FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 12, 1997
Lexington B & L Financial Corp.
(Exact name of registrant as specified in its charter)
Missouri 0-28120 43-1739555
State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
919 Franklin Ave., Lexington, Missouri 64067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code) (816) 259-2247
Not Applicable
(Former name or former address, if changed since last report)
Item 5. Other Events
On March 12, 1997, Lexington B & L Financial Corp. (the "Company")
entered into an Agreement and Plan of Merger ("Agreement") with Lafayette
Bancshares, Inc. ("Lafayette") and its wholly-owned subsidiary, Lafayette
County Bank of Lexington/Wellington, pursuant to which Lafayette will be
merged into a wholly-owned subisidary of the Company, which will then be
merged into the Company. As a result, Lafayette County Bank will become a
subsidiary of the Company. The Agreement provides that shareholders of
Lafayette will receive a combination of cash and shares of the Company's
common stock for each share of Lafayette common stock. Under the terms of the
Agreement, Lafayette's shareholders would receive $0.92 in cash plus 0.0977
shares of the Company's common stock for each share of Lafayette common stock
if the Company's common stock price is between $12.00 and $14.00 per share.
If the Company's common stock price is $12.00 or less, Lafayette shareholders
would receive $0.92 in cash plus $1.17 in value of the Company's common stock
for each share of Lafayette common stock. If the Company's common stock price
is $14.00 or more, Lafayette shareholders would receive $0.92 in cash plus
$1.37 in value of the Company's common stock for each share of Lafayette
common stock. The calculation of the Company's common stock price will be
based upon the average closing price of the Company's common stock for the 20
trading days prior to the effective date of the acquisition. Lafayette has
1,129,500 shares outstanding.
Pursuant to the Agreement, Lafayette has agreed to pay the Company a
termination fee of $100,000 in the event the Agreement is terminated under
certain conditions, including as a result of a material breach by Lafayette,
the acquisition by a third party of securities representing 25% or more of the
voting shares of Lafayette or the agreement between Lafayette and a third
party to engage in a merger or consolidation.
Consummation of the acquisition is subject to several conditions,
including satisfactory completion by the Company of a due diligence
investigation of Lafayette, receipt of applicable regulatory approvals and
approval by Lafayette's shareholders. For information regarding the terms of
the proposed transaction, reference is made to the Agreement and the press
release dated March 12, 1997, which are attached hereto as Exhibits 2 and 99,
respectively, and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit
2 Agreement and Plan of Merger dated as of March 12, 1997 between
Lexington B & L Financial Corp., Lafayette Bancshares, Inc. and
Lafayette County Bank of Lexington/Wellington
99 Press Release dated March 12, 1997
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.
LEXINGTON B & L FINANCIAL CORP.
DATE: March 17, 1997 By: /s/ Erwin Oetting, Jr.
Erwin Oetting, Jr.
President
Exhibit 2
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of the 12th day of March 1997
(this "Agreement"), by and among LEXINGTON B & L FINANCIAL CORP. (the
"Company"), LAFAYETTE BANCSHARES, INC. ("Lafayette") and LAFAYETTE COUNTY BANK
OF LEXINGTON/WELLINGTON (the "Bank").
RECITALS:
(A) THE COMPANY. The Company is a corporation duly organized and
existing in good standing under the laws of the State of Missouri, with its
principal executive offices located in Lexington, Missouri. As of the date
hereof, the Company has 8,000,000 authorized shares of common stock of $.01
par value per share ("Company Common Stock") and 500,000 shares of preferred
stock of $.01 par value per share ("Company Preferred Stock") (no other class
of capital stock being authorized), of which 1,265,000 shares of Company
Common Stock and no shares of Company Preferred Stock are issued and
outstanding.
(B) LAFAYETTE. Lafayette is a corporation duly organized and existing
in good standing under the laws of the State of Missouri, with its principal
executive offices located in Lexington, Missouri. Lafayette is a registered
bank holding company with the Board of Governors of the Federal Reserve System
("Federal Reserve Board") under the Bank Holding Company Act, as amended. As
of the date hereof, Lafayette has 1,250,000 authorized shares of common stock
of $1.00 par value per share ("Lafayette Common Stock") (no other class of
capital stock being authorized), of which 1,129,500 shares of Lafayette Common
Stock are issued and outstanding.
(C) THE BANK. The Bank is a commercial bank duly organized and existing
in good standing under the laws of the State of Missouri, with its principal
executive offices located in Lexington, Missouri. As of the date hereof, the
Bank has 720 authorized shares of common stock of $100.00 par value per share
("the Bank Common Stock") (no other class of capital stock being authorized),
of which 720 shares of the Bank Common Stock are issued and outstanding. As of
the date hereof, 676.834 shares of Bank Common Stock are owned by Lafayette.
(D) VOTING AGREEMENT. As a condition and an inducement to the Company's
willingness to enter into this Agreement, Donald L. Coen, Terry L. Thompson,
Ranie Thompson, William J. Huhmann and Robert F. Jackson have entered into
agreements with the Company pursuant to which, among other things, they have
agreed to vote in favor of approval of the transactions contemplated by this
Agreement at the Meeting (as hereinafter defined).
(E) RIGHTS, ETC. Except as Previously Disclosed in Schedule 4.01(C),
there are no shares of capital stock of Lafayette or the Bank authorized and
reserved for issuance, neither Lafayette nor the Bank has any Rights (as
defined below) issued or outstanding and neither Lafayette nor the Bank has
any commitment to authorize, issue or sell any such shares or any Rights,
except pursuant to this Agreement. The terms "Rights" means securities or
obligations convertible into or exchangeable for, or giving any person any
right to subscribe for or acquire, or any options, calls or commitments
relating to, shares of capital stock. There are no preemptive rights in
respect of Lafayette Common Stock or Bank Common Stock.
(F) APPROVALS. The Board of Directors of each of Lafayette, the Bank,
and the Company has approved, at meetings of each of such Boards of Directors,
this Agreement and has authorized the execution hereof in counterparts.
In consideration of their mutual promises and obligations, the parties
hereto adopt and make this Agreement and prescribe the terms and conditions
thereof and the manner and basis of carrying it into effect, which shall be as
follows:
I. THE MERGER
1.01. THE MERGER. Subject to the provisions of this Agreement, at
the Effective Time (as hereinafter defined):
(A) THE CONTINUING CORPORATION. Lafayette shall be merged into a
wholly-owned subsidiary of the Company (the "Merger Co.") pursuant to the
terms and conditions set forth herein and pursuant to the Plan of Merger
attached hereto as Exhibit A (the "Merger"). Upon consummation of the Merger,
the separate existence of Lafayette shall cease and Merger Co. (the
"Continuing Corporation") shall survive.
(B) RIGHTS, ETC. The Continuing Corporation shall thereupon and
thereafter possess all of the rights, privileges, immunities and franchises,
of a public as well as of a private nature, of each of the merging
corporations; and all property, real, personal and mixed, and all debts due on
whatever account, and all other chooses in action, and all and every other
interest, of or belonging to or due to each of the corporations so merged,
shall be deemed to be vested in the Continuing Corporation without further act
or deed; and the title to any real estate or any interest therein, vested in
each of such corporations, shall not revert or be in any way impaired by
reason of the Merger.
(C) LIABILITIES. The Continuing Corporation shall thenceforth be
responsible and liable for all the liabilities, obligations and penalties of
each of the corporations so merged, in accordance with applicable law.
(D) ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS; OFFICERS. The
Articles of Incorporation and Bylaws of the Continuing Corporation shall be
those of Merger Co., as in effect immediately prior to the Merger becoming
effective. The directors and officers of Merger Co. in office immediately
prior to the Merger becoming effective shall be the directors and officers of
the Continuing Corporation, together with such additional directors and
officers as may thereafter be elected, who shall hold office until such time
as their successors are elected and qualified.
1.02. EFFECTIVE DATE. Subject to the conditions to the obligations
of the parties to effect the Merger as set forth in Article VI, the effective
date (the "Effective Date") of the Merger shall be such date as the Company
shall notify Lafayette in writing not less than five days prior thereto, which
date shall not be more than 30 days after such conditions have been satisfied
or waived in writing. Prior to the Effective Date, the Company and Lafayette
shall execute and deliver to the Secretary of State of the State of Missouri,
Articles of Merger in accordance with applicable law. The time on the
Effective Date at which the Merger becomes effective is referred to as the
"Effective Time."
II. CONSIDERATION
2.01. MERGER CONSIDERATION. Subject to the provisions of this
Agreement, at the Effective Time:
(A) OUTSTANDING MERGER CO. COMMON STOCK. The shares of common stock of
Merger Co. issued and outstanding immediately prior to the Effective Time
shall, on and after the Effective Time, remain as issued and outstanding
shares of common stock of Merger Co.
(B) OUTSTANDING LAFAYETTE COMMON STOCK. Each share (excluding (i)
shares ("Dissenters' Shares") that have not been voted in favor of approval of
this Agreement and with respect to which dissenters' rights have been
perfected in accordance with Section 351.455 of the Missouri General and
Business Corporation Law (the "MGBCL") or (ii) shares held by Lafayette or any
of its subsidiaries or by the Company or any of its subsidiaries, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted ("Excluded Shares")) of Lafayette Common Stock issued and
outstanding immediately prior to the Effective Time shall become and be
converted into the right to receive $0.92 in cash plus a number of shares of
Company Common Stock equal to the Exchange Ratio.
The "Exchange Ratio" shall be equal (rounded to the nearest
ten-thousandth) to: (i) .0977 if the Company Price (as defined below) is
greater than $12.00 and less than $14.00, (ii) the result obtained by
dividing $1.17 by the Company Price if the Company Price is $12.00 or less; or
(iii) the result obtained by dividing $1.37 by the Company Price if the
Company Price is $14.00 or greater. The "Company Price" shall be the average
last price per share of Company Common Stock as reported in The Wall Street
Journal for each of the twenty trading days immediately preceding the
Effective Date. In the event the Company Common Stock does not trade on one
or more of the trading days in such period, any such date shall be disregarded
in computing the average last price per share and the average shall be based
upon the last price per share and number of days on which Company Common Stock
actually traded during such period.
2.02. SHAREHOLDER RIGHTS; STOCK TRANSFERS. At the Effective Time,
holders of Lafayette Common Stock shall cease to be, and shall have no rights
as, stockholders of Lafayette, other than to receive the Merger Consideration
provided under this Article II. After the Effective Time, there shall be
no transfers on the stock transfer books of Lafayette or the Continuing
Corporation of the shares of Lafayette Common Stock which were issued and
outstanding immediately prior to the Effective Date.
2.03. FRACTIONAL SHARES. Notwithstanding any other provision hereof,
no fractional shares of Company Common Stock and no certificates or scrip
therefor, or other evidence of ownership thereof, will be issued in the
Merger; instead, the Company shall pay to each holder of Lafayette Common
Stock who would otherwise be entitled to a fractional share an amount in cash
determined by multiplying such fraction by a number equal to (i) $0.92 plus
(ii) the Company Price multiplied by the Exchange Ratio.
2.04 EXCHANGE PROCEDURES. As promptly as practicable after the Effective
Date, the Company shall send or cause to be sent to each former shareholder of
Lafayette of record immediately prior to the Effective Date transmittal
materials for use in exchanging such shareholder's certificates for Lafayette
Common Stock for the consideration set forth in this Article II. The
certificates representing the shares of Company Common Stock into which shares
of such shareholder's Lafayette Common Stock are converted on the Effective
Date, a check in the amount equal to the cash which such holder has the right
to receive pursuant to the provisions of this Article II (including any cash
in lieu of fractional shares of the Company pursuant to Section 2.03), and any
dividends paid on such shares of Company Common Stock for which the record
date for determination of shareholders entitled to such dividends is on or
after the Effective Date, will be delivered to such shareholder only upon
delivery to an independent exchange agent selected by the Company (the
"Exchange Agent") of the certificates representing all of such shares of
Lafayette Common Stock (or indemnity satisfactory to the Company and the
Exchange Agent, in their judgement, if any of such certificates are lost,
stolen or destroyed). No interest will be paid on any cash or dividends to
which the holder of such shares shall be entitled to receive upon such
delivery. Certificates surrendered for exchange by any person constituting an
"affiliate" of Lafayette for purposes of Rule 145 of the Securities Act of
1933, as amended ("Securities Act"), shall not be exchanged for certificates
representing Company Common Stock until the Company has received a written
agreement from such person as specified in Section 5.17.
2.05. ANTI-DILUTION PROVISIONS. In the event the Company changes the
number of shares of Company Common Stock issued and outstanding prior to the
Effective Date as a result of a stock split, stock dividend, recapitalization
or similar transaction with respect to the outstanding Company Common Stock
and the record date therefor shall be prior to the Effective Date, the Merger
Consideration shall be proportionately adjusted.
2.06. EXCLUDED SHARES; DISSENTERS' SHARES. Each of the Excluded
Shares shall be canceled and retired at the Effective Time and no
consideration shall be issued in exchange therefor. Dissenters' Shares shall
be purchased and paid for in accordance with Section 351.455 of the MGBCL.
2.07. RESERVATION OF RIGHT TO REVISE TRANSACTION. The Company may at
any time change the method of effecting the acquisition of Lafayette and the
Bank by the Company (including without limitation the provisions of this
Article II) if and to the extent it deems such change to be desirable;
PROVIDED,
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HOWEVER, that no such change shall (i) alter or change the amount or kind of
consideration to be issued to holders of Lafayette Common Stock as provided
for in this Agreement or (ii) adversely affect the tax treatment to Lafayette
shareholders as a result of receiving such consideration.
III. ACTIONS PENDING CONSUMMATION
Without the prior written consent of the Company, each of Lafayette and
the Bank shall conduct its and each of the Lafayette Subsidiaries' (as
hereinafter defined) business in the ordinary and usual course consistent with
past practice and shall use its best efforts to maintain and preserve its and
each of the Lafayette Subsidiaries' business organization, employees and
advantageous business relationships and retain the services of its and each of
its Subsidiaries' officers and key employees, and each of Lafayette and the
Bank will not, and will cause each of the Lafayette Subsidiaries not to, agree
to:
3.01. CAPITAL STOCK. Except for or as otherwise permitted in or
expressly contemplated by this Agreement or as Previously Disclosed in
Schedule 4.01(C), issue, sell or otherwise permit to become outstanding any
additional shares of capital stock of Lafayette, the Bank or any Lafayette
Subsidiary, or any Rights with respect thereto, or enter into any agreement
with respect to the foregoing, or permit any additional shares of Lafayette
Common Stock to become subject to grants of employee stock options, stock
appreciation rights or similar stock based employee compensation rights.
3.02. DIVIDENDS, ETC. Make, declare or pay any dividend on or in
respect of, or declare or make any distribution on, or directly or indirectly
combine, redeem, reclassify, purchase or otherwise acquire, any shares of its
capital stock or, other than as permitted in or contemplated by this
Agreement, authorize the creation or issuance of, or issue, any additional
shares of its capital stock or any Rights with respect thereto.
3.03. INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary
course of business consistent with past practice, incur any indebtedness for
borrowed money, assume, guarantee, endorse or otherwise as an accommodation
become responsible or liable for the obligations of any other individual,
corporation or other entity.
3.04. LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be
directed by any regulatory agency, (i) change its lending, investment,
liability management or other material banking policies in any material
respect, except such changes as are in accordance and in an effort to comply
with Section 5.10, or (ii) commit to incur any further capital expenditures
beyond those Previously Disclosed in Schedule 3.04 other than in the ordinary
course of business and not exceeding $10,000 individually or $15,000
in the aggregate.
3.05. LIENS AND ENCUMBRANCES. Impose, or suffer the imposition, on
any shares of capital stock of any of the Lafayette Subsidiaries, or on any of
its or the Lafayette Subsidiaries' other assets, any lien, charge or
encumbrance, or permit any such lien, charge or encumbrance to exist.
3.06. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as Previously
Disclosed in Schedule 3.06, enter into or amend any employment, severance or
similar agreement or arrangement with any of its directors, officers or
employees, or grant any salary or wage increase, amend the terms of any stock
option or increase any employee benefit (including incentive or bonus
payments), except normal individual increases in regular compensation to
employees in the ordinary course of business consistent with past practice.
3.07. BENEFIT PLANS. Except as Previously Disclosed in Schedule
3.07, enter into or modify (except as may be required by applicable law) any
pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, consulting, bonus, group insurance or other employee
benefit, incentive or welfare contract, plan or arrangement, or any trust
agreement related thereto, in respect of any of its directors, officers or
other employees, including without limitation taking any action that
accelerates the vesting or exercise of any benefits payable thereunder.
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3.08. CONTINUANCE OF BUSINESS. Dispose of or discontinue any portion
of its assets, business or properties, which is material to Lafayette and the
Lafayette Subsidiaries taken as a whole, or merge or consolidate with, or
acquire all or any portion of, the business or property of any other entity
which is material to Lafayette and the Lafayette Subsidiaries taken as a whole
(except foreclosures or acquisitions by the Bank in a fiduciary capacity, in
each case in the ordinary course of business consistent with past practice).
3.09. AMENDMENTS. Amend its Articles of Incorporation, Charter or
Bylaws.
3.10. CLAIMS. Settle any claim, litigation, action or proceeding
involving any liability for money damages in excess of $25,000 or restrictions
upon the operations of Lafayette or any Lafayette Subsidiary.
3.11 CONTRACTS. Except as previously disclosed on Schedule 3.11, enter
into, renew, terminate or make any change in any material contract, agreement
or lease, except in the ordinary course of business consistent with past
practice with respect to contracts, agreements and leases that are terminable
by it without penalty on more than 60 days prior written notice.
3.12. LOANS. Extend credit other than in accordance with existing
lending policies, except that the Bank shall not, without the prior written
consent of the Company, make any new loan or modify, restructure or renew any
existing loan to any borrower if the amount of the resulting loan, when
aggregated with all other loans or extensions of credit to such person (or
which would be required to be aggregated for loans to one borrower
limitations) would be in excess of $150,000.
IV. REPRESENTATIONS AND WARRANTIES
4.01. REPRESENTATIONS AND WARRANTIES OF LAFAYETTE AND THE BANK. Each
of Lafayette and the Bank hereby represents and warrants to the Company as
follows:
(A) RECITALS. The facts set forth in the Recitals of this Agreement
with respect to it are true and correct.
(B) ORGANIZATION, STANDING AND AUTHORITY. It is duly qualified to do
business and is in good standing in the States of the United States and
foreign jurisdictions where the failure to be duly qualified, individually or
in the aggregate, is reasonably likely to have a Material Adverse Effect (as
hereinafter defined) on it. Each of Lafayette and the Lafayette Subsidiaries
has in effect all federal, state, local, and foreign governmental
authorizations necessary for it to own or lease its properties and assets and
to carry on its business as it is now conducted, the absence of which,
individually or in the aggregate, is reasonably likely to have a Material
Adverse Effect on it.
(C) SHARES. The outstanding shares of it are validly issued and
outstanding, fully paid and nonassessable, and subject to no preemptive
rights. Except as Previously Disclosed in Schedule 4.01(C), there are no
shares of capital stock or other equity securities of Lafayette or the Bank
outstanding and no outstanding Rights with respect thereto.
(D) LAFAYETTE SUBSIDIARIES. Lafayette has Previously Disclosed in
Schedule 4.01(D) a list of all the subsidiaries of Lafayette (each a
"Lafayette Subsidiary" and, collectively, the "Lafayette Subsidiaries"). Each
of the Lafayette Subsidiaries that is a commercial bank is an "insured
depository institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder. No equity securities of any of the
Lafayette Subsidiaries are or may become required to be issued (other than to
Lafayette or a wholly-owned Lafayette Subsidiary) by reason of any Rights with
respect thereto. There are no contracts, commitments, understandings or
arrangements by which any of the Lafayette Subsidiaries is or may be bound to
sell or otherwise issue any shares of its capital stock, and there are no
contracts, commitments, understandings or arrangements relating to the rights
of Lafayette or the Bank,
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as applicable, to vote or to dispose of such shares. All of the shares of
capital stock of each Lafayette Subsidiary held by Lafayette or a Lafayette
Subsidiary are fully paid and nonassessable and are owned by Lafayette or a
Lafayette Subsidiary free and clear of any charge, mortgage, pledge, security
interest, restriction, claim, lien or encumbrance. Each Lafayette Subsidiary
is in good standing under the laws of the jurisdiction in which it is
incorporated or organized, and is duly qualified to do business and in good
standing in the jurisdictions where the failure to be duly qualified is
reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on it. Except as Previously Disclosed in Schedule 4.01(D),
Lafayette does not own beneficially, directly or indirectly, any shares of any
equity securities or similar interests of any corporation, bank, partnership,
joint venture, business trust, association or other organization. The
deposits of the Bank are insured by the Bank Insurance Fund (the "BIF") of the
Federal Deposit Insurance Corporation (the "FDIC"). The Bank is a member in
good standing with the FHLB of Des Moines and the Federal Reserve Bank of
Kansas City.
(E) CORPORATE POWER. It and each of the Lafayette Subsidiaries has the
corporate power and authority to carry on its business as it is now being
conducted and to own all its material properties and assets.
(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval
by its stockholders referred to in Section 6.01, this Agreement has been
authorized by all necessary corporate action of it and is a valid and binding
agreement of it enforceable against it in accordance with its terms, subject
as to enforcement as to bankruptcy, insolvency and other similar laws of
general applicability relating to or affecting creditors' rights and to
general equity principles.
(G) NO DEFAULTS. Subject to the approval by its shareholders referred
to in Section 6.01, the required regulatory approvals referred to in Section
6.02, and the required filings under federal and state securities laws, and
except as Previously Disclosed in Schedule 4.01(G), the execution, delivery
and performance of this Agreement and the consummation by it of the
transactions contemplated hereby, does not and will not (i) constitute a
breach or violation of, or a default under, any law, rule or regulation or any
judgment, decree, order, governmental permit or license, or agreement,
indenture or instrument of it or of any of the Lafayette Subsidiaries or to
which it or any of the Lafayette Subsidiaries or its or their properties is
subject or bound, which breach, violation or default is reasonably likely,
individually or in the aggregate, to have a Material Adverse Effect on it,
(ii) constitute a breach or violation of, or a default under, its Articles
of Incorporation, Charter or Bylaws, or (iii) require any consent or approval
under any such law, rule, regulation, judgment, decree, order, governmental
permit or license or the consent or approval of any other party to any such
agreement, indenture or instrument, other than any such consent or approval,
which if not obtained, would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on Lafayette.
(H) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule
4.01(H), (i) as to Lafayette, its consolidated balance sheet as of December
31, 1996 and 1995 and related consolidated statements of income and changes in
stockholders' equity and cash flows for the years ended December 31, 1996,
1995 and 1994, and (ii) as to the Bank, its call report for the fiscal year
ended December 31, 1996, and all other financial reports filed or to be filed
subsequent to December 31, 1996, in the form filed with the FDIC and the
Missouri State Division of Finance ("Division") (together, the "Lafayette
Financial Reports") did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and each of the
balance sheets in or incorporated by reference into the Lafayette Financial
Reports (including the related notes and schedules thereto) fairly presents
and will fairly present the financial position of the entity or entities to
which it relates as of its date and each of the statements of income and
changes in stockholders' equity and cash flows or equivalent statements in the
Lafayette Financial Reports (including any related notes and schedules
thereto) fairly presents and will fairly present the results of operations,
changes in stockholders' equity and cash flows, as the case may be, of the
entity or entities to which it relates for the periods set forth therein, in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except in each case as may
be noted therein.
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(I) ABSENCE OF UNDISCLOSED LIABILITIES. None of Lafayette or the
Lafayette Subsidiaries has any obligation or liability (contingent or
otherwise) that, individually or in the aggregate, is reasonably likely to
have a Material Adverse Effect on it, except (i) as reflected in Lafayette
Financial Reports prior to the date of this Agreement, and (ii) for
commitments and obligations made, or liabilities incurred, in the ordinary
course of its business consistent with past practice since December 31, 1996.
Since December 31, 1996, none of Lafayette or the Lafayette Subsidiaries has
incurred or paid any obligation or liability (including any obligation or
liability incurred in connection with any acquisitions in which any form of
direct financial assistance of the federal government or any agency thereof
has been provided to any Lafayette Subsidiary) which, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect on it.
(J) NO EVENTS. Except as Previously Disclosed on Schedule 4.01(J),
since December 31, 1996, no events have occurred which, individually or in the
aggregate, have had or are reasonably likely to have a Material Adverse Effect
on it.
(K) PROPERTIES. Except as reserved against in the Lafayette Financial
Reports, Lafayette and the Lafayette Subsidiaries have good and marketable
title, free and clear of all liens, encumbrances, charges, defaults, or
equities of any character, to all of the properties and assets, tangible and
intangible, reflected in the Lafayette Financial Reports as being owned by
Lafayette or the Lafayette Subsidiaries as of the dates thereof other than
those that, individually or in the aggregate, are not reasonably likely to
have a Material Adverse Effect on it, except those properties or assets sold
or otherwise disposed of in the ordinary course of business. All buildings and
all material fixtures, equipment, and other property and assets which are held
under leases or subleases by any of Lafayette or Lafayette Subsidiaries are
held under valid leases or subleases enforceable in accordance with their
respective terms, other than any such exceptions to validity or enforceability
that, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on Lafayette.
(L) LITIGATION; REGULATORY ACTION. Except as Previously Disclosed in
Schedule 4.01(L), no litigation, proceeding or controversy before any court or
governmental agency is pending which, individually or in the aggregate, is
reasonably likely to have a Material Adverse Effect on Lafayette or which
alleges claims under any fair lending law or other law relating to
discrimination, including, without limitation, the Equal Credit Opportunity
Act, the Fair Housing Act, the Community Reinvestment Act and the Home
Mortgage Disclosure Act, and, to the best of its knowledge, no such
litigation, proceeding or controversy has been threatened; and except as
Previously Disclosed in Schedule 4.01(L), neither it nor any of the Lafayette
Subsidiaries or any of its or their material properties or their officers,
directors or controlling persons is a party to or is subject to any order,
decree, agreement, memorandum of understanding or similar arrangement with,
or a commitment letter or similar submission to, any federal or state
governmental agency or authority charged with the supervision or regulation of
depository institutions or engaged in the insurance of deposits (together
with any and all agencies or departments of federal, state or local government
(including, without limitation, the Division, the FHL Bank, the Federal
Reserve Board, the FDIC and any other federal or state bank, or other
financial institution, insurance and securities regulatory authorities, the
"Regulatory Authorities")) and neither it nor any of the Lafayette
Subsidiaries has been advised by any of such Regulatory Authorities that
such authority is contemplating issuing or requesting (or is considering the
appropriateness of issuing or requesting) any such order, decree, agreement,
memorandum or understanding, commitment letter or similar submission.
(M) COMPLIANCE WITH LAWS. Except as Previously Disclosed in Schedule
4.01(M), each of Lafayette and the Lafayette Subsidiaries:
(1) has all permits, licenses, authorizations, orders and approvals
of, and has made all filings, applications and registrations
with, all Regulatory Authorities that are required in order to
permit it to own its businesses presently conducted and that
are material to the business of Lafayette and the Lafayette
Subsidiaries taken as a whole; all such permits, licenses,
certificates of authority, orders and approvals are in full
force and effect and, to the best of its knowledge, no
suspension
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PAGE
or cancellation of any of them is threatened; and all such
filings, applications and registrations are current;
(2) has received no notification or communication from any
Regulatory Authority or the staff thereof (i) asserting that
any of Lafayette or the Lafayette Subsidiaries is not in
compliance with any of the statutes, regulations or ordinances
which such Regulatory Authority enforces, which, as a result of
such noncompliance in any such instance, individually or in the
aggregate, is reasonably likely to have a Material Adverse
Effect on Lafayette, (ii) threatening to revoke any license,
franchise, permit or governmental authorization, which
revocation, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect on Lafayette, or
(iii) requiring any of Lafayette or the Lafayette Subsidiaries
(or any of its officers, directors or controlling persons) to
enter into a cease and desist order, agreement or memorandum of
understanding (or requiring the board of directors thereof to
adopt any resolution or policy);
(3) is not required to give prior notice to any federal banking or
thrift agency of the proposed addition of an individual to its
board of directors or the employment of an individual as a
senior executive; and
(4) is in compliance in all material respects with all fair lending
laws or other laws relating to discrimination, including,
without limitation, the Truth in Lending Act, the Equal Credit
Opportunity Act, the Fair Housing Act, the Community
Reinvestment Act and the Home Mortgage Disclosure Act.
(N) MATERIAL CONTRACTS.
(1) Except as Previously Disclosed in Schedule 4.01(N), (and with a
true and correct copy of the document or other item in question
attached to such Schedule), neither Lafayette nor any Lafayette
Subsidiary is a party or subject to any of the following
(whether written or oral, express or implied):
(i) any agreement, arrangement or commitment (a) not made in
the ordinary course of business or (b) pursuant to which
Lafayette or any Lafayette Subsidiary is or may become
obligated to invest in or contribute capital to any Lafayette
Subsidiary or any other entity;
(ii) any agreement, indenture or other instrument not disclosed
in the Lafayette Financial Reports relating to the borrowing of
money by Lafayette or any Lafayette Subsidiary or the guarantee
by Lafayette or any Lafayette Subsidiary of any such obligation
(other than trade payables or instruments related to
transactions entered into in the ordinary course of business by
any Lafayette Subsidiary, such as deposits, Fed Funds
borrowings and repurchase agreements);
(iii) any contract containing covenants that limit the
ability of Lafayette or any Lafayette Subsidiary to compete in
any line of business or with any person or containing any
restriction of the geographical area in which, or method by
which, Lafayette or any Lafayette Subsidiary may carry on its
business (other than as may be required by law or any
applicable Regulatory Authority);
(iv) any contract or agreement which is a "material contract"
within the meaning of Item 601(b)(10) of Regulation S-K
promulgated by the Securities and Exchange Commission ("SEC");
(v) any lease with annual rental payments aggregating $10,000
or more;
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(vi) consulting agreement (other than data processing, software
programming and licensing contracts entered into in the
ordinary course of business) involving the payment of more than
$10,000 per annum;
(vii) any agreement with any executive officer or other key
employee of Lafayette or any Lafayette Subsidiary the benefits
of which are contingent, or the terms of which are materially
altered or any payments or rights are accelerated, upon the
occurrence of a transaction involving Lafayette or any of
Lafayette Subsidiaries of the nature contemplated by this
Agreement;
(viii) any agreement with respect any executive officer of
Lafayette or any Lafayette Subsidiary providing any term of
employment or compensation guarantee extending for a period
longer than one year and for the payment of in excess of
$50,000 per annum; or
(ix) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock
purchase plan, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated
by this Agreement.
(2) Except as Previously Disclosed on Schedule 4.01(N), no officer
or director of Lafayette or any "associate" (as such term is
defined in Rule 12b-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of any such officer or
director, has any material interest in any material contract or
property (real or personal), tangible or intangible, used in or
pertaining to the business of Lafayette or any Lafayette
Subsidiary.
(3) None of Lafayette or the Lafayette Subsidiaries is in default
under any contract, agreement, commitment, arrangement, lease,
insurance policy or other instrument to which it is a party, by
which its respective assets, business or operations may be
bound or affected, or under which it or any of its respective
assets, business or operations receives benefits, which
default, individually or in the aggregate, is reasonably likely
to have a Material Adverse Effect on Lafayette, and there has
not occurred any event that, with the lapse of time or the
giving of notice or both, would constitute such a default.
Except as Previously Disclosed in Schedule 4.01(N), neither
Lafayette nor any Lafayette Subsidiary is subject to or bound
by any contract containing covenants which limit the ability of
Lafayette or any Lafayette Subsidiary to compete in any line of
business or with any person or which involve any restriction of
geographical area in which, or method by which, Lafayette or
any Lafayette Subsidiary may carry on its business (other than
as may be required by law or any applicable Authority).
(O) REPORTS. Since January 1, 1992, each of Lafayette and the Lafayette
Subsidiaries has filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with (i) the FDIC, (ii) the Division, (iii) the FHL Bank and the FHL Bank
System, (iv) the Federal Reserve Board and (v) any other applicable Regulatory
Authorities. As of their respective dates (and without giving effect to any
amendments or modifications filed after the date of this Agreement with
respect to reports and documents filed before the date of this Agreement),
each of such reports and documents, including the financial statements,
exhibits and schedules thereto, complied in all material respects with all of
the statutes, rules and regulations enforced or promulgated by the Regulatory
Authority with which they were filed and did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading.
(P) NO BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by it directly with the
other parties hereto and no action has been taken by it that would give rise
to any valid claim against any party hereto for a brokerage commission,
finder's fee or other like payment.
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(Q) EMPLOYEE BENEFIT PLANS.
(1) Schedule 4.01(Q)(1) contains a complete list of all bonus,
deferred compensation, pension, retirement, profit-sharing,
thrift savings, employee stock ownership, stock bonus,
stock purchase restricted stock and stock option plans, all
employment or severance contracts, all medical, dental, health
and life insurance plans, all other employee benefit plans,
contracts or arrangements and any applicable "change of
control" or similar provisions in any plan, contract or
arrangement maintained or contributed to by it or any of the
Lafayette Subsidiaries for the benefit of employees, former
employees, directors, former directors or their beneficiaries
(the "Compensation and Benefit Plans"). True and complete
copies of all Compensation and Benefit Plans, including, but
not limited to, any trust instruments and/or insurance
contracts, if any, forming a part thereof, and all amendments
thereto have been supplied to the Company.
(2) All "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), other than "multiemployer plans" within the
meaning of Section 3(37) of ERISA ("Multiemployer Plans"),
covering employees or former employees of it and the Lafayette
Subsidiaries (the "ERISA Plans"), to the extent subject to
ERISA, are in substantial compliance with ERISA. Except as
Previously Disclosed in Schedule 4.01(Q)(2) each ERISA Plan
which is an "employee pension benefit plan" within the meaning
of Section 3(2) of ERISA ("Pension Plan") and which is intended
to be qualified under Section 401(a) of the Internal Revenue
Code of 1986 (as amended, the "Code") has received a favorable
determination letter from the Internal Revenue Service, and it
is not aware of any circumstances reasonably likely to result
in the revocation or denial of any such favorable determination
letter or the inability to receive such a favorable
determination letter. There is no material pending or, to its
knowledge, threatened litigation relating to the ERISA Plans.
Neither it nor any of the Lafayette Subsidiaries has engaged
in a transaction with respect to any ERISA Plan that could
subject it or any of the Lafayette Subsidiaries to a tax or
penalty imposed by either Section 4975 of the Code or Section
502(i) of ERISA in an amount which would be material.
(3) No liability under Subtitle C or D of Title IV of ERISA has
been or is expected to be incurred by it or any of the
Lafayette Subsidiaries with respect to any ongoing, frozen or
terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained
by any of them, or the single-employer plan of any entity
which is considered one employer with it under Section
4001(a)(15) of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither it nor any of the Lafayette Subsidiaries
presently contributes to a Multiemployer Plan, nor have they
contributed to such a plan within the past five calendar years.
No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the 30-day reporting
requirement has not been waived, has been required to be filed
for any Pension Plan or by any ERISA Affiliate within the past
12-month period.
(4) All contributions required to be made under the terms of any
ERISA Plan have been timely made. Neither any Pension Plan nor
any single-employer plan of an ERISA Affiliate has an
"accumulated funding deficiency" (whether or not waived) within
the meaning of Section 412 of the Code or Section 302 of ERISA.
Neither it nor any of the Lafayette Subsidiaries has provided,
or is required to provide, security to any Pension Plan or to
any single-employer plan of an ERISA Affiliate pursuant to
Section 401(a)(29) of the Code.
(5) Under each Pension Plan which is a single-employer plan, as of
the last day of the most recent plan year, the actuarially
determined present value of all "benefit liabilities," within
the meaning of Section 4001(a)(16) of ERISA (as determined on
the basis of the actuarial assumptions contained in the plan's
most recent actuarial valuation) did not exceed the then
current value of
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the assets of such plan, and there has been no
material change in the financial condition of such plan since
the last day of the most recent plan year.
(6) Neither it nor any of the Lafayette Subsidiaries has any
obligations for retiree health and life benefits under any
plan, except as set forth in Schedule 4.01(Q)(6). There are no
restrictions on the rights of it or any of the Lafayette
Subsidiaries to amend or terminate any such plan without
incurring any liability thereunder.
(7) Except as Previously Disclosed in Schedule 4.01(Q)(7), neither
the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation,
severance, unemployment compensation, golden parachute or
otherwise) becoming due to any director or any employee of it
or any of the Lafayette Subsidiaries under any Compensation and
Benefit Plan or otherwise from it or any of the Lafayette
Subsidiaries, (ii) increase any benefits otherwise payable
under any Compensation and Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such
benefit.
(R) NO KNOWLEDGE. It knows of no reason why the regulatory approvals
referred to in Section 6.02 should not be obtained.
(S) LABOR AGREEMENTS. Neither it nor any Lafayette Subsidiary is a
party to, or is bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor
is it or any Lafayette Subsidiary the subject of a proceeding asserting that
it or any such subsidiary has committed an unfair labor practice (within the
meaning of the National Labor Relations Act) or seeking to compel it or such
subsidiary to bargain with any labor organization as to wages and conditions
of employment, nor is there any strike or other labor dispute involving it or
any Lafayette Subsidiary, pending or, to the best of its knowledge,
threatened, nor is it aware of any activity involving its or any Lafayette
Subsidiary's employees seeking to certify a collective bargaining unit or
engaging in any other organization activity.
(T) ASSET CLASSIFICATION. It has Previously Disclosed in Schedule
4.01(T) a list, accurate and complete in all material respects, of the
aggregate amounts of loans, extensions of credit or other assets of Lafayette
and the Lafayette Subsidiaries that have been classified by it as of December
31, 1996 (the "Asset Classification"); and no amounts of loans, extensions of
credit or other assets that have been classified as of December 31, 1996 by
any regulatory examiner as "Other Loans Specially Mentioned," "Substandard,"
"Doubtful," "Loss," or words of similar import are excluded from the amounts
disclosed in the Asset Classification, other than amounts of loans, extensions
of credit or other assets that were charged off by Lafayette or any Lafayette
Subsidiary prior to December 31, 1996.
(U) ALLOWANCE FOR LOAN AND LEASE LOSSES. The allowance for loan and
lease losses shown on the consolidated balance sheets of Lafayette included in
the December 31, 1996 Lafayette Financial Reports was, and the allowance for
possible loan losses to be shown on subsequent Lafayette Financial Reports,
will be, adequate in the opinion of the Board of Directors, to provide for
possible losses, net of recoveries relating to loans previously charged off,
on loans outstanding (including accrued interest receivable) as of the date
thereof.
(V) INSURANCE. Each of Lafayette and the Lafayette Subsidiaries has
taken all requisite action (including without limitation the making of claims
and the giving of notices) pursuant to its directors' and officers' liability
insurance policy or policies in order to preserve all rights thereunder with
respect to all matters that are known to Lafayette, except for such matters
which, individually or in the aggregate, are not reasonably likely to have a
Material Adverse Effect on it. Previously Disclosed in Schedule 4.01(V) is a
list of all insurance policies maintained by or for the benefit of Lafayette
or the Lafayette Subsidiaries or their directors, officers, employees or
agents.
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(W) STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION. It has taken all
necessary action to exempt this Agreement and the transactions contemplated
hereby and thereby from, and this Agreement and the transactions contemplated
hereby are exempt from, (i) any applicable state takeover laws, including
Section 351.459 of the MGBCL, and (ii) any supermajority provisions or other
provisions imposing special conditions on business combinations contained in
Lafayette's Articles of Incorporation.
(X) NO FURTHER ACTION. It has taken all action so that the entering
into of this Agreement and the consummation of the transactions contemplated
hereby (including without limitation the Merger), or any other action or
combination of actions, or any other transactions, contemplated hereby or
thereby do not and will not (i) require a vote of shareholders (other than as
set forth in Section 6.01), or (ii) result in the grant of any rights to any
person under the Articles of Incorporation, Charter or Bylaws of Lafayette or
any Lafayette Subsidiary or under any agreement to which Lafayette or any
Lafayette Subsidiary is a party, or (iii) restrict or impair in any way the
ability of the Company to exercise the rights granted hereunder.
(Y) ENVIRONMENTAL MATTERS.
(1) To its knowledge, it and each of the Lafayette Subsidiaries,
the Participation Facilities and the Loan/Fiduciary Properties
(each as defined below) are, and have been, in compliance with
all Environmental Laws (as defined below), except for instances
of noncompliance which are not reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect on
Lafayette.
(2) There is no proceeding pending or, to its knowledge, threatened
before any court, governmental agency or board or other forum
in which it or any of the Lafayette Subsidiaries or any
Participation Facility has been, or with respect to threatened
proceedings, reasonably would be expected to be, named as a
defendant or potentially responsible party (i) for alleged
noncompliance (including by any predecessor) with any
Environmental Law, or (ii) relating to the release or
threatened release into the environment of any Hazardous
Material (as defined below), whether or not occurring at or on
a site owned, leased or operated by it or any of the Lafayette
Subsidiaries or any Participation Facility, except for such
proceedings pending or threatened that are not reasonably
likely, individually or in the aggregate, to have a Material
Adverse Effect on it or have been Previously Disclosed in
Schedule 4.01(Y)(2).
(3) There is no proceeding pending or, to its knowledge, threatened
before any court, governmental agency or board or other forum
in which any Loan/Fiduciary Property (or it or any of the
Lafayette Subsidiaries in respect of any Loan/Fiduciary
Property) has been, or with respect to threatened proceedings,
reasonably would be expected to be, named as a defendant or
potentially responsible party (i) for alleged noncompliance
(including by any predecessor) with any Environmental Law, or
(ii) relating to the release or threatened release into the
environment of any Hazardous Material, whether or not occurring
at or on a Loan/Fiduciary Property, except for such proceedings
pending or threatened that are not reasonably likely,
individually or in the aggregate, to have a Material Adverse
Effect on it or have been Previously Disclosed in Schedule
4.01(Y)(3).
(4) To its knowledge, there is no reasonable basis for any
proceeding of a type described in subparagraphs (2) or (3)
above, except as has been Previously Disclosed in Schedule
4.01(Y)(4).
(5) To its knowledge, during the period of (i) its or any of the
Lafayette Subsidiaries' ownership or operation of any of their
respective current properties, (ii) its or any of the
Lafayette Subsidiaries' participation in the management of any
Participation Facility, or (iii) its or any of Lafayette
Subsidiaries' holding of a security or other interest in a
Loan/Fiduciary Property, there have been no releases of
Hazardous Material in, on, under or affecting any such
property, Participation Facility or Loan/Fiduciary Property,
except for such releases that are not reasonably
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likely, individually or in the aggregate, to have a Material
Adverse Effect on it or have been Previously Disclosed in
Schedule 4.01(Y)(5).
(6) To its knowledge, prior to the period of (i) its or any of the
Lafayette Subsidiaries' ownership or operation of any of their
respective current properties, (ii) its or any of the
Lafayette Subsidiaries' participation in the management of any
Participation Facility, or (iii) its or any of the Lafayette
Subsidiaries' holding of a security or other interest in a
Loan/Fiduciary Property, there were no releases of Hazardous
Material in, on, under or affecting any such property,
Participation Facility or Loan/Fiduciary Property, except for
such releases that are not reasonably likely, individually or
in the aggregate, to have a Material Adverse Effect on it or
have been Previously Disclosed in Schedule 4.01(Y)(6).
(7) The following definitions apply for purposes of this Section
4.01(Y): "Loan/Fiduciary Property" means any property owned or
controlled by it or any of the Lafayette Subsidiaries or in
which it or any of the Lafayette Subsidiaries holds a security
or other interest, and, where required by the context, includes
any such property where Lafayette or any of the Lafayette
Subsidiaries constitutes the owner or operator of such
property, but only with respect to such property;"Participation
Facility" means any facility in which it or any of the
Lafayette Subsidiaries participates in the management and,
where required by the context, includes the owner or operator
of such property, but only with respect to such property;
"Environmental Law" means (i) any federal, state and local law,
statute, ordinance, rule, regulation, code, license, permit,
authorization, approval, consent, legal doctrine, order,
judgment, decree, injunction, requirement or agreement with any
governmental entity, relating to (a) the protection,
preservation or restoration of the environment, (including,
without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface
land, plant and animal life or any other natural resource), or
to human health or safety, or (b) the exposure to, or the use,
storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal
of Hazardous Material, in each case as amended and as now in
effect and includes, without limitation, the Federal
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act,
the Federal Resource Conservation and Recovery Act of 1976
(including the Hazardous and Solid Waste Amendments thereto),
the Federal Solid Waste Disposal and the Federal Toxic
Substances Control Act, and the Federal Insecticide, Fungicide
and Rodenticide Act, the Federal Occupational Safety and Health
Act of 1970, each as amended and as now in effect, and (ii) any
common law or equitable doctrine (including, without
limitation, injunctive relief and tort doctrines such as
negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to,
or threatened as a result of, the presence of or exposure to
any Hazardous Material; "Hazardous Material" means any
substance presently listed, defined, designated or classified
as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law, whether by type or
quantity, and includes, without limitation, any oil or other
petroleum product, toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special
waste or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos, asbestos containing
material, urea formaldehyde foam insulation, lead and
polychlorinated biphenyl.
(Z) TAX REPORTS. Except as Previously Disclosed in Schedule 4.01(Z),
(i) all reports and returns with respect to Taxes (as defined below) that are
required to be filed by or with respect to it or the Lafayette Subsidiaries,
including without limitation consolidated federal income tax returns of it and
the Lafayette Subsidiaries (collectively, the "Lafayette Tax Returns"), have
been duly filed, or requests for extensions have been timely filed and have
not expired, except to the extent all such failures to file, taken together,
are not reasonably likely to have a Material Adverse Effect on it, and such
Lafayette Tax Returns were true, complete and accurate in all material
respects, (ii) all taxes (which shall mean federal, state, local or foreign
income, gross receipts, windfall profits,
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severance, property, production, sales, use, license, excise, franchise,
employment, withholding or similar taxes imposed on the income, properties or
operations of it or the Lafayette Subsidiaries, together with any interest,
additions, or penalties with respect thereto and any interest in respect of
such additions or penalties, collectively the "Taxes") shown to be due on
Lafayette Tax Returns have been paid in full, (iii) the Lafayette Tax Returns
have been examined by the Internal Revenue Service or the appropriate state,
local or foreign taxing authority or the period for assessment of the Taxes in
respect of which such Lafayette Tax Returns were required to be filed has
expired, (iv) all Taxes due with respect to completed and settled examinations
have been paid in full, (v) no issues have been raised by the relevant taxing
authority in connection with the examination of any of the Lafayette Tax
Returns which are reasonably likely, individually or in the aggregate, to
result in a determination that would have a Material Adverse Effect on it,
except as reserved against in the Lafayette Financial Reports, and (vi) no
waivers of statutes of limitations (excluding such statutes that relate to
years under examination by the Internal Revenue Service) have been given by or
requested with respect to any Taxes of it or the Lafayette Subsidiaries.
(AA) ACCURACY OF INFORMATION. The statements with respect to Lafayette
and the Lafayette Subsidiaries contained in this Agreement, the Schedules and
any other written documents executed and delivered by or on behalf of Company
or the Bank pursuant to the terms of this Agreement are true and correct in
all material respects, and such statements and documents do not omit any
material fact necessary to make the statements contained therein, in light of
the circumstances under which they were made, not misleading.
(BB) DERIVATIVES CONTRACTS. None of Lafayette or the Lafayette
Subsidiaries is a party to or has agreed to enter into an exchange-traded or
over-the-counter swap, forward, future, option, cap, floor or collar financial
contract or any other contract not included on the balance sheet which is a
derivative contract (including various combinations thereof) (each a
"Derivatives Contract") or owns securities that are referred to as "structured
notes" except for those Derivatives Contracts and structured notes Previously
Disclosed in Schedule 4.01(BB), including a list, as applicable, of any
Lafayette or Lafayette Subsidiary assets pledged as security for each such
Derivatives Contract.
(CC) ACCOUNTING CONTROLS. Each of Lafayette and the Lafayette
Subsidiaries has devised and maintained systems of internal accounting
controls sufficient to provide reasonable assurances that (i) all material
transactions are executed in accordance with management's general or specific
authorization; (ii) all material transactions are recorded as necessary to
permit the preparation of financial statements in conformity with generally
accepted accounting principles consistently applied with respect to banks or
any other criteria applicable to such statements, and to maintain proper
accountability for items; (iii) access to the material property and assets of
Lafayette and the Lafayette Subsidiaries is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for items is compared with the actual levels at reasonable
intervals and appropriate action is taken with respect to any differences.
4.02. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to Lafayette and the Bank, as
follows:
(A) RECITALS. The facts set forth in the Recitals of this Agreement
with respect to it are true and correct.
(B) CORPORATE AUTHORITY. Subject to the required regulatory approvals
referred to in Section 6.02, this Agreement has been authorized by all
necessary corporate action of it and is a valid and binding agreement of it
enforceable against it in accordance with its terms, subject as to enforcement
as to bankruptcy, insolvency and other similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
(C) NO DEFAULTS. Subject to the required regulatory approvals referred
to in Section 6.02 herein and the required filings under federal and state
securities' laws, the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby and thereby by
it, do not and will not (i)
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constitute a breach or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order, governmental permit or license, or
agreement, indenture or instrument of it or of any of its subsidiaries or to
which it or any of its subsidiaries or properties is subject or bound, which
breach, violation or default is reasonably likely to have a Material Adverse
Effect on it, (ii) constitute a breach or violation of, or a default under,
its Articles of Incorporation or Bylaws, or (iii) require any consent or
approval under any such law, rule, regulation, judgment, decree, order,
governmental permit or license, or the consent or approval of any other party
to any such agreement, indenture or instrument.
(D) FINANCIAL REPORTS. Except as Previously Disclosed in Schedule
4.02(D), its Registration Statement on Form S-1, and all documents filed or to
be filed under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, in the
form filed with the SEC (in each such case, the "the Company Financial
Reports"), did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading; and each of the balance sheets in
or incorporated by reference into the Company Financial Reports (including the
related notes and schedules thereto) fairly presents and will fairly present
the financial position of the entity or entities to which it relates as of its
date and each of the statements of income and changes in stockholders' equity
and cash flows or equivalent statements in the Company Financial Reports
(including any related notes and schedules thereto) fairly presents and will
fairly present the results of operations, changes in stockholders' equity and
changes in cash flows, as the case may be, of the entity or entities to which
it relates for the periods set forth therein, in each case in accordance with
generally accepted accounting principles consistently applied to savings
associations and savings and loan holding companies during the periods
involved, except as may be noted therein, subject to normal and recurring
year-end audit adjustments in the case of unaudited statements.
(E) NO EVENTS. Except as Previously Disclosed in Schedule 4.02(E),
since September 30, 1996, no events have occurred which, individually or in
the aggregate, have had or are reasonably likely to have a Material Adverse
Effect on it.
(F) SHARES AUTHORIZED. The shares of Company Common Stock to be issued
in exchange for shares of Lafayette Common Stock upon consummation of the
Merger in accordance with Article II of this Agreement have been duly
authorized and, when issued in accordance with the terms of this Agreement,
will be validly issued, fully paid and nonassessable and subject to no
preemptive rights.
(G) CORPORATE POWER. The Company has the corporate power and authority
to carry on its business as it is now being conducted and to own all its
material properties and assets.
(H) ACCURACY OF INFORMATION. The statements with respect to the Company
and its subsidiaries contained in this Agreement, the Schedules and any other
written documents executed and delivered by or on behalf of the Company
pursuant to the terms of this Agreement are true and correct in all material
respects, and such statements and documents do not omit any material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
V. COVENANTS
Each of Lafayette and the Bank hereby covenants to the Company and the
Company hereby covenants to Lafayette and the Bank, that:
5.01. BEST EFFORTS. Subject to the terms and conditions of this
Agreement and to the exercise by its Board of Directors of such Board's
fiduciary duties, it shall use its best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or desirable, or advisable under applicable laws, so as to
permit consummation of the Merger on the Effective Date and to otherwise
enable
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consummation of the transactions contemplated hereby and shall cooperate fully
with the other parties hereto to that end.
5.02. REGISTRATION STATEMENT. The Company, in cooperation with
Lafayette, shall prepare and file with the SEC a Registration Statement with
respect to the shares of Company Common Stock to be issued in the Merger.
Such Registration Statement shall contain a Proxy Statement/Prospectus which
shall serve as the proxy statement of Lafayette for the Meeting (as defined
below) and as the prospectus of the Company for the shares of Company Common
Stock to be issued in the Merger. The Company shall use its best efforts to
cause the Registration Statement to become effective.
5.03 LAFAYETTE MEETING. With respect to Lafayette, it shall call a
special meeting (the "Meeting") of the holders of Lafayette Common Stock to be
held as soon as practicable for purposes of voting upon the transactions
contemplated hereby and Lafayette shall use its best efforts to solicit and
obtain votes of the holders of Lafayette Common Stock in favor of the
transactions contemplated hereby and, subject to the exercise of its fiduciary
duties, the Board of Directors of Lafayette shall recommend approval of such
transactions by such holders. In connection with the Meeting, the Company and
Lafayette shall cooperate in the preparation of the Proxy Statement/Prospectus
and, with the approval of each of the Company and Lafayette, which approvals
will not be unreasonably withheld, the Proxy Statement/Prospectus will be
mailed to the shareholders of Lafayette.
5.04. REGISTRATION STATEMENT EFFECTIVENESS. The Company will advise
Lafayette, promptly after the Company receives notice thereof, of the time
when the Registration Statement has become effective or any supplement or
amendment has been filed, of the issuance of any stop order or the suspension
of the qualification of the Company Common Stock for offering or sale in any
jurisdiction, of the initiation or threat of any proceeding for any such
purpose, or of any request by the SEC for the amendment or supplement of the
Registration Statement or for additional information.
5.05. REGISTRATION STATEMENT COMPLIANCE WITH SECURITIES LAWS. When
the Registration Statement or any post-effective amendment or supplement
thereto shall become effective, and at all times subsequent to such
effectiveness, up to and including the date of the Meeting, such Registration
Statement and all amendments or supplements thereto, with respect to all
information set forth therein furnished or to be furnished by or on behalf of
Lafayette relating to Lafayette or the Lafayette Subsidiaries and by or on
behalf of the Company relating to the Company or its subsidiaries, (i) will
comply in all material respects with the provisions of the Securities Act and
any other applicable statutory or regulatory requirements, and (ii) will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading; PROVIDED, HOWEVER, in no event shall any
party hereto be liable for any untrue statement of a material fact or
omission to state a material fact in the Registration Statement made in
reliance upon, and in conformity with, written information concerning another
party furnished by or on behalf of such other party specifically for use
in the Registration Statement.
5.06. PRESS RELEASES. Lafayette and the Bank will not, without the
prior approval of the Company, and the Company will not, without the prior
approval of Lafayette, issue any press release or written statement for
general circulation relating to the transactions contemplated hereby, except
as otherwise required by law.
5.07. ACCESS; INFORMATION.
(1) Upon reasonable notice, Lafayette and the Bank shall afford the
Company and its officers, employees, counsel, accountants and other authorized
representatives, access, during normal business hours throughout the period up
to the Effective Date, to all of its and the Lafayette Subsidiaries'
properties, books, contracts, commitments and records and, during such period,
Lafayette and the Bank shall furnish promptly to the Company (i) a copy of
each material report, schedule and other document filed by Lafayette and the
Lafayette Subsidiaries with any Regulatory Authority, and (ii) all other
information concerning the business, properties and personnel of Lafayette and
the Lafayette Subsidiaries as the Company may reasonably request, provided
that no
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investigation pursuant to this Section 5.07 shall affect or be deemed to
modify or waive any representation or warranty made by Lafayette or the Bank
or the conditions to the obligations of Lafayette and the Bank to consummate
the transactions contemplated by this Agreement; and
(2) The Company will not use any information obtained pursuant to
this Section 5.07 for any purpose unrelated to the consummation of the
transactions contemplated by this Agreement and, if this Agreement is
terminated, will hold all information and documents obtained pursuant to this
paragraph in confidence (as provided in Section 8.06) unless and until such
time as such information or documents become publicly available other than by
reason of any action or failure to act by the Company or as it is advised by
counsel that any such information or document is required by law or applicable
stock exchange rule to be disclosed, and in the event of the termination of
this Agreement, the Company will, upon request by Lafayette, deliver to
Lafayette all documents so obtained by the Company or destroy such documents
and, in the case of destruction, will certify such fact to Lafayette.
5.08. ACQUISITION PROPOSALS. In the case of Lafayette, without the
prior written consent of the Company, it shall not, and it shall cause the
Lafayette Subsidiaries not to, solicit, initiate or encourage inquiries or
proposals with respect to, or furnish any nonpublic information relating to or
participate in any negotiations or discussions concerning, any acquisition or
purchase of all or a substantial portion of the assets of, or a substantial
equity interest in, Lafayette or any of the Lafayette Subsidiaries or any
merger or other business combination with Lafayette or any of the Lafayette
Subsidiaries other than as contemplated by this Agreement; it shall instruct
its and the Lafayette Subsidiaries' officers, directors, agents, advisors and
affiliates to refrain from doing any of the foregoing; and it shall notify the
Company immediately if any such inquiries or proposals are received by, or any
such negotiations or discussions are sought to be initiated with, Company
or any of the Lafayette Subsidiaries.
5.09. BLUE-SKY FILINGS. In the case of the Company, it shall use its
best efforts to obtain all necessary state securities laws or "blue sky"
permits and approvals, provided that the Company shall not be required by
virtue thereof to submit to general jurisdiction in any state.
5.10. CERTAIN POLICIES OF LAFAYETTE AND THE BANK. In the case of
each of Lafayette and the Bank, it shall, at the Company's request: (i)
modify and change its loan, litigation and other reserve and real estate
valuation policies and practices (including loan classifications and levels of
reserves), and (ii) generally conform its operating, lending and compliance
policies and procedures, prior to the Effective Date so as to be consistent on
a mutually satisfactory basis with those of the Company and generally accepted
accounting principles; PROVIDED, HOWEVER, Lafayette and the Bank shall not be
required to take any such action set forth in (i) above until all regulatory
approvals set forth in Section 6.02 shall have been obtained. Lafayette's and
the Bank's representations, warranties and covenants contained in this
Agreement shall not be deemed to be untrue or breached in any respect for any
purpose as a consequence of any modifications or changes undertaken solely on
account of this Section 5.10.
5.11. STATE TAKEOVER LAW. In the case of Lafayette, Lafayette shall
not take any action that would cause the transactions contemplated by this
Agreement to be subject to any applicable state takeover statute and Lafayette
shall take all necessary steps to exempt (or ensure the continued exemption
of) the transactions contemplated by this Agreement from, or, if necessary,
challenge the validity or applicability of, any applicable state takeover law,
as now or hereafter in effect, including, without limitation, Section 351.459
of the MGBCL.
5.12. NO RIGHTS TRIGGERED. In the case of Lafayette, Lafayette shall
take all necessary steps to ensure that the entering into of this Agreement
and the consummation of the transactions contemplated hereby and thereby
(including without limitation the Merger) and any other action or combination
of actions, or any other transactions contemplated hereby or thereby do not
and will not (i) result in the grant of any rights to any person under the
Articles of Incorporation or Bylaws of Lafayette or under any agreement to
which Lafayette or any Lafayette Subsidiary is a party, or (ii) restrict or
impair in any way the ability of the Company to exercise the rights granted
hereunder.
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5.13. SHARES LISTED. In the case of the Company, it shall file with
the Nasdaq Stock Market a Notification Form for Listing of Additional Shares.
5.14. REGULATORY APPLICATIONS. In the case of the Company, (i) it
shall promptly prepare and submit applications to the appropriate Regulatory
Authorities for approval of the Merger, and (ii) promptly make all other
appropriate filings to secure all other approvals, consents and rulings which
are necessary for the consummation of the Merger by the Company.
5.15 REGULATORY DIVESTITURES. In the case of Lafayette, effective on or
before the Effective Date, Lafayette shall cease engaging in such activities
as the Company shall advise Lafayette in writing are not permitted to be
engaged in by the Company under applicable law following the Effective Date
and, to the extent required by any Regulatory Authority as a conditional
approval of the transactions contemplated by this Agreement, Lafayette shall
divest any subsidiary engaged in activities or holding assets that are
impermissible for the Company on terms and conditions agreed to by the
Company.
5.16 CURRENT INFORMATION.
(a) During the period from the date of this Agreement to the Effective
Date, each of Lafayette, the Bank and the Company shall, and shall cause its
representatives to, confer on a regular and frequent basis with
representatives of the other.
(b) Lafayette and the Bank shall promptly notify the Company of (i) any
material change in the business or operations of Lafayette, the Bank or any
Lafayette Subsidiary, (ii) any material complaints, investigations or hearings
(or communications indicating that the same may be contemplated) of any
Regulatory Authority relating to Lafayette, the Bank, or any Lafayette
Subsidiary, (iii) the initiation or threat of material litigation involving or
relating to Lafayette, the Bank or any Lafayette Subsidiary, or (iv) any event
or condition that might reasonably be expected to cause any of Lafayette's or
the Bank' representation or warranties set forth herein not to be true and
correct in all material respects as of the Effective Date or prevent Lafayette
or the Bank from fulfilling its or their obligations hereunder; and in each
case shall keep the Company informed with respect thereto.
(c) The Company shall (i) promptly notify Lafayette of any event or
condition that might reasonably be expected to cause any of the Company's
representations or warranties set forth herein not to be true and correct in
all material respects as of the Effective Date, and (ii) notify Lafayette
immediately of any denial of any application filed by the Company with any
Regulatory Authority with respect to this Agreement, and in each case shall
keep Lafayette and the Bank informed with respect thereto.
5.17 AFFILIATE AGREEMENTS. In the case of Lafayette, it will cause each
person who is an "affiliate" of Lafayette for purposes of Rule 145 under the
Securities Act (each an "Affiliate") to execute and deliver to the Company on
or before the mailing of the Proxy Statement/Prospectus for the Meeting an
agreement in the form attached hereto as Exhibit B restricting the disposition
of the shares of Company Common Stock to be received by such person in
exchange for such person's shares of Lafayette Common Stock. Previously
Disclosed on Schedule 5.17 is a list of Affiliates as of the date hereof.
5.18 BANK COMMON STOCK. In the case of Lafayette, it will use its best
efforts to acquire all of the outstanding shares of Bank Common Stock that it
does not own, provided that the price to be paid to acquire such shares shall
not exceed one and one-half times the book value per share of the Bank on
September 30, 1996.
-18-
VI. CONDITIONS TO CONSUMMATION OF THE MERGER
Consummation of the Merger is conditioned upon:
6.01. SHAREHOLDER VOTE. Approval of the transactions contemplated
hereby by the requisite vote of the shareholders of Lafayette.
6.02. REGULATORY APPROVALS. Procurement by the Company of all
required regulatory consents and approvals by the appropriate Regulatory
Authorities and the expiration of the statutory waiting period relating
thereto; PROVIDED, HOWEVER, that no such approval or consent shall have
imposed any condition or requirement which, in the opinion of the Company,
would so materially adversely impact the economic or business benefits to the
Company of the transactions contemplated by this Agreement so as to render
inadvisable the consummation of the Merger.
6.03. NO INJUNCTION. There shall not be in effect any order, decree
or injunction of any court or agency of competent jurisdiction that enjoins or
prohibits consummation of any of the transactions contemplated hereby.
6.04. LEGAL OPINION. Lafayette and the Bank shall have received an
opinion, dated the Effective Date, of Breyer & Aguggia, special counsel for
the Company, in form reasonably satisfactory to Lafayette, which shall cover
the matters contained in Exhibit C hereto.
6.05. LEGAL OPINION. The Company shall have received an opinion,
dated the Effective Date, of Humphrey, Farrington & McClain, P.C., counsel for
Lafayette and the Bank, in form reasonably satisfactory to the Company, which
shall cover the matters contained in Exhibit D hereto.
6.06. OFFICER'S CERTIFICATE. (i) Each of the representations and
warranties contained herein of the Company shall be true and correct as of the
date of this Agreement and upon the Effective Date with the same effect as
though all such representations and warranties had been made on the Effective
Date, except for any such representations and warranties made as of a
specified date, which shall be true and correct as of such date, and (ii) each
and all of the agreements and covenants of the Company to be performed and
complied with pursuant to this Agreement on or prior to the Effective Date
shall have been duly performed and complied with in all material respects, and
Lafayette and the Bank shall have received a certificate signed by the Chief
Executive Officer and the Chief Financial Officer of the Company dated the
Effective Date, to such effect.
6.07. OFFICERS' CERTIFICATE. (i) Each of the representations and
warranties contained herein of Lafayette and the Bank shall be true and
correct as of the date of this Agreement and upon the Effective Date with the
same effect as though all such representations and warranties had been made on
the Effective Date, except for any such representations and warranties made as
of a specified date, which shall be true and correct as of such date and
except as otherwise provided in Section 5.10, and (ii) each and all of the
agreements and covenants of Lafayette and the Bank to be performed and
complied with pursuant to this Agreement on or prior to the Effective Date
shall have been duly performed and complied with in all material
respects, and the Company shall have received a certificate signed by the
Chief Executive Officers and the Chief Financial Officers of Lafayette and the
Bank dated the Effective Date, to such effect.
6.08. EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall have become effective and no stop order or other order suspending the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the SEC or any other
Regulatory Authority.
6.09. BLUE-SKY PERMITS. The Company shall have received all state
securities laws and "blue sky" permits necessary to consummate the Merger.
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6.10. TAX OPINION. The Company and Lafayette shall have received an
opinion from Breyer & Aguggia to the effect that (i) the Merger constitutes a
reorganization under Section 368 of the Code, and (ii) no gain or loss will be
recognized by shareholders of Lafayette who receive shares of the Company
Common Stock in exchange for their shares of Lafayette Common Stock, and, in
rendering their opinion, Breyer & Aguggia may require and rely upon
representations contained in certificates of officers of the Company,
Lafayette and others.
6.11. EMPLOYMENT AGREEMENTS. The Employment Agreements attached as
Exhibits E-1 through E-3 shall have been duly executed and delivered by all
parties to such agreements.
6.12. ADVERSE CHANGE. During the period from December 31, 1996 to
the Effective Date, there shall not have been any material adverse change in
the financial position or results of operations of Lafayette or the Bank, nor
shall Lafayette or the Bank have sustained any loss or damage to its
properties, whether or not insured, that materially affects its ability to
conduct its business; and the Company shall have received a certificate dated
the Effective Date signed by the Chief Executive Officers of Lafayette and the
Bank to such effect.
6.13. DISSENTERS' RIGHTS. The number of Dissenters' Shares shall not
exceed in the aggregate five percent of the outstanding shares of Lafayette
Common Stock.
6.14. BANK COMMON STOCK. There shall be no more than 11.666 shares
of Bank Common Stock outstanding that are not owned by Lafayette.
6.15. RECEIPT OF AFFILIATE AGREEMENTS. The Company shall have
received from each Affiliate of Lafayette the agreements referred to in
Section 5.17.
PROVIDED, HOWEVER, that a failure to satisfy any of the conditions set
forth in the proviso following Section 6.02 or in Sections 6.05, 6.07, 6.11,
6.12, 6.13, 6.14 or, 6.15 shall only constitute conditions if asserted by the
Company, and a failure to satisfy any of the conditions set forth in Section
6.04 or 6.07 shall only constitute conditions if asserted by Lafayette.
VII. TERMINATION
This Agreement may be terminated prior to the Effective Date, either
before or after receipt of required shareholder approvals:
7.01. MUTUAL CONSENT. By the mutual consent of the Company and
Lafayette, if the Board of Directors of each so determines by vote of a
majority of the members of its entire Board.
7.02. BREACH. By the Company or Lafayette, if its Board of Directors
so determines by vote of a majority of the members of its entire Board, in the
event of (i) a material breach by the other party of any representation or
warranty contained herein, which breach cannot be or has not been cured within
thirty (30) days after the giving of written notice to the breaching party of
such breach, or (ii) a breach by the other party of any of the material
covenants or agreements contained herein, which breach cannot be or has not
been cured within thirty (30) days after the giving of written notice to the
breaching party of such breach.
7.03. DELAY. By the Company or Lafayette, if its Board of Directors
so determines by vote of a majority of the members of its entire Board, in the
event that the Merger is not consummated by December 31, 1997.
7.04. NO SHAREHOLDER OR REGULATORY APPROVAL. By the Company or
Lafayette, if its Board of Directors so determines by a vote of a majority of
the members of its entire Board, (i) in the event that any shareholder
approval contemplated by Section 6.01 is not obtained at the Meeting,
including any adjournment
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or adjournments thereof, or (ii) in the event that written notice is received
which states that any required regulatory approval contemplated by Section
6.02 has not been approved or has been denied.
7.05. DUE DILIGENCE REVIEW. By the Company in the event that (i) any
situation, event, circumstance or other matter shall come to the attention of
the Company during the course of the Company Due Diligence Review which the
Company shall, in a good faith exercise of its reasonable discretion, believe
(a) to be inconsistent in any material respect with any of the representations
and warranties of Lafayette or the Bank, (b) to be of such significance as to
have a Material Adverse Effect on the financial condition, prospects, results
of operations or business of Lafayette and the Bank, taken as a whole, or (c)
is a material deviation from the Lafayette Financial Reports, and (ii) the
Company notifies Lafayette of such matters within five (5) business days after
the end of the Company Due Diligence Review Period and such matters are not
capable of being cured or have not been cured within thirty (30) days after
written notice thereof to Lafayette. For purposes of this Section 7.05, (i)
the "Company Due Diligence Review" shall mean a review by the Company of
Lafayette's and the Bank's operations, business affairs, prospects and
financial condition, including without limitation, those matters which are the
subject of Lafayette's and the Bank's representations and warranties and (ii)
the "Company Due Diligence Review Period" shall mean a thirty (30) day period
beginning on the date of this Agreement. Notwithstanding anything in this
Section 7.05 contained or implied to the contrary, the Company Due Diligence
Review shall not limit, restrict or preclude the Company, at any time
or from time to time, from conducting such reviews or from exercising any
rights available to it hereunder as a result of the existence or occurrence
prior to the Company Due Diligence Review Period of any event or condition
which was not detected in the Company Due Diligence Review by the Company and
which constitutes a breach of any representation or warranty of Lafayette or
the Bank under this Agreement.
VIII. OTHER MATTERS
8.01. SURVIVAL. If the Effective Date occurs, all representations,
warranties, agreements and covenants contained in this Agreement shall not
survive the Effective Date. If this Agreement is terminated prior to the
Effective Date, the agreements and representations of the parties in Section
4.01(P), Sections 5.05, 5.07(2), 5.11 and 5.12, and Sections 8.01, 8.03, 8.04,
8.05, 8.06, 8.07, 8.09 and 8.11 shall survive such termination.
8.02. WAIVER; AMENDMENT. Prior to the Effective Date, any provision
of this Agreement may be (i) waived in writing by the party benefitted by the
provision, or (ii) amended or modified at any time (including the structure of
the transactions contemplated hereby) by an agreement in writing among the
parties hereto approved by their respective Boards of Directors and executed
in the same manner as this Agreement, except that, after the vote by the
shareholders of Lafayette, the consideration to be received by the
shareholders of Lafayette for each share of Lafayette Common Stock shall not
thereby be decreased.
8.03. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original. This
Agreement shall become effective when one counterpart has been signed by each
party hereto.
8.04. GOVERNING LAW. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Missouri, except as
federal law may be applicable.
8.05. EXPENSES. Each party hereto will bear all expenses incurred by
it in connection with this Agreement and the transactions contemplated hereby.
8.06. CONFIDENTIALITY. Except as otherwise provided in Section
5.07(2), each of the parties hereto and their respective agents, attorneys and
accountants will maintain the confidentiality of all information provided in
connection herewith which has not been publicly disclosed.
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8.07. NOTICES. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed to have been duly
given when delivered by hand, telegram or telex (confirmed in writing) to such
party at its address set forth below or such other address as such party may
specify by notice to the parties hereto.
If to the Company to: Lexington B&L Financial Corp.
919 Franklin Avenue
Lexington, Missouri 64067
Attn: Erwin Oetting, Jr.
Copies to: Paul M. Aguggia, Esq.
Breyer & Aguggia
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
If to Lafayette or the Bank to: Lafayette Bancshares, Inc.
20th and 13 Highway
Lexington, Missouri 64067
Attn: William J. Huhmann
Copies to: Buford L. Farrington, Esq.
Humphrey, Farrington & McClain, P.C.
221 West Lexington
Suite 400
Independence, Missouri 64051
8.08. DEFINITIONS. Any term defined anywhere in this Agreement shall
have the meaning ascribed to it for all purposes of this Agreement (unless
expressly noted to the contrary). In addition:
(A) the term "Material Adverse Effect," when applied to a party,
shall mean an event, occurrence or circumstance (including without
limitation (i) the making of any provisions for possible loan and
lease losses, write-downs of other real estate and taxes and (ii)
any breach of a representation or warranty contained herein by such
party) which (a) has or is reasonably likely to have a material
adverse effect on the financial condition, results of operations,
business or prospects of the party and its subsidiaries, taken as a
whole, or (b) would materially impair the party's ability to perform
its obligations under this Agreement or the consummation of any of
the transaction contemplated hereby; and
(B) the term "Previously Disclosed" by a party shall mean
information set forth in a Schedule that is delivered by that party
to the other party contemporaneously with the execution of this
Agreement and specifically designated as information "Previously
Disclosed" pursuant to this Agreement.
8.09. BREAK-UP FEE. The parties hereby acknowledge that, in
negotiating and executing this Agreement and in taking the steps necessary or
appropriate to effect the transaction contemplated hereby, the Company has
incurred and will incur direct and indirect monetary and other costs
(including, without limitation, attorney's fees and costs and costs of the
Company employee and management time) and will forego discussion with respect
to other potential acquisitions. To compensate the Company for such cost and
to induce it to forego initiating discussions regarding other acquisitions,
Lafayette and the Bank shall be obligated to pay the Company on demand
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(and in no event more than three days after such demand) in immediately
available funds $100,000 ("Break-up Fee") if:
(A) (i) this Agreement terminates because Lafayette and the Bank and
their respective directors do not use all reasonable efforts to consummate the
transactions contemplated by this Agreement in accordance with the terms of
this Agreement, (ii) Lafayette terminates this Agreement for any reason other
than the grounds for termination set out in Sections 7.01, 7.02 (but only in
the event that the Company willfully breaches a representation, warranty or
covenant contained herein and, as a result thereof, Lafayette exercises its
right to terminate this Agreement under Section 7.02 at a time when the
Company was not entitled to terminate this Agreement under Section 7.02, 7.03
or 7.04) or 7.03, or (iii) the Company terminates this Agreement pursuant to
Section 7.02 as a result of Lafayette's breach of a representation, warranty
or covenant, including, but not limited to its covenants contained in Section
5.08; or
(B) within 12 months after the date hereof, the Merger has not been
completed and there occurs any of the events set forth in subparagraphs (i),
(ii) or (iii) below.
(i) Any person other than the Company or an affiliate of the
Company acquires beneficial ownership of 25% or more of the then-outstanding
Lafayette Common Stock;
(ii) Lafayette or any of its affiliates, without having received the
Company's prior written consent, enters into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term "person"
for purposes of this section having the meaning assigned thereto in Sections
3(a)(9) and 13(d)(3) of the Exchange Act and the rules and regulations
thereunder) other than the Company or any of its subsidiaries, or Lafayette's
Board of Directors recommends that the shareholders of Lafayette approve or
accept any Acquisition Transaction with any person other than the Company or
any of its subsidiaries. For purposes of this section, "Acquisition
Transaction" shall mean (a) a merger or consolidation, or any similar
transaction, involving Lafayette or the Bank, (b) a purchase, lease or other
acquisition of all or substantially all of the assets of Lafayette or the
Bank, or (c) a purchase or other acquisition (including by way of merger,
consolidation, share exchange or otherwise) of securities representing 10% or
more of the voting power of Lafayette or the Bank; or
(iii) A bona fide proposal is made by a third party to Lafayette
or the Bank to engage in an Acquisition Transaction and after such proposal is
made any of the following events occurs: Lafayette willfully breaches this
Agreement and such breach entitles the Company to terminate this Agreement;
the holders of Lafayette Common Stock do not approve this Agreement at the
Meeting; the Meeting is not held or is canceled prior to termination of this
Agreement for reasons other than the fault of the Company; or Lafayette's
Board of Directors modifies in a manner adverse to the Company the
recommendation of Lafayette's Board of Directors with respect to this
Agreement.
Notwithstanding the foregoing, Lafayette and the Bank shall not be
obligated to pay to the Company the Break-up Fee if, prior to the occurrence
of any of the events specified in 8.09(B)(i), (ii) or (iii), Lafayette
validly terminates this Agreement pursuant to Section 7.01 or clause (ii) of
Section 7.04. The parties further agree that this Section 8.09 is without
prejudice to any other rights that the parties hereto may have for any failure
to perform this Agreement.
8.10. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This
Agreement together represent the entire understanding of the parties hereto
with reference to the transactions contemplated hereby and thereby and
supersede any and all other oral or written agreements heretofore made.
Nothing in this Agreement expressed or implied, is intended to confer upon any
person, other than the parties hereto or their respective successors, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.
8.11. HEADINGS. The headings contained in this Agreement are for
reference purposes only and are not part of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed in counterparts by their duly authorized officers, all as of the day
and year first above written.
LEXINGTON B&L FINANCIAL CORP.
By: /s/ Erwin Oetting, Jr.
NAME: Erwin Oetting, Jr.
TITLE: President
LAFAYETTE BANCSHARES, INC.
By: /s/ William J. Huhmann
NAME: William J. Huhmann
TITLE: Chairman
LAFAYETTE COUNTY BANK OF
LEXINGTON/WELLINGTON
By: /s/ William J. Huhmann
NAME: William J. Huhmann
TITLE: Chairman
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Exhibit 99
*PRESS RELEASE*
FOR IMMEDIATE RELEASE:
March 12, 1997
CONTACT: Erwin Oetting, Jr., CEO and President
Lexington B & L Financial Corp.
(816) 259-2247
William J. Huhmann, Chairman
Lafayette Bancshares, Inc.
(816) 259-4363
LEXINGTON B & L FINANCIAL CORP.
TO ACQUIRE LAFAYETTE BANCSHARES
Lexington, Missouri, March 12, 1997 -- Lexington B & L Financial Corp.
(Nasdaq SmallCap: LXMO), the holding company for B & L Bank, and Lafayette
Bancshares, Inc., the holding company for Lafayette County Bank, today
announced the execution of a definitive agreement that will result in
Lafayette County Bank becoming a subsidiary of Lexington B & L Financial Corp.
Lafayette County Bank, headquartered in Lexington, Missouri, had total
assets of $32.5 million at December 31, 1996. It has three full service
offices, one in Lexington, one in Wellington and one in Callao, Missouri.
"We believe this transaction will be mutually beneficial to customers,
employees and shareholders of both banks," stated Erwin Oetting, Jr.,
President and Chief Executive Officer of Lexington. "Lafayette County Bank
specializes in commercial and consumer lending, while Lexington's strength is
in mortgage lending. By combining the expertise of both institutions,
Lexington will be able to provide an enhanced range of community banking
services."
"We are pleased to affiliate with Lexington and B & L Bank," said William
J. Huhmann, Chairman of Lafayette. "With the ongoing consolidation in the
financial services industry, we believe joining with B & L Bank to form a
larger community financial institution will be in the best interests of our
employees, customers and shareholders."
In the transaction, Lafayette shareholders will receive a combination of
cash plus shares of Lexington common stock for each share of Lafayette common
stock. Under the terms of the agreement, Lafayette's shareholders would
receive $0.92 in cash plus 0.0977 shares of Lexington common stock for each
share of Lafayette common stock if Lexington's common stock price is between
$12.00 and $14.00 per share. If Lexington's common stock price is $12.00 or
less, Lafayette shareholders would receive $0.92 in cash plus $1.17 in value
of Lexington common stock for each share of Lafayette common stock. If
Lexington's common stock price is $14.00 or more, Lafayette shareholders would
receive $0.92 in cash plus $1.37 in value of Lexington common stock for each
share of Lafayette common stock. The calculation of Lexington's common stock
price will be based upon the average closing price of Lexington common stock
for the 20 trading days prior to the effective date of the acquisition.
Based on Lexington's closing stock price of $14.75 on March 11, 1997, the
transaction would be valued at approximately $2,587,000, representing an
exchange value of $2.29 for each Lafayette share. In connection with the
acquisition, Lexington expects to issue approximately 105,000 shares, based
on the closing price of Lexington's common stock on March 11, 1997.
Lexington also announced that it has received regulatory approval to
commence a stock repurchase program to acquire up to 10%, or 126,500 shares,
of its outstanding common stock. According to Mr. Oetting, the repurchases
generally would be conducted through open market purchases, although he did
not rule out the possibility of unsolicited negotiated transactions or other
types of repurchases. The program is expected to be completed within six
months, at which time Lexington will reevaluate the program and decide whether
to terminate or continue it. In the event that Lexington is unable to
repurchase a sufficient number of shares for issuance in connection with the
acquisition, Lexington will utilize authorized but unissued shares to
complete the acquisition.
The merger, which is expected to be completed in the fourth calendar
quarter of 1997, is subject to the approval of federal banking regulators and
the shareholders of Lafayette, among other conditions.
B & L Bank, which completed its conversion from the mutual to stock form
in June 1996, is located in Lexington, Missouri. At December 31, 1996,
Lexington had total assets of $61.7 million and total stockholders' equity of
$19.0 million. On March 11, 1997, Lexington's stock closed the trading day at
$14.75 per share.
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