SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 1997
Joachim Bancorp, Inc.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Missouri 0-27154 43-1721475
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
Plaza Square, DeSoto, Missouri 63020
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 586-8821
Not Applicable
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
Item 5. Other Events
On December 29, 1997, Joachim Bancorp, Inc. ("Joachim") entered into a
definitive merger agreement ("Agreement") with First State Bancshares, Inc.
("First State") pursuant to which Joachim will be merged into First State and
Joachim's wholly-owned subsidiary, Joachim Federal Savings and Loan
Association, will be merged into First State's wholly-owned subsidiary, First
State Community Bank. The Agreement provides that each share of Joachim's
common stock will be exchanged for $17.25 in cash. The aggregate value of the
consideration to all shareholders and option holders is approximately $12.8
million.
Pursuant to the Agreement, Joachim has agreed to pay First State a
termination fee of $500,000 in the event the Agreement is terminated under
certain conditions, including the failure of Joachim's shareholders to approve
the Agreement or if the Agreement is terminated as a result of a willful
breach by Joachim and within 18 months thereafter Joachim shall have entered
into an agreement with a third party relating to certain business
combinations.
Consummation of the merger is subject to several conditions, including
receipt of applicable regulatory approval, completion of due diligence by
First State and approval by Joachim's shareholders. For information regarding
the terms of the proposed transaction, reference is made to the Agreement and
the press release dated December 29, 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
(c) Exhibits:
2 Agreement and Plan of Merger dated as of December 29, 1997
by and among First State Bancshares, Inc., FSB Sub, Inc.
and Joachim Bancorp, Inc.
99 Press Release dated December 29, 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.
JOACHIM BANCORP, INC.
January 5, 1998 By: /s/ Bernard R. Westhoff
------------------------
Bernard R. Westhoff
President
Exhibit 2
Agreement and Plan of Merger
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") is made and entered
into as of the date last below written by and among FIRST STATE BANCSHARES,
INC., a Missouri corporation ("First State"), FSB Sub, Inc., a Missouri
corporation ("FSB," and collectively with First State, the "First State
Entities") and JOACHIM BANCORP, INC., a Missouri corporation ("Joachim"):
WHEREAS, Joachim is the beneficial and record owner of 100 percent of the
issued and outstanding shares of the capital stock of Joachim Federal Savings
and Loan Association ("JFSL"); and
WHEREAS, First State is the beneficial and record owner of 100 percent of
the issued and outstanding shares of the capital stock of FSB; and
WHEREAS, the respective Boards of Directors of the First State Entities
and Joachim have authorized the execution and delivery of this Agreement; and
WHEREAS, the First State Entities and Joachim desire to provide for
certain undertakings, conditions, representations, warranties, and covenants
in connection with the transactions contemplated by this Agreement;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, and agreements herein contained, the parties
agree as follows:
ARTICLE I
The Merger
1.01 The Merger. Subject to the terms and conditions of this Agreement,
FSB shall be merged with and into Joachim (the "Merger") in accordance with
the Missouri General and Business Corporation Law (the "Missouri Act") and the
separate corporate existence of FSB shall cease. Joachim shall be the
surviving corporation in the Merger (sometimes referred to herein as the
"Surviving Corporation").
1.02 Closing. The closing (the "Closing") of the Merger shall take
place, subject to satisfaction or waiver of all conditions set forth in
Article VI hereof, at the offices of Suelthaus & Walsh, P.C., 7733 Forsyth
Blvd., 12th Floor, St. Louis, Missouri 63105, at 10:00 am., local time, on
such date as the First State Entities shall notify Joachim in writing (such
notice to be reasonably in advance of the Closing), but not earlier than the
later of (i) five business days after the special meeting of Joachim
shareholders held to approve this Agreement and (ii) 30 days after receipt of
approval of the Merger by the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") or at such other time and place as the First
State Entities and Joachim shall agree (the "Closing Date").
Agreement and Plan of Merger Page 1
1.03 Effective Time. On the Closing Date, the First State Entities will
cause the Merger to be consummated by delivering to the Missouri Secretary of
State for filing articles of merger (the "Articles of Merger") in such form as
required by, and duly executed and acknowledged in accordance with, the
relevant provisions of the Missouri Act. The Merger shall be effective (the
Effective Time ) at the time specified in such Articles of Merger.
1.04 Articles of Incorporation and By-Laws. The Articles of
Incorporation and By-Laws of FSB in effect immediately prior to the Effective
Time shall be the Articles of Incorporation and By-Laws of the Surviving
Corporation, and the Articles of Incorporation and Bylaws of Joachim shall be
changed accordingly, and this shall continue in each case until amended in
accordance with their respective provisions and applicable law.
1.05 Board of Directors and Officers.
(a) At the Effective Time, the Board of Directors of the Surviving
Corporation shall consist of those persons serving as directors of FSB
immediately prior to the Effective Time and the terms of those directors after
the Effective Time shall be the same as their respective terms immediately
prior to the Effective time (either by operation of this Agreement or by
action of First State as the sole shareholder of the Surviving Corporation
immediately after the Effective Time).
(b) At the Effective Time, the officers of FSB shall become the
officers of the Surviving Corporation until their respective successors are
duly elected and qualified, and the prior officers of Joachim shall be
relieved of their offices with Joachim and JFSL.
1.06 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further deeds,
assignments, or assurances in law or any other acts are necessary or desirable
to (i) vest, perfect, or confirm, of record or otherwise, in the Surviving
Corporation its right, title, or interest in, to, or under any of the rights,
properties, or assets of Joachim, or (ii) otherwise carry out the purposes of
this Agreement, Joachim and its officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments, or assurances in law and to
do all acts necessary or proper to vest, perfect, or confirm title to and
possession of such rights, properties, or assets in the Surviving Corporation
and otherwise to carry out the purposes of this Agreement, and the officers
and directors of the Surviving Corporation are authorized in the name of
Joachim or otherwise to take any and all such actions.
1.07 Merger Consideration. At the Effective Time, by virtue of the
Merger and without any action on the part of the First State Entities,
Joachim, or the holder of any of the following securities:
(a) The shares of common stock, par value $0.01 per share, of
Joachim ("Joachim Common Stock") issued and outstanding immediately prior to
the Effective Time shall be canceled and extinguished and be converted into
and become rights of the holders thereof to receive $17.25 in cash for each
one share of Joachim Common Stock (in the aggregate the "Merger
Consideration"). No such conversion shall be made in respect of any such
shares of
Agreement and Plan of Merger Page 2
Joachim Common Stock ("Dissenting Shares") the holder of which has
effectively demanded pursuant to the Missouri Act the appraisal of such shares
and who has timely filed a written objection to the Merger and who neither
voted in favor of, nor consented in writing to, the Merger, and who, as a
result thereof, is entitled to receive the payment of the fair value of such
holder's shares of Joachim Common Stock from the Surviving Corporation in
accordance with the Missouri Act (the "Dissenting Shareholder"). No
conversion shall be made with respect to any treasury shares of Joachim Common
Stock.
(b) Each share of common stock of FSB issued and outstanding
immediately prior to the Effective Time shall continue to be issued and
outstanding from and after the Effective Time, and shall for all purposes be
deemed to be validly issued and outstanding shares of the Surviving
Corporation.
(c) The holders of the Dissenting Shares, if any, shall be entitled
to payment for such shares only to the extent permitted by and in accordance
with the provisions of the Missouri Act. Liabilities, if any, of the
Surviving Corporation to make payment to the holders of Dissenting Shares
pursuant to the Missouri Act shall be, and the same hereby are, guaranteed and
paid as required by law by First State, just as if First State were deemed the
Surviving Corporation under the Missouri Act and obligated to make such
payments thereunder.
(d) If, in accordance with the Missouri Act any holder of
Dissenting Shares shall forfeit such right to payment of the fair value of
such shares, such shares shall thereupon be deemed to have been converted into
and to have become exchangeable for, as of the Effective Time, the right to
receive the applicable share of the Merger Consideration.
(e) Joachim shall give the First State Entities (i) prompt notice
of any written objections to the Merger and any written demands for the
payment of the fair value of any shares, withdrawals of such demands, and any
other instruments served pursuant to the Missouri Act received by Joachim, and
(ii) the opportunity to direct all negotiations and proceedings with respect
to such demands under the Missouri Act. Joachim shall not voluntarily make
any payment with respect to any demands for payment of fair value and shall
not, except with the prior written consent of the First State Entities, settle
or offer to settle any such demands.
(f) As used herein, the term "Capital Change" includes stock
splits, stock dividends, combinations of shares, distributions of warrants or
other rights, and/or any other capital rearrangements (other than cash
dividends permitted herein) by Joachim. In the event that any Capital Change
occurs between the date of this Agreement and the Closing Date respecting the
shares of Joachim Common Stock, the Merger Consideration to be received for
such shares, as set forth in subsection (a) of this Section, shall be
equitably adjusted so that the holders of Joachim Common Stock will receive
(in lieu of $17.25 per share of Joachim Common Stock) the same dollar amount
that such holder would have received in the Merger, had the Effective Time
been immediately prior to such Capital Change. This provision shall apply
severally in the event of successive Capital Changes.
(g) With respect to the options to purchase 60,839 shares of
Joachim Common Stock granted by Joachim pursuant to its 1996 Stock Option
Plan, such options shall, as of the Effective
Agreement and Plan of Merger Page 3
Time, be canceled, and in lieu thereof the holders of such options shall be
paid $4.9375 for each share of Joachim Common Stock the holder of the option
formerly had the right to purchase and such holders shall have no other
rights, privileges, or benefits arising out of or resulting from the grant of
said options. In the event of a Capital Change, the amount to be paid per
option share shall be equitably adjusted such that the holders will receive an
amount per option share, after adjustment, that is equivalent to the
difference between the exercise price of the options ($12.3125 per share prior
to adjustment) and the merger consideration per share of Joachim Common Stock
($17.25 per share prior to adjustment). At the Effective Time the 1996 Stock
Option Plan shall be deemed terminated.
(h) With respect to the 23,113 unvested restricted shares of
Joachim Common Stock granted by Joachim pursuant to its 1996 Management
Recognition and Development Plan, such shares shall, as of the Effective Time,
be canceled, and in lieu thereof the holders of such shares shall be paid
$17.25 for each share and such holders shall have no other rights, privileges,
or benefits arising out of or resulting from the grant of such restricted
shares. At the Effective Time the 1996 Management Recognition and Development
Plan shall be deemed terminated.
1.08 Surrender and Exchange of Shares.
(a) After the Effective Time, each holder of a certificate or
certificates theretofore evidencing outstanding shares of Joachim Common Stock
shall, upon surrender of the same to First State Community Bank, Farmington,
Missouri (the "Exchange Agent"), be entitled to receive in exchange therefor
such portion of the Merger Consideration as shall be attributable to the
shares of Joachim Common Stock theretofore represented by the certificate or
certificates so surrendered, all as determined pursuant to Section 1.07. At
the Effective Time, First State shall deliver the Merger Consideration to the
Exchange Agent for subsequent delivery to the former holders of Joachim Common
Stock, as hereinafter provided. Promptly after the Effective Time the
Exchange Agent shall mail to each holder of record of an outstanding
certificate which immediately prior to the Effective Time evidenced shares of
Joachim Common Stock, and which is to be exchanged for Merger Consideration, a
form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to such certificate shall pass, only upon
delivery of such certificate to the Exchange Agent) advising such holder of
the terms and the exchange effected by the Merger and the procedure for
surrendering to the Exchange Agent such certificate in exchange for the
portion of the Merger Consideration attributable to the Joachim Common Stock
being surrendered. Upon receipt by the Exchange Agent of a properly completed
and executed letter of transmittal and applicable certificate for shares of
Joachim Common Stock, the Exchange Agent shall promptly forward to the
person(s) properly designated in the letter of transmittal the applicable
portion of the Merger Consideration that may be due. After 180 days following
the Effective Time, the Exchange Agent shall deliver to First State all
undistributed Merger Consideration (including any interest received with
respect thereto) which First State, or any of the First State Entities have
transferred to the Exchange Agent and which have not been disbursed to holders
of certificates formerly representing shares of Joachim Common Stock, and
thereafter such holder shall be entitled to look to the First State Entities,
jointly and/or severally (subject to abandoned property, escheat, and other
similar laws) with respect to such of the foregoing as would otherwise be
deliverable or payable upon due surrender of their certificates.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable
Agreement and Plan of Merger Page 4
to any holder of shares of Joachim Common Stock for any consideration paid to
a public official pursuant to any applicable abandoned property, escheat, or
similar laws.
(b) If any portion of the Merger Consideration is to be issued to a
person other than the person in whose name the certificate so surrendered in
exchange therefor is registered, it shall be a condition of the issuance
thereof that the certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
exchange pay to First State any transfer or other taxes required by reason of
the payment of a portion of the Merger Consideration to a person other than
the person who is the registered holder of the certificate surrendered or
otherwise establish to the satisfaction of First State that such tax has been
paid or is not payable.
1.09 Closing of Stock Transfer Books. The stock transfer books of
Joachim shall be closed at the Effective Time. In the event of a transfer of
ownership of Joachim Common Stock which is not registered in the transfer
records of Joachim, the Merger Consideration to be distributed pursuant to
this Agreement may be delivered to a transferee if the certificate
representing such shares is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by payment of
any applicable stock transfer taxes. The First State Entities and the
Exchange Agent shall be entitled to rely upon the stock transfer books of
Joachim to establish the identity of those persons entitled to receive the
Merger Consideration specified in this Agreement for their shares of Joachim
Common Stock, which books shall be conclusive with respect to the ownership of
such shares. In the event of a dispute with respect to the ownership of any
such shares, the First State Entities and the Exchange Agent shall be entitled
to deposit any consideration represented thereby in escrow with an independent
party and thereafter be relieved with respect to any claims to such
consideration.
1.10 Subsidiary Merger. It is the intention of the parties hereto that
simultaneously with the Effective Time JFSL will merge with and into First
State Community Bank, a wholly- owned subsidiary of First State, and that
First State Community Bank shall be the survivor of such merger and the former
banking office of JFSL shall become a branch of First State Community Bank
(collectively such transactions, together will all related and ancillary
transactions, are referred to as the "Subsidiary Merger"). Joachim and JFSL
shall cooperate with First State in obtaining all requisite federal and/or
state regulatory approvals for the Subsidiary Merger, including, but not
limited to causing JFSL to enter into an agreement with First State Community
Bank providing for the Subsidiary Merger in such form as First State shall
reasonably deem advisable (the "Subsidiary Merger Agreement") and such
regulatory applications as First State shall deem necessary to accomplish the
Subsidiary Merger.
ARTICLE II
Representations and Warranties of Joachim
As a material inducement to the First State Entities to enter into and
perform their respective obligations under this Agreement, and notwithstanding
any examinations, inspections, audits, and other investigations heretofore and
hereafter made by the First State Entities, Joachim hereby represents and
warrants to the First State Entities as follows:
Agreement and Plan of Merger Page 5
2.01 Organization and Authority. Joachim is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Missouri. Joachim is registered as a savings and loan holding company with
the Office of Thrift Supervision ("OTS") under the Home Owners Loan Act
("HOLA"). Joachim has no subsidiaries except JFSL and those set forth on
Schedule 2.01 (together with JFSL, the "Subsidiaries").
JFSL is chartered as a federal savings and loan association, is duly
organized, validly existing, and in good standing under the laws of the United
States of America, and its deposits are insured up to applicable limits by
Savings Association Insurance Fund of the Federal Deposit Insurance
Corporation (the "FDIC") under the Federal Deposit Insurance Act of 1950, as
amended (the "FDIC Act"). Each of Joachim and JFSL possess all corporate
power and authority to own and operate their respective properties and to
carry out their respective businesses as and where the same are now being
conducted. The character of the properties owned or leased by each of Joachim
and JFSL and the nature of the business transacted by each do not require that
either of them be qualified to do business in any other jurisdiction.
Each of the Subsidiaries other than JFSL is duly organized, validly
existing, and in good standing in its state of incorporation and in all states
in which it does business or owns or leases property. Each of the
Subsidiaries other than JFSL possesses all corporate power and authority to
own and operate its respective properties and to carry out its respective
businesses as and where the same are now being conducted.
2.02 Corporate Authorization; Records. Joachim has the corporate power
and authority to enter into this Agreement and, subject to the approval of the
Merger by the shareholders of Joachim and such approvals of government
agencies and other governing boards having regulatory authority over Joachim
and the Subsidiaries as may be required by applicable law, rule, or
regulation, to carry out its obligations hereunder. The only shareholder vote
of Joachim required to approve the Merger is the affirmative vote of the
holders of two-thirds of the outstanding shares of Joachim Common Stock,
entitled to vote at any meeting of shareholders of Joachim held for such
purpose. The execution, delivery, and performance of this Agreement by
Joachim and the consummation of the transactions contemplated hereby have been
duly authorized by the Board of Directors of Joachim. Subject to the
approvals as aforesaid, this Agreement is the valid and binding obligation of
Joachim, enforceable against Joachim in accordance with its terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other laws now or hereafter in effect relating
to the enforcement of creditors' rights generally, and except that equitable
principles may limit the right to obtain specific performance or other
equitable remedies.
Neither the execution, delivery and performance by Joachim of this
Agreement, nor the consummation of the transactions contemplated hereby, nor
compliance by Joachim with any of the provisions hereof, will (a) except as
set forth in Schedule 2.02 attached hereto and except for non-material
breaches which individually and in the aggregate do not or will not have a
material adverse affect upon the financial condition, results of operations,
business, assets, or operations of Joachim and the Subsidiaries taken as a
whole, violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance
Agreement and Plan of Merger Page 6
required by, or result in a right of termination or acceleration of, or result
in the creation of any lien, security interest, charge, or encumbrance upon
any of the properties or assets of Joachim or any of the Subsidiaries under
any of the terms, conditions, or provisions of (i) the articles of
incorporation, articles of association, or Bylaws of each, or (ii) any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement, or other
instrument or obligation to which Joachim or any of the Subsidiaries is a
party or by which it may be bound, or to which Joachim or any of the
Subsidiaries or any of the properties or assets of Joachim or any of the
Subsidiaries may be subject, or (b) subject to compliance with the statutes
and regulations referred to in this Section, violate any judgment, ruling,
order, writ, injunction, decree, or to the best of Joachim's knowledge, any
statute, rule, or regulation applicable to Joachim or any of the Subsidiaries
or any of their respective properties or assets.
Other than in connection or in compliance with the provisions of the
Missouri Act, the Securities Exchange Act of 1934 and the rules and
regulations thereunder (the "Exchange Act"), or filings, consents, reviews,
authorizations, approvals, or exemptions required under the Bank Holding
Company Act of 1956 ("BHC Act"), notice filings with the OTS under the HOLA,
or any required approvals of the Missouri Division of Finance (the "Division
of Finance"), and the FDIC, no notice to, filing with, exemption or review by,
or authorization, consent, or approval of, any public body or authority is
necessary for the consummation by Joachim of the transactions contemplated by
this Agreement.
The minute books and stock records of Joachim and the Subsidiaries are
complete and correct in all material respects and accurately reflect in all
material respects all meetings, consents and other actions of the organizers,
incorporators, shareholders, boards of directors, and committees of the boards
of directors occurring since the organization of each.
2.03 Subsidiaries of Subsidiaries. Except as set forth in Schedule 2.03
attached hereto, the Subsidiaries have no subsidiaries and do not control, or
have any interest in any other corporation, partnership, joint venture, or
other business association (other than any interest pledged to JFSL in the
ordinary course of their business as security for the obligations of third
parties to JFSL or held by JFSL as a consequence of their exercise of rights
and remedies in respect of any interest pledged as security in respect of such
obligations).
2.04 Capitalization of Joachim. The authorized stock of Joachim consists
of 5,000,000 shares of common stock, par value $0.01 per share, of which, as
of the date hereof, 722,415 shares were issued and outstanding, and 38,022
shares are issued but not outstanding and held in treasury, and 1,000,000
shares of preferred stock, par value $0.01 per share, of which, as of the date
hereof, none were issued and outstanding. Except as set forth in Schedule
2.04, there are no other shares of capital stock or other equity securities of
Joachim outstanding and no other options, warrants, scrip, rights to subscribe
to, calls, or commitments of any character whatsoever relating to, or
securities or rights convertible into, shares of any capital stock of Joachim,
or contracts, commitments, understandings, or arrangements by which Joachim is
or may become bound to issue additional shares of its capital stock or
options, warrants, or rights to purchase or acquire any additional shares of
its capital stock. Schedule 2.04 summarizes all plans and agreements for all
options, warrants, scrip, rights to subscribe to, calls, and commitments, and
the number of shares for which each is subject. All of the issued and
outstanding shares of
Agreement and Plan of Merger Page 7
Joachim Common Stock are validly issued, fully paid, and nonassessable, and
have not been issued in violation of any preemptive right to any shareholder
of Joachim.
2.05 Capitalization of the Subsidiaries. The authorized capital stock of
JFSL consists of 1,000 shares of common stock, par value $1.00 per share, of
which 1,000 shares are issued and outstanding and 9,000 shares of preferred
stock, none of which are outstanding. Joachim has and will have as of the
Closing Date good and marketable title to all then issued and outstanding
shares of the common stock of JFSL, free and clear of any liens, claims,
charges, encumbrances, and assessments of any kind or nature whatsoever,
except as set forth in Schedule 2.05 attached hereto. There are no other
shares of capital stock or other equity securities of JFSL outstanding and no
other outstanding options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or securities or rights
convertible into, shares of any capital stock of JFSL, or contracts,
commitments, understandings, or arrangements by which JFSL is or may become
bound to issue additional shares of capital stock or options, warrants, or
rights to purchase or acquire any additional shares of capital stock. All of
the issued and outstanding shares of JFSL's common stock are validly issued,
fully paid, and nonassessable.
The authorized capital stock of each of the Subsidiaries (other than
JFSL) is described in Schedule 2.05 attached hereto under the heading
"Capitalization of Non-Thrift Subsidiaries." Joachim has and will have as of
the Closing Date good and marketable title to all then issued and outstanding
shares of common stock of each Subsidiary (other than JFSL), free and clear of
any liens, claims, charges, encumbrances, and assessments of any kind or
nature whatsoever, except as set forth in Schedule 2.05 attached hereto.
There are no other shares of capital stock or other equity securities of any
of the Subsidiaries (other than JFSL) outstanding and no outstanding options,
warrants, scrip, rights to subscribe to, calls, or commitments of any
character whatsoever relating to, or securities or rights convertible into,
shares of any capital stock of each Subsidiary (other than JFSL), or
contracts, commitments, understandings, or arrangements by which any such
Subsidiary (other than JFSL) is or may become bound to issue additional shares
of capital stock or options, warrants, or rights to purchase or acquire any
additional shares of capital stock. All of the issued and outstanding shares
of common stock of each Subsidiary (other than JFSL) are validly issued, fully
paid, and nonassessable.
2.06 Financial Statements.
(a) Not later than seven business days following execution of this
Agreement, Joachim shall furnish First State with copies of the following
financial statements:
(i) Consolidated balance sheets, statements of income or loss,
statements of cash flows, and statements of shareholders' equity, together
with the notes thereto, as certified by Joachim's independent certified public
accountants, for each of the years in the 3-year period ending March 31, 1997,
and unaudited consolidated balance sheets and statements of income or loss and
statements of shareholders' equity at and for the periods ending June 30 and
September 30, 1997, together with copies of the H-(b)11 reports filed with the
OTS, containing such financial statements;
(ii) <RESERVED>;
Agreement and Plan of Merger Page 8
(iii) The Thrift Financial Reports of JFSL as of March 31,
1995, 1996, and 1997, and as of June 30 and September 30, 1997, as furnished
by JFSL to the OTS; and
(iv) The balance sheet, the statement of income or loss, the
statement of cash flows, and the statement of shareholders' equity for each of
the Subsidiaries (other than JFSL) at and for the period ending March 31,
1997;
(b) The financial statements referenced above in subsection (a) of
this Section are referred to collectively as the "Financial Statements." The
Financial Statements have been prepared in accordance with the books and
records of Joachim and the Subsidiaries in accordance with generally accepted
accounting principles consistently applied, and present fairly the
consolidated financial position of Joachim and the financial position of the
Subsidiaries at the dates thereof and the consolidated results of their
operations and cash flows of Joachim; except that the Thrift Financial Reports
have been prepared in accordance with regulatory accounting principles rather
than generally accepted accounting principles, and that statements for interim
periods are subject to normal adjustments.
(c) Joachim and the Subsidiaries have each prepared, kept, and
maintained through the date hereof true, correct, and complete financial and
other books and records of their affairs which fairly reflect their respective
assets, properties, liabilities, and operations.
(d) All of the accounts, notes, other receivables, and investment
securities which are reflected in the Financial Statements were acquired in
the ordinary course of business.
2.07 Reports. Joachim and the Subsidiaries have filed all reports,
registrations, and statements, together with any required amendments thereto,
that they were required to file with (i) the OTS, (ii) the FDIC, (iii) the
Securities and Exchange Commission (the "SEC") and (iv) any applicable state
securities authorities. All such reports and statements filed with any such
regulatory body or authority are collectively referred to herein as the
"Joachim Reports." As of their respective dates, the Joachim Reports complied
in all material respects with all published rules and regulations promulgated
by the OTS, the FDIC, the SEC, and any applicable state securities
authorities, as the case may be, and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Not later than seven business days following execution of this Agreement,
Joachim shall furnish First State with copies of all of the Joachim Reports
filed with the SEC by Joachim pursuant to the Exchange Act.
2.08 Title to and Condition of Subsidiary Assets.
(a) Except as may be reflected in the Financial Statements, Joachim
and the Subsidiaries have, and at the Closing Date will have, good and
marketable title to all of their respective properties and assets reflected on
the Financial Statements, free and clear of any liens, charges, pledges,
encumbrances, defects, claims, or rights of third parties, except:
Agreement and Plan of Merger Page 9
(i) as set forth in Schedule 2.08 attached hereto under the
heading "Encumbrances;" or
(ii) for liens for taxes, assessments, or other governmental
charges not yet delinquent; or
(iii) with respect to real property only, for such easements
and other encumbrances as do not individually or in the aggregate materially
and adversely affect the use or value of such real estate.
(b) No material assets reflected on the consolidated balance sheet
of Joachim as of March 31, 1997, have been sold, leased, transferred,
assigned, or otherwise disposed of since March 31, 1997, except in the
ordinary course of business or as set forth in Schedule 2.08 under the heading
"Dispositions."
(c) All furniture, fixtures, vehicles, machinery, equipment, and
computer software owned or used by Joachim and the Subsidiaries, including any
of such items leased as a lessee and all facilities and improvements
comprising part of any owned or leased real property, taken as a whole as to
each of the foregoing, and with no single such item being deemed of material
importance, is fit for the purposes for which they are currently used. The
operation by Joachim and the Subsidiaries of such properties is in compliance
in all material respects with all applicable laws, ordinances, and rules and
regulations of any governmental authorities having jurisdiction.
2.09 Real Property.
(a) The legal description of each parcel of real property owned by
Joachim and the Subsidiaries (other than real property (i) held by any of the
Subsidiaries as a trustee in the ordinary course of its business, or (ii)
acquired in foreclosures or in lieu of foreclosures and being held by any of
the Subsidiaries for disposition as required by law ("OREO")) is set forth in
Schedule 2.09 attached hereto under the heading "Owned Real Property" (such
real property and other similar real property previously owned by Joachim or
the Subsidiaries being herein referred to as the "Owned Real Property"). The
legal description of each parcel of real property leased by Joachim and the
Subsidiaries as lessee is also set forth in Schedule 2.09 under the heading
"Leased Real Property" (such real property being herein referred to as the
"Leased Real Property"). Collectively, the Owned Real Property and the Leased
Real Property is herein referred to as the "Real Property."
(b) Joachim and the Subsidiaries enjoy peaceful possession of all of
the Real Property.
(c) Neither Joachim nor any of the Subsidiaries has any interest in
any other real property except interests as a mortgagee, and except for OREO.
(d) To the best of Joachim's knowledge, none of the buildings,
structures, or other improvements located on the Real Property encroaches upon
or over any adjoining parcel of real estate or any easement or right-of-way or
"setback" line in any material respect, and all such
Agreement and Plan of Merger Page 10
buildings, structures, and improvements are located and constructed in
material conformity with all applicable zoning ordinances and building codes.
(e) None of the buildings, structures, or improvements located on
the Real Property are the subject of any official complaint or notice of
violation of any applicable zoning ordinance or building code, and there is no
zoning ordinance, building code, use or occupancy restriction, or condemnation
action or proceeding pending or, to the best of Joachim s knowledge,
threatened with respect to any such building, structure or improvement.
(f) Except as set forth in Schedule 2.09 under the heading of
"Property Especially Mentioned," to the best of Joachim's knowledge, neither
any Owned Real Property nor any real property now or previously held by
Joachim or any of the Subsidiaries as a result of any foreclosures is or was
in violation of any federal, state, or municipal environmental laws,
regulations, or ordinances and there are not nor have there been conditions
existing on any of the Owned Real Property or on any real property held by any
of the Subsidiaries as a result of foreclosure, or otherwise existing with
respect to Joachim and the Subsidiaries, which give rise to, or may give rise
to, any such violation, or which require or may in the future require remedial
action under or with respect to such laws, regulations, and ordinances.
2.10 Contracts, Commitments, and Certain Loans.
(a) Schedule 2.10 attached hereto contains a complete and accurate
listing of all agreements (written or oral) and other contracts (including any
leases, whether as lessor or as lessee) to which Joachim or any of the
Subsidiaries is a party which involve commitment of funds by either of more
than $25,000 or which cannot be terminated by Joachim or the Subsidiary on 30
days notice or less without liability, other than contracts entered into in
respect of deposits, loan agreements and commitments, notes, security
agreements, repurchase agreements, bankers acceptances, outstanding letters
of credit and commitments to issue letters of credit, participation
agreements, and other documents relating to loan or deposit transactions
entered into by any of the Subsidiaries in the ordinary course of business.
In addition, Schedule 2.10 also contains a complete and accurate listing of
all loan commitments, outstanding letters of credit and commitments to issue
letters of credit, and other documents relating to or involving commitments to
extend credit by Joachim or JFSL.
(b) Except for the contracts and agreements required to be listed on
Schedule 2.10, neither Joachim nor any of the Subsidiaries is a party to or
bound by any written or oral:
(i) agreement, contract, arrangement, understanding, or
commitment with any labor union or similar organization;
(ii) <RESERVED>;
(iii) franchise or license agreement;
(iv) employment, severance or termination pay, agency,
consulting, or similar agreement, contract, arrangement, understanding or
commitment;
Agreement and Plan of Merger Page 11
(v) loans or other obligations payable or owing to any
officer, director, or employee, except (i) salaries and wages incurred and
accrued in the ordinary course of business and/or (ii) obligations due in
respect of any depository accounts maintained by any of the foregoing at a
bank in the ordinary course of business;
(vi) loans or debts payable or owing by any executive officer
or director of Joachim or any of the Subsidiaries or any other person or
entity deemed an "executive officer" or a "related interest" of any of the
foregoing, as such terms are defined in Regulation O of the Federal Reserve
Board; or
(vii) other material agreement, contract, arrangement,
understanding or commitment extending beyond six months from the date hereof
that cannot be canceled without cost or penalty upon notice of 30 days or
less.
(c) Joachim and each of the Subsidiaries carry property, casualty,
liability, fidelity, and other insurance coverage as set forth in Schedule
2.10 under the heading "Insurance."
(d) True, correct, and complete copies of the agreements, contracts,
leases, insurance policies, and other documents referred to in Schedule 2.10
have been or shall be furnished or made available to the First State Entities
promptly upon request.
(e) Each of the agreements, contracts, leases, insurance policies,
and other documents referred to in Schedule 2.10 is a valid, binding, and
enforceable obligation of Joachim or the Subsidiaries and, to the best of
Joachim's knowledge, of the other parties sought to be bound thereby, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other laws now or hereafter in effect relating
to the enforcement of creditors' rights generally, and except that equitable
principles may limit the right to obtain specific performance or other
equitable remedies.
(f) There is set forth in Schedule 2.10 under the heading "Loans" a
true, correct, and complete listing, by account or other identifying number,
of: (i) all loans of JFSL which have been accelerated during the past 24
months and which as of the time of acceleration, had in excess of $25,000 of
principal and interest due; (ii) all loan commitments or lines of credit of
JFSL which have been terminated during the past 24 months by reason of default
or material adverse developments in the condition of the borrower or other
events or circumstances affecting the credit of the borrower and which, as of
the time of termination, pertained to more than $25,000 of principal and
interest; (iii) all loans, lines of credit, and loan commitments as to which
JFSL has given notice to the borrower or customer of JFSL's intent to
terminate during the past 24 months and which, as of the time of such notice
pertained to more than $25,000 of principal and interest; (iv) as to all
loans, during the past 12 months under which, or pursuant to which, JFSL has
requested or demanded that actions be taken to correct existing defaults or
facts or circumstances which may become defaults, which, as of the time of
such request or demand, had more than $25,000 of principal and interest due
and were past due by at least 30 days; and (v) each borrower, customer, or
other party which has notified JFSL during the past 24 months of, or asserted
against JFSL, in writing, any lender liability or similar claim, and, to
the best of
Agreement and Plan of Merger Page 12
Joachim s knowledge, each borrower, customer, or other party which has given
Joachim or JFSL any oral notification of, or asserted against Joachim or JFSL,
any such claim.
2.11 Absence of Defaults. Except as set forth in Schedule 2.11 attached
hereto under the heading "Defaults", there are no pending material disputes
between Joachim or the Subsidiaries and the other parties to the agreements,
contracts, leases, insurance policies, and other documents referred to in
Schedule 2.10, and all such agreements, contracts, leases, insurance policies,
and other documents are in full force and effect and not in default in any
material respect with respect to Joachim or the Subsidiaries, or, to the best
of Joachim's knowledge, any other party thereto.
2.12 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
2.12 attached hereto:
(a) Neither Joachim nor any of the Subsidiaries, as of the date
hereof, has any debts, liabilities, or obligations, whether accrued, absolute
or contingent and whether due or to become due, except
(i) liabilities reflected in the Financial Statements; or
(ii) debts, liabilities or obligations incurred since March
31, 1997, in the ordinary and usual course of their respective businesses,
none of which are for breach of contract, breach of warranty, tort,
infringement, or lawsuits, and none of which materially and adversely affect
their respective financial positions or results of operations, or businesses,
assets, or operations; and
(b) Joachim and each of the Subsidiaries were not, as of March 31,
1997, and since such date have not become a party to, any contract or
agreement which affected, affects, or may reasonably be expected to affect,
materially and adversely, their respective financial positions, results of
operations, businesses, assets, or operations.
2.13 Taxes. Joachim and each of the Subsidiaries have timely filed or
will timely file all tax returns required to be filed at or prior to the
Closing Date. Joachim and each of the Subsidiaries have paid, or have set up
adequate reserves on the Financial Statements for the payment of, all taxes
required to be paid in respect of the periods covered by such returns and have
set up adequate reserves on the Financial Statements for the payment of all
taxes anticipated to be payable in respect of the periods subsequent to the
last of said periods for which returns have been filed (treating for this
purpose the Closing Date as the last day of an applicable period, whether or
not it is in fact the last day of a taxable period). Neither Joachim nor any
of the Subsidiaries will have any material liability for any such taxes in
excess of the amounts so paid or reserves so established and no material
deficiencies for any tax, assessment, or governmental charge have been
proposed, asserted, or assessed (tentatively or definitely) against Joachim or
any of the Subsidiaries which would not be covered by existing reserves.
Neither Joachim nor any of the Subsidiaries is delinquent in the payment of
any material tax, assessment, or governmental charge, nor has it requested any
extension of time within which to file any tax returns in respect of any
fiscal year which have not since been filed and no requests for waivers of the
time to assess any taxes are pending. No tax returns of Joachim or the
Subsidiaries have been audited
Agreement and Plan of Merger Page 13
by the Internal Revenue Service (the "IRS") within the past five years.
Except as set forth on Schedule 2.13, no extensions have been requested for
any federal tax return for Joachim or any of the Subsidiaries within the past
five years.
2.14 Material Adverse Change. Except as otherwise disclosed in any of
the Schedules of Joachim referenced herein, since March 31, 1997, there has
been no material adverse change in the business, financial condition, results
of operations, or prospects of Joachim and the Subsidiaries taken as a whole
(other than changes in laws or regulations, or interpretations thereof, that
affect the banking and/or thrift industries generally, or changes in the
general level of interest rates or economic changes).
2.15 Litigation and Other Proceedings. Except as set forth in Schedule
2.15 and except for those claims, actions, suits, proceedings, governmental
proceedings and investigations which, even if adversely determined, will not,
individually or in the aggregate, have a material adverse effect upon the
conditions, results of operations, business, assets, or operations of Joachim
and the Subsidiaries, taken as a whole, neither Joachim nor any of the
Subsidiaries is a party to any pending or to the best knowledge of Joachim
threatened, claim, action, suit, investigation, or proceeding, other than
foreclosure proceedings against borrowers of JFSL, or is subject to any order,
judgment or decree. Without limiting the generality of the foregoing, except
as set forth in Schedule 2.15 and except for those claims, actions, suits,
proceedings, governmental proceedings and investigations which, even if
adversely determined, will not, individually or in the aggregate, have a
material adverse effect upon the conditions, results of operations, business,
assets, or operations of Joachim and the Subsidiaries, taken as a whole, as of
the date of this Agreement, there are no actions, suits, or proceedings
pending or to the best of Joachim s knowledge threatened against Joachim or
any of the Subsidiaries or any of their respective officers, employees, or
directors by any shareholder of Joachim (or any former shareholder) or
involving claims under the Community Reinvestment Act of 1977, the Bank
Secrecy Act, the Right to Financial Privacy Act, or any other laws applicable
to Joachim or the Subsidiaries.
2.16 Legal Proceedings and Governmental Compliance. Joachim and the
Subsidiaries are in compliance in all material respects with all laws,
ordinances, rules, regulations, and orders that are applicable to each, except
where the failure to be in compliance, individually or in the aggregate, would
not have a material adverse affect upon the financial condition, results of
operations, business, assets, or operations of Joachim and the Subsidiaries
taken as a whole.
Joachim and the Subsidiaries hold all permits, business licenses,
certificates, franchises, and other similar items, which, if not held, would
materially adversely affect the financial condition, operations, prospects,
and/or ownership rights as to the assets and properties of any of the
foregoing. A true, correct and complete list of all such items is set forth
in Schedule 2.16 attached hereto.
There is no legal action or governmental proceeding or investigation
pending or to the best of Joachim s knowledge threatened against Joachim or
any of the Subsidiaries that could prevent or adversely affect or seeks to
prohibit the consummation of the transactions contemplated hereby, nor is
Joachim or any of the Subsidiaries subject to any order of court or
governmental authority having any such effect.
Agreement and Plan of Merger Page 14
Except as set forth in Schedule 2.16, to the best knowledge of Joachim
neither Joachim nor any of the Subsidiaries is subject to a material liability
as a result of its ownership, operation, or use of any property (whether
directly or as a consequence of such property being part of its investment
portfolio, including, without limitation, properties under foreclosure,
property held by such in its capacity as a trustee, and property in which any
venture capital or similar unit of any of the Subsidiaries has an interest,
but excluding property held as collateral for the security of any loan due it)
(the "Property") (a) that is contaminated by or contains any hazardous waste,
toxic substance, or related materials, including without limitation, asbestos,
PCBs, pesticides, herbicides, or any other substance or waste that is
hazardous to human health or the environment (collectively, a "Toxic
Substance"), or (b) on which any Toxic Substance has been stored, disposed of,
placed, or used in the construction thereof. No claim, action, suit,
proceeding, or investigation is pending or has been initiated against Joachim
or any of the Subsidiaries relating to the Property before any court or other
governmental authority or arbitration tribunal relating to hazardous
substances, pollution, or the environment, and there is no outstanding
judgment, order, writ, injunction, decree, or award against Joachim or any of
the Subsidiaries with respect to the same. Except for statutory or regulatory
restrictions of general application, no federal, state, municipal or other
governmental authority has placed any restriction on the business of Joachim
or the Subsidiaries which reasonably could be expected to have a material
adverse effect on the business, financial condition, results of operations, or
prospects of Joachim or the Subsidiaries.
2.17 Labor and Employment. No work stoppage involving Joachim or any of
the Subsidiaries is pending or, to the best knowledge of Joachim, threatened.
Joachim and the Subsidiaries are not involved in, or to their knowledge
threatened with, any labor dispute, arbitration, lawsuit, or administrative
proceeding which could materially and adversely affect the business of Joachim
and any of the Subsidiaries.
2.18 Material Interests of Certain Persons. Except as set forth on
Schedule 2.18 and except for loans made by JFSL in the ordinary course of
business and in compliance with all applicable regulations, to the best
knowledge of Joachim, no officer or director of Joachim or any of the
Subsidiaries has any material interest in any material contract or property
(real or personal, tangible or intangible) used in or pertaining to the
business of Joachim or such Subsidiary.
2.19 Employee Benefit Plans. There are set forth in Schedule 2.19 all
pension, retirement, stock option, stock purchase, stock ownership, restricted
stock, savings, stock appreciation right, profit sharing, deferred
compensation, consulting, bonus, group insurance, Section 125, severance, and
other employee benefit, incentive, and welfare policies, contracts, plans, and
arrangements, and all trust agreements related thereto, in respect of any of
the present or former directors, officers, or other employees of Joachim and
the Subsidiaries (collectively, Employee Plans or Policies ). Except as set
forth in Schedule 2.19, all Employee Plans or Policies currently comply and
have at all relevant times complied in all material respects with all
applicable laws, requirements, and orders under the Employee Retirement Income
Security Act of 1974, as amended ( ERISA ), the Internal Revenue Code of
1986, as amended (the Code ), and state law. With respect to each Employee
Plan or Policy which is a pension plan (as defined in Section 3(2) of ERISA)
(the Pension Plans ), except as set forth in Schedule 2.19: (a) no Pension
Plan is a multi-employer plan within the meaning of Section 3(37) of ERISA;
(b) each
Agreement and Plan of Merger Page 15
Pension Plan, to the extent necessary and applicable, is qualified
within the meaning of Section 401(a) of the Code, and each related trust, if
any, is exempt from taxation under Section 501(a) of the Code; (c) the present
value of all benefits vested and all benefits accrued under each Pension Plan
which is subject to Title IV of ERISA did not, in each case, as of the last
applicable annual valuation date (as indicated on Schedule 2.19), exceed the
value of the assets of the Pension Plans allocable to such vested or accrued
benefits; (d) to the best of Joachim s knowledge no Pension Plan or any trust
created thereunder, nor any trustee, fiduciary, or administrator thereof, has
engaged in a prohibited transaction within the meaning of Section 4975 of
the Code or Section 406 of ERISA, which could subject such plan or trust, or
any trustee, fiduciary, or administrator thereof, or any party dealing with
any such plan or trust, to the tax or penalty on prohibited transactions
imposed by said Section 4975 or by Section 502(l) of ERISA; (e) no Pension
Plan or any trust created thereunder has been terminated, nor have there been
any reportable events with respect to any Pension Plan, as that term is
defined in Section 4043 of ERISA; and (f) no Pension Plan or any trust created
thereunder has incurred any accumulated funding deficiency, as such term is
defined in Section 302 of ERISA (whether or not waived), since the effective
date of ERISA.
2.20 Conduct of Joachim and of Subsidiaries to Date. Except as disclosed
in Schedule 2.20, from and after March 31, 1997:
(a) Joachim and the Subsidiaries have carried on their respective
businesses in the ordinary and usual course consistent with their past
practices;
(b) Neither Joachim nor any of the Subsidiaries has issued or sold
any of its capital stock or any corporate debt securities which should, under
generally accepted accounting principles, be classified as long-term debt on
its balance sheet;
(c) Joachim has not granted any option for the purchase of its
capital stock, effected any stock split, or otherwise changed its
capitalization;
(d) Joachim has not declared, set aside, or paid any dividend or
other distribution in respect of its capital stock, or, directly or
indirectly, redeemed or otherwise acquired any of its capital stock, except
for dividends declared and paid prior to or on September 30, 1997, and a
dividend of $0.125 per share payable on December 31, 1997;
(e) Neither Joachim nor any of the Subsidiaries has incurred any
material obligation or liability (absolute or contingent), except normal trade
or business obligations or liabilities incurred in the ordinary course of
business, or mortgaged, pledged, or subjected to lien, claim, security
interest, charge, encumbrance, or restriction on any of its assets or
properties;
(f) Neither Joachim nor any of the Subsidiaries has discharged or
satisfied any material lien, mortgage, pledge, claim, security interest,
charge, encumbrance, or restriction or paid any material obligation or
liability (absolute or contingent), other than in the ordinary course of
business;
Agreement and Plan of Merger Page 16
(g) Neither Joachim nor any of the Subsidiaries has sold, assigned,
transferred, leased, exchanged, or otherwise disposed of any of its properties
or assets other than for a fair consideration (in the reasonable opinion of
Joachim s management) in the ordinary course of business;
(h) Neither Joachim nor any of the Subsidiaries has: increased the
rate of compensation of, or paid any bonus to, any of its directors, officers,
or other employees, except merit or promotion increases in accordance with
past practices; entered into any new, or amended or supplemented any existing
employment, management, consulting, deferred compensation, severance, or other
similar contract; entered into, terminated, or substantially modified any
Employee Plan or Policy in respect of any of its present or former directors,
officers, or other employees; or agreed to do any of the foregoing;
(i) Neither Joachim nor any of the Subsidiaries has suffered any
material damage, destruction, or loss, whether as the result of fire,
explosion, earthquake, accident, casualty, labor trouble, requisition, or
taking of property by any government or any agency of any government, flood,
windstorm, embargo, riot, act of God or the enemy, or other similar or
dissimilar casualty or event or otherwise, and whether or not covered by
insurance; and
(j) Neither Joachim nor any of the Subsidiaries has entered into any
material transaction, contract, or commitment outside the ordinary course of
its business.
2.21 Proxy Statement, etc. None of the information regarding Joachim
and/or the Subsidiaries supplied or to be supplied by Joachim for inclusion or
included in (i) the Proxy Statement to be mailed to shareholders of Joachim in
connection with the meeting to be called to consider the Merger (the Proxy
Statement ), and (ii) any other documents to be filed with the SEC, the
Federal Reserve Board, the OTS, the Division of Finance, or any other
regulatory authority in connection with the transactions contemplated hereby
will, at the respective times such documents are filed with such applicable
regulatory authority and, with respect to the Proxy Statement, when mailed, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading
or, in the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the meeting of shareholders referred to in Section
5.03, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for such meeting.
All documents which Joachim is responsible for filing with any regulatory
authority in connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
2.22 Brokers, Investment Bankers, and Finders. Neither Joachim, the
Subsidiaries, nor any of their respective officers, directors, or employees
has employed any broker, investment banker, finder or incurred any liability
for any financial advisory fees, brokerage fees, commissions, investment
banker fees or commissions, or finder s fees, except as described in Schedule
2.22, and no broker, investment banker, or finder has acted directly or
indirectly for Joachim and/or the Subsidiaries in connection with this
Agreement or the transactions contemplated hereby, except as described in
Schedule 2.22.
Agreement and Plan of Merger Page 17
2.23 Accuracy of Information. The statements contained in this
Agreement, the Schedules, and in any other written document executed and
delivered by or on behalf of Joachim 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 not misleading.
ARTICLE III
Representations and Warranties of First State
As a material inducement to Joachim to enter into and perform its
obligations under this Agreement, and notwithstanding any examinations,
inspections, audits, or other investigations made by Joachim, First State
hereby represents and warrants to Joachim as follows:
3.01 Organization and Authority. First State is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Missouri, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, and has corporate power and authority
to own its properties and assets and to carry on its business as it is now
being conducted. First State is registered as a bank holding company with the
Federal Reserve Board under the BHC Act.
FSB is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Missouri, is duly qualified to do
business and is in good standing in all jurisdictions where its ownership or
leasing of property or the conduct of its business requires it to be so
qualified, and has corporate power and authority to own its properties and
assets and to carry on its business as it is now being conducted.
3.02 Corporate Authorization; Records. First State and FSB each have the
corporate power and authority to enter into this Agreement and to carry out
their respective obligations hereunder. The execution, delivery, and
performance of this Agreement by First State and FSB and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of each of First State and FSB. Subject to such approvals of
government agencies and other governing boards having regulatory authority
over First State and FSB as may be required by statute or regulation, this
Agreement is a valid and binding obligation of First State and FSB,
enforceable against each in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other laws now or hereafter in effect relating
to the enforcement of creditors rights generally, and except that equitable
principles may limit the right to obtain specific performance or other
equitable remedies.
Neither the execution, delivery and performance by First State or FSB of
this Agreement, nor the consummation of the transactions contemplated hereby,
nor compliance by First State or FSB with any of the provisions hereof will
(i) violate, conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance
Agreement and Plan of Merger Page 18
required by, or result in a right of termination or acceleration of, or result
in the creation of, any lien, security interest, charge, or encumbrance upon
any of the properties or assets of First State or FSB under any of the terms,
conditions, or provisions of (x) their respective articles of incorporation or
by-laws, or (y) any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement, or other instrument or obligation to which First State or
FSB is a party or by which it may be bound, or to which First State or FSB or
any of its properties or assets may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next paragraph, to the
best knowledge of First State, violate any judgment, ruling, order, writ,
injunction, decree, statute, rule, or regulation applicable to First State or
FSB or any of their properties or assets.
Other than in connection or compliance with the provisions of the
Missouri Act, the Exchange Act, the securities or blue sky laws of the various
states or filings, consents, reviews, authorizations, approvals, notices, or
exemptions required under the BHC Act, the HOLA, or any required approvals of
the Division of Finance or the FDIC, no notice to, filing with, exemption or
review by, or authorization, consent, or approval of, any public body or
authority is necessary for the consummation by First State and FSB of the
transactions contemplated by this Agreement.
The minute books and stock records of First State and FSB are complete
and correct in all material respects and accurately reflect in all material
respects all meetings, consents, and other actions of the organizers,
incorporators, shareholders, boards of directors, and committees of the boards
of directors occurring since the organization of each.
3.03 First State Financial Statements. The consolidated balance sheets
of First State and its subsidiaries (hereinafter sometimes referred to
collectively as the First State Subsidiaries ) as of December 31, 1996 and
1995 and related consolidated statements of income, shareholders equity, and
cash flows for the three years ended December 31, 1996, together with the
notes thereto, certified by KPMG Peat Marwick, and the unaudited consolidated
balance sheet of First State as of September 30, 1997, and the related
unaudited consolidated statements of income and cash flows for the period then
ended, have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, and present fairly the consolidated
financial position of First State at the dates and the consolidated results of
operations and cash flows of First State for the periods stated therein.
3.04 Reports. First State and each of the First State Subsidiaries have
filed all reports, registrations, and statements, together with any required
amendments thereto, that they were required to file with (i) the Federal
Reserve Board, (ii) the FDIC, and (iii) the Division of Finance. All such
reports and statements filed with any such regulatory body or authority are
collectively referred to herein as the First State Reports. As of their
respective dates, the First State Reports complied in all material respects
with all the rules and regulations promulgated by the Federal Reserve Board,
the FDIC, and the Division of Finance, as the case may be, and did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
3.05 Material Adverse Changes. Except as set forth in Schedule 3.05,
since December 31, 1996, there has been no material adverse change in the
business, financial condition, results
Agreement and Plan of Merger Page 19
of operations or prospects of First State and the First State Subsidiaries
taken as a whole (other than changes in banking laws or regulations, or
interpretations thereof, that affect the banking industry generally or changes
in the general level of interest rates).
3.06 Proxy Statement, etc. None of the information regarding First State
and FSB supplied or to be supplied by First State for inclusion or included in
(i) the Proxy Statement, or (ii) any other documents to be filed with the SEC,
the Federal Reserve Board, the OTS, the Division of Finance, or any other
regulatory authority in connection with the transactions contemplated hereby
will, at the respective times such documents are filed with such regulatory
authority and, with respect to the Proxy Statement, when mailed, be false or
misleading with respect to any material fact, or omit to state any material
fact necessary in order to make the statements therein not misleading or, in
the case of the Proxy Statement or any amendment thereof or supplement
thereto, at the time of the meeting of shareholders of Joachim to approve the
Merger provided for elsewhere herein, be false or misleading with respect to
any material fact, or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of any
proxy for such meeting. All documents which First State and the First State
Subsidiaries are responsible for filing with the SEC and any regulatory
authority in connection with the Merger will comply as to form in all material
respects with the provisions of applicable law.
3.07 Brokers, Investment Bankers, and Finders. Neither First State, FSB,
nor any of their respective officers, directors, or employees has employed any
broker, investment banker, or finder or incurred any liability for any
financial advisory fees, brokerage fees, commissions, investment banker fees
or commissions, or finder s fees, and no broker, investment banker, or finder
has acted directly or indirectly for First State or in connection FSB with
this Agreement or the transactions contemplated hereby.
3.08 Litigation. There is no legal action or government proceeding or
investigation pending or to the best of First State s knowledge threatened
against First State or FSB that could prevent or adversely affect or seeks to
prohibit the consummation of the transactions contemplated hereby, nor is
First State or FSB subject to any court order or governmental authority having
such effect.
3.09 Availability of Funds. At Closing, First State will have sufficient
funds readily available to it to satisfy its obligations under Article I of
the Agreement.
3.10 Accuracy of Information. The statements contained in this
Agreement, the Schedules, and in any other written document executed and
delivered by or on behalf of First State 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 not misleading.
Agreement and Plan of Merger Page 20
ARTICLE IV
Conduct of Business Prior to the Effective Time
4.01 Conduct of Businesses Prior to the Effective Time. During the
period from the date of this Agreement to the Effective Time, Joachim and each
of the First State Entities shall, and shall cause each of their respective
subsidiaries to, conduct its business according to the ordinary and usual
course consistent with past and current practices and each shall use its best
efforts to maintain and preserve its business organization, employees, and
advantageous business relationships and retain the services of its officers
and key employees.
4.02 Forbearances by Joachim. During the period from the date of this
Agreement to the Effective Time and except as provided in Schedule 4.02,
Joachim shall not, and shall not cause, vote in favor of, or otherwise
authorize, approve, or permit any of the Subsidiaries to, without the prior
written consent of the First State Entities:
(a) Declare and/or pay any dividends on its outstanding shares of
capital stock, other than the $0.125 per share dividend to be paid as of
December 31, 1997, and a $0.125 per share dividend to be declared and paid
during the first three months of 1998;
(b) Enter into or amend any employment, severance, or similar agreements
or arrangements with any director, officer, key employee, or consultant;
(c) Authorize, recommend, propose, or announce an intention to
authorize, recommend, or propose, or enter into an agreement in principle with
respect to, any acquisition of a business or assets by means of a merger,
consolidation, or acquisition of a material amount of assets or securities, or
any release or relinquishment of any material contract rights not in the
ordinary course of business;
(d) Propose or adopt any amendments to the Articles of Incorporation of
Joachim, the federal stock charter of JFSL, the Articles of Incorporation of
any of the Subsidiaries (other than JFSL), or any of their respective Bylaws;
(e) Issue any shares of capital stock or effect any stock split or
otherwise change its capitalization as it existed as of the date hereof,
except for shares issued upon the exercise of stock options outstanding as of
the date hereof as set forth on Schedule 2.04 hereof;
(f) Grant, confer, or award any options, warrants, conversion rights, or
other rights not existing on the date hereof to acquire any shares of its
capital stock;
(g) Purchase or redeem any shares of its capital stock;
(h) Enter into or increase any loan or credit commitment (including
standby letters of credit), purchase securities, or invest or agree to invest
in any person or entity in an amount in excess of $75,000, without first
consulting with the First State Entities, provided, however, that nothing in
this paragraph shall prohibit any Subsidiary from honoring any contractual and
legally binding obligation in existence on the date of this Agreement--it
being understood that
Agreement and Plan of Merger Page 21
"consulting with" in the context of this paragraph means advising sufficiently
in advance of any proposed action to allow First State a reasonable
opportunity to offer a (non-binding) responsive opinion;
(i) Agree in writing or otherwise to take any of the foregoing actions
or, subject to the provisions of this Agreement, engage in any activity, enter
into any transaction, or take or omit to take any other act which would make
any of Joachim s representations and warranties untrue or incorrect in any
material respect if made anew after engaging in such activity, entering into
such transaction, or taking or omitting such other act;
(j) Take back or commence foreclosure on any property other than in the
ordinary course of business; or
(k) Other than as otherwise contemplated herein, take any actions, or
fail to take any actions which alone, or together with any other action or
inaction, shall create, alter, or eliminate any rights, benefits, obligations,
or liabilities of any person (including, but not limited to the participants,
beneficiaries, Joachim, the Subsidiaries, or, after the Merger First State or
FSB) with respect to any Employee Plans or Policies.
ARTICLE V
Additional Agreements
5.01 Access and Information. Joachim and the Subsidiaries shall each
afford to First State and First State's accountants, counsel, and other
representatives, full access during normal business hours, upon reasonable
notice during the period prior to the Closing Date, to all their respective
properties, books, contracts, commitments, and records and, during such
period, each shall furnish promptly to First State (i) a copy of each report,
schedule, and other document filed or received by it during such period
pursuant to the requirements of Federal and state securities laws and (ii) all
other information concerning its business, properties, and personnel as such
other party may reasonably request. In the event of the termination of this
Agreement First State shall, and shall cause its advisors and representatives
to, (x) hold confidential all information obtained in connection with any
transaction contemplated hereby with respect to the other party which is not
otherwise public knowledge, (y) return all documents (including copies
thereof) obtained hereunder from Joachim or JFSL to Joachim, and (z) use its
best efforts to cause all information obtained pursuant to this Agreement or
in connection with the negotiation hereof to be treated as confidential and
not use, or knowingly permit others to use, any such information unless such
information becomes generally available to the public.
5.02 Proxy Statement; Regulatory Matters.
(a) Joachim shall prepare and file with the SEC, as soon as is
reasonably practicable, the Proxy Statement with respect to the special
meeting of shareholders of Joachim to be held to consider the Merger.
(b) Each of the parties hereto shall cooperate and use their respective
best efforts to prepare all documentation, to effect all filings, and to
obtain all permits, consents, approvals, and
Agreement and Plan of Merger Page 22
authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement, including, without
limitation, any such approval or authorization required by the Federal Reserve
Board, the OTS, the Division of Finance, and the FDIC.
5.03 Shareholder Approvals. Joachim shall call a meeting of its
shareholders to be held as soon as practicable for the purpose of voting upon
the Merger and related matters. In connection with such meeting, Joachim
shall mail the Proxy Statement and related documents to its shareholders. The
Board of Directors of Joachim shall submit for approval of its shareholders
the matters to be voted upon at such meeting. Subject to the exercise of the
fiduciary duties of directors, the Board of Directors of Joachim will
recommend the approval of this Agreement and the transactions contemplated
hereby and will use its best efforts to obtain the votes and approvals of its
shareholders necessary for the approval and adoption of this Agreement and the
Merger contemplated hereby.
So long as Joachim is not in breach of any of the terms of this Agreement
and upon satisfaction of all other conditions to Closing, First State agrees
to vote its shares of FSB in favor of the Merger, as well as its shares of
Joachim.
5.04 Current Information. During the period from the date of this
Agreement to the Closing Date, each party shall cause one or more of its
designated representatives to confer on a regular and frequent basis with
representatives of the other party. Each party shall promptly notify the
other party of any material change in its business, operations, or prospects
and of any governmental complaints, investigations, or hearings (or
communications indicating that the same may be contemplated), or the
institution or the threat of material litigation or administrative or other
claim involving such party, and shall keep the other party fully informed of
such events.
5.05 Employment Agreements. It is the intention of the parties hereto
that prior to or at the Effective Time each of Bernard R. Westhoff
("Westhoff"), Lee Ellen Hogan ("Hogan"), and Melvin Yarbrough ("Yarbrough")
shall have entered into employment agreements with either or both of First
State and First State Community Bank (the "Employment Agreements"). The
Employment Agreements shall be in lieu of and in replacement for the
employment agreements currently entered into by Joachim and JFSL on the one
hand, and each of Westhoff, Hogan, and Yarbrough on the other hand (the "Prior
Agreements").
The Employment Agreements shall provide, among other things, that:
(a) the Prior Agreements are terminated as of the Effective Time, and
that none of Joachim, JFSL, or any of their successors shall have any
obligation to Westhoff, Hogan, or Yarbrough under the Prior Agreements, except
for normally accruing Base Salary for work performed through the Effective
Time;
(b) none of the entering into the Employment Agreements, terminating the
Prior Agreements, or consummation of the transactions contemplated in this
Agreement shall constitute an Event of Termination as such term is defined
in the Prior Agreements;
Agreement and Plan of Merger Page 23
(c) the Merger, upon the Effective Time, shall constitute a Change in
Control as such term is defined in the Prior Agreements, but that for so
long as Westhoff, Hogan, or Yarbrough as the case may be, remains employed by
any of First State, First State Community Bank, or their successors, Westhoff,
Hogan, or Yarbrough as the case may be, shall not be deemed to have suffered a
termination of employment as such term is used in Section 5 of each of the
Prior Agreements;
(d) with respect to Westhoff, the Employment Agreement shall be upon
substantially the same terms as his Prior Agreement, except that Westhoff s
annual Base Salary after the Effective Time shall be as follows:
Year 1 $85,300
Year 2 $86,500
Year 3 $89,800
Year 4 $89,800
Year 5 $89,800
provided, however, that for years 4 and 5, Westhoff shall only receive
one-half of the annual Base Salary unless both Westhoff and the employer(s)
under the Employment Agreement mutually agree to continue Westhoff s
employment for each such year; and further, that during the course of
Westhoff s employment he shall be provided an automobile comparable to the
automobile currently provided to him by Joachim; and further that Westhoff
will be subject to a non-competition covenant for a two-year period following
termination of the Employment Agreement;
(e) with respect to Hogan, the Employment Agreement shall be upon
substantially the same terms as her Prior Agreement, except that Hogan's
annual Base Salary after the Effective Time shall be as follows:
Year 1 $62,700
Year 2 $64,400
Year 3 $66,100
provided, however, that Hogan will be subject to a non-competition covenant
for a two-year period following termination of the Employment Agreement; and
(f) with respect to Yarbrough, the Employment Agreement shall be upon
substantially the same terms as his Prior Agreement.
5.06 Expenses.
(a) In the event that (x) this Agreement and the Merger contemplated
hereby are not approved by the requisite vote of Joachim s Shareholders at
the meeting of shareholders called pursuant to Section 5.03, or (y) this
Agreement is terminated by First State or FSB pursuant to Section 7.01(d)
(other than by reason of an unintentional breach of the Agreement by Joachim
which cannot be cured by Joachim) and within 18 months after the occurrence of
either (x) or
Agreement and Plan of Merger Page 24
(y), Joachim shall have entered into an agreement with any person (other than
the First State Entities and other than a banking regulatory agency that
accomplishes a regulatory or similar takeover pursuant to applicable law) to
(i) merge or consolidate, or enter into any similar transaction with Joachim
or any of the Subsidiaries, (ii) purchase, lease, or otherwise acquire all or
any substantial part of the assets of Joachim or any of the Subsidiaries, or
(iii) purchase or otherwise acquire (including by way of merger,
consolidation, share exchange, or any similar transaction) securities
representing 25 percent or more of the voting power of Joachim or any of the
Subsidiaries (or rights or options exercisable for, or securities convertible
into, securities representing 25 percent or more of the voting power of
Joachim or any of the Subsidiaries), Joachim will, within 10 business days
following written demand by First State, pay to First State, as liquidated
damages and in lieu of any liabilities otherwise due First State and/or FSB,
in immediately available funds, an amount equal to $500,000. Upon payment in
full of the foregoing, this Agreement shall be terminated and without further
force and effect; provided, however, that if the termination is due to (x)
above and there has been no breach of any of the terms of this Agreement by
Joachim, or if the termination is due to (y) above and the breach by Joachim
(in addition to being unintentional) is wholly unrelated to the subsequent
agreement with another person, there shall be substituted in place of the
$500,000 amount shown above an amount equal to 150 percent of the difference
(if positive) between the fair market value of the consideration paid and/or
payable by the other person and the fair market value of the Merger
Consideration payable by First State hereunder, but the amount so determined
shall in no event exceed $500,000. This subsection (a) shall not apply in the
event of a termination under Section 7.01 unless such termination is for
breach of this Agreement by Joachim pursuant to Section 7.01(d) (other than by
reason of an unintentional breach of the Agreement by Joachim which cannot be
cured by Joachim).
(b) In the event that First State willfully breaches a representation,
warranty or covenant contained herein and, as a result thereof (i) Joachim
exercises its right to terminate this Agreement at a time when First State was
not entitled to terminate this Agreement and (ii) the Merger is not
consummated, then First State agrees to pay to Joachim a fee of $100,000,
within 10 business days of First State's receipt of written demand thereof.
If First State terminates this Agreement pursuant to Section 7.01(e) of this
Agreement, First State will pay a fee of $100,000 to Joachim within 10
business days of First State's receipt of written demand thereof.
(c) Except as provided in subsections (a) and (b) of this Section, each
Party hereto shall bear its own expenses incident to preparing, entering into,
and carrying out this Agreement and to consummating the Merger.
5.07 Miscellaneous Agreements and Consents. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement as expeditiously as possible, including, without limitation,
using its best efforts to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate
the transactions contemplated hereby. Joachim and the First State Entities
shall use their best efforts to obtain consents of all third parties and
governmental bodies
Agreement and Plan of Merger Page 25
necessary or, in the opinion of any of the parties, desirable for the
consummation of the transactions contemplated by this Agreement.
5.08 Press Releases. Joachim and the First State Entities shall
cooperate with each other in the development and distribution of all news
releases and other public disclosures concerning this Agreement and the Merger
and shall not issue any news release or make any other public disclosure
without the prior consent of the other party, unless it reasonably believes
such is required by law upon the advice of counsel or is in response to
published newspaper or other mass media reports regarding the transactions
contemplated by this Agreement, in which such latter event the parties shall
give reasonable notice, and to the extent practicable, consult with each other
regarding such responsive public disclosure.
5.09 Due Diligence Review. The First State Entities, promptly following
execution and delivery of this Agreement by Joachim, shall undertake review of
Joachim and the Subsidiaries and their respective operations, business
affairs, and financial condition, including, without limitation, those matters
which are the subject of Joachim s representations and warranties, as well as
the nature, structure, status, and other aspects of all Employee Plans or
Policies. The First State Entities shall conclude such review by not later
than 15 days following the execution of this Agreement (the "Due Diligence
Review" and the time for said review is referred to as the "Due Diligence
Review Period"). Notwithstanding anything hereinabove contained or implied to
the contrary, the Due Diligence Review shall not limit, restrict, or preclude,
or be construed to limit, restrict, or preclude, the First State Entities, at
any time or from time to time thereafter, from conducting further such reviews
or from exercising any rights available to them hereunder as a result of the
existence or occurrence prior to the date of the Due Diligence Review of any
event or condition which was not detected in the Due Diligence Review by any
of them and which would constitute a breach of any representation, warranty,
or agreement of Joachim under this Agreement. During the Due Diligence Review
First State shall have such access to Joachim's and JFSL's management and
personnel, and Joachim's and JFSL's loan files, records, and loan and other
committee meetings (including, but not limited to attending any or all of such
meetings in person and reviewing the minutes of any such meetings), and having
such of any First State Entities' personnel present at Joachim and JFSL during
business hours, as First State, in its sole discretion, shall deem appropriate
or useful, provided, however, that First State shall not, by this Section, be
deemed to have the right to attend Board of Directors meetings of Joachim.
5.10 Employee Plans and Policies Matters. Subject to other provisions
hereof, Joachim shall take any action reasonably requested by the First State
Entities with respect to any of the Employee Plans or Policies, including, but
not limited to, correcting operational errors or deficiencies, making
necessary filings with the Internal Revenue Service, the Department of Labor,
or the Pension Benefit Guaranty Corporation, or amending, freezing,
terminating, or merging one or more Employee Plans or Policies.
5.11 Nonsolicitation and Exclusive Dealing. Recognizing the substantial
expenditure of time, effort, and expense First State has incurred as of the
date hereof, and will incur through the Effective Time in connection with
negotiating, performing its due diligence investigation, and attempting to
complete the Merger, the Subsidiary Merger, and the other transactions
Agreement and Plan of Merger Page 26
contemplated herein, until such time as either the Effective Time has occurred
or this Agreement is terminated in accordance with the provisions of Article
VII hereof, none of Joachim, JFSL, or the directors, officers, attorneys,
financial advisors, accountants, or other representatives of Joachim or JFSL
will directly or indirectly: (i) solicit, encourage (including by way of
furnishing any non-public information concerning Joachim's business, property,
or assets) or, except as may be required in the exercise of fiduciary duties,
consider or discuss any Acquisition Offer or Proposal (as defined below); or
(ii) except as may be required in the exercise of fiduciary duties, provide
any information to, or negotiate with, any other person or entity in
connection with any possible sale of all or any portion of the stock, assets,
or business of either of Joachim or JFSL when Joachim has reason to believe
that such information may be utilized to evaluate or make a possible
Acquisition Offer or Proposal. As used herein, "Acquisition Offer or
Proposal" shall mean any offer or proposal for an acquisition, merger, or
other business combination involving either of Joachim or JFSL, or for the
acquisition of a substantial equity interest in, or a substantial portion of
the stock, assets, or business of either of Joachim or JFSL. Joachim will
immediately give notice to First State, in the manner provided for herein,
regarding any contact between Joachim, JFSL, or the directors, officers,
attorneys, financial advisors, accountants, or other representatives of
Joachim, JFSL, and any other person in connection with any Acquisition Offer
or Proposal or related inquiry.
5.12 Indemnification and Directors and Officers Insurance
(a) First State shall indemnify, defend and hold harmless the present
and former officers, directors, employees and agents of Joachim and JFSL
(each, an "Indemnified Party") against all losses, expenses, claims, damages,
or liabilities arising out of actions or omissions occurring on or prior to
the Effective Time (including, without limitation, the transactions
contemplated by this Agreement) to the full extent provided for under the
Missouri Act, as in effect as of the date hereof.
(b) If after the Effective Time First State or its successors or assigns
shall transfer all or substantially all of its properties and assets, and the
acquiror, as a matter of law does not assume all obligations of First State or
its successors or assigns, First State shall use its best efforts to include
in any definitive agreement a provision so that its successors and assigns
shall assume any remaining obligations set forth in this Section 5.12. If
First State shall liquidate, dissolve, or otherwise wind up its business, then
the successors and assigns of First State shall be obligated to assume any
remaining obligations set forth in this Section 5.12.
(c) First State shall use its reasonable best efforts to cause the
persons serving as officers and directors of Joachim and JFSL immediately
prior to the Effective Time to be covered for a period of three years from the
Effective Time by the directors' and officers' liability insurance policy
maintained by Joachim and JFSL (provided that First State may substitute
therefor policies of at least the same coverage and amounts containing terms
and conditions which are not materially less advantageous than such policy)
with respect to acts or omissions occurring prior to the Effective Time which
were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall First State be required to expend
more than 150 percent of the annual amount (not to exceed $6,750 each year in
total) currently expended by Joachim to maintain or procure insurance coverage
pursuant hereto and further provided that
Agreement and Plan of Merger Page 27
if First State is unable to maintain or obtain the insurance called for by
this paragraph, First State shall use its reasonable best efforts to obtain as
much comparable insurance as is available for such amount.
5.13 Ancillary Matters.
(a) Directors of Joachim, including Directors Emeritus, will become
advisory directors of First State Community Bank's DeSoto Branch at the
Effective Time, and will serve as such for at least one year. Fees for such
services during such one-year period will be $500 per month. Notwithstanding
the foregoing, Westhoff and Hogan shall continue as advisory directors for
such time as they remain employed pursuant to the Employment Agreements.
(b) Employees of JFSL will be subject to the vacation policies of First
State, except that those employees with five or more years of service shall be
entitled to three weeks of paid vacation per year. Years of services with
Joachim and/or JFSL will be deemed years of service at First State or First
State Community Bank for purposes of this subsection.
5.14 Employee Stock Ownership Plan.
(a) Any cash received by the Trustees of the Joachim Federal Savings and
Loan Association Employee Stock Ownership Plan ("ESOP") in the course of the
Merger with respect to unallocated shares of Joachim Common Stock first shall
be applied by the Trustees to the repayment of the outstanding debt of the
ESOP.
(b) The balance of the cash (if any) received by the ESOP Trustee in the
course of the Merger with respect to unallocated shares of Joachim Common
stock shall be allocated to the accounts of all participants in the ESOP who
have accounts remaining under the ESOP (whether or not such participants are
then actively employed) and beneficiaries in proportion to the account
balances of such participants and beneficiaries as they existed as of the
Effective Time. The foregoing notwithstanding, no allocation shall be made
pursuant to this Section 5.14(b) unless counsel for First State has determined
that the allocation will not adversely affect a determination that the
allocation is in accordance with the terms of the ESOP plan document.
(c) Subject to Section 5.14(e) hereof, following the allocation
contemplated by paragraph (b), the ESOP shall be terminated and distributions
of participant account balances shall be made in accordance with the terms of
the ESOP, subject to the requirements of the Code and ERISA.
(d) Prior to the Effective Time, in addition to regularly scheduled
payments on the outstanding debt of the ESOP, Joachim may, to its sole
discretion, elect to prepay principal on the outstanding debt of the ESOP,
subject to applicable limits on the deductibility of such payments under the
Code.
(e) Notwithstanding anything in this Section 5.14 to the contrary, in
connection with the allocation contemplated by Section 5.14(b), as soon as
practicable after the date of this Agreement, Joachim shall file an
application for determination to the IRS regarding the proposed
Agreement and Plan of Merger Page 28
termination of the ESOP and whether any amount of such allocation is subject
to the limitation on annual additions under Section 415 of the Code. In the
event that a favorable determination letter is received by Joachim relating to
the allocation contemplated by Section 5.14(b) on or prior to 180 days after
the Effective Time, then the ESOP shall make allocation of remaining funds in
a manner consistent with such favorable determination letter. If a favorable
determination letter is not received within such time period, then in that
event, the termination date shall be postponed until the date immediately
prior to the expiration of the transition period specified in Section
410(b)(6)(C) of the Code and any funds remaining after repaying of the ESOP
debt shall be allocated to the greatest extent possible as ESOP earnings with
the balance of such funds to be allocated through the date of termination
subject to the limitations of Section 415 and based on compensation earned by
ESOP participants through the date of termination.
5.15 Employee Benefits. First State anticipates retaining the employees
of JFSL as employees of First State Community Bank after the Effective Time,
subject to the needs of First State Community Bank and the qualifications of
such employees. If at the Effective Time any employee of Joachim or JFSL is
not offered employment by First State Community Bank at compensation at least
equal to their compensation from Joachim or JFSL, or, if any employee is
terminated within six months after the Effective Time without cause (as
determined in the reasonable discretion of the Board of Directors of First
State), such employee shall be paid a severance payment by First State or
First State Community Bank equal to one week s compensation for each full
year s employment at Joachim, JFSL, and First State Community Bank, not to
exceed a maximum of six weeks compensation. Except with respect to First
State s 401(k) Plan, employees of Joachim or the Subsidiaries who continue in
employment with First State or any subsidiary of First State following the
Effective Time shall be credited for prior years service with Joachim or any
Subsidiary for purposes of eligibility and vesting (but not for the accrual of
benefits) under First State s and its Subsidiaries benefit plans and
policies (including, without limitation, vacation and sick leave policies),
there shall be no exclusion from medical coverage as the result of
pre-existing conditions that were covered under the medical plan of Joachim or
the applicable Subsidiary, and such employees shall be entitled to participate
on an equitable basis in the same benefit plans and policies as are generally
available to First State and First State Community Bank employees of similar
rank and status.
ARTICLE VI
Certain Conditions
6.01 Conditions to Each Party s Obligation To Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment or waiver at or prior to the Closing Date of all of the
following conditions:
(a) This Agreement and the Merger shall have received the requisite
approval of shareholders of Joachim at the meeting of shareholders called for
purposes of approving the Merger.
(b) This Agreement and the transactions contemplated hereby, including
the Subsidiary Merger, shall have been approved by the Federal Reserve Board,
and each other federal and/or state regulatory agencies whose approval is
required for consummation of the transactions
Agreement and Plan of Merger Page 29
contemplated hereby or in the Subsidiary Merger Agreement, and with respect to
the Subsidiary Merger, that such merger may be effected simultaneously with
the Effective Time, and all applicable waiting periods shall have expired.
(c) None of Joachim, First State, or FSB shall be subject to any order,
decree, or injunction of a court or agency of competent jurisdiction which
enjoins or prohibits the consummation of the Merger, nor shall JFSL or First
State Community Bank be subject to any order, decree, or injunction of a court
or agency of competent jurisdiction which enjoins or prohibits the
consummation of the Subsidiary Merger.
(d) Each of Westhoff, Hogan, and Yarbrough on the one hand, and either
or both of First State and First State Community Bank on the other hand, shall
have executed and delivered the respective Employment Agreements.
6.02 Conditions to Obligations of Joachim. The obligations of Joachim to
effect the Merger shall be subject to the fulfillment or waiver at or prior to
the Effective Time of all of the following additional conditions:
(a) Representations and Warranties. The representations and warranties
of First State set forth in Article III hereof shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing
Date (as though made on and as of the Closing Date except (i) to the extent
such representations and warranties are by their express provisions made as of
a specified date, and (ii) for the effect of transactions contemplated by this
Agreement) and Joachim shall have received a signed certificate of the
President or Chief Executive Officer and the Corporate Secretary of First
State, signing on behalf of the First State Entities, to that effect.
(b) Performance of Obligations. The First State Entities shall have
performed in all material respects all obligations required to be performed by
each under this Agreement prior to the Effective Time, and Joachim shall have
received a signed certificate of the President or Chief Executive Officer and
the Corporate Secretary of First State to that effect, including, without
limitation, the obligations of the First State Entities under Section 1.08
hereof in respect of the payment and/or delivery of the Merger Consideration
to the Exchange Agent.
(c) No Material Adverse Change. Since the date of this Agreement, there
shall have been no material adverse change in the business, financial
condition, or results of operations of First State and the First State
Subsidiaries, taken as a whole (other than changes in banking laws or
regulations, or interpretations thereof, that affect the banking industry
generally or changes in the general level of interest rates).
(d) Opinion of Counsel. First State shall have delivered to Joachim an
opinion of counsel to First State dated as of the Closing Date or a mutually
agreeable earlier date in form substantially similar to that attached hereto
as Exhibit 6.02.
(e) Segregated Account. The Escrow Agent shall have delivered a
certificate to Joachim that as of the Effective Time the Merger Consideration
is being held in a segregated account to be used in accordance with the
provisions of Section 1.08 hereof.
Agreement and Plan of Merger Page 30
6.03 Conditions to Obligations of the First State Entities. The
obligations of the First State Entities to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of all of the following
additional conditions:
(a) Representations and Warranties. The representations and warranties
of Joachim set forth in Article II hereof shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing Date
(as though made on and as of the Closing Date except (i) to the extent such
representations and warranties are by their express provisions made as of a
specific date and (ii) for the effect of transactions contemplated by this
Agreement) and First State shall have received a signed certificate of the
President or Chief Executive Officer and Corporate Secretary of Joachim,
signing on behalf of Joachim, to that effect.
(b) Performance of Obligations. Joachim shall have performed in all
material respects all obligations required to be performed by it under this
Agreement prior to the Closing Date, and First State shall have received a
signed certificate of the President or Chief Executive Officer and Corporate
Secretary of Joachim, signing on behalf of Joachim, to that effect.
(c) Permits, Authorizations, etc. Joachim shall have obtained any and
all material consents or waivers from other parties to loan agreements,
leases, or other contracts material to Joachim's and the Subsidiaries'
businesses required for the consummation of the Merger, and First State,
Joachim, and the Subsidiaries shall have obtained any and all material
permits, authorizations, consents, waivers, and approvals required for the
lawful consummation of the Merger.
(d) No Material Adverse Change. Since the date of this Agreement, there
shall have been no material adverse change in the business, financial
condition, or results of operations, of Joachim or the Subsidiaries taken as a
whole (other than changes in banking laws or regulations, or interpretations
thereof, that affect the banking and/or thrift industries generally or changes
in the general level of interest rates or economic conditions).
(e) Election of Dissenting Shareholders. The number of shares of
Joachim Common Stock which have neither voted in favor of the Merger nor
consented thereto in a writing pursuant to the Missouri Act and as to which
written demand for the fair value of their shares pursuant thereto has been
delivered to Joachim by the holders thereof prior to or at the time of the
taking of the vote on the Merger shall not exceed 10 percent of the total
shares of Joachim Common Stock outstanding at the time when the vote is taken.
(f) Opinion of Counsel. Joachim shall have delivered to First State an
opinion of counsel to Joachim dated as of the Closing Date or a mutually
agreeable earlier date in form substantially similar to that attached hereto
as Exhibit 6.03.
ARTICLE VII
Termination, Amendment, and Waiver
7.01 Termination. This Agreement may be terminated at any time prior to
the Closing Date, whether before or after approval by the shareholders of
Joachim:
Agreement and Plan of Merger Page 31
(a) By mutual consent of the Boards of Directors of all parties hereto;
or
(b) By the Board of Directors of any party hereto at any time after
September 30, 1998, if the Merger shall not theretofore have been consummated;
or
(c) By the Board of Directors of any party hereto if the Federal Reserve
Board, or any other federal and/or state regulatory agency whose approval is
required for the consummation of the transactions contemplated hereby shall
have denied approval of such transaction and such denial has, after exhaustion
of any and all available appellate procedures, become final;
(d) By the Board of Directors of either of the First State Entities or
the Board of Directors of Joachim in the event of a material breach by the
other of any representation, warranty, or agreement contained in this
Agreement, which breach is not cured within 15 days (or such longer period not
exceeding 40 days in the event such breach cannot reasonably be cured within
15 days and a cure is being pursued with reasonable diligence) after written
notice thereof is given to the party committing such breach or waived by such
other party(ies); or
(e) By First State, in its sole discretion and without penalty except as
set forth in Section 5.06 of this Agreement, by written notice to Joachim
within 10 days after the end of the Due Diligence Review Period.
(f) By the Board of Directors of any party hereto in the event the
shareholders of Joachim fail to approve the Agreement and Merger at the
special meeting of shareholders called for such purposes.
7.02 Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.01 above, this Agreement shall forthwith
become void and without further effect and there shall be no liability on the
part of any party hereto or the respective officers and directors of any
party, except as set forth in the second sentence of Section 5.01 (respecting
confidentiality and the return of information) and in Section 5.06 (respecting
payment of certain expenses), and, except that no termination of this
Agreement pursuant to subsection (d) of Section 7.01 shall relieve the
non-performing or defaulting party of any liability to any other party hereto
arising from the non-performance and/or breach prior to the date of such
termination of any covenant, agreement, term, provision, representation,
warranty required to be observed, performed, complied with and/or kept by such
non-performing or defaulting party; provided, however, that there shall be no
liability for breach of a representation or warranty that was, when given,
true and correct to the best knowledge and belief of the party giving same and
which later turns out (without any other fault of the party giving same) to be
incorrect.
7.03 Amendment. This Agreement and the Exhibits and Schedules hereto may
be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors, at any time before or after approval of this
Agreement by the shareholders of Joachim; provided, however, that after any
such approval no such modification shall alter the amount or change the form
of the consideration contemplated by this Agreement to be received by
shareholders of Joachim or alter or change any of the terms of this Agreement
if such alteration or change would materially and adversely affect the
shareholders of Joachim. This Agreement
Agreement and Plan of Merger Page 32
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
7.04 Waiver. Any term, condition or provision of this Agreement may be
waived in writing at any time by the party which is, or whose shareholders
are, entitled to the benefits thereof.
ARTICLE VIII
General Provisions
8.01 Survival of Representations, Warranties, and Agreements. No
investigation by the parties hereto made heretofore or hereafter shall affect
the representations and warranties of the parties which are contained herein
and each such representation and warranty shall survive such investigation.
Except as set forth below in this Section, all representations, warranties,
and agreements in this Agreement of the First State Entities and Joachim or in
any instrument delivered by the First State Entities or Joachim pursuant to
this Agreement shall expire at the Effective Time or upon termination of this
Agreement in accordance with its terms. In the event of termination of this
Agreement in accordance with its terms, the agreements contained in Sections
5.01 (second sentence), 5.06 and 7.02 shall survive such termination.
Sections 5.12, 5.13, 5.14, and 5.15 of this Agreement shall survive the
Effective Time.
8.02 <RESERVED>
8.03 No Assignment; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, but neither this Agreement nor any right or
obligation set forth in any provision hereof may be transferred or assigned by
any party hereto without the prior written consent of all other parties, and
any purported transfer or assignment in violation of this Section shall be
void and of no effect.
8.04 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remaining provisions of this Agreement.
8.05 No Implied Waiver. No failure or delay on the part of either party
hereto to exercise any right, power, or privilege hereunder or under any
instrument executed pursuant hereto shall operate as a waiver nor shall any
single or partial exercise of any right, power, or privilege preclude any
other further exercise thereof or the exercise of any other right, power, or
privilege.
8.06 Headings. Article, section, subsection, and paragraph titles,
captions and headings herein are inserted only as a matter of convenience and
for reference, and in no way define, limit, extend, or describe the scope of
this Agreement or the intent of any provision hereof.
Agreement and Plan of Merger Page 33
8.07 Entire Agreement. This Agreement and the Schedules and Exhibits
hereto constitutes the entire agreement between and among the parties with
respect to the subject matter hereof, supersedes all prior negotiations,
representations, warranties, commitments, offers, letters of interest or
intent, proposal letters, contracts, writings, or other agreements or
understandings with respect thereto. No waiver, and no modification or
amendment of any provision of this Agreement shall be effective unless
specifically made in writing and duly signed by all parties thereto.
The parties hereto acknowledge that the Schedules referenced in Article
II hereof are not incorporated in this Agreement as of the date of its
execution. Joachim shall provide all such Schedules to the First State
Entities within seven days after the date of execution of this Agreement, and
at such time the Schedules shall be deemed a part of this Agreement. A
representation in one Schedule shall constitute a representation in all
Schedules. The obligations on the part of the First State Entities under this
Agreement are expressly conditioned upon, and subject to, acceptance by the
First State Entities of the form and/or substance of the Schedules, in each
case, in the reasonable discretion of the First State Entities, except that
the First State Entities may not terminate this Agreement pursuant to this
Section: (i) after 10 business days after the receipt of all of the Schedules
in accordance with the terms hereof; and (ii) unless and until Joachim has had
the opportunity to cure such objections to the information set forth in the
Schedules in a manner satisfactory to the First State Entities, provided that
such cure is accomplished within 15 days after receipt of written notice of
such objections by the First State Entities. In the event that the First
State Entities shall advise Joachim of (a) the unacceptability of any such
cure or (b) Joachim's failure to cure within the 15-day period provided above,
this Agreement, notwithstanding anything herein contained or implied to the
contrary, shall be terminable upon written notice to Joachim by the First
State Entities, subject to the provisions of Section 5.06(b) hereof.
8.08 Counterparts. This Agreement may be executed in one or more
counterparts, and any party to this Agreement may execute and deliver this
Agreement by executing and delivering any of such counterparts, each of which
when executed and delivered shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
8.09 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to be duly received (i) on the date given if
delivered personally or by facsimile transmission, telegram, or telex or (ii)
on the date received if mailed by registered or certified mail (return receipt
requested), to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to the First State Entities:
First State Bancshares, Inc.
201 East Columbia
Farmington, Missouri 63640
Attention: Mr. Greg E. Allen,
President
Agreement and Plan of Merger Page 34
Copy to: Kenneth H. Suelthaus, Esq.
Suelthaus & Walsh, P.C.
7733 Forsyth Boulevard, 12th Floor
St. Louis, Missouri 63105
(b) If to Joachim:
Joachim Bancorp, Inc.
Plaza Square
DeSoto, Missouri 63020
Attention: Mr. Bernard R. Westhoff,
President
Copy to: Paul M. Aguggia, Esq.
Breyer & Aguggia
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
provided, however, that the providing of notice to counsel shall not, of
itself, be deemed the providing of notice to a party hereto.
8.10 Governing Law. This Agreement shall be governed by and controlled
as to validity, enforcement, interpretation, effect, and in all other respects
by the internal laws of the State of Missouri applicable to contracts made in
that state.
Agreement and Plan of Merger Page 35
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the day of
December, 1997.
FIRST STATE: FIRST STATE BANCSHARES, INC.
By: /s/ Greg Allen
Title: President
ATTEST: /s/ Carol Rydon
Title: Assistant Vice President
FSB: FSB
By: /s/ Greg Allen
Title: President
ATTEST: /s/ Carol Rydon
Title: Assistant Vice President
JOACHIM: JOACHIM BANCORP, INC.
By: /s/ Bernard R. Westhoff
Title: President
ATTEST: /s/ Lee Ellen Hogan
Title: Senior Vice President
Agreement and Plan of Merger Page 36
Exhibit 99
Press Release dated December 29, 1997
*PRESS RELEASE*
FOR IMMEDIATE RELEASE:
December 29, 1997
CONTACT: Bernard R. Westhoff
Chief Executive Officer
Joachim Bancorp, Inc.
(314) 586-8821
JOACHIM BANCORP AGREES TO MERGER WITH FIRST STATE BANCSHARES
DeSoto, Missouri, December 29, 1997 -- Joachim Bancorp, Inc. (Nasdaq
SmallCap: JOAC), the holding company for Joachim Federal Savings and Loan
Association, today announced the execution of a definitive agreement with
First State Bancshares, Inc. that will result in the merger of Joachim Federal
Savings and Loan Association with First State Community Bank.
In the transaction, Joachim shareholders will receive $17.25 in cash for
each share of Joachim common stock. The aggregate consideration to be
received by Joachim shareholders and option holders will be approximately
$12.8 million. The transaction is subject to the completion of a due
diligence review of Joachim by First State and to approval by banking
regulators and the shareholders of Joachim.
Joachim Federal operates out of one office in DeSoto, Missouri. At
September 30, 1997, Joachim Bancorp had total assets of $35.1 million and
stockholders' equity of $9.9 million.
First State Bancshares, Inc. is a multi-bank holding company based in
Farmington, Missouri with total assets of $230 million and seven banking
locations.
"We are pleased to affiliate with First State Community Bank," said
Bernard R. Westhoff, President and Chief Executive Officer of Joachim. "With
the ongoing consolidation in the financial services industry, we believe
becoming part of a larger community financial institution will be in the best
interests of our employees, customers and shareholders."
First State Bancshares, Inc. Chairman of the Board, William Cooper, and
President, Greg Allen, commented that Joachim Federal will be a valuable
addition to its family of community banks, as DeSoto fits nicely within First
State's existing market area.
The transaction is expected to close in the second quarter of 1998.