisory agency from the date of this Agreement. Each party
shall furnish the other party with such additional financial and operating data
and other information as to its businesses and properties as may be reasonably
requested.
SECTION 6.09. CONFIDENTIALITY. The parties acknowledge the
confidential and proprietary nature of the information as hereinafter described
which has heretofore been exchanged and which will be received from each other
hereunder (the "Information") and agree to hold and keep the same confidential.
Such Information will include any and all financial, technical, commercial,
marketing, customer or other information concerning the business, operations and
affairs of a party that may be provided to the other, irrespective of the form
of the communications, by such party's employees or agents. Such Information
shall not include information that is or becomes generally available to the
public other than as a result of a disclosure by a party or its representatives
in violation of this Agreement, or Information which is required to be furnished
or used in connection with legal proceedings. The parties agree that the
Information will be used solely for the purposes contemplated by this Agreement
and that such Information will not be disclosed to any person other than
employees and agents of a party who are directly involved in evaluating the
transaction. The Information shall not be used in any way detrimental to a
party, including use directly or indirectly in the conduct of the other party's
business or enterprise in which such party may have an interest, now or in the
future, and whether or not now in competition with such other party. Upon the
written request of the disclosing party, upon termination of this Agreement, the
other parties will promptly return or destroy Information in their possession
and certify to the disclosing party that the party has done so.
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SECTION 6.10. PRESS RELEASES. Camco and CFKY shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement without
obtaining the prior consent of the other party, except as may be required by law
or by obligations pursuant to any listing agreement with any national securities
association.
SECTION 6.11. COSTS AND EXPENSES; TERMINATION FEE. Except as
set forth in Section 6.18 of this Agreement and as set forth below, whether or
not the Corporate Merger is consummated, all costs and expenses incurred in
connection with this Agreement, the Proxy Statement, the Registration Statement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses. Notwithstanding the foregoing, in the event (i) the
board of directors of CFKY or the Bank accepts in any manner an Acquisition
Transaction prior to the earlier of (x) termination of this Agreement for any
reason other than in connection with a breach of this Agreement by CFKY or the
Bank, or (y) August 31, 2002, or (ii) the board of directors of CFKY fails to
recommend to the shareholders of CFKY approval of the Agreement and the
Agreement is rejected by the shareholders of CFKY; or (iii) no meeting of
shareholders is held on or before December 31, 2001, other than for reasons
beyond the control of CFKY, then CFKY shall pay to Camco $1,250,000 in
immediately available federal funds, as follows: (A) in the case of the
execution of any definitive agreement or letter of intent in respect of an
Acquisition Transaction prior to the earlier of (x) termination of this
Agreement for any reason other than in connection with a breach of this
Agreement by CFKY or the Bank, or (y) August 31, 2002, such payment shall be
made within two days of the execution of such agreement or letter of intent, (B)
in the case of the disapproval by the shareholders of CFKY of this Agreement
where the board of directors of CFKY has failed to recommend approval, such
payment shall be made within two days after the date of the CFKY Shareholders
Meeting, and (C) if no meeting of shareholders is held by December 31, 2001,
other than for reasons beyond the control of CFKY, such payment to be made
within two days after December 31, 2001.
SECTION 6.12. REASONABLE EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do or cause
to be done all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
SECTION 6.13. NOTIFICATION OF EVENTS. At all times from the
date of this Agreement until the Effective Time, each party shall promptly
notify the other in writing of any materially adverse business conditions
threatening its normal business operations or of the occurrence of any event or
the failure of any event to occur which might reasonably be expected to result
in a breach of or a failure to comply with any representation, warranty,
covenant, condition or agreement contained in this Agreement or of the
commencement of any action, suit, proceeding or investigation against it.
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SECTION 6.14. VOTING AGREEMENT. Concurrently with the
execution and delivery of this Agreement, and as a condition and material
inducement to Camco's willingness to enter into this Agreement, each of the
directors and executive officers of CFKY and the Bank shall enter into a CFKY
Shareholder Agreement in the form attached hereto as Exhibit B.
SECTION 6.15. [RESERVED].
SECTION 6.16. INDEMNIFICATION. (a) From the Effective Time and
continuing for a period of three years thereafter, the current and former
officers and directors of CFKY shall be indemnified by Camco from their acts and
omissions occurring prior to the Effective Time to the extent permitted by the
certificate of incorporation and bylaws of Camco or the articles of
incorporation and code of regulations of CFKY and applicable law. From the
Effective Time and continuing for a period of three years thereafter, the
current and former officers and directors of the Bank shall be indemnified by
Advantage for their acts and omissions occurring prior to the Effective Time to
the extent permitted by the articles of incorporation and constitution of
Advantage or the Charter and Bylaws of the Bank and applicable law. As a
condition to receiving such indemnification, the party claiming indemnification
shall assign to Camco, by separate writing, all right, title and interest in and
to the proceeds of the claiming party's applicable insurance coverage, if any,
including insurance maintained or provided by Camco or CFKY or the Bank to the
extent of such indemnity. No person shall be entitled to such indemnification
with respect to a claim (i) if such person fails to cooperate in the defense and
investigation of such claim as to which indemnification may be made, (ii) made
by such person against Camco, its subsidiaries, CFKY or the Bank arising out of
or in connection with this Agreement, the transactions contemplated hereby or
the conduct of the business of Camco, its subsidiaries, CFKY or the Bank, or
(iii) if such person fails to deliver such notices as may be required under any
applicable directors and officers liability insurance policy to preserve any
possible claims of which the claiming party is aware, to the extent such failure
results in the denial of payment under such policy.
(b) Camco shall designate one of the following two
alternatives for providing directors' and officers' liability coverage for the
directors and officers of CFKY and the Bank: (i) CFKY shall obtain extended
reporting or "tail" coverage for three years under the director and officer
liability policy currently maintained by CFKY and the Bank or (ii) subject to
CFKY and the Bank providing all requested information and representations to
Camco's directors' and officers' liability insurance carrier, Camco shall add a
rider, to be effective at the Effective Time, to Camco's existing directors' and
officers' liability insurance policy covering the acts and omissions of the
officers and directors of CFKY and the Bank occurring prior to the Effective
Time and to continue such rider for a period of three years. Camco's obligation
under this Section 6.16(b) shall be limited to an aggregate amount not to exceed
150% of the annual premium for the director and officer liability policy
currently maintained by CFKY and the Bank.
SECTION 6.17. CONDUCT OF CAMCO BUSINESS. From the date of this
Agreement until the Effective Time, Camco shall:
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(a) Use all reasonable efforts to preserve intact its business
organization and assets and maintain its rights, franchises and existing
relationships with customer, suppliers, employees and business associates;
(b) Notify CFKY in writing within five business days of (i)
the existence of any adverse business conditions threatening the normal business
operations of Camco, (ii) the occurrence of any event or the failure of any
event to occur which might result in a breach of or a failure to comply with any
representations, warranty, covenant, condition or agreement by or pertaining to
Camco contained in this Agreement, (iii) the commencement of any material
action, suit, proceeding, or investigation against Camco, and (iv) the tender of
any offer to acquire Camco by merger or otherwise;
(c) Take no action that would adversely affect the ability of
Camco to obtain any necessary approvals of governmental authorities required for
the transactions contemplated hereby without the imposition of a burdensome
restriction or condition, or adversely affect the ability of Camco to perform
its covenants and agreements under this Agreement; and
(d) Take all action necessary to cause to be listed on The
Nasdaq Stock Market the Camco Shares to be issued pursuant to this Agreement.
SECTION 6.18. TITLE INSURANCE AND ENVIRONMENTAL STUDIES. (a)
Camco may, in its discretion, and at its expense, obtain title insurance
policies or commitments for any or all of the Real Properties.
(b) Camco and CFKY shall jointly select and retain an expert
to perform environmental inspections of the Real Properties. The scope of such
environmental inspections shall include (i) matters typically covered in an
Environmental Site Assessment "Phase One" investigation in accordance with
American Society for Testing Materials E 1527-00, (ii) a physical inspection
(including sampling) of the Real Properties to identify the presence, location,
amounts and condition of Hazardous Substances, (iii) any additional inspections
or tests required to further investigate potential problems identified in the
"Phase One" investigation and physical inspections, (iv) an estimate of the cost
to take any remedial or other corrective actions and measures which the expert
determines (A) are presently required by applicable law, (B) would be required
to be taken in connection with any reasonable renovation or demolition of the
property, or (C) are prudent in light of serious health or safety concerns
(collectively, the "Environmental Costs Estimate"), and (v) such other items as
may be agreed upon by Camco and CFKY.
If Camco and CFKY have not agreed upon an acceptable
expert on or before June 15, 2001, Camco shall select an expert and shall give
CFKY written notice identifying the expert selected by Camco. If CFKY objects to
the expert selected by Camco, CFKY shall give written notice to Camco within
five business days of receipt by CFKY of the notice from Camco identifying an
expert acceptable to CFKY. The experts selected by Camco and CFKY shall then
jointly select a third expert to conduct the inspections.
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If it is necessary to engage a different expert to
provide the Environmental Costs Estimate from that which conducts the
environmental inspections, the same procedure described above shall be used for
the selection of such other expert; provided, however, that the applicable date
for agreeing upon a mutually acceptable expert in such case shall be five
business days following the receipt of the report of the first expert who
conducted the inspections.
Camco shall pay the fees and expenses of the expert;
provided, however, if CFKY terminates this Agreement pursuant to Section
8.01(d)(ii), CFKY shall reimburse Camco for such fees and expenses.
SECTION 6.19. AMENDMENT TO CFKY ARTICLES AND CHARTER OF THE
BANK. (a) The board of directors of CFKY shall take all steps necessary to amend
the Articles of Incorporation of CFKY to eliminate Article Seventh and shall use
its best efforts to cause the shareholders of CFKY to approve such amendment.
(b) The Bank shall take all steps necessary to amend the
Charter of the Bank to eliminate Section 8.A. CFKY, as the sole shareholder of
the Bank, agrees to vote its shares of the Bank in favor of the amendment to the
Charter of the Bank to eliminate Section 8.A.
ARTICLE SEVEN
CLOSING MATTERS
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF CAMCO, MERGER SUB,
ADVANTAGE, CFKY AND THE BANK. Notwithstanding any other provision of this
Agreement, the obligations of Camco, Merger Sub, Advantage, CFKY and the Bank to
effect the Corporate Merger and the Bank Merger shall be subject to the
fulfillment of each of the following conditions:
(a) This Agreement shall have been validly adopted by the
affirmative vote of the holders of at least the number of
outstanding CFKY Shares required under Ohio law and CFKY's
Articles of Incorporation and Code of Regulations;
(b) All permits, approvals, consents, authorizations,
exemptions or waivers of any federal or state governmental
body or agency necessary or appropriate for consummation of
the Merger shall have been obtained and all notices required
to be filed shall have been filed and any objection or waiting
period with respect to each such notice shall have expired;
(c) All waivers, consents and approvals of every person, in
addition to those required under subsections (a) and (b) of
this Section 7.01, necessary or appropriate for the
consummation of the Corporate Merger and the Bank Merger shall
have been obtained;
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(d) There shall not be in effect any federal or state law,
rule or regulation or any order or decision of a court of
competent jurisdiction which prevents or materially delays the
consummation of the Corporate Merger or the Bank Merger; and
(e) The Registration Statement (including any post-effective
amendment thereto) shall have been declared effective by the
SEC, and no proceeding shall be pending or, to the knowledge
of Camco or CFKY, threatened by the SEC to suspend the
effectiveness of the Registration Statement.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF CAMCO. In addition
to the conditions contained in Section 7.01 of this Agreement, the obligations
of Camco, Merger Sub and Advantage to effect the Corporate Merger and the Bank
Merger shall also be subject to the fulfillment of each of the following
conditions unless fulfillment is waived by Camco in writing:
(a) The representations and warranties of CFKY and the Bank
contained in Article Three of this Agreement shall be true in
all material respects at and as of the date hereof and at and
as of the day of the Closing as if made at and as of such
time, except as otherwise permitted or required by this
Agreement or where such representation or warranty is
expressly made as of a specific date;
(b) CFKY and the Bank shall have duly performed and complied
in all material respects with all agreements, covenants and
conditions required by this Agreement to be performed or
complied with by CFKY and the Bank before or on the day of the
Closing;
(c) There shall not have been a material adverse change in the
financial condition, assets, liabilities, obligations,
properties, business or prospects of CFKY or the Bank after
the date of this Agreement, except (i) changes resulting from
action taken by CFKY or the Bank pursuant to Section 5.03 or
Section 6.07 of this Agreement, (ii) changes resulting from or
attributable to reasonable expenses incurred in connection
with the transactions contemplated by this Agreement, (iii)
changes in law or regulations affecting financial institutions
or their holding companies, (iv) changes in generally accepted
accounting principles or regulatory accounting principles
applicable to financial institutions and their holding
companies, and (v) changes in economic conditions applicable
to depository institutions generally or in general levels of
interest rates;
(d) CFKY and the Bank shall each have delivered to Camco a
certificate dated the day of the Closing and signed by the
President of each of CFKY and the Bank to the effect set forth
in subsections (a), (b) and (c) of this Section 7.02;
(e) There shall not be any action or proceeding commenced by
or before any court or governmental agency or authority in the
United States, or threatened by any governmental agency or
authority in the United States, that challenges or
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seeks to prevent or delay the consummation of the Merger or
seeks to impose material limitations on the ability of Camco to
exercise full rights of ownership of the assets or business of
CFKY and the Bank;
(f) There shall not have been proposed, nor shall there be in
effect, any federal or state law, rule, regulation, order or
statement of policy that, in the reasonable judgment of Camco,
would: (i) prevent or delay the consummation of the Merger or
interfere with the reasonable operation of the business of CFKY
or the Bank (ii) materially adversely affect the ability of
Camco to enjoy the economic or other benefits of the Merger, or
(iii) impose any material adverse condition, limitation or
requirement on Camco in connection with the Merger;
(g) CFKY and the Bank shall not have incurred any damage,
destruction or similar loss, not covered by insurance,
materially affecting its businesses or properties;
(h) The shareholders' equity of CFKY on the day of the Closing
and as calculated in accordance with GAAP shall not be less than
$29.0 million, without giving effect to (i) reserves, accruals
and charges taken or established by CFKY or the Bank at the
request of Camco in accordance with Section 5.03 of this
Agreement, (ii) reasonable expenses incurred in connection with
the transactions contemplated by this Agreement, (iii) realized
or unrealized gains or losses on securities classified as
available for sale in the CFKY Audited Financials, (iv)
dividends paid in accordance with Section 5.04 of this
Agreement, or (v) expenses incurred pursuant to Section 6.07 of
this Agreement;
(i) CFKY and the Bank shall have complied with Section 5.03
hereof to the reasonable satisfaction of Camco;
(j) Camco shall have received the affiliate letters required by
Section 6.03 of this Agreement;
(k) The holders of not more than 10% of the outstanding CFKY
Shares shall have sought relief as Dissenting Shareholders; and
(l) The Bank shall have provided Camco with adequate records
with respect to the liquidation account, and such records are
current and complete.
The fulfillment of any one or all of the foregoing conditions
may be waived in the sole discretion of the board of directors of Camco.
SECTION 7.03. CONDITIONS TO OBLIGATIONS OF CFKY AND THE BANK. In
addition to the conditions contained in Section 7.01 of this Agreement, the
obligations of CFKY and the Bank to effect the Corporate Merger and the Bank
Merger shall also be subject to the fulfillment of each of the following
conditions:
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(a) The representations and warranties of Camco, Merger Sub
and Advantage contained in Article Four of this Agreement
shall be true in all material respects at and as of the date
hereof and at and as of the date of the Closing as if made at
and as of such time, except as otherwise permitted or required
by this Agreement or where such representation or warranty is
expressly made as of a specific date;
(b) Camco, Merger Sub and Advantage shall have duly performed
and complied in all material respects with all agreements,
covenants and conditions required by this Agreement to be
performed or complied with by them before or at the Closing;
(c) There shall not have been a material adverse change in the
financial condition, assets, liabilities, obligations,
properties, business or prospects of Camco after the date of
this Agreement, except (i) changes resulting from or
attributable to expenses incurred in connection with the
transactions contemplated by this Agreement; (ii) changes in
law or regulations affecting financial institutions or their
holding companies; (iii) changes in generally accepted
accounting principles or regulatory accounting principles
applicable to financial institutions and their holding
companies; and (iv) changes in economic conditions applicable
to depository institutions generally or in general levels of
interest rates;
(d) Camco, Merger Sub and Advantage shall each have delivered
to CFKY a certificate dated the day of the Closing and signed
by the President of each of Camco, Merger Sub and Advantage to
the effect set forth in subsections (a) and (b) of this
Section 7.03, and a certificate dated the day of the Closing
and signed by the President of Camco to the effect set forth
in subsection (c) of this Section 7.03;
(e) The market value of a Camco Share shall be equal to or
greater than $9.25 based on the Camco closing price for the
ten trading days ending five calendar days prior to the date
of the Closing; provided, however, that this condition shall
be deemed to have been satisfied if the Camco Share market
value, as described above, is less than $9.25 and Camco
elects, in its sole discretion, to increase either the cash
portion of the Per Share Merger Consideration or the Camco
Share Consideration such that the value of the Per Share
Merger Consideration, before giving effect to any adjustments
pursuant to Section 1.02(a)(iii) and (iv) of this Agreement,
shall be not less than $10.30; and
(f) CFKY shall have received the written opinion of KBW dated
the date of the Proxy Statement to the effect that the Per
Share Merger Consideration is fair to the holders of the CFKY
Common Shares from a financial point of view as of such date.
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The fulfillment of any one or all of the foregoing conditions
may be waived in the sole discretion of the board of directors of CFKY.
ARTICLE EIGHT
TERMINATION
SECTION 8.01. TERMINATION. This Agreement may be terminated at
any time prior to the date of the Closing, whether before or after approval by
the shareholders of CFKY:
(a) By mutual consent of the boards of directors of CFKY and
Camco; or
(b) By the board of directors of CFKY or Camco, in their
sole discretion, if:
(i) The Merger shall not have been consummated on or
before February 28, 2002;
(ii) Any event occurs which, in the reasonable
opinion of either Camco or CFKY, would preclude
satisfaction of any of the conditions set forth
in Section 7.01 of this Agreement; or
(c) By the board of directors of Camco, in its sole
discretion, if any event occurs which, in the reasonable
opinion of such board, would preclude compliance with
any of the conditions set forth in Section 7.02 of this
Agreement.
(d) By the board of directors of CFKY, in its sole
discretion, if:
(i) any event occurs which, in the reasonable
opinion of such board, would preclude compliance
with any of the conditions set forth in Section
7.03 of this Agreement; or
(ii) if the total adjustments to the Per Share Merger
Consideration pursuant to Section 1.02(a)(iii)
and (iv) of this Agreement would exceed $.30 per
share.
SECTION 8.02. WRITTEN NOTICE OF TERMINATION. In order to
terminate this Agreement pursuant to Section 8.01, the party so acting shall
give written notice of such termination to the other party. This Agreement shall
terminate on the date such notice is given.
SECTION 8.03. EFFECT OF TERMINATION. In the event of the
termination of this Agreement, the provisions of this Agreement shall become
void and have no effect; provided, however, that (a) the provisions set forth in
Sections 6.09, 6.10 and 6.11 of this Agreement shall survive such termination
and shall remain in full force and effect, and (b) a termination of this
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Agreement shall not affect the liability of any party for an uncured breach of
any term or condition of this Agreement.
SECTION 8.04. AMENDMENT. This Agreement may be amended at any
time before or after approval of this Agreement by the shareholders of CFKY, but
after such approval no amendment shall be made which materially and adversely
affects the rights of such shareholders without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 8.05. WAIVER. Any term, condition or provision of this
Agreement (other than the requirement for shareholder approval) may be waived in
writing at any time by action of the board of directors of the party which is,
or whose shareholders are, entitled to the benefits thereof.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.01. NOTICES. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If addressed to Camco or Advantage:
Larry A. Caldwell
Chairman of the Board
Camco Financial Corporation
6901 Glenn Highway
Cambridge, Ohio 43725-9757
with a copy to:
Roger A. Yurchuck, Esq. and
Terri Reyering Abare, Esq.
Vorys, Sater, Seymour and Pease LLP
221 East Fourth Street
Atrium Two, Suite 2100
Cincinnati, Ohio 45202
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If addressed to CFKY or the Bank:
Robert V. Lynch
President and Chief Executive Officer
Columbia Financial of Kentucky, Inc.
2497 Dixie Highway
Ft. Mitchell, KY 41017
with a copy to:
John C. Vorys, Esq. and
Cynthia A. Shafer, Esq.
Vorys, Sater, Seymour and Pease LLP
221 East Fourth Street
Atrium Two, Suite 2100
Cincinnati, Ohio 45202
SECTION 9.02. ENTIRE AGREEMENT. This Agreement (including the
exhibits, documents and instruments referred to herein or therein) (a)
constitutes the entire agreement of the parties and supersedes all other prior
agreements and understandings, including the Confidentiality Agreement dated
February 15, 2001, both written and oral, among the parties, or any of them,
with respect to the subject matter hereof; (b) is not intended to and shall not
confer any rights or remedies hereunder upon any person other than Camco, Merger
Sub, Advantage, CFKY and the Bank; (c) shall not be assigned by operation of law
or otherwise; and (d) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Ohio, except to the
extent that Delaware or federal law may be applicable.
SECTION 9.03. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in two or more counterparts which together shall constitute a single
Agreement.
SECTION 9.04. HEADINGS. The headings of articles and sections
herein are for convenience of reference only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
SECTION 9.05. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
No representation or warranty shall survive the Effective Time.
SECTION 9.06. LIABILITIES AND SPECIFIC PERFORMANCE. The
termination fee provided for in Section 6.11 of this Agreement shall be the
exclusive fee and remedy for a termination of this Agreement with respect to the
matters described in Section 6.11 and the consideration, execution or
consummation of an Acquisition Transaction. Other than with respect to such
specific remedies, each party to this Agreement recognizes that, if it fails to
perform, observe or discharge any of its obligations under this Agreement,
remedies at law may not provide adequate relief to the other party or parties.
Therefore, each party is hereby authorized to demand specific performance of
this Agreement and is entitled to temporary and
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permanent injunctive relief in a court of competent jurisdiction at any time
when any other party fails to comply with any of the provisions of this
Agreement applicable to it, in addition to any other remedy that may be
available in law or equity. To the extent permitted by applicable law, each
party hereby irrevocably waives any defense that it might have based on the
adequacy of a remedy at law that might be asserted as a bar to such remedy of
specific performance or injunctive relief.
[Signatures on next page]
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IN WITNESS WHEREOF, Camco, Merger Sub, Advantage, CFKY and the
Bank have caused this Agreement to be signed by their respective duly authorized
officers on the date first above written.
ATTEST: CAMCO FINANCIAL CORPORATION
/s/ Anita Frencik By: /s/ Richard C. Baylor
--------------------------- --------------------------------------------
Anita Frencik Richard C. Baylor
Assistant Secretary President
ATTEST: CAMCO ACQUISITION CORP.
/s/ D. Edward Rugg By: : /s/ Richard C. Baylor
--------------------------- --------------------------------------------
D. Edward Rugg Richard C. Baylor
Secretary President
ATTEST: ADVANTAGE BANK
/s/ D. Edward Rugg By: : /s/ Richard C. Baylor
--------------------------- --------------------------------------------
D. Edward Rugg Richard C. Baylor
Assistant Secretary President
ATTEST: COLUMBIA FINANCIAL OF KENTUCKY, INC.
/s/ Carol Margrave By: /s/ Robert V. Lynch
--------------------------- --------------------------------------------
Carol Margrave Robert V. Lynch
Secretary President and Chief Executive Officer
ATTEST: COLUMBIA FEDERAL SAVINGS BANK
/s/ Carol Margrave By: /s/ Robert V. Lynch
--------------------------- --------------------------------------------
Carol Margrave Robert V. Lynch
Secretary President and Chief Executive Officer
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Annex B
September 20, 2001
Board of Directors
Columbia Financial of Kentucky, Inc.
2497 Dixie Highway
Fort Mitchell, Kentucky
Dear Members of the Board:
You have requested our opinion as an independent investment banking firm
regarding the fairness, from a financial point of view, to the stockholders of
Columbia Financial of Kentucky, Inc. ("CFKY"), of the consideration to be paid
by Camco Financial Corporation ("Camco") in the merger (the "Merger") between
CFKY and Camco. We have not been requested to opine as to, and our opinion does
not in any manner address, CFKY's underlying business decision to proceed with
or effect the Merger.
Pursuant to the Agreement of Merger and Plan of Reorganization, dated June 4,
2001, by and among CFKY and Camco (the "Agreement"), at the effective time of
the Merger, Camco will acquire all of CFKY's issued and outstanding shares of
common stock. Camco will issue to the holders of CFKY's common stock $6.90 in
cash and .3681 shares of Camco stock for each share of CFKY common stock
outstanding. The options of CFKY that remain outstanding at the Effective Time
will be cashed out at the difference between the value of the Per Share Merger
Consideration as defined in the Agreement and the exercise price. The complete
terms of the proposed transaction are described in the Agreement, and this
summary is qualified in its entirety by reference thereto.
Keefe, Bruyette & Woods, Inc., as part of its investment banking business, is
regularly engaged in the evaluation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, and distributions of
listed and unlisted securities. We are familiar with the market for common
stocks of publicly traded banks, savings institutions and bank and savings
institution holding companies.
In connection with this opinion we reviewed certain financial and other business
data supplied to us by CFKY including (i) Agreement of Merger and Plan of
Reorganization by and among CFKY and Camco, (ii) Annual Report, Proxy Statement
and Form 10-K for the years ended September 30, 1999 and 2000, (iii) the
quarterly reports on Form 10-Q for the quarters ended December 31, 2000 and
March 31, 2001; and (iii) other information we deemed relevant. We discussed
with management and the boards of directors of CFKY and its wholly owned
subsidiary, Columbia Federal Savings Bank, the current position and
97
Board of Directors
Columbia Financial of Kentucky, Inc.
September 20, 2001
Page 2
prospective outlook for CFKY. We considered historical quotations and the prices
of recorded transactions in CFKY's common stock. We reviewed financial and stock
market data of other savings institutions, particularly in the Midwestern region
of the United States, and the financial and structural terms of several other
recent transactions involving mergers and acquisitions of savings institutions
or proposed changes of control of comparably situated companies.
For Camco, we reviewed (i) Annual Report, Proxy Statement and Form 10-K for the
years ended December 31, 1999 and 2000, (ii) the quarterly report on Form 10-Q
for the quarter ended March 31, 2001 and (iii) other information we deemed
relevant.
For purposes of this opinion we have relied, without independent verification,
on the accuracy and completeness of the material furnished to us by CFKY and
Camco and the material otherwise made available to us, including information
from published sources, and we have not made any independent effort to verify
such data. With respect to the financial information, including forecasts and
asset valuations we received from CFKY, we assumed (with your consent) that they
had been reasonably prepared reflecting the best currently available estimates
and judgment of CFKY's management. In addition, we have not made or obtained any
independent appraisals or evaluations of the assets or liabilities, and
potential and/or contingent liabilities of CFKY or Camco. We have further relied
on the assurances of management of CFKY and Camco that they are not aware of any
facts that would make such information inaccurate or misleading. We express no
opinion on matters of a legal, regulatory, tax or accounting nature or the
ability of the Merger, as set forth in the Agreement, to be consummated.
In rendering our opinion, we have assumed that in the course of obtaining the
necessary approvals for the Merger, no restrictions or conditions will be
imposed that would have a material adverse effect on the contemplated benefits
of the Merger to CFKY or the ability to consummate the Merger. Our opinion is
based on the market, economic and other relevant considerations as they exist
and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial
advisor to CFKY in connection with the Merger and will receive a fee for such
services. In addition, CFKY has agreed to indemnify us for certain liabilities
arising out of our engagement by CFKY in connection with the Merger.
Based upon and subject to the foregoing, as outlined in the foregoing paragraphs
and based on such other matters as we considered relevant, it is our opinion
that as of the date hereof, the consideration to be paid by Camco in the Merger
is fair, from a financial point of view, to the stockholders of CFKY.
98
Board of Directors
Columbia Financial of Kentucky, Inc.
September 20, 2001
Page 3
This opinion may not, however, be summarized, excerpted from or otherwise
publicly referred to without our prior written consent, although this opinion
may be included in its entirety in the proxy statement of CFKY used to solicit
stockholder approval of the Merger. It is understood that this letter is
directed to the Board of Directors of CFKY in its consideration of the
Agreement, and is not intended to be and does not constitute a recommendation to
any stockholder as to how such stockholder should vote with respect to the
Merger.
Very truly yours,
/s/ KEEFE, BRUYETTE, & WOODS, INC.
----------------------------------
Keefe, Bruyette, & Woods, Inc.
99
ANNEX C
-------
Section 1701.85 DISSENTING SHAREHOLDER'S DEMAND FOR FAIR CASH VALUE OF SHARES.
(A) (1) A shareholder of a domestic corporation is entitled to relief
as a dissenting shareholder in respect of the proposals described in sections
1701.74, 1701.76, and 1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders of the
corporation involved, the dissenting shareholder shall be a record holder of the
shares of the corporation as to which he seeks relief as of the date fixed for
the determination of shareholders entitled to notice of a meeting of the
shareholders at which the proposal is to be submitted, and such shares shall not
have been voted in favor of the proposal. Not later than ten days after the date
on which the vote on the proposal was taken at the meeting of the shareholders,
the dissenting shareholder shall deliver to the corporation a written demand for
payment to him of the fair cash value of the shares as to which he seeks relief,
which demand shall state his address, the number and class of such shares, and
the amount claimed by him as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under division
(C) of section 1701.84 of the Revised Code in the case of a merger pursuant to
section 1701.80 of the Revised Code and a dissenting shareholder entitled to
relief under division (E) of section 1701.84 of the Revised Code in the case of
a merger pursuant to section 1701.801 [1701.80.1] of the Revised Code shall be a
record holder of the shares of the corporation as to which he seeks relief as of
the date on which the agreement of merger was adopted by the directors of that
corporation. Within twenty days after he has been sent the notice provided in
section 1701.80 or 1701.801 [1701.80.1] of the Revised Code, the dissenting
shareholder shall deliver to the corporation a written demand for payment with
the same information as that provided for in division (A)(2) of this section.
(4) In the case of a merger or consolidation, a demand served on
the constituent corporation involved constitutes service on the surviving or the
new entity, whether the demand is served before, on, or after the effective date
of the merger or consolidation.
(5) If the corporation sends to the dissenting shareholder, at the
address specified in his demand, a request for the certificates representing the
shares as to which he seeks relief, the dissenting shareholder, within fifteen
days from the date of the sending of such request, shall deliver to the
corporation the certificates requested so that the corporation may forthwith
endorse on them a legend to the effect that demand for the fair cash value of
such shares has been made. The corporation promptly shall return such endorsed
certificates to the dissenting shareholder. A dissenting shareholder's failure
to deliver such certificates terminates his rights as a dissenting shareholder,
at the option of the corporation, exercised by written notice sent to the
dissenting shareholder within twenty days after the lapse of the fifteen-day
period, unless a court for good cause shown otherwise directs. If shares
represented by a certificate on which such a legend has been endorsed are
transferred, each new certificate issued for them shall bear a similar legend,
together with the name of the original dissenting holder of such shares. Upon
receiving a demand for payment from a dissenting shareholder who is the record
holder of uncertificated securities, the corporation shall make an appropriate
notation of the demand for payment in its shareholder records. If uncertificated
shares for which payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required for
certificated securities as provided in this paragraph. A transferee of the
shares so endorsed, or of uncertificated securities where such notation has been
made, acquires only such rights in the corporation as the original dissenting
holder
100
of such shares had immediately after the service of a demand for payment of the
fair cash value of the shares. A request under this paragraph by the corporation
is not an admission by the corporation that the shareholder is entitled to
relief under this section.
(B) Unless the corporation and the dissenting shareholder have come to
an agreement on the fair cash value per share of the shares as to which the
dissenting shareholder seeks relief, the dissenting shareholder or the
corporation, which in case of a merger or consolidation may be the surviving or
new entity, within three months after the service of the demand by the
dissenting shareholder, may file a complaint in the court of common pleas of the
county in which the principal office of the corporation that issued the shares
is located or was located when the proposal was adopted by the shareholders of
the corporation, or, if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting shareholders,
within that three-month period, may join as plaintiffs or may be joined as
defendants in any such proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of the facts,
including the vote and the facts entitling the dissenting shareholder to the
relief demanded. No answer to such a complaint is required. Upon the filing of
such a complaint, the court, on motion of the petitioner, shall enter an order
fixing a date for a hearing on the complaint and requiring that a copy of the
complaint and a notice of the filing and of the date for hearing be given to the
respondent or defendant in the manner in which summons is required to be served
or substituted service is required to be made in other cases. On the day fixed
for the hearing on the complaint or any adjournment of it, the court shall
determine from the complaint and from such evidence as is submitted by either
party whether the dissenting shareholder is entitled to be paid the fair cash
value of any shares and, if so, the number and class of such shares. If the
court finds that the dissenting shareholder is so entitled, the court may
appoint one or more persons as appraisers to receive evidence and to recommend a
decision on the amount of the fair cash value. The appraisers have such power
and authority as is specified in the order of their appointment. The court
thereupon shall make a finding as to the fair cash value of a share and shall
render judgment against the corporation for the payment of it, with interest at
such rate and from such date as the court considers equitable. The costs of the
proceeding, including reasonable compensation to the appraisers to be fixed by
the court, shall be assessed or apportioned as the court considers equitable.
The proceeding is a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of Appellate Procedure
and, to the extent not in conflict with those rules, Chapter 2505. of the
Revised Code. If, during the pendency of any proceeding instituted under this
section, a suit or proceeding is or has been instituted to enjoin or otherwise
to prevent the carrying out of the action as to which the shareholder has
dissented, the proceeding instituted under this section shall be stayed until
the final determination of the other suit or proceeding. Unless any provision in
division (D) of this section is applicable, the fair cash value of the shares
that is agreed upon by the parties or fixed under this section shall be paid
within thirty days after the date of final determination of such value under
this division, the effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs last. Upon the
occurrence of the last such event, payment shall be made immediately to a holder
of uncertificated securities entitled to such payment. In the case of holders of
shares represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the certificates
representing the shares for which the payment is made.
(C) If the proposal was required to be submitted to the shareholders of
the corporation, fair cash value as to those shareholders shall be determined as
of the day prior to the day on which the vote by the shareholders was taken and,
in the case of a merger pursuant to section 1701.80 or 1701.801 [1701.80.1] of
the Revised Code, fair cash value as to shareholders of a constituent subsidiary
corporation shall be determined as of the day before the adoption of the
agreement of merger by the directors of the particular subsidiary corporation.
The fair cash value of a share for the purposes of this
101
section is the amount that a willing seller who is under no compulsion to sell
would be willing to accept and that a willing buyer who is under no compulsion
to purchase would be willing to pay, but in no event shall the fair cash value
of a share exceed the amount specified in the demand of the particular
shareholder. In computing such fair cash value, any appreciation or depreciation
in market value resulting from the proposal submitted to the directors or to the
shareholders shall be excluded.
(D) (1) The right and obligation of a dissenting shareholder to receive
such fair cash value and to sell such shares as to which he seeks relief, and
the right and obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if any of the following applies:
(a) The dissenting shareholder has not complied with this
section, unless the corporation by its directors waives such failure;
(b) The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders rescind their
adoption of the action involved;
(c) The dissenting shareholder withdraws his demand, with the
consent of the corporation by its directors;
(d) The corporation and the dissenting shareholder have not
come to an agreement as to the fair cash value per share, and neither the
shareholder nor the corporation has filed or joined in a complaint under
division (B) of this section within the period provided in that division.
(2) For purposes of division (D)(1) of this section, if the merger
or consolidation has become effective and the surviving or new entity is not a
corporation, action required to be taken by the directors of the corporation
shall be taken by the general partners of a surviving or new partnership or the
comparable representatives of any other surviving or new entity.
(E) From the time of the dissenting shareholder's giving of the demand
until either the termination of the rights and obligations arising from it or
the purchase of the shares by the corporation, all other rights accruing from
such shares, including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or distribution is paid in
money upon shares of such class or any dividend, distribution, or interest is
paid in money upon any securities issued in extinguishment of or in substitution
for such shares, an amount equal to the dividend, distribution, or interest
which, except for the suspension, would have been payable upon such shares or
securities, shall be paid to the holder of record as a credit upon the fair cash
value of the shares. If the right to receive fair cash value is terminated other
than by the purchase of the shares by the corporation, all rights of the holder
shall be restored and all distributions which, except for the suspension, would
have been made shall be made to the holder of record of the shares at the time
of termination.
102
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COLUMBIA FINANCIAL OF KENTUCKY, INC.
COLUMBIA FINANCIAL OF KENTUCKY, INC.,
SPECIAL MEETING OF SHAREHOLDERS
OCTOBER 31, 2001
The undersigned shareholder of Columbia Financial of Kentucky, Inc.
("CFKY"), hereby constitutes and appoints John C. Layne and Daniel T. Mistler,
or either of them, as the proxy or proxies of the undersigned with full power of
substitution and resubstitution, to vote at the Special Meeting of Shareholders
of CFKY to be held at the Holiday Inn, 2100 Dixie Highway, Ft. Mitchell,
Kentucky, on October 31, 2001, at 11:00 a.m., local time (the "Special
Meeting"), all of the shares of CFKY that the undersigned is entitled to vote at
the Special Meeting, or at any adjournment thereof, on each of the following
proposals, all of which are described in the accompanying Prospectus/Proxy
Statement:
1. The adoption of an amendment to the Articles of Incorporation of CFKY to
eliminate Article Seventh:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. The approval and adoption of the Agreement and Plan of Reorganization dated
June 4, 2001, by and among Columbia Financial of Kentucky, Inc., Columbia
Federal Savings Bank, Camco Financial Corporation, Camco Acquisition Corp.
and Advantage Bank, and the transactions contemplated by that agreement:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IMPORTANT: PLEASE SIGN AND DATE THIS PROXY ON THE REVERSE SIDE.
103
3. In their discretion, upon such other business as may properly come before
the Special Meeting or any adjournments thereof.
The Board of Directors recommends a vote "FOR" the proposals listed on the
reverse side.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF THIS PROXY IS EXECUTED AND RETURNED,
BUT NO BOXES ARE MARKED, THE SHARES WILL BE VOTED FOR PROPOSALS 1 AND 2.
All Proxies previously given by the undersigned are hereby revoked. Receipt
of the Notice of the Special Meeting of Shareholders of CFKY and of the
accompanying Proxy Statement is hereby acknowledged.
Please sign exactly as your name appears on your Stock Certificate(s).
Executors, Administrators, Trustees, Guardians, Attorneys and Agents should give
their full titles.
---------------------------- ------------------------------
Signature Signature
---------------------------- ------------------------------
Print or Type Name Print or Type Name
Dated: _____________________ Dated: _______________________
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED FOR MAILING IN THE USA.