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<P id=PARA1 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>UNITED STATES</B><BR><B>SECURITIES AND EXCHANGE COMMISSION</B><BR><B>Washington, DC 20549</B></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><BR><BR></FONT><FONT style="FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, Times, serif"><B>FORM 8-K</B></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><BR><BR></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>CURRENT REPORT</B><BR></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><BR></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></P>
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<P id=PARA4 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Date of Report (Date of earliest event reported): <B>December 15, 2014</B></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><BR></FONT></P>
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<P id=PARA6 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman, Times, serif"><B><U>HMN Financial, Inc. </U></B></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><BR>(Exact name of registrant as specified in its charter) </FONT></P>
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<P id=PARA8 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Delaware</B>&nbsp;</FONT></P></TD>
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<P id=PARA10 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>0-24100</B>&nbsp;</FONT></P></TD>
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<P id=PARA12 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>41-1777397</B>&nbsp;</FONT></P></TD></TR>
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<P id=PARA13 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(State or other jurisdiction </FONT></P>
<P id=PARA14 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">of incorporation) </FONT></P></TD>
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<P id=PARA15 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Commission </FONT></P>
<P id=PARA16 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">File Number) </FONT></P></TD>
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<P id=PARA17 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(IRS Employer </FONT></P>
<P id=PARA18 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Identification No.) </FONT></P></TD></TR></TABLE>
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<P id=PARA20 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>1016 Civic Center Drive Northwest</B>&nbsp;</FONT></P>
<P id=PARA21 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Rochester, Minnesota</B>&nbsp;</FONT></P></TD>
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<P id=PARA23 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>55901</B></FONT></P></TD></TR>
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<P id=PARA24 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Address of principal executive offices) </FONT></P></TD>
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<P id=PARA25 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Zip Code) </FONT></P></TD></TR></TABLE>
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<P id=PARA27 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Registrant&#39;s telephone number, including area code <B>(507) 535-1200</B></FONT></P>
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<P id=PARA32 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(Former name or former address, if changed since last report) </FONT></P></TD>
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<P id=PARA35 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA34 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 22.5pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions </FONT></P>
<P id=PARA36 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA37 style="TEXT-ALIGN: left; MARGIN: 0pt 0pt 0pt 22.5pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&#8414;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"> Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR>&#8414;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"> Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR>&#8414;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"> Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR>&#8414;</FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"> Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</FONT></P>
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<P id=PARA40 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item </B><B>1</B><B>.01 </B><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Entry into a Material Definitive Agreement</B><B>. </B></FONT></P>
<P id=PARA41 style="MARGIN-BOTTOM: 0pt; MARGIN-TOP: 0pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA42 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">On December 15, 2014, HMN Financial, Inc. (the &#8220;Company&#8221;) entered into a Loan Agreement (the &#8220;Loan Agreement&#8221;) with Project Hawkeye, L.L.C. (the &#8220;Lender&#8221;), providing for a term loan of up to $10 million that will be evidenced by a promissory note (the &#8220;Note&#8221;). The Company may draw the loan on or before March 31, 2015. The principal balance of the Note will bear interest from the date the loan is made until the date the loan is repaid at the rate of 6.5% per annum. The principal balance of the Note will be payable in consecutive equal annual installments of $1 million on each anniversary of the date of the Loan Agreement, commencing on December 15, 2015, with the balance due on the maturity date. The maturity date will be on the earlier of (a) the anniversary of the date of the Loan Agreement obtained by dividing the original principal amount of the loan by $1 million (rounded up to the nearest number of whole years) and (b) the seventh anniversary of the date of the Loan Agreement. Provided that no default or event of default has occurred and is continuing, the Company may, at its option, elect to defer payment of one installment of principal of the Note otherwise due prior to the maturity date, in which event such installment will become due and payable on the maturity date. The Company may voluntarily prepay the Note in whole or in part without payment or penalty.</FONT></P>
<P id=PARA43 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA44 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The Loan Agreement includes customary representations and warranties. An event of default will be deemed to have occurred under the Loan Agreement upon certain uncured payment or performance defaults, breaches of the Loan Agreement, bankruptcy events, or liquidation or dissolution by the Company. For so long as the Note is unpaid or the commitment of the Lender to make the loan is in effect, the Company has agreed that it will not grant a lien on any of its assets to secure any debt for money borrowed from third parties, except that the Company may grant liens if the aggregate amount of such secured debt (or, if less, the aggregate fair market value of the pledged assets, as determined in good faith by the Company&#8217;s board of directors) does not exceed: (a) the aggregate amount by which the principal balance of the Note has been reduced plus (b) if the original amount of the Note was less than $10 million, the unused portion of the Lender&#8217;s original $10 million commitment.</FONT></P>
<P id=PARA45 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA46 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">If the Company elects to draw on the loan, then it must use the proceeds of the loan to fund the repurchase of outstanding shares of the Company&#8217;s Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the &#8220;Preferred Stock&#8221;). Any repurchase or redemption of Preferred Stock would be subject to, among other factors, subsequent approval by the board of directors of the Company and receipt by the Company of all applicable approvals from regulatory authorities.&nbsp;A principal owner of the Lender has an immaterial deposit relationship with Home Federal Savings Bank, a wholly owned subsidiary of the Company.&nbsp;There is no material relationship between the Company or its affiliates and the Lender, other than in respect of the Loan Agreement.</FONT></P>
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<P id=PARA48 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Safe Harbor Statement</U></FONT></P>
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<P id=PARA50 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">This Current Report on Form 8-K may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are often identified by such forward-looking terminology as &#8220;if,&#8221; &#8220;expect,&#8221; &#8220;intend,&#8221; &#8220;look,&#8221; &#8220;believe,&#8221; &#8220;anticipate,&#8221; &#8220;estimate,&#8221; &#8220;project,&#8221; &#8220;seek,&#8221; &#8220;may,&#8221; &#8220;must,&#8221; &#8220;will,&#8221; &#8220;would,&#8221; &#8220;could,&#8221; &#8220;should,&#8221; &#8220;trend,&#8221; &#8220;target,&#8221; and &#8220;goal&#8221; or similar statements or variations of such terms and include, but are not limited to, those relating to the possible draw on the loan; repurchase or redemption of any outstanding Preferred Stock; evaluation of any future redemption of any outstanding Preferred Stock and the factors upon which such matter is likely to depend; and compliance by the Company and its wholly owned subsidiary, Home Federal Savings Bank (the &#8220;Bank&#8221;), with applicable regulatory requirements.</FONT></P>
<P id=PARA51 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA52 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">A number of factors could cause actual results to differ materially from the Company&#8217;s assumptions and expectations. These include but are not limited to the future operating results, financial condition, cash flow requirements and capital spending priorities of the Company and the Bank; the availability of internal and, as required, external sources of funding; the ability of the Company and the Bank to comply with applicable regulatory capital, transaction approval, and other requirements; or other significant uncertainties. Additional factors that may cause actual results to differ from the Company&#8217;s assumptions and expectations include those set forth in the Company&#8217;s most recent filings on Forms 10-K and 10-Q with the Securities and Exchange Commission. All forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements. For additional discussion of the risks and uncertainties applicable to the Company, see the &#8220;Risk Factors&#8221; sections of the Company&#8217;s Annual Report on Form 10-K for the year ended December 31, 2013 and Part II, Item 1A of its subsequently filed Quarterly Reports on Form 10-Q.</FONT></P>
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<P id=PARA54 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">All statements in this Current Report on Form 8-K, including forward-looking statements, speak only as of the date they are made, and the Company does not undertake any duty to update any of the forward-looking statements after the date of this Current Report on Form 8-K. </FONT></P>
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<P id=PARA56 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 2.03&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.</B></FONT></P>
<P id=PARA57 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">&nbsp;</FONT></P>
<P id=PARA58 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25; TEXT-INDENT: 36pt"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">The information disclosed above under &#8220;Item 1. Entry into a Material Definitive Agreement&#8221; with respect to the Loan Agreement and Note is incorporated herein by reference.</FONT></P>
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<P id=PARA60 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>Item 9.01&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial Statements and Exhibits.</B></FONT></P>
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<P id=PARA62 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits</FONT></P>
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<P id=PARA64 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Exhibit Number</U></FONT></P></TD>
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<P id=PARA65 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><U>Description</U></FONT></P></TD></TR>
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<P id=PARA66 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">4.1</FONT></P></TD>
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<P id=PARA67 style="TEXT-ALIGN: left; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif">Certain instruments with respect to long-term debt of the Registrant and its consolidated subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K since the total amount of securities authorized under each such instrument does not exceed 10% of the total assets of Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.</FONT></P></TD></TR></TABLE>
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<P id=PARA73 style="TEXT-ALIGN: center; MARGIN: 0pt; LINE-HEIGHT: 1.25"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman, Times, serif"><B>SIGNATURES</B>&nbsp;</FONT></P>
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<P id=PARA86.2 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><B>HMN Financial, Inc.</B></FONT></P></TD>
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<TD vAlign=top width="38%" colSpan=2>(Registrant)</TD>
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<TD style="PADDING-LEFT: 36pt" vAlign=top width="50%">Date: December 18, 2014</TD>
<TD style="BORDER-BOTTOM: #000000 1px solid" vAlign=top colSpan=2><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/&nbsp;</FONT>Jon Eberle</TD>
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<P id=PARA86.21 style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px"><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"></FONT><FONT style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Senior Vice President,</FONT></P></TD>
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<TD vAlign=top colSpan=2>Chief Financial Officer and</TD>
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<TD vAlign=top colSpan=2>Treasurer</TD>
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esop20141218_8k.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
December 15, 2014
HMN Financial, Inc.
(Exact name of registrant as specified in its charter)
Delaware
0-24100
41-1777397
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
1016 Civic Center Drive Northwest
Rochester, Minnesota
55901
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code
(507) 535-1200
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
⃞
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
1
.01
Entry into a Material Definitive Agreement
.
On December 15, 2014, HMN Financial, Inc. (the "Company") entered into a Loan Agreement (the "Loan Agreement") with Project Hawkeye, L.L.C. (the "Lender"), providing for a term loan of up to $10 million that will be evidenced by a promissory note (the "Note"). The Company may draw the loan on or before March 31, 2015. The principal balance of the Note will bear interest from the date the loan is made until the date the loan is repaid at the rate of 6.5% per annum. The principal balance of the Note will be payable in consecutive equal annual installments of $1 million on each anniversary of the date of the Loan Agreement, commencing on December 15, 2015, with the balance due on the maturity date. The maturity date will be on the earlier of (a) the anniversary of the date of the Loan Agreement obtained by dividing the original principal amount of the loan by $1 million (rounded up to the nearest number of whole years) and (b) the seventh anniversary of the date of the Loan Agreement. Provided that no default or event of default has occurred and is continuing, the Company may, at its option, elect to defer payment of one installment of principal of the Note otherwise due prior to the maturity date, in which event such installment will become due and payable on the maturity date. The Company may voluntarily prepay the Note in whole or in part without payment or penalty.
The Loan Agreement includes customary representations and warranties. An event of default will be deemed to have occurred under the Loan Agreement upon certain uncured payment or performance defaults, breaches of the Loan Agreement, bankruptcy events, or liquidation or dissolution by the Company. For so long as the Note is unpaid or the commitment of the Lender to make the loan is in effect, the Company has agreed that it will not grant a lien on any of its assets to secure any debt for money borrowed from third parties, except that the Company may grant liens if the aggregate amount of such secured debt (or, if less, the aggregate fair market value of the pledged assets, as determined in good faith by the Company's board of directors) does not exceed: (a) the aggregate amount by which the principal balance of the Note has been reduced plus (b) if the original amount of the Note was less than $10 million, the unused portion of the Lender's original $10 million commitment.
If the Company elects to draw on the loan, then it must use the proceeds of the loan to fund the repurchase of outstanding shares of the Company's Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the "Preferred Stock"). Any repurchase or redemption of Preferred Stock would be subject to, among other factors, subsequent approval by the board of directors of the Company and receipt by the Company of all applicable approvals from regulatory authorities. A principal owner of the Lender has an immaterial deposit relationship with Home Federal Savings Bank, a wholly owned subsidiary of the Company. There is no material relationship between the Company or its affiliates and the Lender, other than in respect of the Loan Agreement.
Safe Harbor Statement
This Current Report on Form 8-K may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are often identified by such forward-looking terminology as "if," "expect," "intend," "look," "believe," "anticipate," "estimate," "project," "seek," "may," "must," "will," "would," "could," "should," "trend," "target," and "goal" or similar statements or variations of such terms and include, but are not limited to, those relating to the possible draw on the loan; repurchase or redemption of any outstanding Preferred Stock; evaluation of any future redemption of any outstanding Preferred Stock and the factors upon which such matter is likely to depend; and compliance by the Company and its wholly owned subsidiary, Home Federal Savings Bank (the "Bank"), with applicable regulatory requirements.
A number of factors could cause actual results to differ materially from the Company's assumptions and expectations. These include but are not limited to the future operating results, financial condition, cash flow requirements and capital spending priorities of the Company and the Bank; the availability of internal and, as required, external sources of funding; the ability of the Company and the Bank to comply with applicable regulatory capital, transaction approval, and other requirements; or other significant uncertainties. Additional factors that may cause actual results to differ from the Company's assumptions and expectations include those set forth in the Company's most recent filings on Forms 10-K and 10-Q with the Securities and Exchange Commission. All forward-looking statements are qualified by, and should be considered in conjunction with, such cautionary statements. For additional discussion of the risks and uncertainties applicable to the Company, see the "Risk Factors" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2013 and Part II, Item 1A of its subsequently filed Quarterly Reports on Form 10-Q.
2
All statements in this Current Report on Form 8-K, including forward-looking statements, speak only as of the date they are made, and the Company does not undertake any duty to update any of the forward-looking statements after the date of this Current Report on Form 8-K.
Item 2.03     Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information disclosed above under "Item 1. Entry into a Material Definitive Agreement" with respect to the Loan Agreement and Note is incorporated herein by reference.
Item 9.01     Financial Statements and Exhibits.
(d)     Exhibits
Exhibit Number
Description
4.1
Certain instruments with respect to long-term debt of the Registrant and its consolidated subsidiaries are not filed herewith pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K since the total amount of securities authorized under each such instrument does not exceed 10% of the total assets of Registrant and its subsidiaries on a consolidated basis. The Registrant agrees to furnish a copy of any such instrument to the Securities and Exchange Commission upon request.
3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HMN Financial, Inc.
(Registrant)
Date: December 18, 2014
/s/
Jon Eberle
Jon Eberle
Senior Vice President,
Chief Financial Officer and
Treasurer
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