As filed with the Securities and Exchange Commission on December 17, 1997
Registration No. 333-__________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
LAKEVIEW FINANCIAL CORP.
(Exact Name of Registrant as Specified in Its Charter)
New Jersey 6036 22-3334052
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
1117 Main Street
Paterson, New Jersey 07503
(201) 890-1234
(Address, including zip code, and telephone number,
including area code, of Registrant's
principal executive offices)
Kevin J. Coogan, President and Chief Executive Officer
Lakeview Financial Corp.
989 McBride Avenue
West Paterson, New Jersey 07424
(201) 890-1234
(Name, address, including zip code, and telephone number,
including area code,of agent for service)
COPY TO:
Samuel J. Malizia, Esq.
Malizia, Spidi, Sloane & Fisch, P.C.
One Franklin Square
1301 K Street, N.W.
Suite 700, East
Washington, DC 20005
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the effectiveness of the
Registration Statement.
If any of the securities being registered on this Form are being
offered in connection with the formation of a holding company and there is
compliance with General Instruction G, check the following box. |_|
------------------------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to Offering Price Aggregate Offering Amount of
to be Registered be Registered Per Share Price (1) Registration Fee
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Common Stock,
par value $1.00 per share......... 420,000 $27.13 $9,564,102 $2,821.41
====================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
for the filing of the Form S-4 pursuant to Rule 457(f)(1) and (3) under
the Securities Act based on the average of the high and low prices
reported by NASDAQ for Westwood Financial Corporation common stock as
of December 16, 1997, a date within five business days prior to the
filing of this Registration Statement and reduced by 49.9% of cash to
be paid by Lakeview Financial Corp. As of December 16, 1997, Westwood
Financial Corporation had 645,295 shares of common stock outstanding
and 58,355 options to purchase common stock outstanding. Shareholders
of Westwood Financial Corporation will be entitled to elect their
preference with respect to each share of Westwood Financial Corporation
common stock held by them, subject to pro-rata allocation, such that an
aggregate of 49.9% will be converted into cash and 50.1% will be
converted into stock.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Westwood Financial Corporation
700-88 Broadway
Westwood, New Jersey 07675
_______________ __, 1998
To the Shareholders of
Westwood Financial Corporation
You are cordially invited to attend the Special Meeting of
Shareholders (the "Special Meeting") of Westwood Financial Corporation ("WFC"),
the holding company for Westwood Savings Bank ("WSB"), which will be held on
_________________, 1998, at __:__ ____, local time at ___________________,
_____________________, ______________________, New Jersey.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Reorganization, dated September 10,
1997 (the "Reorganization Agreement") by and between WFC, WSB, and Lakeview
Financial Corp. ("LFC"), a New Jersey corporation and the holding company for
Lakeview Savings Bank, a New Jersey stock savings bank ("LSB") and LSB. Pursuant
to the Reorganization Agreement, WFC will be merged with and into LFC, and as
soon as practicable thereafter, WSB will be merged with and into LSB (together,
the "Merger"). According to the terms of the Reorganization Agreement,
shareholders of WFC may elect, subject to certain election and allocation
procedures, to exchange their shares of WFC common stock for $29.25, payable in
the aggregate form of 50% cash and 50% LFC common stock. An election form and
letter of transmittal is being delivered to you under separate cover. You will
have the right to elect payment in the form of cash or stock, subject to
proration to assure aggregate consideration of approximately 50% LFC common
stock. The allocation of cash and shares of LFC common stock that you receive
will depend on the stated preferences of the WFC shareholders on the election
forms and the proration procedures to be applied. You should note that the
federal income tax consequences of the Merger will depend on whether you receive
cash, stock or a combination of cash and stock in exchange for your shares of
WFC common stock.
Enclosed with this letter are a Notice of Special Meeting of WFC's
Shareholders and the Proxy Statement/Prospectus, which describes in detail the
proposed Merger, the background of the Merger, and other related information.
Also enclosed is a proxy solicited by WFC's Board of Directors in connection
with the Special Meeting.
FinPro, Inc., an investment banking firm, has issued its opinion to
your board of directors regarding the fairness from a financial point of view,
of the consideration to be received by the shareholders of WFC pursuant to the
Reorganization Agreement as of the date of such opinion. A copy of the opinion
is attached as Appendix II to the Proxy Statement/Prospectus.
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE PROPOSED MERGER
AND RECOMMENDS THAT SHAREHOLDERS VOTE THEIR SHARES "FOR" APPROVAL OF THE MERGER.
THE AFFIRMATIVE VOTE OF A MAJORITY OF WFC'S OUTSTANDING SHARES ENTITLED TO VOTE
IS NECESSARY TO APPROVE THE MERGER. ACCORDINGLY, FAILURE TO VOTE, EITHER BY
RETURNING YOUR PROXY CARD OR VOTING IN PERSON AT THE SPECIAL MEETING WILL HAVE
THE EFFECT OF A VOTE AGAINST THE MERGER.
We urge you to consider carefully all of the materials in the Proxy
Statement/Prospectus and to execute and return the enclosed proxy as soon as
possible. If you attend the Special Meeting, you may vote in person if you wish,
even though you have previously returned your proxy.
Sincerely,
William J. Woods
President and Chief Executive Officer
Westwood Financial Corporation
700-88 Broadway
Westwood, New Jersey 07675
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ________________, 1998
To the Holders of Common Stock of Westwood Financial Corporation:
NOTICE IS HEREBY GIVEN that the Special Meeting of shareholders (the "Special
Meeting") of Westwood Financial Corporation ("WFC") will be held on
__________________, 1998, at __:__ __.m., local time at ____________________,
__________________, ______________________, New Jersey. The Special Meeting is
for the purpose of considering and voting upon the following matters, all of
which are set forth more completely in the accompanying Proxy
Statement/Prospectus:
1. To consider and vote upon a proposal to approve an Agreement and Plan of
Reorganization, dated September 10, 1997 (the "Reorganization Agreement")
by and between WFC, Westwood Savings Bank ("WSB"), and Lakeview Financial
Corp. ("LFC"), a New Jersey corporation and the holding company for
Lakeview Savings Bank, a New Jersey stock savings bank ("LSB") and LSB.
Pursuant to the Reorganization Agreement, WFC will be merged with and into
LFC, and as soon as practicable thereafter, WSB will be merged with and
into LSB (together, the "Merger"). According to the terms of the
Reorganization Agreement, shareholders of WFC may elect, subject to certain
election and allocation procedures, to exchange their shares of WFC common
stock for $29.25, payable in the aggregate form of 50% cash and 50% LFC
common stock.
2. To transact such other business as may properly come before the Special
Meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on the record
date, __________ ____, 1998, are entitled to notice of and to vote at the
Special Meeting and any adjournments thereof. The affirmative vote of not less
than a majority of outstanding WFC common stock entitled to vote is necessary to
approve the Merger Proposal. Accordingly, failure to vote either by failing to
return your proxy or failing to vote in person at the Special Meeting will have
the same effect as a vote against the Merger Proposal. We urge you to execute
and return the enclosed proxy as soon as possible to ensure that your shares
will be represented at the Special Meeting. Your proxy may be revoked in the
manner described in the accompanying Proxy Statement/Prospectus at any time
before it has been voted at the Special Meeting.
By Order of the Board of Directors
Joanne Miller
Secretary
Westwood, New Jersey
______________, 1998
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF
THE PROPOSALS STATED ABOVE. PLEASE SIGN AND RETURN THE ENCLOSED PROXY AS
PROMPTLY AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING IN
PERSON. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE SPECIAL
MEETING.
PLEASE DO NOT SEND IN CERTIFICATES FOR YOUR SHARES OF WFC COMMON STOCK
WITH YOUR PROXY CARD; PLEASE CAREFULLY READ AND FOLLOW THE INSTRUCTIONS SET
FORTH IN THE ELECTION FORM AND LETTER OF TRANSMITTAL REGARDING THE MAKING OF
YOUR ELECTION AND THE SURRENDER OF YOUR WFC STOCK CERTIFICATES.
Proxy Statement/Prospectus
Proxy Statement
of
Westwood Financial Corporation
For a Special Meeting of Shareholders
To Be Held on ______________, 1998
LAKEVIEW FINANCIAL CORP.
Prospectus
Up to 420,000 Shares of Common Stock, $1.00 Par Value Per Share
This combined Proxy Statement and Prospectus ("Proxy
Statement/Prospectus") is being furnished to the holders of common stock, $0.10
par value per share ("WFC Common Stock") of Westwood Financial Corporation, a
New Jersey corporation ("WFC"), in connection with the solicitation of proxies
by the Board of Directors of WFC for use at the Special Meeting of Shareholders
of WFC to be held on _______________, 1998 at __:__ __.m., local time, at
_____________________, ____________, _______________________, New Jersey or at
any adjournments or postponements thereof (the "Special Meeting"). This Proxy
Statement/Prospectus and accompanying form of proxy ("Proxy") are first being
mailed to shareholders of WFC as of _________________, 1998 (the "Record Date")
on or about _________________, 1998.
At the Special Meeting, you will be asked to consider and vote upon a
proposal to approve an Agreement and Plan of Reorganization, dated September 10,
1997 (the "Reorganization Agreement") by and between WFC, WSB, and Lakeview
Financial Corp. ("LFC"), a New Jersey corporation and the holding company for
Lakeview Savings Bank, a New Jersey stock savings bank ("LSB") and LSB. Pursuant
to the Reorganization Agreement, WFC will be merged with and into LFC, and as
soon as practicable thereafter, WSB will be merged with and into LSB (together,
the "Merger"). According to the terms of the Reorganization Agreement,
shareholders of WFC may elect, subject to certain election and allocation
procedures, to exchange their shares of WFC common stock for $29.25, payable in
the aggregate form of 50% cash and 50% LFC common stock. You will have the right
to elect payment in the form of cash or stock, subject to proration to assure
aggregate consideration of approximately 50% LFC common stock. The Merger must
qualify as a tax-free reorganization. Thus, no guarantee can be given that an
election by any given shareholder will be honored, or that WFC shareholders will
receive their elected form of consideration. For a more detailed description of
the terms of the Merger, see "Proposal I--The Merger."
This Proxy Statement also constitutes a prospectus of LFC with respect
to up to 420,000 shares of LFC common stock $1.00 par value per share ("LFC
Common Stock") that will be issued in connection with the Merger and the
exercise of certain options granted under the WFC 1993 and 1997 Stock Option
Plans (the "Plans").
THE SHARES OF WFC COMMON STOCK TO BE ISSUED PURSUANT TO THE
REORGANIZATION AGREEMENT HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE SHARES OF LFC COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS,
DEPOSITS OR OTHER OBLIGATIONS OF A BANK OR SAVINGS ASSOCIATION AND ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS ________________, 1998.
This Proxy Statement/Prospectus does not cover any resale of the securities to
be received by shareholders of WFC upon consummation of the proposed
transaction, and no person is authorized to make any use of this Proxy
Statement/Prospectus in connection with any such resale.
No persons have been authorized to give any information or to make any
representations other than those contained in this Proxy Statement/Prospectus or
incorporated by reference herein in connection with the solicitation of proxies
or the offering of securities made hereby and, if given or made, such
information or representations must not be relied upon as having been authorized
by LFC or WFC. This Proxy Statement/Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, any securities, or the solicitation
of a proxy, in any jurisdiction to or from any person to whom it is not lawful
to make any such offer or solicitation in such jurisdiction. Neither the
delivery of this Proxy Statement/Prospectus nor any distribution of securities
made hereunder shall, under any circumstances, create an implication that there
has been no change in the affairs of LFC or WFC since the date of this Proxy
Statement/Prospectus or that the information set forth herein or in the
documents or reports incorporated herein by reference since the date of this
Proxy Statement/Prospectus; however, if any material change occurs in such
affairs or information during the period that this Proxy Statement is required
to be delivered, this Proxy Statement/Prospectus will be amended and
supplemented accordingly. All information contained in this Proxy
Statement/Prospectus relating to WFC and its subsidiary has been supplied by WFC
and all information contained in this Proxy Statement/Prospectus relating to LFC
and its subsidiaries has been supplied by LFC.
AVAILABLE INFORMATION
LFC and WFC are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements, information statements and other
information, when filed, can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and the Commission's Regional offices in New York (7
World Trade Center, Suite 1300 New York, New York 10048) and Chicago (Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661). The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission and the address of such site is http://www.sec.gov. In
addition, the common stock of both LFC and WFC is listed on the Nasdaq Stock
Market and reports, proxy statements and other information concerning LFC and
WFC can be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
From February 23, 1993 to June 6, 1996, WSB was subject to the
informational requirements of the Exchange Act pursuant to Section 12(i) of the
Exchange Act. Such reports, proxy statements, and other information were filed
with the Federal Deposit Insurance Corporation (the "FDIC") and can be inspected
and copied at the public reference facilities maintained by the FDIC. Copies of
such materials can be obtained, at prescribed rates, from the Registration,
Disclosure and Securities Operations Unit, 550 17th Street, N.W., Room F640,
Washington, D.C. 20429, or by calling the FDIC at (202) 899- 8911 or (202)
898-8913 or faxing the FDIC at (202) 898-3909.
LFC has filed with the Commission a registration statement on Form S-4
under the Securities Act of 1933, as amended ("Securities Act"), in respect to
the LFC Common Stock to be issued in the Merger ("Registration Statement"). As
permitted by the rules and regulations of the Commission, this Proxy
Statement/Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. For such information, reference is made
to the Registration Statement and the exhibits filed as a part thereof or
incorporated by reference therein.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents or portions of documents filed by LFC (File No.
0-25106) and WFC (File No. 0-28200) with the Commission are hereby incorporated
by reference into and made a part of this Proxy Statement/Prospectus.
1. LFC's Annual Report on Form 10-K for the fiscal year ended July
31, 1997.
2. LFC's Quarterly Report on Form 10-Q for the fiscal quarter ended
October 31, 1997.
3. LFC's Current Report on Form 8-K filed September 10, 1997.
4. WFC's Annual Report on Form 10-KSB for the fiscal year ended
March 31, 1997.
5. WFC's Quarterly Reports on Form 10-QSB for the quarters ended
June 30, 1997 and September 30, 1997.
6. WFC's Current Report on Form 8-K filed September 10, 1997.
All documents filed by LFC and WFC pursuant to Section 13(a), 14 or
15(d) of the Exchange Act after the date of this Proxy Statement/Prospectus and
prior to the date of the WFC Special Meeting shall be deemed to be incorporated
by reference into this Proxy Statement/Prospectus and to be a part hereof from
the respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Proxy
Statement/Prospectus to the extent that a statement contained herein, or in any
other subsequently filed document that is also incorporated or deemed
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THE LFC DOCUMENTS ARE
AVAILABLE (WITHOUT CHARGE) UPON WRITTEN REQUEST TO SANDRA L. COULTHART, LAKEVIEW
FINANCIAL CORP., 1117 MAIN STREET, PATERSON, NEW JERSEY 07424. THE WFC DOCUMENTS
ARE AVAILABLE (WITHOUT CHARGE) UPON WRITTEN REQUEST TO JOANNE MILLER, WESTWOOD
FINANCIAL CORPORATION, 700-88 BROADWAY, WESTWOOD, NEW JERSEY, 07675. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST MUST BE RECEIVED BY
__________________, 1998.
TABLE OF CONTENTS
SUMMARY............................................................................................................
The Companies.............................................................................................
Westwood Special Meeting..................................................................................
Time, Date, Place and Purpose.............................................................................
Record Date; Vote Required................................................................................
Stock Held By WFC Affiliates..............................................................................
The Merger................................................................................................
Effective Time............................................................................................
Merger Consideration......................................................................................
Election by WFC Shareholders..............................................................................
Allocation Procedures.....................................................................................
Exchange of Certificates; Delivery of LFC Common Stock and Cash...........................................
Opinion of WFC's Financial Advisor........................................................................
Federal Income Tax Consequences...........................................................................
Accounting Treatment......................................................................................
Conditions of the Merger..................................................................................
Comparison of Shareholders' Rights........................................................................
Dissenters' Rights........................................................................................
Interests of Certain Persons in the Merger................................................................
Comparative Market and Stock Price Information............................................................
Comparative Per Share Information.........................................................................
Selected Historical Consolidated Financial Information....................................................
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS........................................................................
INTRODUCTION.......................................................................................................
WFC SPECIAL MEETING................................................................................................
Record Date; Vote Required................................................................................
Proxies; Revocation; Solicitation.........................................................................
PROPOSAL I -- THE MERGER...........................................................................................
Closing and Effective Time................................................................................
The Merger................................................................................................
Effect of the Merger......................................................................................
Merger Consideration......................................................................................
Recommendation of the Board of Directors..................................................................
Background of the Merger..................................................................................
Reasons for the Merger....................................................................................
Opinion of WFC's Financial Advisor........................................................................
Conditions to the Merger..................................................................................
Termination...............................................................................................
Termination Fee...........................................................................................
Business Pending Consummation.............................................................................
The Plans.................................................................................................
Federal Income Tax Consequences...........................................................................
No Dissenters' Rights.....................................................................................
Accounting Treatment......................................................................................
Interests of Certain Persons in the Merger................................................................
Resales by Affiliates.....................................................................................
Regulatory Approvals......................................................................................
EFFECT OF THE MERGER ON SHAREHOLDERS' RIGHTS.......................................................................
General...................................................................................................
Board of Directors........................................................................................
Meetings of Shareholders; Cumulative Voting; Proxies......................................................
Nominations to the Board of Directors, Shareholder Proposals, and Conduct of Meetings.....................
Authorized Shares.........................................................................................
Limitations on Voting.....................................................................................
Indemnification; Limitation of Liability..................................................................
LFC................................................................................................................
DESCRIPTION OF LFC CAPITAL STOCK...................................................................................
WFC................................................................................................................
EXPERTS............................................................................................................
LEGAL MATTERS......................................................................................................
OTHER MATTERS......................................................................................................
AGREEMENT AND PLAN OF REORGANIZATION
DATED SEPTEMBER 10, 1997.............................................................................APPENDIX I
FAIRNESS OPINION OF FINPRO, INC........................................................................APPENDIX II
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SUMMARY
The following is a brief summary of the matters to be considered at the
Special Meeting. This summary is not intended to be complete and is qualified in
its entirety by reference to, and should be read in conjunction with, the
detailed information, including the Appendices hereto, contained or incorporated
by reference herein. A copy of the Reorganization Agreement is attached as
Appendix I to this Proxy Statement/Prospectus. Shareholders are urged to read
carefully the entire Proxy Statement/Prospectus. As used in this Proxy
Statement/Prospectus, the terms "LFC," and "WFC" refer to such corporations,
respectively, and where the context requires such corporations and their
subsidiaries on a consolidated basis.
The Companies
LFC
LFC, a New Jersey corporation and savings and loan holding company with
principal executive offices at 1117 Main Street, Paterson, New Jersey, through
its wholly-owned stock savings bank subsidiary, Lakeview Savings Bank ("LVSB"),
operated, as of October 31, 1997, eight banking offices located in Bergen and
Passaic Counties, New Jersey. LFC's primary business consist of attracting
deposits from the general public and originating loans that are secured by
residential properties, as well as originating multi-family, commercial real
estate, home equity, second mortgage and home improvement loans. In addition,
LFC owns two active nonbank subsidiaries that are engaged primarily in mortgage
brokerage services and consumer finance services, respectively.
WFC
WFC, a New Jersey corporation and bank holding company with principal
executive offices at 700-88 Broadway, Westwood, New Jersey, through its
wholly-owned stock savings bank subsidiary, WSB, operated as of September 30,
1997, two banking offices in Westwood and Haworth, New Jersey. WSB's primary
business consist of attracting deposits from the general public and originating
loans that are secured by residential properties as well as originating
commercial real estate and consumer loans.
Westwood Special Meeting
Time, Date, Place and Purpose
The Special Meeting will be held on __________ ____, 1998 at ____:____
____.m. local time, at the __________, __________, __________, New Jersey, to
consider and vote upon (1) a proposal to approve the Reorganization Agreement
and the transactions contemplated thereby, and (2) a proposal to approve in
advance an adjournment of the Special Meeting if insufficient shares are present
to constitute a quorum or to approve the Reorganization Agreement. A copy of the
Reorganization Agreement (without exhibits) is attached hereto as Appendix I.
Record Date; Vote Required
The record date ("Record Date") for determining WFC shareholders
entitled to notice of and to vote at the Special Meeting is __________ ____,
1998. The presence, in person or by proxy, of holders of shares entitled to cast
at least a majority of the votes at the Special Meeting is necessary to
constitute a quorum at the Special Meeting. Assuming a quorum is present, an
affirmative vote of at least a majority of the votes cast and entitled to vote
at the Special Meeting is necessary to approve the
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(i)
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Reorganization Agreement. In the event a quorum is not present or there are
insufficient votes to approve any proposal, the Special Meeting may be adjourned
from time to time by a majority of those present in person or by proxy in order
to permit, as appropriate, further solicitation of proxies by the WFC Board.
Stock Held By WFC Affiliates
The directors and executive officers of WFC and their affiliates
beneficially owned, as of the Record Date, 133,895 shares of common stock ("WFC
Common Stock"), representing 19% of the issued and outstanding shares of WFC
Common Stock. The directors and executive officers of WFC have all indicated
that they will vote their shares of WFC Common Stock in favor of the proposal to
approve the Reorganization Agreement.
LFC beneficially owns 28,145 shares of WFC Common Stock, which
represents 4% of the issued and outstanding WFC Common Stock. LFC intends to
vote its shares in favor of the proposal to approve the Reorganization
Agreement.
The Merger
Effective Time
The merger of WFC with and into LFC (the "Holding Company Merger") will
become effective at the hour and on the date ("Effective Time") specified in the
Articles of Merger to be filed pursuant to the New Jersey Business Corporation
Act with the Secretary of State of the State of New Jersey immediately following
the closing of the Holding Company Merger. If the Holding Company Merger is
approved by WFC shareholders, subject to the satisfaction or waiver of certain
other conditions set forth in the Reorganization Agreement, it is currently
contemplated that the Effective Time will occur during the first calendar
quarter of 1998. At the Effective Time, WFC will be merged with and into LFC.
See "Proposal I -- The Merger-Closing and Effective Time."
Merger Consideration
The Reorganization Agreement provides that, subject to the election and
allocation procedures provided for therein, each issued and outstanding share of
WFC Common Stock will be converted into the right to receive, at the election of
each holder thereof, either (a) cash equal to $29.25 (the "Cash Merger
Consideration", or (b) a number of shares of LFC Common Stock equal to $29.25
divided by the Final Market Price. The Final Market Price will be the average
closing price per share of the "last" real time trades (i.e., closing price) of
the LFC Common Stock as reported on the Nasdaq National Market for each of the
15 Nasdaq National Market general market trading days preceding one week prior
to the Closing Date on which the Nasdaq National Market was open for business.
Fractional shares of LFC Common Stock will not be issued in the Merger.
WFC shareholders otherwise entitled to a fractional share will be paid the value
of such fraction in cash determined as described herein under "Proposal I -- The
Merger-Effect of the Merger."
On ____________, 1998, the most recent date for which it was
practicable to obtain market price data prior to the printing of this Proxy
Statement/Prospectus, the closing sales price per share of LFC Common Stock was
$______.
Because the Merger must qualify as a tax-free reorganization, no
guarantee can be given that an election by any given shareholder will be
honored. Rather, the election by each holder will be subject
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(ii)
- --------------------------------------------------------------------------------
to the proration and allocation procedures described herein and in the
Reorganization Agreement. Thus, holders may not receive their chosen form of
consideration. See "Proposal I -- The Merger-Election and Allocation
Procedures."
Election by WFC Shareholders
Each shareholder of WFC will have the opportunity to submit an election
form and letter of transmittal ("Election Form") specifying the kind of
consideration sought to be received in exchange for his or her shares of WFC
Common Stock. The Election Form will be mailed (the "Mailing Date") concurrently
with this Proxy Statement/Prospectus to each holder of record of WFC Common
Stock as of the Record Date. An Election Form and a copy of this Proxy
Statement/Prospectus also will be mailed to persons who become shareholders of
record of WFC after the Record Date up to one business day prior to the Election
Deadline (as defined below). Election Forms also will be available at WFC's main
office, LFC's main office and from the Exchange Agent at all times through the
Election Deadline.
The Election Form will permit WFC shareholders (i) to indicate that
they elect to receive in exchange for their WFC shares (a) LFC Common Stock
("Stock Election Shares"), (b) cash ("Cash Election Shares"), or (c) a
combination thereof, or (ii) to make no election ("Non-Electing Shares"). The
Non-Electing Shares will be converted into LFC Common Stock, cash or a
combination thereof as necessary to ensure that (i) the aggregate amount of
consideration payable in cash is equal to 49.9% of the aggregate value of all of
the consideration issued or paid in connection with the Merger, and the total
number of shares of LFC Common Stock to be issued in connection with the Merger
shall be that number of whole shares of LFC Common Stock that is equal to 50.1%
of the aggregate value of all of the consideration issued or paid in connection
with the Merger, and (ii) the Merger will qualify as a tax-free reorganization.
The Election Form together with stock certificates representing all shares of
WFC Common Stock covered thereby (or customary affidavits and indemnification
regarding the loss or destruction of such certificates or the guaranteed
delivery of such certificates), must be returned to Registrar and Transfer
Company, as exchange agent (the "Exchange Agent"), no later than __:__ _:m.,
local time, on ______________, 1998 (the "Election Deadline"). Shares of WFC
Common Stock for which a properly completed Election Form has not been received
by the Exchange Agent by the Election Deadline will be deemed Non-Electing
Shares. Accordingly, persons who become shareholders of WFC after the Election
Deadline will be deemed to hold Non-Electing Shares, because they could not have
made an effective election with respect to such shares. See "Proposal I -- The
Merger-Election and Allocation Procedures."
Because the Merger must qualify as a tax-free reorganization, the
extent to which individual elections will be accommodated will depend upon the
respective number of WFC shareholders who elect cash and stock and who fail to
make an election. Accordingly, a WFC shareholder who elects to receive cash may
instead receive a combination of cash and shares of LFC Common Stock, a WFC
shareholder who elects to receive shares of LFC Common Stock (plus cash in lieu
of fractional shares) may instead receive a combination of cash and shares of
LFC Common Stock, and a WFC shareholder who elects to receive a combination of
cash and shares of LFC Common Stock may instead receive a different combination
of cash and shares of LFC Common Stock.
Because the tax consequences of receiving cash or LFC Common Stock will
differ, shareholders of WFC are urged to read carefully the information under
the caption "Proposal I -- The Merger-Federal Income Tax Consequences" and
consult their own tax advisor to determine the particular tax consequences to
them of the Merger.
- --------------------------------------------------------------------------------
(iii)
- ------------------------------------------------------------------------------
Allocation Procedures
The aggregate amount of consideration to be received by WFC
shareholders in exchange for their shares of WFC Common Stock shall consist of
cash or LFC Common Stock, in such proportion as follows: (i) the aggregate
amount of consideration payable in cash ("Cash Amount") shall be 49.9% of the
aggregate value of all of the consideration issued or paid in connection with
the Merger; and (ii) the total number of shares of LFC Common Stock to be issued
in connection with the Merger ("Stock Amount") shall be that number of whole
shares of LFC Common Stock that has an aggregate value of 50.1% of the aggregate
value of all of the consideration issued or paid in connection with the Merger.
The Reorganization Agreement provides that the value of the aggregate number of
shares of LFC Common Stock to be issued in the Merger shall not exceed 50.1% of
the aggregate value of all of the consideration to be paid in connection with
the Merger. However, in order for Malizia, Spidi, Sloane & Fisch, P.C. to render
its opinion that the Merger qualifies as a tax-free reorganization, the value of
the aggregate number of shares of LFC Common Stock to be issued in the Merger
must be at least 50.1% of the aggregate value of all of the consideration to be
paid in connection with the Merger. To the greatest extent possible, LFC will
allocate cash and stock in accordance with each WFC shareholder's election.
However, if either the cash portion or the stock portion is oversubscribed, or
if the initial allocation based on WFC shareholder elections would threaten
satisfaction of the conditions to the consummation of the Merger, WFC
shareholder elections will be adjusted in accordance with the election and
allocation procedures, as described herein. See "Proposal I -- The
Merger-Election and Allocation Procedures."
Exchange of Certificates; Delivery of LFC Common Stock and Cash
No holder of certificates formerly representing shares of WFC Common
Stock will be entitled to receive either cash or shares of LFC Common Stock
until the certificates are properly surrendered to the Exchange Agent and no
interest will accrue in respect thereof. Each share of LFC Common Stock for
which shares of WFC Common Stock are exchanged in the Merger will be deemed to
have been issued on the Effective Date. Accordingly, WFC shareholders who
receive LFC Common Stock in the Merger will be entitled to vote their shares and
to receive any dividends or other distributions, without interest, that may be
payable to holders of record of LFC Common Stock after the Effective Date,
except that no such dividend will be remitted until the certificate representing
WFC Common Stock have been properly surrendered to the Exchange Agent. Within
five business days after the allocation described above under "--Allocation
Procedures," the Exchange Agent will distribute LFC Common Stock and cash with
respect to shares of WFC Common Stock which have been properly surrendered to
the Common Stock for LFC. Instead, each holder of shares of WFC Common Stock who
would otherwise be entitled to a fractional share of LFC Common Stock will
receive in lieu thereof a check in an amount equal to the value of such
fractional share based upon the Final Market Price.
Opinion of WFC's Financial Advisor
WFC engaged FinPro, Inc. ("FinPro") to render financial advisory and
investment banking services in connection with WFC management's decision to
explore various methods to enhance WFC shareholder value. Pursuant to such
engagement, FinPro has evaluated the fairness of the consideration to be
received by WFC's shareholders. FinPro has delivered to WFC an opinion dated
September 9, 1997 stating that, as of such date, based on the review and
assumptions and subject to the limitations described therein, the Merger
Consideration was fair, from a financial point of view, to WFC's shareholders. A
copy of FinPro's opinion is attached as Appendix II to this Proxy
Statement/Prospectus and should be read in its entirety. See "Proposal I -- The
Merger-Opinion of WFC's Financial Advisor."
- --------------------------------------------------------------------------------
(iv)
- --------------------------------------------------------------------------------
Federal Income Tax Consequences
The Merger is intended to be a reorganization within the meaning of
Section 368 of the Code; accordingly, a gain or loss generally will not be
recognized by WFC shareholders who receive solely LFC Common Stock in exchange
for their WFC Common Stock. Receipt of cash in the Merger will be a taxable
event. The Reorganization Agreement provides that consummation of the Merger is
conditioned upon receipt by LFC and WFC of an opinion of Malizia, Spidi, Sloane
& Fisch, P.C., legal counsel to LFC, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code. For a
further discussion of the federal income tax consequences of the Merger, see
"Proposal I-- The Merger-Federal Income Tax Consequences".
BECAUSE CERTAIN TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON
THE PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER AND OTHER FACTORS, EACH HOLDER
OF WFC COMMON STOCK IS URGED TO CONSULT SUCH HOLDER'S OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE MERGER
(INCLUDING THE APPLICATION AND EFFECT OF STATE AND LOCAL INCOME AND OTHER TAX
LAWS).
Accounting Treatment
It is anticipated that the Merger, when consummated, will be accounted
for as a purchase. See "Proposal I -- The Merger-Accounting Treatment".
Conditions of the Merger
Consummation of the Merger is subject, among other things, to the
approval of the Reorganization Agreement by the requisite vote of WFC
shareholders and the receipt of all requisite regulatory approvals. See
"Proposal I -- The Merger-Conditions to the Merger."
Comparison of Shareholders' Rights
Because LFC and WFC are both New Jersey corporations, any differences
in the rights of holders of their respective common stock are due to differences
in the certificates of incorporation and by-laws of the two corporations. At the
Effective Time, holders of WFC Common Stock who become shareholders of LFC will
have their rights as shareholders of LFC determined by LFC's Certificate of
Incorporation and By-laws. See "Effect of the Merger on Shareholders' Rights."
Dissenters' Rights
Under the New Jersey Business Corporation Act, there are no dissenters'
rights of appraisal available to holders of WFC Common Stock in connection with
the Merger. See "Proposal I -- The Merger-No Dissenters Rights."
- --------------------------------------------------------------------------------
(v)
- --------------------------------------------------------------------------------
Interests of Certain Persons in the Merger
Certain members of WFC's management and Board of Directors have
interests in the Merger in addition to their interests as WFC shareholders.
These include provisions in the Reorganization Agreement relating to continued
employment, indemnification, severance payments, stock options and restricted
stock payments. See "Proposal I -- The Merger-Interests of Certain Persons in
the Merger."
Comparative Market and Stock Price Information
LFC Common Stock is quoted on the Nasdaq National Market under the
symbol "LVSB". WFC Common Stock is quoted on the Nasdaq SmallCap Market under
the symbol "WWFC". The table below sets forth, for the fiscal quarterly
indicated, the high and low sales prices for LFC Common Stock and WFC Common
Stock and the dividends per share declared on LFC Common Stock and WFC Common
Stock in each quarter. No assurance can be given as to the market price of LFC
Common Stock or WFC Common Stock at, or in the case of LFC Common Stock, after,
the Effective Date.
LFC WFC
---------------------------------------- ------------------------------------------
Sales Price Cash Sales Price Cash
----------- Dividends ----------- Dividends
High Low Paid High Low Paid
---- --- ---- ---- --- ----
1996
Quarter Ended October 31.............. $ 7.91 $ 7.18 $.03125 N/A N/A N/A
Quarter Ended January 31.............. 8.13 7.28 .03125 N/A N/A N/A
Quarter Ended April 30................ 9.04 7.84 .03125 N/A N/A N/A
Quarter Ended July 31................. 9.55 8.07 .03125 $11.00 $10.25 $.05
1997
Quarter Ended October 31.............. 12.44 9.21 .03125 13.75 10.50 .05
Quarter Ended January 31.............. 15.69 11.25 .03125 17.13 13.25 .05
Quarter Ended April 30................ 17.13 13.75 .03125 20.38 16.25 .05
Quarter Ended July 31................. 17.32 13.63 .03125 28.00 18.25 .05
1998
Quarter Ended October 31.............. 26.75 16.13 .03125 28.00 20.00 .10
Quarter Ended January 31
(through December 2)................ 26.00 24.13 27.88 27.50
N/A - WFC's conversion and reorganization from the mutual holding company to the
stock holding company form of reorganization was completed on June 6, 1996.
Prior to that time, WSB's common stock was not listed on the Nasdaq stock market
or any national exchange.
- --------------------------------------------------------------------------------
(vi)
- --------------------------------------------------------------------------------
On September 9, 1997, the last trading day before the public
announcement of the Reorganization Agreement, the reported closing sale prices
of LFC Common Stock and WFC Common Stock were $17.75 and $21.25, respectively.
On ______________, 1998, the most recent date for which it was practicable to
obtain market price data prior to the printing of this Proxy
Statement/Prospectus, the reported closing sale prices per share of LFC Common
Stock and WFC Common Stock were $_____ and $_____, respectively. The per share
stock distribution will be determined based on a formula set forth in the
Reorganization Agreement that takes into consideration the average closing price
per share of the "last" real time trades (i.e. closing price of LFC common stock
as reported on the Nasdaq National Market for each of the fifteen Nasdaq
National Market general market trading days preceding the week prior to the
Closing Date on which the Nasdaq National Market was open for business (the
"Pricing Period").
No assurance can be given as to what LFC average stock price will be
during the actual Pricing Period or as to what the market price of the shares of
LFC Common Stock will be at the time the Merger is consummated. WFC shareholders
are encouraged to obtain current market quotations for LFC Common Stock and WFC
Common Stock. No assurance can be given as to the market price of LFC Common
Stock or WFC Common Stock at, or in the case of LFC Common Stock, after, the
Effective Date.
- --------------------------------------------------------------------------------
(vii)
- --------------------------------------------------------------------------------
Comparative Per Share Information
The following table sets forth unaudited comparative per share data of
LFC on both a historical and pro forma combined basis and per share data of WFC
on both a historical and pro forma equivalent combined basis. These tables
should be read in conjunction with the consolidated financial statements and
notes thereto of LFC contained in the LFC 1997 Annual Report and the LFC Form
10-Q for the three months ended October 31, 1997, the consolidated financial
statements and notes thereto of WFC contained in the WFC 1997 Annual Report
accompanying this Proxy Statement/Prospectus, and the pro forma combined
financial statements and notes thereto appearing elsewhere in this Proxy
Statement/Prospectus. See "Incorporation of Certain Information By Reference"
and "Pro Forma Consolidated Financial Information." Pro forma combined and pro
forma equivalent per share data have been prepared giving effect to the Merger
under the purchase method of accounting. The following information is not
necessarily indicative of the results of operations or combined financial
position that would have resulted had the Merger been consummated at the
beginning of the periods indicated, nor is it necessarily indicative of the
results of operations of future periods or future combined financial position.
As discussed under "Proposal I - The Merger--Merger Consideration," the
conversion ratio is subject to adjustment as a result of changes in the market
price of shares of LFC Common Stock.
At or For the At or For the
Three Months Ended Year Ended
October 31, 1997 July 31, 1997
---------------- -------------
Book Value Per Share
Historical:
LFC...................................................... $13.29 $13.71
WFC...................................................... 15.95 15.76
Pro Forma:
LFC and WFC combined..................................... 14.27 14.42
WFC equivalent(1)........................................ 16.87 17.04
Cash Dividends Per Share
Historical:
LFC...................................................... $.03125 $.1250
WFC...................................................... .05000 .2000
Pro Forma:
LFC and WFC combined(2).................................. .03125 .1250
WFC equivalent(1)........................................ .03690 .1478
Net Income Per Share
Historical:
LFC...................................................... $.26 $1.20
WFC...................................................... .19 .78
Pro Forma:
LFC and WFC combined..................................... .20 .96
WFC equivalent(1)........................................ .24 1.13
(footnotes on following page)
- --------------------------------------------------------------------------------
(viii)
- --------------------------------------------------------------------------------
- ------------------
(1) The pro forma equivalent per share data for WFC has been computed by
multiplying the pro forma combined amount (giving effect to the Merger)
by the ratio of 1.182 (based on the consideration of $29.25 divided by
$24.75, the last sales price of a share of LFC Common Stock on October
31, 1997.
(2) Based on historical dividends of LFC.
Selected Historical Consolidated Financial Information
The following tables set forth, for the periods indicated, certain
selected historical financial information for LFC and WFC. This information
should be read in conjunction with the consolidated financial statements of LFC
and WFC, and the related notes thereto, included in documents incorporated
herein by reference. See "Incorporation of Certain Information by Reference."
The historical balance sheet and income statement information included
in the selected financial information for LFC for the five years ended July 31,
1997, and for WFC for the five years ended March 31, 1997, are derived from
audited financial statements as of, and for, such years. The historical balance
sheet and income statement information for LFC for the three months ended
October 31, 1997 and 1996 and WFC for the six months ended September 30, 1997
and 1996 are derived from unaudited financial statements as of, and for, such
period. These unaudited financial statements include all adjustments which are,
in the opinion of LFC management and WFC management, necessary for a fair
statement of the results of these periods and are of a normal recurring nature.
- --------------------------------------------------------------------------------
(ix)
- --------------------------------------------------------------------------------
Selected Historical Financial Information of LFC
At or For the
Three Months Ended
October 31, At or For the Year Ended July 31,
--------------------- ------------------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands, except per share data)
Income Statement Data:
Interest income.......................... $ 8,971 $ 8,058 $ 32,842 $ 30,972 $ 28,430 $ 18,947 $15,179
Interest expense......................... 4,636 4,209 17,318 16,550 13,539 7,735 7,154
Net interest income...................... 4,335 3,849 15,524 14,423 14,891 11,212 8,025
Provision for loan losses................ 301 105 961 664 1,376 2,047 2,031
Investment securities gains (losses)..... (13) 764 4,788 2,769 2,107 866 679
Net income (loss)........................ 1,266 346 6,061 6,274 6,295 4,571 2,339
Net income (loss) per share.............. .26 .07 1.20 1.13 1.01 N/A N/A
Average common shares outstanding........ 4,822 5,142 5,071 5,560 6,261 N/A N/A
Balance Sheet Data:
Total assets............................. 517,975 472,698 505,882 457,860 419,212 413,725 207,462
Investment securities.................... 252,892 263,459 250,523 252,250 239,680 246,973 56,493
Loans.................................... 233,514 149,223 224,564 163,457 142,123 136,143 137,301
Total deposits........................... 369,056 360,989 370,787 354,247 343,489 344,915 164,130
Borrowings............................... 85,782 58,187 63,604 54,721 19,859 19,021 18,500
Shareholders' equity..................... 55,359 48,415 61,809 45,760 49,440 46,982 22,211
Book value per common share.............. 13.29 9.73 13.71 9.18 8.51 7.30 N/A
Selected Ratios:
Return on average assets(1).............. 1.00 .30 1.28 1.42 1.50 1.16 1.13
Return on average equity(1).............. 8.63 2.98 11.27 13.18 13.06 13.21 11.11
Average interest rate spread............. 3.06 3.24 3.15 3.21 3.58 4.07 3.89
Average net interest margin.............. 3.61 3.57 3.51 3.51 3.86 4.31 4.13
Allowance for loan losses to total loans. 1.51 1.76 1.52 1.88 1.78 1.26 1.92
Allowance for loan losses
to nonperforming assets................ 59.91 55.16 59.4 67.1 32.4 14.99 17.21
(1) Annualized for the three months ended October 31, 1997 and 1996.
- --------------------------------------------------------------------------------
(x)
- --------------------------------------------------------------------------------
Selected Historical Financial Information of WFC
At or For the
Six Months Ended
September 30, At or For the Year Ended March 31
------------- -------------------------------------------------------
1997 1996 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
(Unaudited)
(In thousands, except per share data)
Income Statement Data:
Interest income.......................... $ 3,777 $ 3,061 $ 6,648 $ 5,566 $ 4,535 $ 3,700 $ 3,647
Interest expense......................... 2,235 1,716 3,775 3,314 2,229 1,671 1,876
Net interest income...................... 1,542 1,345 2,873 2,252 2,236 2,029 1,771
Provision for loan losses................ 17 40 52 35 39 14 12
Investment securities gains (losses)..... - (17) (98) - - - -
Net income (loss)........................ 357 19 435 552 550 698 592
Net income (loss) per share.............. .55 .03 .73 1.45 1.45 .49 N/A
Cash dividends declared per share........ .15 .05 .20 .20 .40 .10 N/A
Average common shares outstanding........ 645 549 645 380 380 N/M N/A
Balance Sheet Data:
Total assets............................. 110,425 93,648 107,981 86,564 75,497 53,807 49,026
Investment securities.................... 60,512 46,680 58,633 43,445 35,039 21,489 18,547
Loans.................................... 40,067 38,486 40,371 34,504 32,205 28,246 27,640
Total deposits........................... 89,745 83,425 87,857 80,356 69,822 48,639 45,534
Long-term debt........................... 10,000 - - - - - -
Shareholders' equity..................... 10,290 9,546 9,950 6,126 5,543 5,084 3,381
Book value per common share.............. 15.95 14.76 15.42 N-M N-M N-M N/A
Selected Ratios:
Return on average assets(1).............. .7% .04% .5% .7% .8% 1.3% 1.3%
Return on average equity(1).............. 7.0 .4 4.8 9.4 10.1 17.0 19.2
Average interest rate spread............. 2.5 2.8 2.7 2.7 3.1 3.6 3.5
Average net interest margin.............. 2.8 3.1 3.0 2.9 3.3 3.9 3.8
Allowance for loan losses to total loans. .04 .1 .5 .5 .4 .3 .3
Allowance for loan losses
to nonperforming assets................ - - - - - - -
(1) Annualized for the six months ended September 30, 1997 and 1996.
N-M - Not meaningful as a result of the conversion and reorganization
completed June 6, 1996.
- --------------------------------------------------------------------------------
(xi)
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements
give effect to the Merger as if it had been consummated on October 31, 1997 for
statement of condition purposes, and August 1, 1997 or August 1, 1996 for
statement of income purposes, as the case may be. Pro forma adjustments are
based on the purchase method of accounting and a preliminary allocation of the
purchase price based on the estimated fair value of the net assets acquired as
of October 31, 1997. The actual purchase accounting adjustments and goodwill
will be based on the facts and circumstances on the date the transaction closes.
The transaction is structured such that LFC will pay 50.1% in LFC Common Stock
and 49.9% cash for the estimated fair market value of net assets acquired of
WFC. The actual allocation of the purchase price between stock and cash, as
outlined in "Proposal I - The Merger," may have an impact on the pro forma
consolidated results of operations and earnings per share reported herein,
although such impact is not expected to be material. Accordingly, the pro forma
combined consolidated financial statements are intended for informational
purposes and is not necessarily indicative of the future financial position or
future results of operations of the combined company or of the financial
position or the results of operations of the combined company that would have
actually occurred had the Merger been in effect as of the date or for the
periods presented. See "Proposal I - The Merger" for a discussion of the
determination of the aggregate value of all consideration paid in connection
with the Merger.
The following unaudited pro forma consolidated financial statements
assume the following with respect to the allocation of the purchase price and
determination of goodwill:
Purchase price:
Stock portion (416,613 shares of LFC Common Stock
issued at a value of $24.75 per share)................ $10,311,170
Cash portion ($7 million borrowed from a
third party financial institution).................... 10,270,008
Estimated direct costs.................................. 335,000
-----------
20,916,178
Estimated fair market value of assets acquired:
WFC book value at September 30, 1997.................... 10,290,000
Estimated mark-to-market adjustments, net............... 529,855
-----------
Estimated fair market value of net assets acquired...... 10,819,855
----------
Estimated goodwill...................................... $10,096,323
==========
The following information should be read in conjunction with the
consolidated financial statements of LFC and WFC, and the related notes thereto,
included herein or in documents incorporated herein by reference. As a result of
the different fiscal year-ends between LFC and WFC, the historical statements of
income of WFC included in the pro forma consolidated financial statements of
income have been updated to conform with the reporting requirements of Article
11 of Regulation SX. Accordingly, for the year ended July 31, 1997 the results
of operations of the last three quarters of WFC's 1997 fiscal year-end have been
combined with the first quarter of WFC's 1998 fiscal year end. Furthermore, the
results of operations for second fiscal quarter of WFC's 1998 fiscal year-end
have been separated from that period's six month results of operations in order
to make WFC's results comparable to the reporting periods included in LFC's
results of operations for the three months ended October 31, 1997.
(xii)
PRO FORMA CONSOLIDATED STATEMENTS OF CONDITION
(Unaudited)
Historical
-----------------------------------------
October 31, 1997 September 30, 1997 Pro Forma Pro Forma
LFC WFC Adjustments Consolidated
---------------- ------------------ ----------- ------------
Assets
- ------
Cash on hand and in banks $ 6,482,274 $ 6,302,000 $(3,270,008)(2) $ 9,514,266
Investment securities held to maturity 45,816,417 42,399,000 (727,000)(5) 87,488,417
Investment securities available for sale 109,118,930 2,000 109,120,930
Mortgage-backed securities held to maturity 97,956,618 18,111,000 116,067,618
Loans receivable, net 233,514,164 40,067,000 (200,000)(5) 273,381,164
Real estate owned, net 1,761,637 0 1,761,637
FHLB of New York stock, at cost 3,800,000 576,000 4,376,000
Accrued interest receivable 3,959,441 1,115,000 5,074,441
Office properties and equipment, net 3,976,046 711,000 4,687,046
Excess of cost over fair value of net assets acquired 8,526,064 1,085,000 10,096,323 (1) 19,497,047
(210,340)(6)
Other assets 3,063,245 57,000 35,700 (7) 3,155,945
----------- ------------- ----------- -----------
Total assets $517,974,836 $110,425,000 $ 5,724,675 $634,124,511
=========== =========== ========== ===========
Liabilities
- -----------
Deposits $369,056,018 $ 89,745,000 ($2,000,000)(5) $456,801,018
Borrowings 83,450,000 10,000,000 7,000,000 (2) 100,450,000
Borrowings - (ESOP) obligation 2,332,375 0 2,332,375
Advance payments by borrowers for taxes
and insurance 267,978 0 267,978
Other liabilities 7,508,997 390,000 878,145 (5) 8,882,142
105,000 (7)
----------- -------------- ------------ ----------
Total liabilities 462,615,368 100,135,000 5,983,145 568,733,513
Stockholders' Equity
- --------------------
Common Stock $ 6,441,504 $ 65,000 $ (65,000)(4) $ 6,858,117
416,613 (3)
Additional paid-in capital 33,277,112 3,212,000 (3,212,000)(4) 43,171,669
9,894,557 (3)
Retained income 29,743,857 7,013,000 (7,013,000)(4) 29,464,217
(69,300)(7)
(210,340)(6)
Unrealized gain on securities available for sale,
net of tax 14,290,563 0 0 14,290,563
Treasury stock at cost (25,010,210) 0 0 (25,010,210)
Unallocated ESOP shares (2,325,710) 0 0 (2,325,710)
Unallocated MSBP shares (1,057,648) 0 0 (1,057,648)
----------- -------------- ------------ ----------
Total stockholders' equity 55,359,468 10,290,000 (258,470) 65,390,998
----------- ----------- ---------- -----------
Total liabilities and stockholders' equity $517,974,836 $110,425,000 $5,724,675 $634,124,511
=========== =========== ========= ===========
(footnotes on following page)
(xiii)
1. Excess of cost over fair value of net assets acquired resulting from
the Merger, after application of purchase accounting adjustments, is
assumed to approximate $10.1 million.
2. Amount to fund the cash portion of the transaction assumed to be $10.3
million, represented by $7.0 million in borrowings and $3.3 million in
cash on hand and in banks.
3. 416,613 shares of $1 par value LFC Common Stock are assumed to have
been issued at a value of $24.75 per share or $10.3 million in total.
The per share amount represents the market value of LFC Common Stock at
October 31, 1997.
4. Adjustments necessary to eliminate WFC equity accounts.
5. All other pro forma adjustments to assets and liabilities represent
estimated mark-to-market adjustments and other accrued liabilities
associated with the Merger as of October 31, 1997. Mark-to-market
adjustments are based on third party securities prices, appraisals, or
in circumstances where such could not be obtained, management's best
estimate of the value of the asset or liability.
6. Amount reflects the amortization of goodwill to give effect of the
transaction as if it had occurred at the beginning of the year.
7. Amount reflects the interest expense that would have been recorded on
the borrowings at an assumed rate of 6%, net of tax, as if the
transaction had occurred at the beginning of the year.
(xiv)
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Historical
------------------------------------
Year Ended Year Ended
July 31, 1997 June 30, 1997 Pro Forma Pro Forma
LFC WFC Adjustments Consolidated
------------- ------------- ----------- ------------
Interest Income
- ---------------
Loans receivable $16,841,183 $3,083,000 $19,924,183
Mortgage-backed securities 7,319,449 1,267,000 8,586,449
Investment securities, held to maturity and
Federal Funds 3,425,496 2,671,000 $ 145,400 (3) 6,241,896
Investment securities available for sale 5,255,997 0 5,255,997
----------- ----------- ---------- ----------
Total interest income 32,842,125 7,021,000 145,400 40,008,525
---------- --------- ---------- ----------
Interest Expense
- ----------------
Interest on deposits 13,987,512 3,669,000 400,000 (3) 18,056,512
Interest on borrowings 3,330,542 364,000 420,000 (2) 4,114,542
----------- ----------- ---------- -----------
Total interest expense 17,318,054 4,033,000 820,000 22,171,054
---------- ----------- ---------- ----------
Net interest income 15,524,071 2,988,000 (674,600) 17,837,471
Provision for losses on loans 961,217 25,000 986,217
---------- ----------- ---------- -----------
Net interest income after provision for losses 14,562,854 2,963,000 (674,600) 16,851,254
---------- --------- ---------- ----------
on loans
Other income:
Loan fees and service charges 1,192,971 156,000 1,348,971
Net realized gain (loss) on sales of
investment securities available for
sale and trading securities 4,787,866 (98,000) 4,689,866
Other operating income 2,120,763 6,000 2,126,763
---------- ---------- ----------
Total other income 8,101,600 64,000 8,165,600
---------- ----------- ----------
Other Expenses:
Compensation and employee benefits 5,707,554 685,000 6,392,554
Office occupancy and equipment expense 932,128 107,000 1,039,128
Net loss on real estate owned activities 206,369 0 206,369
Other operating activities 2,769,553 790,215 3,559,768
SAIF recapitalization assessment 2,218,674 454,000 2,672,674
Amortization of the excess of cost over fair
value of net assets acquired 1,320,288 105,785 829,985 (1) 2,256,058
---------- ----------- -------- ----------
Total other expenses 13,154,566 2,142,000 829,985 16,126,551
Income before Federal and state income tax 9,509,888 885,000 (1,504,585) 8,890,303
Federal and state income tax expense
(benefit) 3,448,877 382,000 (142,800)(2) 3,601,513
(86,564)(3)
---------- ---------- ----------- ----------
Net income $6,061,011 $ 503,000 $(1,275,221) $5,288,790
========= ========= ========== ==========
Weighted average shares outstanding 5,071,444 645,268 (228,655) 5,488,057
Earnings per common share $1.20 $0.78 $0.96
(footnotes on following pages)
(xv)
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Historical
---------------------------------------------
Three Months Ended Three Months Ended
October 31, 1997 September 30, 1997 Pro Forma Pro Forma
LFC WFC Adjustments Consolidated
------------------- ------------------ ----------- ------------
Interest Income
- ---------------
Loans receivable $5,183,596 $ 774,000 $ 5,957,596
Mortgage-backed securities 1,635,489 328,000 1,963,489
Investment securities, held to maturity
and Federal Funds 937,332 793,000 $ 36,350 (3) 1,766,682
Investment securities available for sale 1,214,099 0 1,214,099
---------- ----------- ------ ----------
Total interest income 8,970,516 1,895,000 36,350 10,901,866
Interest Expense
- ----------------
Interest on deposits 3,568,271 983,000 100,000 (3) 4,651,271
Interest on borrowings 1,068,140 150,000 105,000 (2) 1,323,140
---------- ---------- -------- ---------
Total interest expense 4,636,411 1,133,000 205,000 5,974,411
Net interest income 4,334,105 762,000 (168,650) 4,927,455
Provision for losses on loans 300,518 9,000 309,518
---------- ---------- ---------- ----------
Net interest income after provision
for losses on loans 4,033,587 753,000 (168,650) 4,617,937
Other income:
Loan fees and service charges 323,604 58,000 381,604
Net realized gain (loss) on sales of
investment securities available for
sale and trading securities (13,056) 0 (13,056)
Other operating income 434,717 6,000 440,717
---------- ---------- ----------
Total other income 745,265 64,000 809,265
Other Expenses:
Compensation and employee benefits 1,507,226 244,000 1,751,226
Office occupancy and equipment expense 230,504 76,000 306,504
Net loss on real estate owned activities 41,487 0 41,487
Other operating activities 713,648 236,000 949,648
Amortization of the excess of cost over
fair value of net assets acquired 330,072 23,000 210,340 (1) 563,412
---------- ---------- --------- ----------
Total other expenses 2,822,937 579,000 210,340 3,612,277
Income before Federal and state income
tax 1,955,915 238,000 (378,990) 1,814,925
Federal and state income tax expense
(benefit) 689,600 118,000 (35,700)(2) 750,259
(21,641)(3)
---------- ---------- --------- ----------
Net income $1,266,315 $ 120,000 $(321,649) $1,064,666
========= ========= ======== =========
Weighted average shares outstanding 4,822,350 645,268 (228,655) 5,238,963
Earnings per common share $0.26 $0.19 $0.20
(footnotes on following page)
(xvi)
1. Excess of cost over fair value of net assets acquired is assumed to
approximate $10.1 million and is amortized over 12 years.
2. Borrowings drawn by LFC to fund the transaction are assumed have an
annual rate of 6%.
3. All other pro forma adjustments represent the amortization of estimated
mark-to-market adjustments amortized over five years and the related
income tax effect of such adjustments at an assumed tax rate of 34%.
The pro forma adjustments give no effect to cost savings or revenue
enhancements that may be realized as a result of the Merger.
(xvii)
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to WFC Shareholders
in connection with the solicitation of proxies by the WFC Board for use at the
WFC Special Meeting to be held on _______________, 1998, at
____________________________, _________________________, ___________________,
New Jersey, at __:__ _._. local time or any adjournments thereof. The purpose of
the Special Meeting is to consider and vote upon a proposal to approve the
Reorganization Agreement and the transactions contemplated thereby, as more
fully set forth in the Notice of Special Meeting accompanying this Proxy
Statement/Prospectus.
The Board of Directors of WFC unanimously approved the Reorganization
Agreement and recommends that WFC Shareholders vote FOR its approval.
WFC SPECIAL MEETING
Record Date; Vote Required
The securities to be voted at the WFC Special Meeting consist of shares
of WFC Common Stock, with each share entitling its owner to one vote on the
proposal brought before the WFC Special Meeting. WFC had no other class of
securities entitled to vote on the Reorganization Agreement outstanding at the
close of business on the WFC Record Date. There were _____ holders of record of
WFC Common Stock and ______ shares of WFC Common Stock outstanding and eligible
to be voted at the WFC Special Meeting as of the Record Date.
The presence at the WFC Special Meeting, in person or by proxy, of the
holders of a majority of the outstanding shares of WFC Common will constitute a
quorum for the transaction of business. Under the New Jersey Corporation Act and
WFC's Certificate of Incorporation, the approval of the Reorganization Agreement
requires the affirmative vote of a majority of the shares entitled to vote. The
approval of the Reorganization Agreement by WFC Shareholders is a condition to
the consummation of the Merger. See Proposal I -- "The Merger-Conditions to the
Merger.
For purposes of determining the number of votes cast with respect to a
matter, only those votes cast "for" and "against" a proposal are counted. There
will be no "broker non-votes" (i.e., shares held by brokers or nominees as to
which instructions have not been received from the beneficial owners or the
persons entitled to vote such shares and the broker or nominee does not have
discretionary voting power under the applicable NASD rules) submitted by brokers
or nominees in connection with the Special Meeting because, even though the
proposal to approve the Reorganization Agreement is a nondiscretionary matter
under rules of the NASD. Consequently, broker nonvotes will have no impact on
the votes counted as "for" or "against" for purposes of determining the number
of votes cast and no impact on the determination whether a quorum is present.
Abstentions will be treated as shares that are present for purposes of
determining the presence of a quorum but will not be counted "for" or "against"
the proposal.
1
Proxies; Revocation; Solicitation
If the form of WFC proxy is properly executed and returned to WFC in
time to be voted at the WFC Special Meeting, the shares represented thereby will
be voted in accordance with the instructions marked thereon. WFC proxies that
are executed, but as to which no instructions have been marked, will be voted
FOR the approval of the Reorganization Agreement. Should any other matter
properly come before the WFC Special Meeting, the persons named as proxies in
the WFC proxy, acting by a majority of those proxies present, will have
discretionary authority to vote on such matters in accordance with their
judgment. However, no proxy which is voted "against" the proposal to approve and
adopt the Reorganization Agreement will be voted in favor of any such
adjournment or postponement. As of the time of the preparation of this Proxy
Statement/Prospectus, the WFC Board does not know of any matter, other than
those matters referred to in the WFC Notice of Special Meeting of Shareholders,
to be presented for action at the WFC Special Meeting.
The cost of soliciting proxies will be borne by WFC. In addition to use
of the mails, proxies may be solicited personally or by telephone, telecopier or
telegraph by officers, directors or employees of WFC, who will not be specially
compensated for such solicitation activities. Arrangements will also be made by
WFC to reimburse brokerage houses and other custodians, nominees and fiduciaries
for their reasonable expenses incurred in forwarding solicitation materials to
the beneficial owners of shares held of record by such persons.
A proxy may be revoked by the person giving the proxy at any time prior
to the close of voting. Prior to the WFC Special Meeting a proxy may be revoked
by filing with the Secretary of WFC at Westwood Financial Corporation, 700-88
Broadway, Westwood, New Jersey 07675, a written revocation or a duly executed
proxy bearing a later date. During the WFC Special Meeting a proxy may be
revoked by filing a written revocation or a duly executed proxy bearing a later
date with the secretary of the WFC Special Meeting prior to the close of voting
or by attending the WFC Special Meeting and voting in person. Any shareholder of
record may attend the WFC Special Meeting and vote in person, whether or not a
proxy has previously been given.
If a person holding WFC Common in street name wishes to vote such WFC
Common at the WFC Special Meeting, the person must obtain from the nominee
holding the WFC Common in street name a properly executed "legal proxy"
identifying the individual as a WFC Shareholder, authorizing the WFC Shareholder
to act on behalf of the nominee at the Special Meeting and identifying the
number of shares with respect to which the authorization is granted.
PROPOSAL I -- THE MERGER
The following information concerning the Merger, insofar as it relates
to matters contained in the Reorganization Agreement, is qualified in its
entirety by reference to the full text of the Reorganization Agreement which is
attached as Appendix I to this Proxy Statement/Prospectus and is incorporated by
reference.
2
Closing and Effective Time
The Reorganization Agreement provides that the closing of the Merger
(the "Closing") will be held on the second business day after satisfaction of
the conditions or waiver of the Holding Company Merger, unless another date,
time or place is agreed to in writing by the parties hereto, provided, however,
that the Closing Date will not occur prior to January 1, 1998.
The Holding Company Merger shall become effective on the date and at
the time of filing of the Articles of Merger with the Secretary of State of the
State of New Jersey or at such later date and/or time as may be agreed upon by
the Parties and set forth in the Articles of Merger so filed.
The Merger
The Reorganization Agreement provides that LFC will acquire WFC through
a merger of WFC into LFC with LFC being the surviving entity. Upon consummation
of the Merger, all shares of WFC Common Stock will no longer be outstanding and
will automatically be canceled and retired and will cease to exist, and each
holder of a certificate representing any shares of WFC Common Stock will cease
to have any rights with respect thereto, except the right to receive cash and/or
shares of LFC Common Stock to be paid or issued upon the surrender of such
certificate, without interest, as described below. LFC also plans to merge WSB
into LVSB on, or as soon as practicable after, the Effective Date (the "Bank
Merger"), and LFC and WFC have agreed to take all action necessary and
appropriate to effectuate the Bank Merger.
Effect of The Merger
On the Effective Date, as defined below, WFC will merge with and into
LFC. The WFC Common Stock will be exchanged for shares of LFC Common Stock or
cash as described under "-- Merger Consideration." Each share of LFC Common
Stock outstanding immediately prior to the Effective Date will remain
outstanding and unchanged as a result of the Merger.
No fractional shares of LFC Common Stock will be issued in connection
with the Merger. In lieu of issuing fractional shares, LFC will make a cash
payment equal to the fractional interest which a WFC shareholder would otherwise
receive multiplied by the Final Market Price (described below).
Merger Consideration
Conversion of Stock. At the Effective Time of the Merger, each share of
WFC Common Stock then issued and outstanding (other than shares held directly or
indirectly by LFC, excluding shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive the cash and/or shares of stock of LFC
constituting the Per Share Merger Consideration (as defined below). As of the
Effective Time of the Merger, each share of the WFC Common Stock held directly
or indirectly by LFC, excluding shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted, shall be canceled, retired and
cease to exist, and no exchange or payment shall be made with respect thereto.
3
As used herein, the term "Per Share Merger Consideration" shall mean
either the amount of cash set forth in clause (i) below (the "Cash Merger
Consideration") or that number of shares of LFC Common Stock as set forth in
clause (ii) below (the "Stock Merger Consideration"), at the election of the
holder of each share of WFC Common Stock, subject however to proration as set
forth below.
(i) If Cash Merger Consideration is to be paid with respect to a
share of WFC Common Stock, the Per Share Merger Consideration
with respect to such share of WFC Common Stock shall be in the
amount of $29.25.
(ii) If Stock Merger Consideration is to be paid with respect to a
share of WFC Common Stock, the Per Share Merger Consideration
with respect to such share of WFC Common Stock shall be that
number of shares of LFC Stock (the "Conversion Number") equal
to $29.25 divided by the Final Market Price as defined below.
The "Final Market Price" shall be the average closing price per share
of the "last" real time trades (i.e., closing price) of the LFC Common Stock as
reported on the Nasdaq National Market for each of the 15 Nasdaq National Market
general market trading days preceding one week prior to the Closing Date on
which the Nasdaq National Market was open for business (the "Pricing Period").
In the event the LFC Common Stock does not trade on one or more of the trading
days during the Pricing Period (a "No Trade Date"), any such No Trade Date shall
be disregarded in computing the average closing price per share of LFC Common
Stock and the average shall be based upon the "last" real time trades and number
of days on which the LFC Common Stock actually traded during the Pricing Period.
No such holder will be entitled to dividends, voting rights or any
other rights of a stockholder of LFC or WFC in respect of any such fractional
share.
The calculations of the respective amounts of cash and LFC Common Stock
payable and issuable pursuant to the terms of this Reorganization Agreement
shall be jointly prepared and agreed to by LFC and WFC and set forth in
reasonable detail in a schedule that shall be delivered to Registrar and
Transfer Company (the "Exchange Agent") prior to the Closing Date.
Election and Allocation Procedures. Subject to and in accordance with
the allocation and election procedures set forth herein, each record holder of a
share of WFC Common Stock (the "WFC Shareholders") shall, prior to the Election
Deadline (as hereinafter defined) specify (i) the number of whole shares of WFC
Common Stock held by such Shareholder as to which such Shareholder shall desire
to receive the Cash Merger Consideration, and (ii) the number of whole shares of
WFC Common Stock held by such Shareholder as to which such Shareholder shall
desire to receive the Stock Merger Consideration.
At the Effective Time of the Merger, each unexercised WFC Stock Option
shall be deemed canceled and as consideration therefor, at the election of each
holder of a WFC Stock Option (the "Option Holders," and together with the
Shareholders the "Holders") shall be converted into the right to receive either
(i) solely a cash payment amount (the "Cash Out") equal to the excess of (A)
$29.25 over the exercise price per share of WFC Common Stock covered by the WFC
Stock Option, multiplied by (B) the total number of shares of WFC Common Stock
covered by the WFC Stock Option or (ii) solely a number of shares of LFC Common
Stock (the "Stock Exchange") equal to the excess of (A) $29.25 over the exercise
price per share of WFC Common Stock covered by the WFC Stock Option, multiplied
by
4
(B) the total number of shares of WFC Common Stock covered by the WFC Stock
Option and divided by (C) the Final Market Price.
An election as described in clause (i) above is herein referred to as a
"Cash Election," and shares of WFC Common Stock as to which a Cash Election has
been made are herein referred to as "Cash Election Shares." An election as
described in clause (ii) above is herein referred to as a "Stock Election," and
shares as to which a Stock Election has been made are herein referred to as
"Stock Election Shares." A failure to indicate a preference in accordance
herewith is herein referred to as a "Non-Election," and shares as to which there
is a Non-Election are herein referred to as "Non-Electing Shares."
Payment of cash pursuant to the Cash Merger Consideration and the Cash
Out, and issuance of LFC Common Stock pursuant to the Stock Merger Consideration
and the Stock Exchange, shall be allocated to Holders such that the number of
shares of WFC Common Stock (outstanding or subject to WFC Stock Options) as to
which cash is paid shall equal 49.9% of the aggregate number of shares of WFC
Common Stock outstanding plus those subject to WFC Stock Options (the "Aggregate
Shares"), and the number of shares of WFC Common Stock (outstanding or subject
to WFC Stock Options) as to which WFC Stock are issued shall equal 50.1% of the
Aggregate Shares, as follows:
(1) If the number of Cash Election Shares is in excess of 49.9% of
the Aggregate Shares, then (i) Non-Electing Shares shall be
deemed to be Stock Election Shares, (ii) Cash Election Shares of
Option Holders shall be treated as Cash Election Shares without
adjustment, and (iii)(A) Cash Election Shares of each Shareholder
shall be reduced pro rata by multiplying the number of Cash
Election Shares of such Shareholder by a fraction, the numerator
of which is the number of shares of WFC Common Stock equal to
49.9% of the Aggregate Shares minus the aggregate number of Cash
Election Shares of Option Holders and the denominator of which is
the aggregate number of Cash Election Shares of all Shareholders,
and (B) the shares of such Shareholder representing the
difference between such Shareholder's initial Cash Election and
such Shareholder's reduced Cash Election pursuant to clause (A)
shall be converted into and be deemed to be Stock Election
Shares.
(2) If the number of Stock Election Shares is in excess of 50.1% of
the Aggregate Shares, then (i) Non-Electing Shares shall be
deemed to be Cash Election Shares, and (ii)(A) Stock Election
Shares of each Holder shall be reduced pro rata by multiplying
the number of Stock Election Shares of such Holder by a fraction,
the numerator of which is the number of shares of WFC Common
Stock equal to 50.1% of the Aggregate Shares and the denominator
of which is the aggregate number of Stock Election Shares of all
Holders, and (B) the shares of such Holder representing the
difference between such Holder's initial Stock Election and such
Holder's reduced Stock Election pursuant to clause (A) shall be
converted into to and be deemed to be Cash Election Shares.
(3) If the number of Cash Election Shares is less than or equal to
49.9% of the Aggregate Shares and the number of Stock Election
Shares is less than or equal to 50.1% of the Aggregate Shares,
then (i) there shall be no adjustment to the elections made by
electing Holders, and (ii) Non-Electing Shares of each Holder
shall be treated as Stock Elections Shares and/or as Cash
Election Shares in proportion to the respective amounts by which
the Cash Election Shares and the Stock Election Shares are less
than the 49.9% and 50.1% limits, respectively.
5
After taking into account the foregoing adjustment provisions, each
Cash Election Share (including those deemed to be Cash Election Shares) shall
receive in the Merger the Cash Merger Consideration or the Cash Out, as
applicable, and each Stock Election Share (including those deemed to be Stock
Election Shares) shall receive in the Merger the Stock Merger Consideration (and
cash in lieu of fractional shares).
Notwithstanding any other provision of the Reorganization Agreement, if
the application of the proration provisions would result in receiving a number
of shares of LFC Common Stock that would prevent the Per Share Merger
Consideration from consisting in the aggregate of 49.9% Cash Merger
Consideration and 50.1% Stock Merger Consideration or otherwise prevent the
satisfaction of any of the conditions set forth in the Reorganization Agreement,
the number of shares otherwise allocable shall be adjusted in an equitable
manner as shall be necessary to enable the satisfaction of all conditions.
Election Procedures. Election forms have been mailed and the election
deadline is __________ ____, 1998.
Elections shall be made by Shareholders of WFC (the "Holders" or
"Holder") by mailing to the Exchange Agent a completed Election Form. To be
effective, an Election Form must be properly completed, signed and submitted to
the Exchange Agent and must be accompanied by certificates representing the
shares of WFC Common Stock or the WFC Stock Option as to which the election is
being made (or by an appropriate guaranty of delivery by a commercial bank or
trust company in the United States or a member of a registered national security
exchange or the National Association of Security Dealers, Inc.), or by evidence
that such certificates have been lost, stolen or destroyed accompanied by such
security or indemnity as shall be reasonably requested by LFC. A properly
completed Election Form and accompanying share certificates or WFC Stock
Options, as the case may be, must be received by the Exchange Agent by the close
of business on __________ ____, 1998 for an election to be effective. An
election may be changed or revoked but only by written notice received by the
Exchange Agent prior to the Election Deadline including, in the case of a
change, a properly completed revised Election Form.
LFC will have the discretion, which it may delegate in whole or in part
to the Exchange Agent, to determine whether the Election Forms have been
properly completed, signed and submitted or changed or revoked and to disregard
immaterial defects in Election Forms. The decision of LFC (or the Exchange
Agent) in such matters shall be conclusive and binding. Neither LFC nor the
Exchange Agent will be under any obligation to notify any person of any defect
in an Election Form submitted to the Exchange Agent.
For the purposes hereof, a Holder who does not submit an effective
Election Form to the Exchange Agent prior to the Election Deadline shall be
deemed to have made a Non-Election.
In the event that the Reorganization Agreement is terminated pursuant
to the provisions hereof and any shares or WFC Stock Options have been
transmitted to the Exchange Agent pursuant to the provisions hereof, LFC and WFC
shall cause the Exchange Agent to promptly return such shares to the person
submitting the same.
Mechanics of Payment of Consideration. The conversion of shares of
WFC's Common Stock into the right to receive the Cash Merger Consideration or
the Stock Merger Consideration will occur at the Effective Time of the Merger.
6
As soon as practicable as of or after the Effective Time of the Merger,
the Exchange Agent will send a letter of transmittal to each Holder of WFC
Common Stock or WFC Stock Options (other than the Holder who has properly
submitted the Election Form and certificates of WFC Common Stock or WFC Stock
Options (the "share certificates") to the Exchange Agent). The letter of
transmittal will contain instructions with respect to the surrender of the
Holder's share certificates in order for the Holder to receive the consideration
to be paid in the Merger.
EXCEPT FOR THE SHARE CERTIFICATES SURRENDERED WITH AN ELECTION FORM AS
DESCRIBED ABOVE UNDER "-- ELECTION PROCEDURE," THE HOLDER SHOULD NOT FORWARD
SHARE CERTIFICATES TO THE EXCHANGE AGENT UNTIL HE HAS RECEIVED THE LETTER OF
TRANSMITTAL.
After the Effective Time of the Merger and until properly surrendered
to the Exchange Agent, each outstanding share certificates shall be deemed for
all corporate purposes to represent and evidence only the right to receive the
consideration into which the Holder's share certificates were converted and
aggregated at the Effective Time of the Merger. Unless and until the outstanding
share certificates shall have been properly surrendered as provided above, the
consideration issued or payable to the Holder of the canceled share certificates
as of any time after the Effective Date of the Merger shall not be paid to the
Holder of the share certificates until the share certificates shall have been
surrendered in the manner required. Each Holder will be responsible for all
federal, state and local taxes which may be incurred by him on account of his
receipt of the consideration to be paid in the Merger.
The Holder of any share certificates which shall have been lost or
destroyed may nevertheless, subject to the provisions of the Reorganization
Agreement, receive the consideration to which the Holder is entitled, provided
that the Holder shall deliver to LFC and to the Exchange Agent: (i) a sworn
statement certifying the loss or destruction and specifying the circumstances
thereof and (ii) a lost instrument bond in form satisfactory to LFC and the
Exchange Agent which has been duly executed by a corporate surety satisfactory
to LFC and the Exchange Agent, indemnifying LFC and the Exchange Agent (and
their respective successors) to their satisfaction against any loss or expense
which any of them may incur as a result of the lost or destroyed share
certificates being thereafter presented. Any costs or expenses which may arise
from such replacement procedure, including the premium on the lost instrument
bond, shall be paid by the Holder.
Recommendation of the Board of Directors
The Reorganization Agreement has been approved by the WFC Board and
believes that the Merger is in the best interests of WFC shareholders. The WFC
Board unanimously recommends that the shareholders vote FOR the proposal to
approve the Reorganization Agreement.
7
Background of the Merger
In 1993 WSB converted from a mutual savings bank to a stock savings
bank, as part of a reorganization to the mutual holding company ("MHC"), form of
organization. As part of the MHC reorganization, approximately 42% of WSB's
stock was owned by the public and 58% by the mutual holding company. In June
1996, the mutual holding company reorganized to a full stock company and WFC
conducted an initial public offering of common stock, whereby the approximately
42% of the stock of WSB held by the public was exchanged for the stock of WFC
and the remaining 58% of the stock held by the mutual holding company was
offered to the public. Since the public offering, the Board of Directors and
management of WFC have recognized that the increased competition from commercial
banks and other financial institutions has changed fundamentally the environment
in which traditional thrifts have operated and threatens the market share held
by thrifts for their traditional services. Competition with these commercial
banks, with other financial institutions and with other providers of financial
services, such as credit unions, is strong, making it extremely difficult for
WFC, despite its diversification efforts and accomplishments, to meaningfully
expand into the commercial banking business or make significant market share
gains in any one market area.
The Board of Directors and management of WFC have assessed the
foregoing and other developments and their significance to WFC and its
shareholders. At the same time, the Board of Directors has been cognizant of
changes in WFC's operating environment, including rising interest rates and
shrinking interest margins, causing the Board of Directors and management to
project slower growth in earnings and a decline in the estimated fair value of
financial assets compared to their carrying values over the next few years.
In light of these occurrences and conditions, the Board of Directors,
in April, 1997, decided to undertake a comprehensive study of WFC's future and
the strategic options available to WFC. The Board of Directors employed FinPro
to provide business and financial advice regarding the strategic future of WFC.
With the assistance of FinPro, the Board of Directors reviewed the economic and
competitive conditions in the market areas of WFC, changes in the residential
mortgage industry, the trend of consolidation among federally-insured depository
institutions, the potential effects of the Interstate Banking Act and the advent
of interstate banking, and the effects that rising interest rates and cyclical
trends could have on bank and thrift stock prices in coming years. The Board of
Directors also analyzed the history and market performance of WFC since it
converted to a stock institution in 1996 and of WSB since its MHC form of
organization.
The Board of Directors considered several options for the future of
WFC, including: (i) remaining independent and seeking to generate growth and
added profits by expanding and diversifying WFC's financial services and product
offerings, (ii) expanding through establishment of new branches, (iii) expanding
by acquiring smaller savings institutions, commercial banks or branches, (iv)
merging with an institution of nearly equal size, and (v) being acquired by a
larger bank or thrift holding company. The Board reviewed each option and
concluded, in light of current business conditions, WFC's particular
circumstances and prospects, and the risks and expenses of expanding its
products, services, and/or branch network on an independent basis, that the best
interests of WFC and its shareholders should be served by exploring closely the
possibility of combining with another institution in a sale transaction in the
near term.
Accordingly, the Board of Directors decided to survey the most likely
obtainable terms and conditions on which WFC could combine with a larger
in-state or out-of-state bank or thrift holding
8
company. FinPro, on behalf of WFC, communicated directly with certain financial
institutions it considered to be the most likely potential acquirors of WFC to
invite expressions of interest in pursuing acquisition proposals. Several
companies, including LFC, acting pursuant to written confidentiality agreements
and with the aid of certain information provided by FinPro and WFC, expressed
indications of value, with LFC ultimately submitting a proposal in response to
FinPro's communications. The Board of Directors of WFC determined, with the
assistance of FinPro, that LFC's indication of value represented the highest
value to, and the best strategic alternative for WFC and its shareholders. With
the advice of FinPro, WFC proceeded to enter into further discussions with LFC.
Over the next three months, several lengthy meetings of certain members of the
senior management of LFC and WFC were held to discuss and develop the basis for
a potential acquisition of WFC by LFC. Between meetings, and subject to a
confidentiality agreement between the parties, an appreciable exchange of
information occurred. Representatives of LFC conducted due diligence of WFC and
FinPro conducted due diligence of LFC on behalf of WFC. FinPro further conducted
a due diligence examination of WFC and its subsidiary.
Throughout the foregoing process, management advised and informed the
Board of Directors of WFC of developments and was directed by the Board to
pursue discussions.
On August 15, 1997, the Board of Directors reviewed the proposal and
met with FinPro and WFC's attorneys to discuss and review the final proposal,
including the form of agreement which had previously been distributed to the
Board of Directors for its review. FinPro presented a detailed analysis of the
proposal to the Board of Directors and concluded that in FinPro's opinion LFC's
proposal was fair to WFC's shareholders from a financial point of view.
On August 21, 1997 the Board of Directors of WFC met with senior
management of WFC. Management reviewed with the Board of Directors the
alternative strategies for the future operation of WFC including the potential
of a merger with LFC. On this same date, the full Board of Directors of WFC met
with senior management and FinPro representatives in attendance. Management
repeated the review of alternative strategies for the future operation of WFC
previously discussed with the Executive Committee. FinPro addressed the Board on
these strategies and reviewed with the Board the tentative proposal of LFC.
FinPro also briefed the Board on the general climate of the merger/acquisitions
market place and reported on all contacts with other financial institutions by
FinPro acting in WFC's behalf. The Board directed senior management to continue
negotiations with LFC, including the conduct of due diligence by both parties.
Through the month of September 1997, senior management of both
institutions, with the assistance of FinPro and outside counsel, negotiated a
form of a definitive reorganization agreement. Draft copies of the proposed
agreement were distributed to the Board of Directors of WFC for their review.
On the basis of the independent judgment of the members of the WFC
Board and the advice of FinPro, that the LFC proposal was fair to WFC's
shareholders from a financial point of view, the Board of Directors concluded
that LFC's offer was in the best interests of WFC and its shareholders.
Accordingly, for all of the reasons herein, on September 10, 1997, WFC's Board
of Directors accepted LFC's offer and authorized execution of the Reorganization
Agreement.
9
Reasons for the Merger
In reaching its conclusion to approve the Merger, the WFC Board
considered a number of factors. The WFC Board did not assign any relative or
specific weights to the factors considered. Among other things, The WFC Board
considered: (i) the Merger consideration in relation to earnings, book value,
and assets of WFC; (ii) information concerning the financial condition, results
of operations and prospects of WFC, including the return on assets and return on
equity of WFC; (iii) the financial terms of other recent business combinations
in the banking industry; and (iv) the opinion of FinPro as to the fairness of
the consideration to be received by WFC shareholders from a financial point of
view.
The WFC Board believes that the terms of the Reorganization Agreement,
which are the product of arms-length negotiations between LFC and WFC, are in
the best interest of WFC and its shareholders. In the course of reaching its
determination, the WFC Board consulted with legal counsel with respect to its
legal duties, the terms of the Reorganization Agreement and the issues related
thereto; with its financial advisor with respect to the financial aspects and
fairness of the transaction; and with senior management regarding, among other
things, operational matters.
In reaching its determination to approve the Reorganization Agreement,
the WFC Board considered all factors it deemed material, which are the
following:
(a) The WFC Board analyzed information with respect to the financial
condition, results of operations, businesses and prospects of WFC and LFC. In
this regard, the WFC Board analyzed the options of selling WFC or continuing on
a stand-alone basis. The range of values on a sale basis were determined to
generally exceed the present value of WFC shares on a stand-alone basis under
business strategies which could be reasonably implemented by WFC.
(b) The WFC Board considered the written opinion of FinPro that, as of
September 9, 1997, the Merger Consideration was fair to WFC shareholders from a
financial point of view. See "--Opinion of WFC's Financial Advisor."
(c) The WFC Board considered the current operating environment,
including, but not limited to, the continued merger and increasing competition
in the banking and financial services industries, the prospect for further
changes in these industries, and the importance of being able to capitalize on
developing opportunities in these industries. This information has been
periodically reviewed by the WFC Board at its regular board meetings and was
also discussed between the WFC Board and WFC's various advisors.
(d) The WFC Board considered the other terms of the Reorganization
Agreement and exhibits, including the tax-free nature of the transaction for
those shareholders who receive LFC Common Stock.
(e) The WFC Board considered the detailed financial analyses and other
information with respect to WFC and LFC discussed by FinPro, as well as the WFC
Board's own knowledge of WFC, LFC and their respective businesses. In this
regard, the latest publicly-available financial and other information for WFC
and LFC were analyzed, including a comparison to publicly-available financial
and other information for other similar institutions.
(f) The WFC Board considered the value of WFC Common Stock if WFC
continued as a stand-alone entity compared to the effect of WFC combining with
LFC in light of the factors summarized
10
above and the current economic and financial environment, including, but not
limited to, other possible strategic alternatives, the results of the contacts
and discussions between WFC and its financial advisor and various third parties
and the belief of the WFC Board and management that the Merger offered the best
transaction available to WFC and its shareholders.
(g) The WFC Board considered the likelihood of the Merger being
approved by the appropriate regulatory authorities, including factors such as
market share analysis, LFC's Community Reinvestment Act rating at that time and
the estimated pro forma financial impact of the Merger on LFC.
The foregoing discussion of the information and factors considered by
the WFC Board is not intended to be exhaustive, but constitutes the material
factors considered by the WFC Board. In reaching its determination to approve
and recommend the Reorganization Agreement, the WFC Board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have weighted factors differently. After deliberating with respect to the
Merger and the other transactions contemplated by the Reorganization Agreement,
considering, among other things, the matters discussed above and the opinion of
FinPro referred to above, the WFC Board approved and adopted the Reorganization
Agreement and the transactions contemplated thereby as being in the best
interests of WFC and its shareholders.
Opinion of WFC's Financial Advisor
On August 20, 1997 WSB retained FinPro, Inc., a financial consulting
firm, on the basis of its experience, to render a written fairness opinion to
the Board of Directors and shareholders of WFC. FinPro, Inc. has been in the
business of consulting for the banking industry for eight years, including the
appraisal and valuation of banking institutions and their securities in
connection with mergers, acquisitions and other securities transactions. FinPro
has knowledge of and experience with the New Jersey banking and thrift market
and financial organizations operating in that market. FinPro reviewed the
negotiated terms of the Reorganization Agreement including governance matters.
Except as described herein, FinPro is not affiliated in any way with WFC or LFC
or their respective affiliates.
On August 8, 1997, in connection with its consideration of the
Reorganization Agreement, FinPro issued an oral Opinion to the Board of
Directors of WFC that, in its opinion as financial consultants, the terms of the
Merger as provided in the Reorganization Agreement are fair and equitable, from
a financial perspective, to WFC and its shareholders. On September 9, 1997 the
written Opinion confirming the oral Opinion was submitted. This opinion was
based upon conditions as they existed on July 31, 1997. A copy of the opinion is
attached as Appendix II to this Proxy Statement/Prospectus and should be read in
its entirety by WFC shareholders. FinPro's written opinion does not constitute
an endorsement of the Merger or a recommendation to any shareholder as to how
such shareholder should vote at the WFC Meeting.
In rendering its opinion, FinPro reviewed certain publicly available
information concerning WFC and LFC, including each party's audited financial
statements and annual reports. FinPro considered many factors in making its
evaluation. In arriving at its Opinion regarding the fairness of the
transaction, FinPro reviewed: (i) the Reorganization Agreement; (ii) the most
recent external auditor's reports to the Boards of Directors of each
organization; (iii) the June 30, 1997 Report of Condition and Income for each
organization; (iv) the Rate Sensitivity Analysis reports for each organization;
(v) each organization's listing of marketable securities showing rate, maturity,
and market value as compared to book value; (vi) each organization's internal
loan classification list; (vii) a listing of other real estate owned for each
11
organization; (viii) the budget and long range operating plan of each
organization; (ix) the Minutes of the Board of Directors meeting for WFC; (x)
the most recent Board report for WFC; (xi) the listing and description of
significant real properties for each organization; and (xii) the directors and
officers liability and blanket bond insurance policies for each organization.
FinPro conducted an on-site review of each organization's historical performance
and current financial condition and performed a market area analysis.
In addition, FinPro discussed with the management of WFC and LFC the
relative operating performance and future prospects of each organization,
primarily with respect to the current level of their earnings and future
expected operating results, giving weight to FinPro's assessment of the future
of the banking industry and each organization's performance within the industry.
FinPro compared the results of operation of WFC with the results of operation of
all New Jersey thrifts.
New Jersey
WFC LFC Thrifts
--- --- -------
Return on Average Assets .47% 1.02% .97%
Return On Average Equity 5.8 10.7 9.9
Net Interest Margin/Average Assets 3.04 3.68 3.02
Noninterest Income/Average Earning Assets .15 .29 .14
Total Overhead Expense/Average Earning Assets 1.56 1.92 1.32
Nonearning Assets/Total Assets 3 7 3
Total Loans/Earning Assets 39 48 46
Loan Loss Reserves/Total Equity 3 9 3
Efficiency Ratio 49.0 48.5 40.7
Tier 1 Capital/Assets 6.8 7.3 9.5
Tier I & II Capital/Risk Based Assets 19.1 14.8 27.0
Many variables affect the value of banks, not the least of which is the
uncertainty of future events, so that the relative importance of the valuation
variable differs in different situations, with the result that appraisal
theorists argue about which variable are the most appropriate ones on which to
focus. However, most appraisers agree that the primary financial variables to be
considered are earnings, equity, dividends or dividend-paying capacity, asset
quality and cash flow. In addition, in most instances, if not all, value is
further tempered by non-financial factors such as marketability, voting rights
or block size, history of past sales of the banking company's stock, nature and
relationship of the other shareholdings in the bank, and special ownership or
management considerations.
FinPro analyzed the total purchase price on a cash equivalent fair
market value basis using the standard evaluation techniques (as discussed below)
including comparable sales multiples, net present value, return on investment
and the price equity index based on certain assumptions of projected growth,
earnings and dividends and a range of discount rates from 10% to 12%
Net Asset Value. Net asset value is the value of the net equity of a
bank, including every kind of property and value. This approach normally assumes
liquidation on the date of appraisal with the recognition of securities gains or
losses, real estate appreciation or depreciation, adjustments to the loan loss
reserve, premium or discount to the loan portfolio, premium or discount for
deposits, premium or
12
discount for borrowings, and changes in the net value of other assets and/or
liabilities. As such, it is not the best approach to use when valuing a going
concern, because it is based on historical costs and varying accounting methods.
Even if the assets and liabilities are adjusted to reflect prevailing prices and
yields (which is often of limited accuracy because readily available data is
often lacking), it still results in a liquidation value for the concern.
Furthermore, since this method does not take into account the values
attributable to the going concern such as the interrelationship among the
company's assets and liabilities, customer relations, market presence, image and
reputation, and staff expertise and depth, little weight is given by FinPro to
the net asset value method of valuation.
Market Value. Market value is generally defined as the price,
established on an "arms-length" basis, at which knowledgeable, unrelated buyers
and sellers would agree. The market value is frequently used to determine the
price of a minority block of stock when both the quantity and the quality of the
"comparable" data are deemed sufficient. However, the relative thinness of the
specific market for the stock of the banking company being appraised may result
in the need to review alternative markets for comparative pricing purposes. The
"hypothetical" market value for a small bank with a thin market for its stock is
normally determined by comparison to the average price to earnings, price to
equity and dividend yield of local or regional publicly-traded bank issues,
adjusting for significant differences in financial performance criteria and for
any lack of marketability or liquidity. The market value in connection with the
evaluation of control of a bank is determined by the previous sales of banks in
the state or region. In valuing a business enterprise, when sufficient
comparable trade data is available, the market value deserves greater weight
than the net asset value and similar emphasis as the investment value as
discussed below.
FinPro maintains substantial files concerning the prices paid for
banking institutions nationwide. The database includes transactions involving
New Jersey thrift organizations and thrift organizations in the Eastern region
of the United States, and national thrift organizations over the last five
years. The database provides comparable pricing and financial performance data
for banking organizations sold or acquired. Organized by different peer groups,
the data present averages of financial performance and purchase price levels,
thereby facilitating a valid comparative purchase price analysis. In analyzing
the transaction value of WFC, FinPro has considered the market approach and has
evaluated price to equity and price to earnings multiples of all New Jersey
banking organizations and Regional banking organizations with assets less than
$150 million.
Comparable Sales Multiples. FinPro calculated an "Adjusted Book Value"
of $28.81 per share, based on WFC's fully diluted June 30, 1997 equity and the
average price to book multiple of 199.37% for New Jersey savings organizations
sold between January 1, 1997 and August 8, 1997. FinPro calculated an "Adjusted
Book Value" of $23.43 per share, based on WFC's fully diluted June 30, 1997
equity and the average price to book multiple of 162.17% for New Jersey savings
organizations sold between January 1, 1996 and December 31, 1996.
FinPro calculated an "Adjusted Earnings Value" of $20.78 per share,
based on WFC's fully diluted unadjusted last twelve months earnings ending June
30, 1997 and the average price to earnings multiple of 16.76 for New Jersey
savings organizations sold between January 1, 1997 and August 8, 1997. FinPro
calculated an "Adjusted Earnings Value" of $26.77 per share, based on WFC's
fully diluted unadjusted last twelve months earnings ending June 30, 1997 and
the average price to earnings multiple of 21.59 for New Jersey savings
organizations sold between January 1, 1996 and December 31, 1996.
13
FinPro calculated an "Adjusted Book Value" of $24.44 per share, based
on WFC's fully diluted June 30, 1997 equity and the average price to book
multiple of 169.14% for New Jersey, New York, Pennsylvania, and Delaware savings
organizations less than $150 million in assets sold between January 1, 1997 and
August 8, 1997. FinPro calculated an "Adjusted Book Value" of $18.27 per share,
based on WFC's fully diluted June 30, 1997 equity and the average price to book
multiple of 126.42% for New Jersey, New York, Pennsylvania, and Delaware savings
organizations less than $150 million in assets sold between January 1, 1996 and
December 31, 1996.
FinPro calculated an "Adjusted Earnings Value" of $16.28 per share,
based on WFC's fully diluted last twelve months earnings ending June 30, 1997
and the average price to earnings multiple of 13.13 for New Jersey, New York,
Pennsylvania, and Delaware banking organizations less than $150 million in
assets sold between January 1, 1997 and August 8, 1997. FinPro calculated an
"Adjusted Earnings Value" of $32.15 per share, based on WFC's fully diluted last
twelve months earnings ending June 30, 1997 and the average price to earnings
multiple of 25.93 for New Jersey, New York, Pennsylvania, and Delaware banking
organizations less than $150 million in assets sold between January 1, 1996 and
December 31, 1996.
The financial performance characteristics of the regional banking
organizations vary, sometimes substantially, from those of WFC. When the
variance is significant for relevant performance factors, adjustments to the
price multiples are appropriate when comparing them to the transaction value.
Investment Value. The investment value is sometimes referred to as the
income value or earnings value. One investment value method frequently used
estimates the present value of an enterprise's future earnings or cash flow.
Another popular investment value method is to determine the level of current
annual benefits (earnings, cash flow, dividends, etc.), and then capitalize one
or more of the benefit types using an appropriate capitalization rate such as an
earnings or dividend yield. Yet another method of calculating investment value
is a cash flow analysis of the ability of a banking company to service
acquisition debt obligations (at a certain price level) while providing
sufficient earnings for reasonable dividends and capital adequacy requirements.
In connection with the cash flow analysis, the return on investment that would
accrue to a prospective buyer at the transaction value is calculated. The
investment value methods which were analyzed in connection with this transaction
were the net present value analysis, and the return on investment analysis,
which are discussed below.
Net Present Value Analysis. The investment of earnings value of any
banking organization's stock is an estimate of present value of the future
benefits, usually earnings, cash flow or dividends, which will accrue to the
stock. An earnings value is calculated using an annual future earnings stream
over a period of time of no less than ten years and the residual value of the
earnings stream after ten years, assuming no earnings growth, and an appropriate
capitalization rate (the net present value discount rate). FinPro's computations
were based on an analysis of the banking industry, the economic and competitive
situations in WFC's market area, its current financial condition and historical
levels of growth and earnings. Using a net present value discount rate of 11%,
an acceptable discount rate considering the risk-return relationship most
investors would demand for an investment of this as of the valuation date, the
"Net Present Value of Future Earnings," equaled $26.41 per share.
Return on Investment Analysis. Return on investment (ROI) analysis
assumes the formation of a bank holding company and analyzes the ten year ROI of
an equity investment equal to WFC's book value at July 31, 1997, (i) assuming a
constant return on equity of 9.37%, with a liquidation at book value in the year
2007, as opposed to a sale at ten times projected earnings for the year 2007;
and (ii)
14
assuming a gradual reduction in return on equity from 9.37% to 6.87%, with a
liquidation at book value in the year 2007, as opposed to a sale at ten times
projected earnings for the year 2007. This ROI analysis provides a benchmark for
assessing the validity of the fair market value of a majority block of stock.
The ROI analysis is one approach to valuing a going concern, and is directly
impacted by the earning stream, dividend payout levels and levels of debt, if
any. Other financial and non-financial factors indirectly affect the ROI;
however, these factors more directly influence the level of ROI an investor
would demand from an investment in a majority block of stock of a specific bank
at a certain point in time. The ROI, assuming a constant return on equity of
9.37% with liquidation at book value in 2007, is 7.83%, and sale at twenty times
projected earnings in 2007, is 13.78%. The ROI, assuming a gradual reduction in
return on equity with liquidation at book value in 2007, is 6.99%, and sale at
twenty times projected earnings in 2007, is 10.29%.
Price Equity Index Analysis. Furthermore, a price level indicator, the
equity index, may be used to confirm the validity of the transaction value. The
equity index adjusts the price to equity multiple in order to facilitate a truer
price level comparison with comparable banking organizations, regardless of
differing levels of equity capital. The equity index is derived by multiplying
the price to equity multiple by the equity-to-assets ratio. The following table
sets forth the average price equity indexes for all New Jersey transactions, for
transactions in New Jersey, New York, Pennsylvania, and Delaware for
organizations less than $150 million, and for WFC for the years 1997, 1996,
1995, and 1994.
Year New Jersey Region WFC
---- ---------- ------ ---
Average Price Equity Index 1997 14.86% 15.81% 17.48%
Average Price Equity Index 1996 12.66 19.43 N/A
Average Price Equity Index 1995 20.02 11.22 N/A
Average Price Equity Index 1994 11.44 12.25 N/A
Finally, another test of appropriateness for the transaction value of a
majority block of stock is the net present value-to-transaction value ratio.
Theoretically, an earnings stream may be valued through the use of a net present
value analysis. In FinPro's experience with majority block community bank stock
valuations, it has determined that a relationship does exist between the net
present value of an "average" community banking organization and the transaction
value of a majority block of the banking organization's stock. The net present
value-to-transaction value ratio equals 90.28% for WFC, which falls within
FinPro's expected range. There are many other factors to consider, when valuing
a going concern, which do not directly impact the earnings stream and the net
present value but which do exert a degree of influence over the fair market
value of a going concern. These factors include, but are not limited to, the
general condition of the industry, the economic and competitive situations in
the market area and the expertise of the management of the organization being
valued.
When the net asset value, market value and investment value methods are
subjectively weighted, using the appraiser's experience and judgment, it is
FinPro's opinion that the proposed transaction is fair.
FinPro considered this transaction as a merger rather than a purchase
of assets. Consideration was given to the levels of earnings per share, equity
per share and dividends per share appreciation or dilution percentages between
the merger partners over the next three to five years after consummation. A
merger is usually completed with the hopes of realizing economics of scale and
earnings enhancement opportunities, thereby providing a benefit to WFC
shareholders that otherwise might not be attainable.
15
To justify the fairness of the transaction for WFC shareholders, it is important
to project, based upon realistic projections of future performance, a positive
impact for WFC shareholders. FinPro projected that WFC shareholders will have a
higher level of earnings per share, equity per share and dividends per share
after the Merger with LFC than they would on a stand-alone basis. The primary
focus has been on short-term and long-term earnings per share, equity per share
and dividends per share appreciation potential for WFC shareholders.
Neither WFC nor LFC imposed any limitations upon the scope of the
investigation to be performed by FinPro in formulating its Opinion. In rendering
its Opinion, FinPro did not independently verify the asset quality and financial
condition of WFC or LFC, but instead relied upon the data provided by or on
behalf of WFC and LFC to be true and accurate in all material respects.
For its services as independent financial analyst of the Merger,
including the rendering of its Opinion referred to above, WFC has paid FinPro
aggregate fees of approximately $140,000. WFC also agreed to reimburse FinPro
for reasonable out-of-pocket expenses. In addition, over the last two years,
FinPro has provided consulting services to both WFC and LFC and received fees
for these services of approximately $47,000 and $30,000, respectively.
Conditions to the Merger
The obligation of each party to consummate the Merger is subject to
satisfaction or waiver of certain conditions, including (i) approval of the
Reorganization Agreement and the transactions contemplated thereby by the
requisite vote of the holders of WFC Common Stock; (ii) the receipt of all
consents, approvals and authorizations of all necessary federal and state
government authorities and expiration of all required waiting periods, necessary
for the consummation of the Merger (see "-- Regulatory Approvals"); (iii) the
effectiveness of the registration statement covering the shares of LFC Common
Stock to be issued to WFC shareholders, and the qualification of the issuance of
LFC Common Stock in every state where such qualification is required under
applicable state securities laws; (iv) the absence of any litigation that would
restrain or prohibit the consummation of the Merger; and (v) receipt by the
parties of an opinion of Malizia, Spidi, Sloane & Fisch, P.C. to the effect that
the exchange of WFC Common Stock for LFC Common Stock is a tax-free
reorganization within the meaning of Section 368 of the Code. See "-- Certain
Federal Income Tax Consequences".
The obligation of LFC to consummate the Merger is also conditioned on,
among other things, (i) the continued accuracy in all material respects of the
representations and warranties of WFC contained in the Reorganization Agreement;
and (ii) the performance by WFC, in all material respects, of all its
obligations under the Reorganization Agreement.
The obligation of WFC to consummate the Merger is also conditioned on,
among other things, (i) the continued accuracy in all material respects of the
representations and warranties of LFC contained in the Reorganization Agreement;
and (ii) the performance by LFC, in all material respects, of all its
obligations under the Reorganization Agreement; and (iii) the receipt on Opinion
by FinPro, Inc. regarding the fairness from a financial point of view of the
consideration to be received by the WFC shareholders in the Merger.
16
Termination
The Reorganization Agreement may be terminated at any time prior to the
closing: (i) by mutual consent in writing of the parties; (ii) by LFC or WFC in
the event the closing shall not have occurred by June 30, 1998, unless the
failure of the closing to occur shall be due to the failure of the party seeking
to terminate the Reorganization Agreement to perform its obligations hereunder
in a timely manner; (iii) by either LFC or WFC upon written notice to the other
party, upon (i) denial of any governmental approval necessary for the
consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transactions contemplated); provided, however,
that either LFC or WFC may, upon written notice to the other, extend the term of
this Reorganization Agreement for only one or more sixty (60) day periods to
prosecute diligently and overturn such denial, provided that such denial has
been appealed within twenty (20) business days of the receipt thereof or (ii)
upon the failure to obtain the approval of the WFC shareholders at the WFC
shareholders meeting; (iv) by LFC or WFC in the event that there shall have been
a material breach of any obligations or covenant of the other party hereunder
and such breach shall not have been remedied within sixty (60) days after
receipt by the breaching party of written notice from the other party specifying
the nature of such breach and requesting that it be remedied; (v) by LFC or WFC
should WFC or any WFC subsidiary enter into any letter of intent or agreement
with a view of being acquired by or effecting a business combination with any
other person; or any agreement to merge, to consolidate, to combine or to sell a
material portion of its assets or to be acquired in any other manner by any
other person or to acquire a material amount of assets or a material equity
position in any other person, whether financial or otherwise; (vi) by LFC should
either WFC or WSB enter into any formal agreement, letter of understanding,
memorandum or other similar arrangement with any bank regulatory authority
establishing a formal capital plan requiring WFC or WSB to raise additional
capital or to sell a substantial portion of its assets.
Termination Fee
Pursuant to the Reorganization Agreement, WFC has agreed to pay LFC a
fee of $900,000 following the occurrence of a "Purchase Event." The term
"Purchase Event" means any of the following events, or WFC agreeing to enter
into an agreement relating to any of the following events, occurring before the
Effective Date or within 12 months of the date of termination of the
Reorganization Agreement: (i) the acquisition by any person, other than LFC, of
beneficial ownership of 25% or more of WFC Common Stock; (ii) a merger,
consolidation, share exchange, business combination or any similar transaction
involving WFC or WSB; (iii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 50% or more of the assets of WFC or WSB, in
single transaction or series of transactions; or (iv) the WFC Board does not
recommend approval of the Merger to the WFC shareholders. The fee will not be
paid to LFC if the Reorganization Agreement is terminated (i) by mutual consent
of WFC and LFC; (ii) by LFC or WFC if the closing of this transaction does not
occur by June 30, 1998, (iii) by either LFC or WFC upon written notice to the
other party, upon denial of any government approval; (iv) in the event
terminated by WFC due to a material breach by LFC, or (v) prior to the
occurrence of a Purchase Event.
Business Pending Consummation
WFC has agreed in the Reorganization Agreement not to take certain
actions relating to the operation of WFC pending consummation of the Merger
without the prior written consent of LFC except as otherwise permitted in the
Reorganization Agreement. See the Reorganization Agreement attached hereto as
Appendix I.
17
WFC Stock Option
Pursuant to WFC's stock option plans, options to acquire an aggregate
of 58,335 shares of WFC Common Stock have been granted to officers, directors
and employees of WFC and WSB. Pursuant to the Reorganization Agreement, on the
Effective Date of the Merger, each option granted under WFC Stock Option Plan
which is outstanding and unexercised will be converted, at the election of the
holder, into the right to receive either (i) cash equal to the excess of $29.25
over the exercise price per share of WFC Common Stock or (ii) a number of shares
of LFC Common Stock equal to the excess of $29.25 over the exercise price per
share of WFC Common Stock, multiplied by the total number of shares of WFC
Common Stock covered by the WFC stock option and divided by the Final Market
Price.
Federal Income Tax Consequences
The following is a summary description of the material federal income
tax consequences of the Merger. This summary is not a complete description of
all of the consequences of the Merger and, in particular, may not address
federal income tax consequences which may be applicable to particular categories
of taxpayers, such as broker-dealers, or to any shareholder who acquired his or
her WFC Common Stock through the exercise of an employee stock option including
a plan under Section 422 of the Code, or otherwise as compensation. This
discussion does not address the effect of any applicable foreign, state, local
or other tax laws. SHAREHOLDERS OF WFC ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE MERGER, INCLUDING
THE APPLICABILITY OF AND EFFECT OF FOREIGN, STATE, LOCAL AND OTHER TAX LAWS.
Tax Treatment to LFC, WFC, and WSB. No gain or loss will be recognized
by LFC, WFC and WSB solely as a result of the Merger.
Receipt of LFC Common Stock for WFC Common Stock. No gain or loss will
be recognized by a holder who receives solely shares of LFC Common Stock (except
for cash received in lieu of fractional shares, as discussed below) in exchange
for all of his or her shares of WFC Common Stock. The tax basis of the shares of
LFC Common Stock received by a holder in such exchange will be equal (except for
the basis attributable to any fractional shares of LFC Common Stock, as
discussed below) to the basis of the WFC Common Stock surrendered in exchange
therefor. The holding period of the LFC Common Stock received will include the
holding period of shares of WFC Common Stock surrendered in exchange therefor,
provided that such shares were held as capital assets on the Effective Date of
the Merger.
Receipt of LFC Common Stock and Cash in Exchange for WFC Common Stock.
A holder who receives a combination of LFC Common Stock and cash in exchange for
his or her WFC Common Stock will not be permitted to recognize any loss for
federal income tax purposes. Such a holder will recognize gain, if any, equal to
the lesser of (i) the amount of cash received, or (ii) the amount of gain
"realized" in the transaction. The amount of gain a holder "realizes" will equal
the amount by which (i) the cash plus the fair market value on the Effective
Date of the Merger of the LFC Common Stock received exceeds (ii) the holders'
basis in the WFC Common Stock to be surrendered in the exchange therefor. Any
recognized gain could be taxed as a capital gain or a dividend, as described
below. The aggregate tax basis of the shares of LFC Common Stock received by
such holder will be the same as the aggregate basis of the shares of WFC Common
Stock surrendered in exchange therefor, adjusted as provided in Section 358(a)
of the Code for the cash received in exchange for such shares of WFC
18
Common Stock. The holding period for shares of LFC Common Stock received in the
Merger will be the same as the holding period for WFC Common Stock surrendered
in exchange therefor, provided that such shares were held as capital assets of
the holder on the Effective Date of the Merger.
A holder's federal income tax consequences also will depend on whether
his or her shares of WFC Common Stock were purchased at different times at
different prices. If they were, the holder could realize gain with respect to
some of the shares of WFC Common Stock and loss with respect to other shares.
Such holder would have to recognize such gain to the extent such holder receives
cash with respect to those shares in which the holder's adjusted tax basis is
less than the amount of cash plus the fair market value on the Effective Date of
the Merger of the LFC Common Stock received, but could not recognize loss with
respect to those shares in which the holder's adjusted tax basis is greater than
the amount of cash plus the fair market value on the Effective Date of the
Merger of the LFC Common Stock received. Any disallowed loss would be included
in the adjusted basis of the LFC Common Stock. Such a holder is urged to consult
his or her own tax advisor regarding the tax consequences of the Merger on that
holder.
Possible Dividend Treatment. In certain circumstances, a holder who
receives cash or a combination of cash and LFC Common Stock in the Merger may
receive ordinary dividend, rather than capital gain, treatment on all or a
portion of the gain recognized by that holder. The determination of whether a
cash payment has the effect of a dividend distribution is made by treating a WFC
shareholder as if such holder had received solely LFC Common Stock in the
Merger, and LFC immediately thereafter redeemed a number of shares of LFC Common
Stock equal in value to the cash consideration received. This hypothetical
redemption is then tested under the provisions and limitations of Section 302 of
the Code to determine whether the holder's change in ownership in LFC results in
a dividend distribution. For purposes of this hypothetical Section 302
redemption analysis, shares of LFC Common Stock held by certain members of the
holder's family or certain entities in which the holder has an ownership or
beneficial interest and certain stock options may be aggregated with the
holder's shares of LFC Common Stock. The amount of the cash payment that may be
treated as a dividend is limited to the holder's ratable share of the
accumulated earnings and profits of WFC (or possibly of the total earnings and
profits of WFC and LFC) on the Effective Date of the Merger. Any gain that is
not treated as a dividend will be taxed as a capital gain, provided that the
holder's shares were held as capital assets on the Effective Date of the Merger.
Because the determination of whether a cash payment will be treated as having
the effect of a dividend will depend in part upon the facts and circumstances of
each holder, holders are advised to consult their own tax advisors regarding the
tax treatment of cash received in the Merger.
Receipt of Cash in Exchange for WFC Common Stock. A holder who receives
solely cash in exchange for all of his or her shares of WFC Common Stock, and
owns no LFC Common Stock actually or constructively, will recognize gain or loss
for federal income tax purposes equal to the difference between the cash
received and such holder's tax basis in the WFC Common Stock surrendered in
exchange therefor. Such gain or loss will be a capital gain or loss, provided
that such shares were held as capital assets of the holder on the Effective Date
of the Merger. Such gain or loss will be long-term capital gain or loss if the
holder's holding period is more than eighteen months on the Effective Date of
the Merger. The Code contains limitations on the extent to which a holder may
deduct capital losses from ordinary income. It is not clear whether the above
treatment would apply to a holder who receives solely cash for his or her shares
but who owns constructively shares of LFC Common Stock, or owns constructively
shares of WFC Common Stock which are not exchanged solely for cash, or whether
instead the treatment referred to above under "--Certain Federal Income Tax
Consequences -- Possible
19
Dividend Treatment" would apply. A holder in this situation is advised to
consult his or her own tax advisor regarding the tax consequences to the holder.
Cash in Lieu of Fractional Shares. A holder who holds WFC Common Stock
as a capital asset and who receives in the Merger, in exchange for such stock,
solely LFC Common Stock and cash in lieu of a fractional share interest in LFC
Common Stock will be treated as having received such fraction of a shares of LFC
Common Stock and then as having received cash in redemption by LFC of the
fractional share interest. Under the IRS's present advance ruling position,
since the cash is being distributed in lieu of factional shares solely for the
purpose of savings LFC the expense and inconvenience of issuing and transferring
fractional shares, and is not separately bargained-for consideration, the cash
received will be treated as having been received in part or full payment in
exchange for the fractional share of stock redeemed, and as capital gain or
loss, not as a dividend.
Backup Withholding; Information Reporting. The cash payments due a
holder upon the exchange of such WFC Common Stock pursuant to the Merger (other
than certain exempt persons or entities) will be subject to "backup withholding"
for federal income tax purposes unless certain requirements are met. LFC or a
third party paying agent, as the case may be, must withhold 31% of the cash
payments to a holder, unless such holder (i) is a corporation or comes within
certain other exempt categories and, when required, demonstrates this fact, or
(ii) provides LFC or a third party paying agent, as the case may be, with his or
her taxpayer identification number and completes a form in which he or she
certifies that he or she has not been notified by the IRS that he or she is
subject to backup withholding as a result of a failure to report interest and
dividends. The taxpayer identification number of an individual is his or her
Social Security number. Any amount paid as backup withholding will be credited
against the holder's federal income tax liability. Holders who receive LFC
Common Stock also must comply with the information reporting requirements of the
Treasury regulations under Section 368 of the Code. Appropriate documentation
for the foregoing purposes will be provided to holders with the Election Forms
that will be sent to them by the Exchange Agent.
In rendering the above opinions, Malizia, Spidi, Sloane & Fisch, P.C.
has relied upon written representations and covenants of LFC and WFC. No ruling
has been sought from the Internal Revenue Service as to the federal income tax
consequences of the Merger, and the opinions of Malizia, Spidi, Sloane & Fisch,
P.C. set forth above are not binding on the Internal Revenue Service or any
court.
No Dissenters' Rights
Under applicable New Jersey law, no dissenters' rights of appraisal are
available to holders of WFC stock in connection with the Merger.
Accounting Treatment
Under generally accepted accounting principles, it is anticipated that
the Merger will be accounted for under the purchase method of accounting. The
assets and liabilities of WFC will be reflected in the consolidated financial
statements of LFC based upon their fair values as of the effective date of the
Merger. Results of operations of WFC will be reflected in the consolidated
financial statements of LFC for all periods subsequent to the effective date of
the Merger. Under the purchase method of accounting, the excess purchase price
paid over the fair market value of assets is amortized as an expense over the
period estimated to be benefitted.
20
Interests of Certain Persons in the Merger
Certain members of WFC's management and its Board may be deemed to have
interests in the Merger in addition to their interests, if any, as stockholders
of WFC. These interests are described in more detail below.
Employment and Severance Agreements. Certain officers of WFC will
receive severance benefits. Total severance benefits will aggregate $293,000.
One of such officers will also entered into an employment agreement with LVSB
for three years, at such officer's current salary of $75,000. Chairman of the
Board of WFC and WSB, William J. Woods, will receive a consulting agreement for
a term of not less than three years at his current salary of $80,000 per year.
Such payments will continue to be paid to the spouse, survivor(s) or estate of
Mr. Woods in the event of death or disability.
Stock Options. Certain directors and officers of WFC have been granted
options under the Stock Option Plan to purchase, in the aggregate, 58,355 shares
of WFC Common Stock. As of the Effective Date of the Merger, such Option Plan
will terminate, and such options will be converted into shares of WFC Common
Stock or cash consideration of $29.25 less the exercise price, in accordance
with the Reorganization Agreement. Assuming the options are cashed out, William
J. Woods will receive approximately $255,000 and all other directors and
officers will receive payments aggregating $383,000.
Restricted Stock. Certain officers and directors of WFC have been
awarded shares of restricted stock under the Management Stock Bonus Plan (the
"MSBP"). As of the Effective Date of the Merger, the MSBP will terminate, all
unvested restricted stock awarded to officers and directors of the Company will
vest and be converted into shares of LFC Common Stock or cash in accordance with
the Reorganization Agreement. William J. Woods will receive either cash or stock
with a value of $103,000 in exchange for unvested shares of restricted stock.
Other officers and directors will receive cash or stock aggregating $151,000.
Continued Indemnification and Insurance Coverage. After the Merger is
consummated, LFC will continue to indemnify officers and directors of WFC and
WSB for prior acts in accordance with the provisions of LFC's Certificate of
Incorporation. LFC will also cover officers and directors of WFC and SB for
liability insurance for a three year period after the Merger is consummated.
Advisory Board. Pursuant to the Reorganization Agreement, LFC will
create an advisory board to assist and advise the LFC's Board of Directors with
respect to, the operations of WSB and the maintenance of building existing
relationships within the WSB's business community. The advisory board will
consist of William J. Woods and two directors of WFC and will meet on a
quarterly basis for at least three years. Mr. Woods will not receive
compensation for his services. One of the directors will receive annual board
fees of not less than $7,500.
Resales by Affiliates
The shares of LFC Common Stock issued to WFC shareholders upon
consummation of the Merger have been registered under the Securities Act, but
such registration does not cover resales by affiliates of WFC ("Affiliates").
LFC Common Stock received and beneficially owned by those WFC shareholders who
are deemed to be Affiliates may be resold without registration as provided for
by Rule 145 under the Securities Act, or as otherwise permitted. The term
"Affiliate" is defined to include any
21
person who, directly or indirectly, controls, or is controlled by, or is under
common control with WFC at the time the Reorganization Agreement is submitted
for approval by a vote of the holders of WFC Common Stock. Generally, this
definition includes executive officers, directors and 10% or more shareholders
of WFC. Each Affiliate who desires to resell LFC Common Stock received in the
Merger must sell such LFC Common Stock either (i) pursuant to an effective
registration statement under the Securities Act, (ii) in accordance with the
applicable provisions of Rule 145 under the Securities Act or (iii) in a
transaction which, in the opinion of counsel for such Affiliate or as described
in a "no-action" or interpretive letter from the staff of the Securities and
Exchange Commission, in each case reasonably satisfactory in form and substance
to LFC, to the effect that such resale is exempt from the registration
requirements of the Securities Act.
Rule 145(d) requires that persons deemed to be Affiliates resell their
LFC Common Stock pursuant to certain of the requirements of Rule 144 under the
Securities Act if such LFC Common Stock is sold within the first year after the
receipt thereof. After one year, if such person is not an affiliate of LFC and
LFC is current in the filing of its periodic securities law reports, a former
Affiliate of WFC may freely resell the LFC Common Stock received in the Merger
without limitation. After two years from the issuance of the LFC Common Stock,
if such person is not an affiliate of LFC at the time of sale or for at least
three months prior to such sale, such person may freely resell such LFC Common
Stock, without limitation, regardless of the status of LFC's periodic securities
law reports.
Regulatory Approvals
Consummation of the Merger is subject, among other things, to prior
receipt of all necessary regulatory approvals. Consummation of the Merger
requires approval of the Merger by the New Jersey Department of Banking and
Insurance ("NJDB"), and the FDIC under the Bank Merger Act (the "Bank Merger
Act"), and the approval of the Merger or waiver of the need for such approval by
the FRB. Approval by the NJDB or the FDIC does not constitute an endorsement of
the Merger or a determination by any such regulator that the terms of the Merger
are fair to the shareholders of WFC. While LFC and WFC anticipate receiving all
such approvals, there can be no assurance that they will be granted, or that
they will be granted on a timely basis or that they will be granted without
conditions unacceptable to LFC or WFC.
EFFECT OF THE MERGER ON SHAREHOLDERS' RIGHTS
General
Because WFC and LFC are both New Jersey business corporations, any
differences in rights of holders of their respective stocks are due to the
differences in the certificates of incorporation and by-laws of the two
companies. The following is a summary explanation of the material differences
between the rights of WFC shareholders and the rights of LFC shareholders. This
summary is qualified in its entirety by reference to the governing documents of
WFC and LFC referred to above.
Board of Directors
WFC. The number of directors of WFC will not be less than five nor more
than 21, as provided from time to time in or in accordance with the Bylaws of
WFC, provided that no decrease in the number of directors will have the effect
of shortening the term of any incumbent director, and provided further that no
action will be taken to decrease or increase the number of directors from time
to time unless at
22
least two-thirds of the directors then in office concur in said action.
Vacancies in the board of directors of WFC, however caused, and newly created
directorships are filled by a vote of a majority of the directors then in
office, whether or not a quorum, and any director so chosen will hold office for
a term expiring at the annual meeting of shareholders' or by a sole remaining
director.
Directors shall not be required to own any shares of WFC's common stock
and need not be residents of any particular state, country or other
jurisdiction.
The board of directors of WFC is divided into three classes of
directors which are designated Class I, Class II and Class III. The members of
each class are elected for a term of three years and until their successors are
elected and qualified. Such classes are as nearly equal in number as the then
total number of directors constituting the entire board of directors shall
permit, with the terms of office of all members of one class expiring each year.
A director whose term expires at any annual meeting will continue to serve until
such time as his successor is duly elected and qualified unless his position on
the board of directors is abolished by action taken to reduce the size of the
board of directors prior to said meeting.
Should the number of directors of WFC be reduced, the directorship(s)
eliminated will be allocated among classes as appropriate so that the number of
directors in each class is as specified in the immediately preceding paragraph.
The board of directors will designate, by the name of the incumbent(s), the
position(s) to be abolished. Notwithstanding the foregoing, no decrease in the
number of directors will have the effect of shortening the term of any incumbent
director. Should the number of directors of WFC be increased, the additional
directorships will be allocated among classes as appropriate so that the number
of directors in each class is as specified in the immediately preceding
paragraph.
Whenever the holders of any one or more series of preferred stock of
WFC shall have the right, voting separately as a class, to elect one or more
directors of WFC, the board of directors will consist of said directors so
elected in addition to the number of directors fixed as provided by WFC's
Certificate of Incorporation. Notwithstanding the foregoing, and except as
otherwise may be required by law, whenever the holders of any one or more series
of preferred stock of WFC shall have the right, voting separately as a class, to
elect one or more directors of WFC, the terms of the director or directors
elected by such holders shall expire at the next succeeding annual meeting of
shareholders.
LFC. The number of directors of LFC will not be less than five nor more
than 11, as provided from time to time in or in accordance with the Bylaws of
LFC, provided that no decrease in the number of directors will have the effect
of shortening the term of any incumbent director, and provided further that no
action will be taken to decrease or increase the number of directors from time
to time unless at least two-thirds of the directors then in office concur in
said action. Vacancies in the board of directors of LFC, however caused, and
newly created directorships are filled by a vote of a majority of the directors
then in office, whether or not a quorum, and any director so chosen will hold
office for a term expiring at the annual meeting of shareholders.
Directors shall not be required to own any shares of LFC's common stock
and need not be residents of any particular state, country or other
jurisdiction.
The board of directors of LFC is divided into three classes of
directors which are designated Class I, Class II and Class III. The members of
each class are elected for a term of three years and until
23
their successors are elected and qualified. Such classes are as nearly equal in
number as the then total number of directors constituting the entire board of
directors shall permit, with the terms of office of all members of one class
expiring each year. A director whose term expires at any annual meeting will
continue to serve until such time as his successor is duly elected and qualified
unless his position on the board of directors is abolished by action taken to
reduce the size of the board of directors prior to said meeting.
Should the number of directors of LFC be reduced, the directorship(s)
eliminated will be allocated among classes as appropriate so that the number of
directors in each class is as specified in the immediately preceding paragraph.
The board of directors will designate, by the name of the incumbent(s), the
position(s) to be abolished. Notwithstanding the foregoing, no decrease in the
number of directors will have the effect of shortening the term of any incumbent
director. Should the number of directors of LFC be increased, the additional
directorships will be allocated among classes as appropriate so that the number
of directors in each class is as specified in the immediately preceding
paragraph.
Meetings of Shareholders; Cumulative Voting; Proxies
WFC. An action required to be taken or which may be taken at any annual
or special meeting of shareholders of WFC may be taken without a meeting if all
shareholders entitled to vote thereon consent to such action in writing. The
power of shareholders to take action by non-unanimous consent is specifically
denied. In the case of a merger, consolidation, acquisition of all capital
shares of WFC or sale of assets, such action may be taken without a meeting only
if all shareholders consent in writing, or if all shareholder entitled to vote
consent in writing and all other shareholders are provided the advance
notification required by Section 14A: 5-6(2)(b) of the New Jersey Business
Corporation Act.
Special meetings of the shareholders of WFC for any purpose or purposes
may be called at any time by the chairman of the board, a majority of the board
of directors of WFC, or by a committee of the board of directors which has been
duly designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the Bylaws of WFC,
include the power and authority to call such meetings.
Each shareholder entitled to vote at a meeting of shareholders may
authorize another person or persons to act for him by proxy, but no such proxy
will be voted or acted upon after 11 months from its date, unless the proxy
provides for a longer period. Without limiting the manner in which a shareholder
may authorize another person or persons to act for him as proxy, the following
constitutes a valid means by which a shareholder may grant such authority.
There is no cumulative voting by shareholders of any class or series in
the election of directors of WFC.
Meetings of shareholders may be held within or without the State of New
Jersey, as the Bylaws of WFC may provide.
LFC. An action required to be taken or which may be taken at any annual
or special meeting of shareholders of LFC may be taken without a meeting if all
shareholders entitled to vote thereon consent to such action in writing. The
power of shareholders to take action by non-unanimous consent is specifically
denied. In the case of a merger, consolidation, acquisition of all capital
shares of LFC or
24
sale of assets, such action may be taken without a meeting only if all
shareholders consent in writing, or if all shareholder entitled to vote consent
in writing and all other shareholders are provided the advance notification
required by Section 14A: 5-6(2)(b) of the New Jersey Business Corporation Act.
Special meetings of the shareholders of LFC for any purpose or purposes
may be called at any time by the chairman of the board, a majority of the board
of directors of LFC, or by a committee of the board of directors which has been
duly designated by the board of directors and whose powers and authorities, as
provided in a resolution of the board of directors or in the Bylaws of LFC,
include the power and authority to call such meetings.
Each shareholder entitled to vote at a meeting of shareholders may
authorize another person or persons to act for him by proxy, but no such proxy
will be voted or acted upon after 11 months from its date, unless the proxy
provides for a longer period. Without limiting the manner in which a shareholder
may authorize another person or persons to act for him as proxy, the following
constitutes a valid means by which a shareholder may grant such authority.
There is no cumulative voting by shareholders of any class or series in
the election of directors of LFC.
Meetings of shareholders may be held within or without the State of New
Jersey, as the Bylaws of LFC may provide.
Nominations to the Board of Directors, Shareholder Proposals, and Conduct of
Meetings
WFC. Nominations of candidates for election as directors at any annual
meeting of shareholders may be made (a) by or at the direction of, a majority of
the board of directors or (b) by any shareholder entitled to vote at such annual
meeting. Only persons nominated in accordance with certain procedures described
in WFC's Bylaws (which are summarized below) will be eligible for election as
directors at an annual meeting. Ballots bearing the names of all the persons who
have been nominated for election as directors at an annual meeting will be
provided for use at the annual meeting.
Nominations, other than those made by or at the direction of the board
of directors, must be made pursuant to timely notice in writing to WFC's
Secretary. To be timely, a shareholder's notice shall be delivered to, or mailed
and received at, WFC's principal office not less than 60 days prior to the
anniversary date of the immediately preceding annual meeting of shareholders.
Proposals, other than those made by or at the direction of the board of
directors, must be made pursuant to timely notice in writing to WFC's Secretary.
For shareholder proposals to be included in WFC's proxy materials, the
shareholder must comply with all the timing and informational requirements of
Rule 14a-8 of the Exchange Act or any successor regulation. With respect to
shareholder proposals to be considered at the annual meeting of shareholders but
not included in WFC's proxy materials, the shareholder's notice must be
delivered to, or mailed and received at, the principal office of WFC not less
than 60 days prior to the anniversary date of the immediately preceding annual
meeting of shareholders of WFC.
The board of directors may reject any nomination by a shareholder or
shareholder proposal not timely made. If the board of directors, or a designated
committee thereof, determines that the information provided in a shareholder's
notice does not satisfy the informational requirements in any
25
material respect, the Secretary of WFC will notify such shareholder of the
deficiency in the notice. The shareholder will have an opportunity to cure the
deficiency by providing additional information to the Secretary within such
period of time, not to exceed five days from the date such deficiency notice is
given to the shareholder, as the board of directors or such committee shall
reasonably determine. If the deficiency is not cured within such period, or if
the board of directors or such committee reasonably determines that the
additional information provided by the shareholder, together with information
previously provided, does not satisfy the specified requirements in any material
respect, then the board of directors may reject such shareholder's nomination or
proposal. The Secretary of WFC will notify a shareholder in writing whether his
nomination or proposal has been made in accordance with the time and
informational requirements. Notwithstanding the procedures set forth in this
paragraph, if neither the board of directors nor such committee makes a
determination as to the validity of any nominations or proposals by a
shareholder, the presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the nomination or proposal was made in
accordance with the terms of WFC's Bylaws.
LFC. Nominations of candidates for election as directors at any annual
meeting of shareholders may be made (a) by or at the direction of, a majority of
the board of directors or (b) by any shareholder entitled to vote at such annual
meeting. Only persons nominated in accordance with certain procedures described
in LFC's Bylaws (which are summarized below) will be eligible for election as
directors at an annual meeting. Ballots bearing the names of all the persons who
have been nominated for election as directors at an annual meeting will be
provided for use at the annual meeting.
Nominations, other than those made by or at the direction of the board
of directors, must be made pursuant to timely notice in writing to LFC's
Secretary. To be timely, a shareholder's notice shall be delivered to, or mailed
and received at, LFC's principal office not less than 60 days prior to the
anniversary date of the immediately preceding annual meeting of shareholders.
Proposals, other than those made by or at the direction of the board of
directors, must be made pursuant to timely notice in writing to LFC's Secretary.
For shareholder proposals to be included in LFC's proxy materials, the
shareholder must comply with all the timing and informational requirements of
Rule 14a-8 of the Exchange Act or any successor regulation. With respect to
shareholder proposals to be considered at the annual meeting of shareholders but
not included in LFC's proxy materials, the shareholder's notice must be
delivered to, or mailed and received at, the principal office of LFC not less
than 60 days prior to the anniversary date of the immediately preceding annual
meeting of shareholders of LFC.
The board of directors may reject any nomination by a shareholder or
shareholder proposal not timely made. If the board of directors, or a designated
committee thereof, determines that the information provided in a shareholder's
notice does not satisfy the informational requirements in any material respect,
the Secretary of LFC will notify such shareholder of the deficiency in the
notice. The shareholder will have an opportunity to cure the deficiency by
providing additional information to the Secretary within such period of time,
not to exceed five days from the date such deficiency notice is given to the
shareholder, as the board of directors or such committee shall reasonably
determine. If the deficiency is not cured within such period, or if the board of
directors or such committee reasonably determines that the additional
information provided by the shareholder, together with information previously
provided, does not satisfy the specified requirements in any material respect,
then the board of directors may reject such shareholder's nomination or
proposal. The Secretary of LFC will notify a shareholder in writing whether his
nomination or proposal has been made in accordance with the time
26
and informational requirements. Notwithstanding the procedures set forth in this
paragraph, if neither the board of directors nor such committee makes a
determination as to the validity of any nominations or proposals by a
shareholder, the presiding officer of the annual meeting shall determine and
declare at the annual meeting whether the nomination or proposal was made in
accordance with the terms of LFC's Bylaws.
Authorized Shares
WFC. The aggregate number of shares of all classes of capital stock
which WFC has authority to issue is 7,000,000 of which 5,000,000 are to be
shares of common stock, $0.10 par value per share, and of which 2,000,000 are to
be shares of serial preferred stock, $0.10 par value per share. The shares may
be issued by WFC without the approval of shareholders except as otherwise
provided in its Certificate of Incorporation or the rules of a national
securities exchange, if applicable. The consideration for the issuance of the
shares will be paid to or received by WFC in full before their issuance and will
not be less than the par value per share. The consideration for the issuance of
the shares will be cash, services rendered, personal property (tangible or
intangible), real property, leases of real property or any combination of the
foregoing. In the absence of actual fraud in the transaction, the judgment of
WFC's board of directors as to the value of such consideration will be
conclusive. Upon payment of such consideration such shares will be deemed to be
fully paid and nonassessable. In the case of a stock dividend, the part of the
surplus of WFC which is transferred to stated capital upon the issuance of
shares as a stock dividend will be deemed to be the consideration for their
issuance.
LFC. The aggregate number of shares of all classes of capital stock
which LFC has authority to issue is 10,000,000 shares of common stock, $1.00 par
value per share. The shares may be issued by LFC without the approval of
shareholders except as otherwise provided in its Certificate of Incorporation or
the rules of a national securities exchange, if applicable. The consideration
for the issuance of the shares will be paid to or received by LFC in full before
their issuance and will not be less than the par value per share. The
consideration for the issuance of the shares will be cash, services rendered,
personal property (tangible or intangible), real property, leases of real
property or any combination of the foregoing. In the absence of actual fraud in
the transaction, the judgment of LFC's board of directors as to the value of
such consideration will be conclusive. Upon payment of such consideration such
shares will be deemed to be fully paid and nonassessable. In the case of a stock
dividend, the part of the surplus of LFC which is transferred to stated capital
upon the issuance of shares as a stock dividend will be deemed to be the
consideration for their issuance.
Limitations on Voting
WFC. In no event may any record owner of any outstanding WFC Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of shareholders entitled to vote on any
matter, beneficially owns in excess of 10% of the then-outstanding shares of WFC
Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of
the shares held in excess of the Limit. The number of votes which may be cast by
any record owner by virtue of the provisions hereof in respect of WFC Common
Stock beneficially owned by such person owning shares in excess of the Limit
shall be a number equal to the total number of votes which a single record owner
of all WFC Common Stock owned by such person would be entitled to cast,
multiplied by a fraction, the numerator of which is the number of shares of such
class or series which are both beneficially owned by such person and owned of
record by such record owner and the denominator of which is the total number
27
of shares of WFC Common Stock beneficially owned by such person owning shares in
excess of the Limit.
Further, for a period of five years from the completion of the
conversion of the Mutual Holding Company (i.e., June 6, 1996) to stock form, no
person may directly or indirectly offer to acquire or acquire the beneficial
ownership of more than 10% of any class of any equity security of WFC.
LFC. In no event may any record owner of any outstanding LFC Common
Stock which is beneficially owned, directly or indirectly, by a person who, as
of any record date for the determination of shareholders entitled to vote on any
matter, beneficially owns in excess of 10% of the then-outstanding shares of LFC
Common Stock (the "Limit"), be entitled, or permitted to any vote in respect of
the shares held in excess of the Limit. The number of votes which may be cast by
any record owner by virtue of the provisions hereof in respect of LFC Common
Stock beneficially owned by such person owning shares in excess of the Limit
shall be a number equal to the total number of votes which a single record owner
of all LFC Common Stock owned by such person would be entitled to cast,
multiplied by a fraction, the numerator of which is the number of shares of such
class or series which are both beneficially owned by such person and owned of
record by such record owner and the denominator of which is the total number of
shares of LFC Common Stock beneficially owned by such person owning shares in
excess of the Limit.
Indemnification; Limitation of Liability
WFC. WFC's Certificate of Incorporation provides, in accordance with
the NJBCA, that WFC shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, including actions by or in the right of WFC, whether civil,
criminal, administrative, arbitrative or investigative, by reason of the fact
that such person is or was a director, officer, employee or agent of WFC or of
any constituent corporation absorbed by WFC in a consolidation or merger, or is
or was serving at the request of WFC as a director, officer, employee or agent
of another Company, partnership, joint venture, sole proprietorship, trust or
other enterprise, against expenses (including attorneys' fees), judgements,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding to the full extent
permissible under NJBCA.
WFC may pay in advance any expenses (including attorneys' fees) which
may become subject to indemnification if the person receiving the payment
undertakes in writing to repay the same if it is ultimately determined that he
or she is not entitled to indemnification by WFC under New Jersey law. WFC may
purchase and maintain insurance on behalf of any person who is eligible for
indemnification, against any liability incurred by him or her in any such
position, or arising out of his or her status as such, whether or not WFC would
have power to indemnify him or her against such liability under the Certificate
of Incorporation and New Jersey law.
LFC. LFC's Certificate of Incorporation provides, in accordance with
the NJBCA, that LFC shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, including actions by or in the right of LFC, whether civil,
criminal, administrative, arbitrative or investigative, by reason of the fact
that such person is or was a director, officer, employee or agent of LFC or of
any constituent corporation absorbed by LFC in a consolidation or merger, or is
or was serving at the request of LFC as a director, officer, employee or agent
of another Company, partnership, joint venture, sole proprietorship, trust or
other enterprise,
28
against expenses (including attorneys' fees), judgements, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding to the full extent permissible under NJBCA.
LFC may pay in advance any expenses (including attorneys' fees) which
may become subject to indemnification if the person receiving the payment
undertakes in writing to repay the same if it is ultimately determined that he
or she is not entitled to indemnification by LFC under New Jersey law. LFC may
purchase and maintain insurance on behalf of any person who is eligible for
indemnification, against any liability incurred by him or her in any such
position, or arising out of his or her status as such, whether or not LFC would
have power to indemnify him or her against such liability under the Certificate
of Incorporation and New Jersey law.
LFC
Description of Business
LFC, a New Jersey corporation and savings and loan holding company with
principal executive offices at 1117 Main Street, Paterson, New Jersey, through
its wholly-owned savings bank subsidiary, LVSB, operated, as of July 31, 1997,
eight banking offices located in Bergen and Passaic Counties, New Jersey.
Lakeview's primary business consist of attracting deposits from the general
public and originating loans that are secured by residential properties, as well
as originating multi-family, commercial real estate, home equity, second
mortgage and home improvement loans. In addition, LFC owns two active nonbank
subsidiaries that are engaged primarily in mortgage brokerage services.
DESCRIPTION OF LFC CAPITAL STOCK
The aggregate number of shares of all classes of capital stock which
the LFC has authority to issue is 10,000,000 shares of common stock, $1.00 par
value per share. The shares may be issued by the LFC from time to time as
approved by the board of directors of the LFC without the approval of the
stockholders except as otherwise provided in this Certificate or the rules of a
national securities exchange if applicable. The consideration for the issuance
of the shares shall be paid to or received by the LFC in full before their
issuance and shall not be less than the par value per share. The consideration
for the issuance of the shares may be paid in whole or in part, in cash, real
property, in tangible or intangible personal property, including stock of
another corporation, in labor or services actually performed for the corporation
or in its formation, or as otherwise permitted by New Jersey law. In the absence
of actual fraud in the transaction, the judgment of the board of directors or
the stockholders as the case may be as to the value of such consideration shall
be conclusive. Upon payment of such consideration such shares shall be deemed to
be fully paid and nonassessable. In the case of a stock dividend, the part of
the surplus of the LFC which is transferred to stated capital upon the issuance
of shares as a stock dividend shall be deemed to be the consideration for their
issuance.
The holders of the common stock shall exclusively possess all voting
power. Each holder of shares of common stock shall be entitled to one vote for
each share held by such holders.
Whenever there shall have been paid, or declared and set aside for
payment, to the holders of the outstanding shares of any class of stock having
preference over the common stock as to the payment of dividends, the full amount
of dividends and sinking fund or retirement fund or other retirement payments,
if any, to which such holders are respectively entitled in preference to the
common stock, then dividends
29
may be paid on the common stock, and on any class or series of stock entitled to
participate therewith as to dividends, out of any assets legally available for
the payment of dividends, but only when as declared by the board of directors of
LFC.
In the event of any liquidation, dissolution or winding up of LFC,
after there shall have been paid, or declared and set aside for payment, to the
holders of the outstanding shares of any class having preference over the common
stock in any such event, the full preferential amounts to which they are
respectively entitled, the holders of the common stock and of any class or
series of stock entitled to participate therewith, in whole or in part, as to
distribution of assets shall be entitled, after payment or provision for payment
of all debts and liabilities of LFC, including the payment of all fees, taxes
and other expenses incidental thereto, to receive the remaining assets of LFC
available for distribution, in cash or in kind.
Each share of common stock shall have the same relative rights,
preferences and limitations as, and shall be identical in all respects with, all
the other shares of common stock of LFC.
WFC
Description of Business
WFC, a New Jersey corporation and bank holding company with principal
executive offices at 700-88 Broadway, Westwood, New Jersey, through its
wholly-owned savings and loan savings bank subsidiary, Westwood Savings Bank
("WSB"), operated as of September 30, 1997, two banking offices in Westwood and
Haworth, New Jersey. Westwood's primary business consist of attracting deposits
from the general public and originating loans that are secured by residential
properties as well as originating commercial real estate and consumer loans.
EXPERTS
The consolidated financial statements of LFC as of July 31, 1997 and
1996, and for each of the years in the three-year period ended July 31, 1997,
have been incorporated by reference herein and in the Registration Statement in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein and upon the authority of said
firm as experts in accounting and auditing.
The consolidated financial statements of WFC as of March 31, 1997 and
1996, and for each of the years in the two-year period ended March 31, 1997 have
been incorporated by reference herein and in the Registration Statement in
reliance upon the report of RD Hunter & Company, independent certified public
accountants, incorporated by reference herein and upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of LFC Common Stock to be issued to WFC Shareholders
pursuant to the Merger and certain other legal matters in connection with the
Merger will be passed upon for LFC by Malizia, Spidi, Sloane & Fisch, P.C.,
Washington, D.C.
30
OTHER MATTERS
As of the date of this Proxy Statement, management of WFC know of no
other business that will come before the Special Meeting. Should any other
matters properly come before the Special Meeting, the proxy in the enclosed form
confers upon the person or persons designated to vote the shares discretionary
authority to vote the same with respect to any other matter in accordance with
the direction of the WFC Board.
31
APPENDIX I
AGREEMENT AND PLAN OF REORGANIZATION
by and between
LAKEVIEW FINANCIAL CORP. AND
LAKEVIEW SAVINGS BANK
and
WESTWOOD FINANCIAL CORPORATION AND
WESTWOOD SAVINGS BANK
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
Page
----
Recitals............................................................................. 1
ARTICLE 1
TERMS OF THE REORGANIZATION
1.1 The Merger........................................................................... 2
----------
(a) Effects of the Merger....................................................... 2
---------------------
(b) Transfer of Assets.......................................................... 2
------------------
(c) Assumption of Liabilities................................................... 2
-------------------------
1.2 Certificate of Incorporation, Bylaws, Directors, Officers and Name of the
-------------------------------------------------------------------------
Surviving Corporation................................................................ 2
---------------------
(a) Certificate of Incorporation................................................ 2
----------------------------
(b) Bylaws...................................................................... 2
------
(c) Directors and Officers...................................................... 3
----------------------
(d) Name........................................................................ 3
----
1.3 Availability of Information.......................................................... 3
---------------------------
1.4 Subsidiary Merger and Lakeview's Right to Revise the Structure
--------------------------------------------------------------
of the Transaction; Antidilution Provisions.......................................... 3
-------------------------------------------
1.5 WFC Stock Options.................................................................... 3
-----------------
1.6 Employment Agreements................................................................ 3
---------------------
1.7 Employees............................................................................ 4
---------
1.8 Earnest Money Deposit................................................................ 4
---------------------
1.9 Anti-dilution Provisions............................................................. 4
------------------------
ARTICLE 2
DESCRIPTION OF TRANSACTION
2.1 Terms of the Merger.................................................................. 5
-------------------
(a) Satisfaction of Conditions to Closing....................................... 5
-------------------------------------
(b) Effective Time of the Merger................................................ 5
----------------------------
2.2 Conversion of Stock.................................................................. 5
-------------------
(a) Consideration............................................................... 5
-------------
(b) Cash or Stock Merger Consideration.......................................... 5
----------------------------------
(c) Final Market Price.......................................................... 6
------------------
(d) Fractional Shares........................................................... 6
-----------------
(e) Calculation Schedule........................................................ 6
--------------------
2.3 Election and Allocation Procedures................................................... 6
----------------------------------
2.4 Election Procedures.................................................................. 8
-------------------
2.5 Mechanics of Payment of Consideration ............................................... 9
-------------------------------------
2.6 Time and Place of Closing............................................................ 9
-------------------------
i
ARTICLE 3
REPRESENTATION AND WARRANTIES OF LAKEVIEW AND LAKEVIEW BANK
3.1 Organization and Corporate Authority................................................. 10
------------------------------------
3.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
----------------------------------------------------------------------
Breach............................................................................... 10
------
3.3 No Legal Bar......................................................................... 11
------------
3.4 Government Approvals................................................................. 11
--------------------
3.5 Capitalization....................................................................... 11
--------------
3.6 Lakeview Financial Statements........................................................ 11
-----------------------------
3.7 1934 Act and Nasdaq National Market.................................................. 12
-----------------------------------
3.8 The Lakeview Common Stock............................................................ 12
-------------------------
3.9 Licenses, Franchises, and Permits.................................................... 12
---------------------------------
3.10 Absence of Certain Changes........................................................... 12
--------------------------
3.11 Tax Matters.......................................................................... 13
-----------
3.12 Litigation........................................................................... 13
----------
3.13 Absence of Undisclosed Liabilities................................................... 13
----------------------------------
3.14 Compliance with Laws................................................................. 14
--------------------
3.15 Material Contract Defaults........................................................... 14
--------------------------
3.16 Disclosure........................................................................... 14
----------
3.17 Certain Regulatory Matters........................................................... 15
--------------------------
3.18 Delays............................................................................... 15
------
3.19 Corporate Approvals.................................................................. 15
-------------------
3.20 Charter Documents.................................................................... 15
-----------------
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WFC AND WESTWOOD BANK
4.1 Organization and Qualification of WFC and Subsidiaries............................... 15
------------------------------------------------------
4.2 Authorization, Execution and Delivery; Reorganization Agreement Not in
----------------------------------------------------------------------
Breach.............................................................................. 16
------
4.3 No Legal Bar......................................................................... 17
------------
4.4 Government and Other Approvals....................................................... 17
------------------------------
4.5 Licenses, Franchises and Permits..................................................... 17
--------------------------------
4.6 Charter Documents.................................................................... 17
-----------------
4.7 WFC Financial Statements............................................................. 17
------------------------
4.8 Absence of Certain Changes........................................................... 18
--------------------------
4.9 Deposits............................................................................. 19
--------
4.10 Properties........................................................................... 19
----------
4.11 Condition of Fixed Assets and Equipment.............................................. 19
---------------------------------------
4.12 Tax Matters.......................................................................... 19
-----------
4.13 Litigation........................................................................... 20
----------
4.14 Environmental Materials.............................................................. 20
-----------------------
4.15 Insurance............................................................................ 21
---------
4.16 Books and Records.................................................................... 21
-----------------
4.17 Capitalization of WFC................................................................ 21
---------------------
4.18 Sole Agreement....................................................................... 21
--------------
4.19 Disclosure........................................................................... 22
----------
ii
4.20 Absence of Undisclosed Liabilities................................................... 22
----------------------------------
4.21 Allowance for Possible Loan or REO Losses............................................ 22
-----------------------------------------
4.22 Loan Portfolio....................................................................... 23
--------------
4.23 Compliance with Laws................................................................. 24
--------------------
4.24 Employee Benefit Plans............................................................... 24
----------------------
4.25 Material Contracts................................................................... 25
------------------
4.26 Material Contract Defaults........................................................... 25
--------------------------
4.27 Reports.............................................................................. 25
-------
4.28 1934 Act and Nasdaq Small Cap Market................................................. 25
------------------------------------
4.29 Statements True and Correct.......................................................... 26
---------------------------
4.30 Investment Securities................................................................ 26
---------------------
4.31 Certain Regulatory Matters........................................................... 26
--------------------------
4.32 Corporate Approval................................................................... 27
------------------
4.33 Broker's and Finder's Fees........................................................... 27
--------------------------
ARTICLE 5
COVENANTS OF LAKEVIEW
5.1 Regulatory and Other Approvals....................................................... 27
------------------------------
5.2 Approvals and Registrations.......................................................... 28
---------------------------
5.3 Employee Benefits.................................................................... 28
-----------------
5.4 Notification......................................................................... 29
------------
5.5 Tax Representations.................................................................. 29
-------------------
5.6 Directors and Officers Indemnification and Insurance Coverage........................ 29
-------------------------------------------------------------
5.7 Conduct of Lakeview and Lakeview Bank Prior to the Effective Time.................... 30
-----------------------------------------------------------------
ARTICLE 6
COVENANTS OF WFC AND WESTWOOD BANK
6.1 Preparation of Registration Statement and Applications For Required Consents......... 30
----------------------------------------------------------------------------
6.2 Conduct of Business -- Affirmative Covenants......................................... 30
--------------------------------------------
6.3 Conduct of Business -- Negative Covenants............................................ 32
-----------------------------------------
6.4 Conduct of Business -- Certain Actions............................................... 35
--------------------------------------
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of WFC................................................. 35
------------------------------------
(a) Performance................................................................. 35
-----------
(b) No Material Adverse Change.................................................. 35
--------------------------
(c) Representations and Warranties.............................................. 35
------------------------------
(d) Documents................................................................... 36
---------
(e) Consideration............................................................... 36
-------------
(f) Opinion of Lakeview's Counsel............................................... 36
-----------------------------
(g) Fairness Opinion............................................................ 37
----------------
iii
7.2 Conditions to the Obligations of Lakeview............................................ 37
-----------------------------------------
(a) Performance................................................................. 38
-----------
(b) Representations and Warranties.............................................. 38
------------------------------
(c) Documents................................................................... 38
---------
(d) Inspections Permitted....................................................... 38
---------------------
(e) No Material Adverse Change.................................................. 38
--------------------------
(f) Opinion of WFC's Counsel.................................................... 39
------------------------
(g) Other Business Combinations, Etc............................................ 39
--------------------------------
(h) Regulatory Approvals........................................................ 39
--------------------
(i) WFC Stockholder Approval.................................................... 40
------------------------
(j) No Lakeview Stockholder Approval............................................ 40
--------------------------------
7.3 Conditions to Obligations of All Parties............................................. 40
----------------------------------------
(a) No Pending or Threatened Claims............................................. 40
-------------------------------
(b) Governmental Approvals and Acquiescence Obtained............................ 40
------------------------------------------------
(c) Approval of Stockholders.................................................... 40
------------------------
(d) Effectiveness of Registration Statement..................................... 40
---------------------------------------
(e) Tax Opinion................................................................. 40
-----------
ARTICLE 8
TERMINATION
8.1 Termination.......................................................................... 41
-----------
8.2 Effect of Termination................................................................ 41
---------------------
8.3 Fees................................................................................. 42
----
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices.............................................................................. 43
-------
9.2 Governing Law........................................................................ 43
-------------
9.3 Counterparts......................................................................... 44
------------
9.4 Publicity............................................................................ 44
---------
9.5 Entire Agreement..................................................................... 44
----------------
9.6 Severability......................................................................... 44
------------
9.7 Modifications, Amendments and Waivers................................................ 45
-------------------------------------
9.8 Interpretation....................................................................... 45
--------------
9.9 Payment of Expenses.................................................................. 45
-------------------
9.10 Attorneys' Fees...................................................................... 45
---------------
9.11 No Survival of Representations and Warranties........................................ 45
---------------------------------------------
9.12 No Waiver............................................................................ 45
---------
9.13 Remedies Cumulative.................................................................. 45
-------------------
9.14 Confidentiality...................................................................... 45
---------------
Exhibit A - Plan of Merger (Westwood Financial Corporation and
Lakeview Financial Corp....................................................................... 49
Exhibit B - Plan of Merger (Lakeview Savings Bank and Westwood Savings Bank).............................. 60
iv
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Reorganization
Agreement"), dated as of September 10, 1997, is entered into by and between
Lakeview Financial Corp. ("Lakeview" or the "Surviving Corporation" as the
context may require), a corporation incorporated and existing under the laws of
the State of New Jersey, which is registered as a savings and loan holding
company and whose executive offices are located at 989 McBride Avenue, Paterson,
New Jersey 07424; Lakeview Savings Bank ("Lakeview Bank"), a state savings bank,
chartered and existing under the laws of New Jersey, which has its main office
at 989 McBride Avenue, Paterson, New Jersey 07424, and is a wholly-owned
subsidiary of Lakeview; Westwood Financial Corporation ("WFC"), a corporation
organized and existing under the laws of the State of New Jersey, which is a
registered bank holding company and whose principal offices are located at
700-88 Broadway, Westwood, New Jersey 07675; and Westwood Savings Bank
("Westwood Bank"), a state savings bank, chartered and existing under the laws
of New Jersey, which has its main office at 700-88 Broadway, Westwood, New
Jersey 07675 and is a wholly-owned subsidiary of WFC.
Lakeview, Lakeview Bank, WFC and Westwood Bank are sometimes referred
to herein as the "Parties."
RECITALS
A. WFC is the beneficial owner and holder of record of 1,000 shares of
the common stock, $2.00 par value per share, of Westwood Bank, which constitute
all of the shares of common stock of Westwood issued and outstanding (the
"Westwood Common Stock").
B. The Boards of Directors of WFC and Westwood Bank deem it desirable
and in the best interests of WFC and Westwood Bank and the shareholders of WFC
(the "WFC Shareholders") that WFC be merged (the "Merger") with and into
Lakeview (which would survive the merger as the Surviving Corporation, as
defined herein) on the terms and subject to the conditions set forth in this
Reorganization Agreement and in the manner provided in this Reorganization
Agreement and the Plan of Merger (the "Plan of Merger") attached hereto as
Exhibit A.
C. The Board of Directors of Lakeview deems it desirable and in the
best interests of Lakeview and the shareholders of Lakeview that WFC be merged
with and into Lakeview on the terms and subject to the conditions set forth in
this Reorganization Agreement and in the manner provided in this Reorganization
Agreement and the Plan of Merger.
D. The Parties to this Reorganization Agreement further deem it
desirable and in the best interests of the respective corporations and their
shareholders that Westwood Bank be merged with and into Lakeview Bank (the
"Subsidiary Merger") concurrently with or as soon as reasonably practicable
after the Merger pursuant to the Merger Agreement attached hereto as Exhibit B
(the "Subsidiary Merger Agreement").
E. Pursuant to this Reorganization Agreement, each share of Westwood
Common Stock outstanding at the Effective Time of the Merger will be converted
into either (i) cash in the amount of $29.25 (the "Cash Merger Consideration,"
as defined herein), or (ii) shares of Lakeview Common Stock having a Final
Market Price (as defined herein) equal to $29.25 (the "Stock Merger
Consideration as
defined herein). Shareholders of Westwood Common Stock will be entitled to elect
their preference with respect to each share of Westwood Common Stock held by
them, subject to pro-rata allocation, such that an aggregate of 49.9% will be
converted into the Cash Merger Consideration, and 50.1% will be converted into
the Stock Merger Consideration.
F. It is agreed that the number of outstanding shares of Westwood
Common Stock (including shares issued under any restricted or management stock
bonus plan) outstanding, including 58,335 stock options, is 703,630, resulting
in total aggregate consideration of $20,581,178, at least half of which will be
paid in the form of Lakeview Common Stock.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties, covenants and agreements herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Parties agree as follows:
AGREEMENT
ARTICLE 1
TERMS OF THE REORGANIZATION
1.1 The Merger. Subject to the satisfaction (or lawful
waiver) of each of the condi- tions to the obligations of each of the Parties to
this Reorganization Agreement, at the Effective Time of the Merger (as defined
in Section 2.1(b) herein), WFC shall be merged with and into Lakeview, which
latter corporation shall survive the Merger and is referred to herein in such
capacity as the "Surviving Corporation." The Merger shall have the effects set
forth in the New Jersey Business Corporation Act ("NJBCA"), with respect to
mergers of corporate entities.
(a) Effects of the Merger. At the Effective Time of
the Merger, the separate existence of WFC shall cease, and WFC shall be merged
with and into Lakeview which, as the Surviving Corporation, shall thereupon and
thereafter possess all of the assets, rights, privileges, appointments, powers,
licenses, permits and franchises of the two merged corporations, whether of a
public or a private nature, and shall be subject to all of the liabilities,
restrictions, disabilities and duties of WFC. The Merger is intended to be
treated by the parties as a reorganization within the meaning of Section 368 of
the Internal Revenue Code of 1986, as amended, (the "Code").
(b) Transfer of Assets. At the Effective Time of the
Merger, all rights, assets, licenses, permits, franchises and interests of WFC
in and to every type of property, whether real, personal, or mixed, whether
tangible or intangible, and choses in action shall be deemed to be vested in
Lakeview as the Surviving Corporation by virtue of the Merger becoming effective
and without any deed or other instrument or act of transfer whatsoever.
(c) Assumption of Liabilities. At the Effective Time
of the Merger, the Surviving Corporation shall become and be liable for all
debts, liabilities, obligations and contracts of WFC whether the same shall be
matured or unmatured; whether accrued, absolute, contingent or otherwise; and
whether or not reflected or reserved against in the balance sheets, other
financial statements, books of account or records of WFC.
- 2 -
1.2 Certificate of Incorporation, Bylaws, Directors, Officers
and Name of the Surviving Corporation.
(a) Certificate of Incorporation. At and after the
Effective Time of the Merger, the Certificate of Incorporation of Lakeview, as
in effect immediately prior to the Effective Time of the Merger, shall continue
to be the Certificate of Incorporation of Lakeview as the Surviving Corporation,
unless and until amended thereafter as provided by law and the terms of such
Certificate of Incorporation.
(b) Bylaws. At and after the Effective Time of the
Merger, the Bylaws of Lakeview, as in effect immediately prior to the Effective
Time of the Merger, shall continue to be the Bylaws of Lakeview as the Surviving
Corporation, unless and until amended or repealed as provided by law, the
Certificate of Incorporation of Lakeview and such Bylaws.
(c) Directors and Officers. The directors of
Lakeview in office immediately prior to the Effective Time of the Merger shall
continue to be the directors and officers of the Surviving Corporation, to hold
office as provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, unless and until their successors shall have been elected
or appointed and shall have qualified or until they shall have been removed in
the manner provided in said Certificate of Incorporation and Bylaws.
(d) Advisory Board. The Surviving Corporation shall
appoint William J. Woods, Joanne Miller and John M. Caruso to an Advisory Board
of the Surviving Corporation for a period of at least three years. Mr. Caruso
will receive annual board fees of at not less than $7,500. Mr. Woods and Ms.
Miller will not receive fees for their services.
(e) Name. The name of the Surviving Corporation
following the Merger shall be: Lakeview Financial Corp.
1.3 Availability of Information. Promptly after the execution
by the Parties of this Reorganization Agreement, each Party shall provide to the
other Party, its officers, employees, agents, and representatives access, on
reasonable notice and during customary business hours, to the books, records,
properties and facilities of the Party and shall use its best efforts to cause
its officers, employees, agents and representatives to cooperate with any of the
reviewing Party's reasonable requests for information.
1.4 Subsidiary Merger and Lakeview's Right to Revise the
Structure of the Transaction. The Parties to this Reorganization Agreement shall
take all such action as shall be necessary or appropriate to effect the
Subsidiary Merger pursuant to the terms, subject to the conditions and with the
effects set forth in the Subsidiary Merger Agreement, at or as soon after the
Effective Time of the Merger as is reasonably practicable. With the consent of
WFC, which will not unreasonably be withheld, Lakeview shall have the right to
revise the structure of the corporate Reorganization contemplated by this
Reorganization Agreement in order to achieve tax benefits or for regulatory
reasons which Lakeview may deem advisable; Lakeview may exercise this right of
revision by giving written notice to WFC and Westwood Bank in the manner
provided in this Reorganization Agreement which notice shall be in the form of
an amendment to this Reorganization Agreement or in the form of an Amended and
Restated Agreement and Plan of Reorganization.
- 3 -
1.5 WFC Stock Options. As of the date of this Reorganization
Agreement, there are 58,335 validly issued, outstanding and currently
exercisable options to purchase shares of WFC Common Stock (the "WFC Stock
Options"), and no other options, rights, warrants, scrip or similar rights to
purchase shares of WFC Common Stock are issued and outstanding. At the Effective
Time of the Merger, there will be no issued and outstanding WFC Stock Options.
1.6 Employment Agreements. It is acknowledged that WFC
currently has outstanding, valid and enforceable severance agreements
("Severance Agreements") with Colleen Krenizcky, Joanne Miller, George Niemczyk,
Robert L. Pierson, and Frances Lynne Kopp. Immediately prior to the closing of
the transaction, WFC will terminate the employment of Ms. Miller, President of
Westwood Bank, and pay the "Change of Control" lump sum payment provided for in
Section 3 of her Severance Agreement estimated in accordance with Schedule 1.6,
subject to final adjustment, as of the Closing Date. At the closing of the
acquisition, the Surviving Corporation will hire Ms. Miller for a period of at
least three years at a salary no less than her current salary. As to Colleen
Krenizcky, George E. Niemczyk, Robert L. Pierson and Frances Lynne Kopp ("Other
Management"), the Surviving Corporation shall have the option to either retain
such individuals as employees of the Surviving Corporation, or terminate their
employment subsequent to the close of the transaction, subject to the terms of
the Severance Agreements. In the event the Surviving Corporation offers
employment to any of the Other Management, such individual(s) shall have the
option to accept such employment or collect payment under the terms of their
Severance Agreement. Chairman of the Board, William J. Woods will receive a
consulting agreement for a term not less than three years at his current salary
of $80,000 per year. Such payments will continue to be paid to the spouse,
survivor(s) or estate of Mr. Woods in the event of death or disability.
1.7 Employees. Except as provided in Section 1.6 of this
Reorganization Agreement, the Surviving Corporation shall offer employment to
all employees of WFC and Westwood Bank as of the closing of the transaction at
their salary levels effective immediately prior to closing.
1.8 Earnest Money Deposit. Upon the signing of the
Reorganization Agreement, the Surviving Corporation will deposit $250,000 of
earnest money at Westwood Bank in an account paying interest at a rate equal to
that paid on accounts for similar amounts and terms. The earnest money deposit
will be returned upon termination of the Reorganization Agreement pursuant to
Section 8.1 hereof; provided that Westwood Bank shall retain the earnest money
deposit in the event that WFC terminates the Reorganization Agreement pursuant
to Section 8.1(d) hereof.
1.9 Anti-dilution Provisions. In the event Lakeview changes
the number of shares of Lakeview Common Stock issued and outstanding prior to
the Effective Time of the Merger as a result of a stock split, stock dividend,
recapitalization or similar transaction with respect to the outstanding Lakeview
Common stock and the record date therefor shall be after the first date of the
Pricing Period (as defined below) and prior to the Effective Time of the Merger,
the Per Share Stock Consideration (as defined below) shall be proportionately
adjusted.
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ARTICLE 2
DESCRIPTION OF TRANSACTION
2.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After the
transactions contemplated herein have been approved by the shareholders of WFC
and each other condition to the obligations of the Parties hereto, other than
those conditions which are to be satisfied by delivery of documents by any Party
to any other Party, has been satisfied or, if lawfully permitted, waived by the
Party or Parties entitled to the benefits thereof, a closing (the "Closing")
will be held on the date and at the time of day and place referred to in this
Reorganization Agreement. At the Closing the Parties shall use their respective
best efforts to deliver the certificates, letters and opinions which constitute
conditions to effecting the Merger and the Subsidiary Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions to the obligations of such other Parties to consummate the Merger as
such other Parties may reasonably require. If all conditions to the obligations
of each of the Parties shall have been satisfied or lawfully waived by the Party
entitled to the benefits thereof, the Parties shall, at the Closing, duly
execute Articles of Merger for filing with the Secretary of State of the State
of New Jersey and promptly thereafter WFC and Lakeview shall take all steps
necessary or desirable to consummate the Merger in accordance with all
applicable laws, rules and regulations and the Plan of Merger. The Parties shall
thereupon take such other and further actions as Lakeview shall direct or as may
be required by law or this Reorganization Agreement to consummate the
transactions contemplated herein.
(b) Effective Time of the Merger. Upon the
satisfaction of all conditions to Closing, the Merger shall become effective on
the date and at the time of filing of the Articles of Merger with the Secretary
of State of the State of New Jersey or at such later date and/or time as may be
agreed upon by the Parties and set forth in the Articles of Merger so filed (the
"Effective Time of the Merger").
2.2 Conversion of Stock.
(a) Consideration. At the Effective Time of the
Merger, each share of common stock of WFC, par value $0.10 per share (the "WFC
Common Stock") then issued and outstanding (other than shares held directly or
indirectly by Lakeview, excluding shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive the cash and/or shares of stock of Lakeview
constituting the Per Share Merger Consideration (as defined in paragraph (b)
below). As of the Effective Time of the Merger, each share of the WFC Common
Stock held directly or indirectly by Lakeview, excluding shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall be
cancelled, retired and cease to exist, and no exchange or payment shall be made
with respect thereto.
(b) Cash or Stock Merger Consideration. As used
herein, the term "Per Share Merger Consideration" shall mean either the amount
of cash set forth in clause (i) below (the "Cash Merger Consideration") or that
number of shares of common stock of Lakeview, par value $2.00 per share
("Lakeview Common Stock") as set forth in clause (ii) below (the "Stock Merger
Consideration"), at the election of the holder of each share of WFC Common
Stock, subject however to proration as set forth below.
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(i) If Cash Merger Consideration is to
be paid with respect to a share of
WFC Common Stock, the Per Share
Merger Consideration with respect to
such share of WFC Common Stock shall
be in the amount of Twenty-nine
dollars and Twenty-five Cents
($29.25).
(ii) If Stock Merger Consideration is to
be paid with respect to a share of
WFC Common Stock, the Per Share
Merger Consideration with respect to
such share of WFC Common Stock shall
be that number of shares of Lakeview
Stock (the "Conversion Number")
equal to Twenty-nine Dollars and
Twenty-five Cents ($29.25) divided
by the Final Market Price as defined
below.
(c) Final Market Price. The "Final Market Price"
shall be the average closing price per share of the "last" real time trades
(i.e., closing price) of the Lakeview Common Stock as reported on the Nasdaq
National Market for each of the fifteen (15) Nasdaq National Market general
market trading days preceding one week prior to the Closing Date on which the
Nasdaq National Market was open for business (the "Pricing Period"). In the
event the Lakeview Common Stock does not trade on one or more of the trading
days during the Pricing Period (a "No Trade Date"), any such No Trade Date shall
be disregarded in computing the average closing price per share of Lakeview
Common Stock and the average shall be based upon the "last" real time trades and
number of days on which the Lakeview Common Stock actually traded during the
Pricing Period.
(d) Fractional Shares. Fractional shares of Lakeview
Common Stock shall not be issued and each holder of WFC Common Stock who would
otherwise be entitled to receive any such fractional shares (taking into account
all share amounts to which such holder is otherwise entitled hereunder) shall
receive cash (without interest) in lieu thereof in an amount equal to the
fraction of the share of Lakeview Common Stock to which such holder would
otherwise be entitled multiplied by the Final Market Price. No such holder will
be entitled to dividends, voting rights or any other rights of a stockholder of
Lakeview or WFC in respect of any such fractional share.
(e) Calculation Schedule. The calculations of the
respective amounts of cash and Lakeview Common Stock payable and issuable
pursuant to the terms of this Reorganization Agreement shall be jointly prepared
and agreed to by Lakeview and WFC and set forth in reasonable detail in a
schedule that shall be delivered to Registrar and Transfer Company (the
"Exchange Agent") prior to the Closing Date.
2.3 Election and Allocation Procedures.
(a) Subject to and in accordance with the allocation
and election procedures set forth herein, each record holder of a share of WFC
Common Stock (the "WFC Shareholders") shall, prior to the Election Deadline (as
hereinafter defined) specify (i) the number of whole shares of WFC Common Stock
held by such Shareholder as to which such Shareholder shall desire to receive
the Cash Merger Consideration, and (ii) the number of whole shares of WFC Common
Stock held by such Shareholder as to which such Shareholder shall desire to
receive the Stock Merger Consideration.
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(b) At the Effective Time of the Merger, each
unexercised WFC Stock Option shall be deemed cancelled and as consideration
therefor, at the election of each holder of a WFC Stock Option (the "Option
Holders," and together with the Shareholders the "Holders") shall be converted
into the right to receive either (i) solely a cash payment amount (the "Cash
Out") equal to the excess of (A) $29.25 over the exercise price per share of WFC
Common Stock covered by the WFC Stock Option, multiplied by (B) the total number
of shares of WFC Common Stock covered by the WFC Stock Option or (ii) solely a
number of shares of Lakeview Common Stock (the "Stock Exchange") equal to the
excess of (A) $29.25 over the exercise price per share of WFC Common Stock
covered by the WFC Stock Option, multiplied by (B) the total number of shares of
WFC Common Stock covered by the WFC Stock Option and divided by (C) the Final
Market Price.
(c) An election as described in clause (i) of
Paragraph (a) or Paragraph (b) of this Section is herein referred to as a "Cash
Election," and shares of WFC Common Stock as to which a Cash Election has been
made are herein referred to as "Cash Election Shares." An election as described
in clause (ii) of Paragraph (a) or Paragraph (b) is herein referred to as a
"Stock Election," and shares as to which a Stock Election has been made are
herein referred to as "Stock Election Shares." A failure to indicate a
preference in accordance herewith is herein referred to as a "Non-Election," and
shares as to which there is a Non-Election are herein referred to as
"Non-Electing Shares."
(d) Payment of cash pursuant to the Cash Merger
Consideration and the Cash Out, and issuance of Lakeview Common Stock pursuant
to the Stock Merger Consideration and the Stock Exchange, shall be allocated to
Holders such that the number of shares of WFC Common Stock (outstanding or
subject to WFC Stock Options) as to which cash is paid shall equal 49.9% of the
aggregate number of shares of WFC Common Stock outstanding plus those subject to
WFC Stock Options (the "Aggregate Shares"), and the number of shares of WFC
Common Stock (outstanding or subject to WFC Stock Options) as to which WFC Stock
are issued shall equal 50.1% of the Aggregate Shares, as follows:
(1) If the number of Cash Election Shares is
in excess of 49.9% of the Aggregate
Shares, then (i) Non-Electing Shares
shall be deemed to be Stock Election
Shares, (ii) Cash Election Shares of
Option Holders shall be treated as Cash
Election Shares without adjustment, and
(iii)(A) Cash Election Shares of each
Shareholder shall be reduced pro rata by
multiplying the number of Cash Election
Shares of such Shareholder by a
fraction, the numerator of which is the
number of shares of WFC Common Stock
equal to 49.9% of the Aggregate Shares
minus the aggregate number of Cash
Election Shares of Option Holders and
the denominator of which is the
aggregate number of Cash Election Shares
of all Shareholders, and (B) the shares
of such Shareholder representing the
difference between such Shareholder's
initial Cash Election and such
Shareholder's reduced Cash Election
pursuant to clause (A) shall be
converted into and be deemed to be Stock
Election Shares.
(2) If the number of Stock Election Shares
is in excess of 50.1% of the Aggregate
Shares, then (i) Non-Electing Shares
shall be deemed to be Cash Election
Shares, and (ii)(A) Stock Election
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Shares of each Holder shall be reduced
pro rata by multiplying the number of
Stock Election Shares of such Holder by
a fraction, the numerator of which is
the number of shares of WFC Common Stock
equal to 50.1% of the Aggregate Shares
and the denominator of which is the
aggregate number of Stock Election
Shares of all Holders, and (B) the
shares of such Holder representing the
difference between such Holder's initial
Stock Election and such Holder's reduced
Stock Election pursuant to clause (A)
shall be converted into to and be deemed
to be Cash Election Shares.
(3) If the number of Cash Election Shares is
less than or equal to 49.9% of the
Aggregate Shares and the number of Stock
Election Shares is less than or equal to
50.1% of the Aggregate Shares, then (i)
there shall be no adjustment to the
elections made by electing Holders, and
(ii) Non-Electing Shares of each Holder
shall be treated as Stock Elections
Shares and/or as Cash Election Shares in
proportion to the respective amounts by
which the Cash Election Shares and the
Stock Election Shares are less than the
49.9% and 50.1% limits, respectively.
(e) After taking into account the foregoing
adjustment provisions, each Cash Election Share (including those deemed to be
Cash Election Shares) shall receive in the Merger the Cash Merger Consideration
pursuant to Section 2.2(b) or the Cash Out pursuant to Section 2.3(b), as
applicable, and each Stock Election Share (including those deemed to be Stock
Election Shares) shall receive in the Merger the Stock Merger Consideration (and
cash in lieu of fractional shares) pursuant to Section 2.3(b) or the Stock
Exchange pursuant to Section to 2.3(b), as applicable.
(f) Satisfaction of Conditions to Closing.
Notwithstanding any other provision of this Agreement, if the application of the
provisions of this Section would result in Holders receiving a number of shares
of Lakeview Common Stock that would prevent the Per Share Merger Consideration
from consisting in the aggregate of 49.9% Cash Merger Consideration and 50.1%
Stock Merger Consideration or otherwise prevent the satisfaction of any of the
conditions set forth in Article 7 hereof, the number of shares otherwise
allocable to Holders pursuant to this section shall be adjusted in an equitable
manner as shall be necessary to enable the satisfaction of all conditions.
2.4 Election Procedures.
(a) WFC and Lakeview shall prepare a form for
purposes of making elections and containing instructions with respect thereto
(the "Election Form"). The Election Form shall be distributed to each Holder at
such time as WFC and Lakeview shall determine and shall specify the date by
which all such elections must be made (the "Election Deadline") which date shall
be the date of the meeting of WFC Shareholders to approve the Merger or such
other date determined by WFC and Lakeview.
(b) Elections shall be made by Holders by mailing to
the Exchange Agent a completed Election Form. To be effective, an Election Form
must be properly completed, signed and submitted to the Exchange Agent
accompanied by certificates representing the shares of WFC Common
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Stock or by the WFC Stock Option as to which the election is being made (or by
an appropriate guaranty of delivery by a commercial bank or trust company in the
United States or a member of a registered national security exchange or the
National Association of Security Dealers, Inc.), or by evidence that such
certificates have been lost, stolen or destroyed accompanied by such security or
indemnity as shall be reasonably requested by Lakeview. An Election Form and
accompanying share certificates or WFC Stock Options, as the case may be, must
be received by the Exchange Agent by the close of business on the Election
Deadline. An election may be changed or revoked but only by written notice
received by the Exchange Agent prior to the Election Deadline including, in the
case of a change, a properly completed revised Election Form.
(c) Lakeview will have the discretion, which it may
delegate in whole or in part to the Exchange Agent, to determine whether the
Election Forms have been properly completed, signed and submitted or changed or
revoked and to disregard immaterial defects in Election Forms. The decision of
Lakeview (or the Exchange Agent) in such matters shall be conclusive and
binding. Neither Lakeview nor the Exchange Agent will be under any obligation to
notify any person of any defect in an Election Form submitted to the Exchange
Agent.
(d) For the purposes hereof, a Holder who does not
submit an effective Election Form to the Exchange Agent prior to the Election
Deadline shall be deemed to have made a Non-Election.
(e) In the event that this Agreement is terminated
pursuant to the provisions hereof and any shares or WFC Stock Options have been
transmitted to the Exchange Agent pursuant to the provisions hereof, Lakeview
and WFC shall cause the Exchange Agent to promptly return such shares to the
person submitting the same.
2.5 Mechanics of Payment of Consideration.
(a) Surrender of Certificates pursuant to Section
2.2(b) or the Stock Exchange pursuant to Section 2.3(b), as applicable. Within
five business days after the Effective Time of the Merger, the Exchange Agent
shall deliver to each of the WFC Record Holders who have not previously
submitted properly completed Election Forms, accompanied by all certificates (or
other appropriate documentation) in respect of all shares of WFC Common Stock
held of record by such WFC Record Holders, such materials and information deemed
necessary by the Exchange Agent to advise the WFC Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the WFC Common Stock in order for the WFC Record Holders
to receive the Consideration to which they are entitled as provided herein. Such
materials shall include, without limitation, a Letter of Transmittal, an
Instruction Sheet, and a return mailing envelope addressed to the Exchange Agent
(collectively the "Shareholder Materials"). All Shareholder Materials shall be
sent by United States mail to the WFC Record Holders at the addresses set forth
on a certified shareholder list to be delivered by WFC to Lakeview at the
Closing (the "Shareholder List"). Lakeview shall also make appropriate
provisions with the Exchange Agent to enable WFC Record Holders to obtain the
Shareholder Materials from, and to deliver the certificates formerly
representing shares of WFC Common Stock to, the Exchange Agent in person,
commencing on or not later than the second business day following the Closing
Date. Upon receipt of the appropriate Shareholder Materials, together with the
certificates formerly evidencing and representing all of the shares of WFC
Common Stock which were validly held of record by such holder, the Exchange
Agent shall take prompt action to process such certificates formerly evidencing
and representing shares of WFC Common Stock received by it (including the prompt
- 9 -
return of any defective submissions with instructions as to those actions which
may be necessary to remedy any defects) and to mail to the former WFC Record
Holders in exchange for the certificate(s) surrendered by them, the
Consideration to be issued or paid for each such WFC Record Holder's shares
pursuant to the terms hereof. After the Effective Time of the Merger and until
properly surrendered to the Exchange Agent, each outstanding certificate or
certificates which formerly evidenced and represented the shares of WFC Common
Stock of a WFC Record Holder, subject to the provisions of this Section, shall
be deemed for all corporate purposes to represent and evidence only the right to
receive the Consideration into which such WFC Record Holder's shares of WFC
Common Stock were converted and aggregated at the Effective Time of the Merger.
Unless and until the outstanding certificate or certificates, which immediately
prior to the Effective Time of the Merger evidenced and represented the WFC
Record Holder's WFC Common Stock shall have been properly surrendered as
provided above, the Consideration issued or payable to the WFC Record Holder(s)
of the canceled shares as of any time after the Effective Date of the Merger
shall not be paid to the WFC Record Holder(s) of such certificate(s) until such
certificates shall have been surrendered in the manner required. Each WFC Record
Holder will be responsible for all federal, state and local taxes which may be
incurred by him on account of his receipt of the Consideration to be paid in the
Merger. The WFC Record Holder(s) of any certificate(s) which shall have been
lost or destroyed may nevertheless, subject to the provisions of this Article,
receive the Consideration to which each such WFC Record Holder is entitled,
provided that each such WFC Record Holder shall deliver to Lakeview and to the
Exchange Agent: (i) a sworn statement certifying such loss or destruction and
specifying the circumstances thereof and (ii) a lost instrument bond in form
satisfactory to Lakeview and the Exchange Agent which has been duly executed by
a corporate surety satisfactory to Lakeview and the Exchange Agent, indemnifying
the Surviving Corporation, Lakeview, the Exchange Agent (and their respective
successors) to their satisfaction against any loss or expense which any of them
may incur as a result of such lost or destroyed certificates being thereafter
presented. Any costs or expenses which may arise from such replacement
procedure, including the premium on the lost instrument bond, shall be paid by
the WFC Record Holder.
(b) Stock Transfer Books. At the Effective Time of
the Merger, the stock transfer books of WFC shall be closed and no transfer of
shares of WFC Common Stock shall be made thereafter.
(c) Reservation, Registration and Listing of Shares
of Lakeview Common Stock. Lakeview shall reserve for issuance, register under
the Securities Laws and apply for listing for trading on the Nasdaq National
Market a sufficient number of shares of Lakeview Common Stock for the purpose of
issuing shares of Lakeview Common Stock to the WFC Record Holders in accordance
with the terms and conditions of this Article.
2.6 Time and Place of Closing. Unless this Reorganization
Agreement shall have been herein terminated and the transactions herein
contemplated shall have been abandoned pursuant to Section 8.01 and subject to
the satisfaction or waiver of the conditions set forth in Article 7, the closing
of the Merger (the "Closing") will take place at 10:00 a.m. on the second
business day after satisfaction of the conditions set forth in Section 7.03 (or
as soon as practicable thereafter following satisfaction or waiver of the
conditions set forth in Sections 7.01 and 7.02) (the "Closing Date"), at the
offices of Malizia, Spidi, Sloane & Fisch, P.C., 1301 K Street, N.W., Suite 700
East, Washington, D.C. 20005, unless another date, time or place is agreed to in
writing by the parties hereto; provided, however, that the Closing Date will not
occur prior to January 1, 1998.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF LAKEVIEW AND LAKEVIEW BANK
Except as otherwise disclosed in one or more schedules
(collectively the "Lakeview Schedule") dated as of the date hereof and delivered
concurrently with this Reorganization Agreement, both as of the date hereof and
as of the Effective Time of the Merger, each of Lakeview and Lakeview Bank
represents and warrants to WFC and Westwood Bank as follows:
3.1 Organization and Corporate Authority. Lakeview is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New Jersey and Lakeview Bank is duly organized, validly existing
and in good standing under the laws of the State of New Jersey. Lakeview and
Lakeview Bank (i) have all requisite corporate power and authority to own,
operate and lease their material properties and carry on their businesses as is
currently being conducted; (ii) are in good standing and are duly qualified to
do business in each jurisdiction where the character of their properties owned
or held under lease or the nature of their business is such that failure to be
so qualified would have a material adverse effect on Lakeview and Lakeview Bank
taken as a whole; and (iii) have in effect all federal, state, local and foreign
governmental authorizations, permits and licenses necessary for them to own or
lease their properties and assets and to carry on their businesses as they are
currently being conducted. The Certificate of Incorporation and Bylaws of
Lakeview and the Certificate of Incorporation and Bylaws of Lakeview Bank, each
as amended to date, are in full force and effect.
3.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) Lakeview and Lakeview Bank have all requisite
corporate power and authority to execute and deliver this Reorganization
Agreement and the Plan of Merger and to consummate the transactions contemplated
hereby. The execution and delivery of this Reorganization Agreement and the Plan
of Merger and the consummation of the proposed transactions have been duly
authorized by at least a majority of the entire Boards of Directors of both
Lakeview and Lakeview Bank and no other corporate proceedings on the part of
Lakeview or Lakeview Bank are necessary to authorize the execution and delivery
of this Reorganization Agreement and the Plan of Merger and the consummation of
the transactions contemplated hereby and thereby. This Reorganization Agreement
and all other agreements and instruments herein contemplated to be executed by
Lakeview and Lakeview Bank have been (or upon execution will have been) duly
executed and delivered by Lakeview and Lakeview Bank and constitute (or upon
execution will constitute) legal, valid and enforceable obligations of Lakeview
and Lakeview Bank, subject, as to enforceability, to applicable bankruptcy,
insolvency, receivership, conservatorship, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and to the
application of equitable principles and judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Plan of Merger, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof will not result in a material violation or breach of any of
the terms or provisions of, or constitute a material default under (or an event
which, with the passage of time or the giving of notice or both, would
constitute such a material default under), or conflict with, or permit the
acceleration of any material obligation under, any material mortgage, lease,
covenant, agreement, indenture or other instrument to which Lakeview or Lakeview
Bank is a party or by which it or its property or any of its assets are bound,
the Certificate of Incorporation and Bylaws of Lakeview or the certificate of
incorporation or bylaws of Lakeview Bank, or any material judgment, decree,
order,
- 11 -
regulatory letter of understanding or award of any court, governmental body or
arbitrator by which Lakeview or Lakeview Bank is bound; or any material permit,
concession, grant, franchise, license, law, statute, ordinance, rule or
regulation applicable to Lakeview or Lakeview Bank or their properties, or
result in the creation of any material lien, claim, security interest,
encumbrance, charge, restriction or right of any third party of any kind
whatsoever upon the property or assets of Lakeview or Lakeview Bank, except that
the Government Approvals, as defined below, shall be required in order for
Lakeview or Lakeview Bank to consummate the Merger.
3.3 No Legal Bar. Neither Lakeview nor Lakeview Bank is a
party to, subject to or bound by any material agreement, judgment, order,
regulatory letter of understanding, writ, prohibition, injunction or decree of
any court or other governmental authority or body of competent jurisdiction or
any law which would prevent the execution of this Reorganization Agreement or
the Plan of Merger by Lakeview and Lakeview Bank, the delivery thereof to WFC
and Westwood Bank or the consummation of the transactions contemplated hereby
and thereby and no action or proceeding is pending against Lakeview or Lakeview
Bank in which the validity of this Reorganization Agreement, any of the
transactions contemplated hereby or any action which has been taken by any of
the Parties in connection herewith or in connection with any of the transactions
contemplated hereby, is at issue.
3.4 Government Approvals. No consent, approval, order or
authorization of, or registration, declaration or filing with, any federal,
state or local governmental authority is required to be made or obtained by
Lakeview in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated hereby by
Lakeview except for the prior approval of the Office of Thrift Supervision
("OTS") under the Home Owners' Loan Act of 1933, as amended and recodified
("HOLA"), the Federal Deposit Insurance Corporation ("FDIC"), the New Jersey
Department of Banking and Insurance ("NJDB"), and any other government approvals
that may be necessary (the "Government Approvals"). Neither Lakeview nor
Lakeview Bank is aware of any facts, circumstances or reasons why such
Government Approvals should not be forthcoming or which would prevent or hinder
such approvals from being obtained.
3.5 Capitalization. The authorized capital stock of Lakeview
consists of 10,000,000 shares of common stock having a par value of $2.00 per
share (the "Lakeview Common Stock"). As of July 31, 1997, 2,254,527 shares of
Lakeview Common Stock were validly issued and outstanding. As of the date
hereof, Lakeview is the holder, directly or indirectly, of all of the
outstanding capital stock of its subsidiaries including Lakeview Bank
(collectively, the "Lakeview Subsidiaries"), as reflected on Schedule 3.5,
except for director qualifying shares and shares of Lakeview Mortgage Depot,
Inc. as reflected on Schedule 3.5.
3.6 Lakeview Financial Statements. Lakeview has delivered or
will deliver to WFC copies of the consolidated statements of financial condition
of Lakeview as of July 31, for the fiscal years 1996 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the fiscal years 1995 through 1997, inclusive, as incorporated by
reference in Lakeview's Annual Report to Stockholders in each case accompanied
by the audit report of KPMG Peat Marwick LLP, independent public accountants
with respect to Lakeview, and the unaudited consolidated statements of financial
condition of Lakeview as of October 31, 1997 and the related unaudited
consolidated statements of operations, changes in stockholders' equity and cash
flows for the three month periods then ended as reported in Lakeview's quarterly
report to shareholders. The consolidated statements of financial condition of
Lakeview referred to herein (including the related notes, where applicable)
fairly present the consolidated financial condition of Lakeview as of the
respective dates set forth therein, and
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the related consolidated statements of operations, changes in stockholders'
equity and cash flows (including the related notes, where applicable) fairly
present the results of the consolidated operations, changes in stockholders'
equity and cash flows of Lakeview for the respective periods or as of the
respective dates set forth therein, in each case in conformity with generally
accepted accounting principles ("GAAP") consistently applied, it being
understood that Lakeview's interim financial statements are not audited, not
prepared with related notes and are subject to normal year-end adjustments.
3.7 1934 Act and Nasdaq National Market Filings.
(a) The Lakeview Common Stock is registered with the
SEC pursuant to the Securities Exchange Act of 1934, as amended, (the "1934
Act") and Lakeview has filed with the SEC all material forms and reports
required by law to be filed by Lakeview with the SEC, which forms and reports,
taken as a whole, are true and correct in all material respects, and do not
misstate a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(b) The Lakeview Common Stock is listed for trading
on the Nasdaq National Market (under the symbol "LVSB") pursuant to the listing
rules of the Nasdaq National Market and Lakeview has filed with the Nasdaq
National Market all material forms and reports required by law to be filed by
Lakeview with the Nasdaq National Market, which forms and reports, taken as a
whole, are true and correct in all material respects, and do not misstate a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
3.8 The Lakeview Common Stock. All shares of Lakeview Common
Stock to be issued by Lakeview and delivered to the holders of record of all
issued and outstanding shares of WFC Common Stock immediately prior to the
Effective Time of the Merger (the "WFC Record Holders") in exchange for all of
the WFC Common Stock will be duly authorized, validly issued, fully paid and
non-assessable, and none of such shares of Lakeview Common Stock will have been
issued in violation of any preemptive rights of any Lakeview shareholders.
3.9 Licenses, Franchises and Permits. Lakeview and all
Lakeview Subsidiaries hold all material licenses, franchises, permits and
authorizations necessary for the lawful conduct of their respective businesses.
All of such licenses, franchises, permits and authorizations are in full force
and effect. Neither Lakeview nor any Lakeview Subsidiary has received notice of
any proceeding for the suspension or revocation of any such license, franchise,
permit, or authorization and no such proceeding is pending or to the best
knowledge of Lakeview and the Lakeview Subsidiaries has been threatened by any
governmental authority.
3.10 Absence of Certain Changes. Except as disclosed in
Schedule 3.10 or as provided for or contemplated in this Reorganization
Agreement, since July 31, 1997 (the "Balance Sheet Date") there has not been any
material adverse change in the business, property, assets (including loan
portfolios), liabilities (whether absolute, accrued, contingent or otherwise),
operations, liquidity, income, financial condition or net worth of Lakeview on a
consolidated basis. Lakeview will make no special distribution to its
shareholders (other than the payment of cash or stock dividends in the ordinary
course of business) that will result in a material reduction in stockholders'
equity.
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3.11 Tax Matters. Except as described in Schedule 3.11
hereto:
(a) All federal, state and local tax returns
required to be filed by or on behalf of Lakeview and each Lakeview Subsidiary
have been timely filed or requests for extensions have been timely filed,
granted, and have not expired for periods ended on or before the date of this
Reorganization Agreement, and all returns filed are, and the information
contained therein is, complete and accurate. All tax obligations reflected in
such returns have been paid. As of the date of this Reorganization Agreement,
there is no audit examination, deficiency, or refund litigation or matter in
controversy with respect to any taxes that might reasonably be expected to
result in a determination materially adverse to Lakeview and Lakeview
Subsidiaries, taken as a whole, except as fully reserved for in the Lakeview
Financial Statements. All taxes, interest, additions, and penalties due with
respect to completed and settled examinations or concluded litigation have been
paid;
(b) Neither Lakeview nor any Lakeview Subsidiary has
executed an extension or waiver of any statute of limitations on the assessment
or collection of any tax due that is currently in effect;
(c) Adequate provision for any federal, state or
local taxes due or to become due for Lakeview and all Lakeview Subsidiaries for
all periods through and including July 31, 1997, has been made and is reflected
on the July 31, 1997 financial statements included in the Lakeview Financial
Statements, and have been and will continue to be made with respect to periods
ending after July 31, 1997;
(d) Deferred taxes of Lakeview and each Lakeview
Subsidiary have been and will be provided for in accordance with GAAP; and
(e) To the best knowledge of Lakeview, neither the
Internal Revenue Service nor any state, local or other taxing authority is now
asserting or threatening to assert against Lakeview or any Lakeview Subsidiary
any deficiency or claim for additional taxes, or interest thereon or penalties
in connection therewith. All material income, payroll, withholding, property,
excise, sales, use, franchise and transfer taxes, and all other taxes, charges,
fees, levies or other assessments, imposed upon Lakeview by the United States or
by any state, municipality, subdivision or instrumentality of the United States
or by any other taxing authority, including all interest, penalties or additions
attributable thereto, which are due and payable by Lakeview or any Lakeview
Subsidiary, either have been paid in full or have been properly accrued and
reflected in the Lakeview Financial Statements.
3.12 Litigation. Except as set forth in Schedule 3.12 hereto,
there is no action, suit or proceeding pending against Lakeview or any Lakeview
Subsidiary, or to the best knowledge of Lakeview, threatened against or
affecting Lakeview, any Lakeview Subsidiary or any of their assets, before any
court or arbitrator or any governmental body, agency or official that would, if
decided against Lakeview or the Lakeview Subsidiary, have a material adverse
impact on the business, properties, assets, liabilities or condition (financial
or other) of Lakeview and that are not reflected in the Lakeview Financial
Statements.
3.13 Absence of Undisclosed Liabilities. Except as described
in Schedule 3.13 hereto, to their knowledge neither Lakeview nor any Lakeview
Subsidiary has any obligation or liability that is material to the financial
condition or operations of Lakeview or any Lakeview Subsidiary, or that, when
combined with all similar obligations or liabilities, would be material to the
financial condition or
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operations of Lakeview or any Lakeview Subsidiary (i) except as disclosed in the
Lakeview Financial Statements delivered to WFC prior to the date of this
Reorganization Agreement, (ii) except obligations or liabilities incurred in the
ordinary course of its business consistent with past practices or (iii) except
as contemplated under this Reorganization Agreement. Except as disclosed in
Schedule 3.13 hereto, since July 31, 1997, neither Lakeview nor any Lakeview
Subsidiary has incurred or paid any obligation or liability which would be
material to the financial condition or operations of Lakeview or such Lakeview
Subsidiary, except for obligations paid in connection with transactions made by
it in the ordinary course of its business consistent with past practices and the
laws and regulations applicable to Lakeview or any Lakeview Subsidiary.
3.14 Compliance with Laws.
(a) Lakeview and each Lakeview Subsidiary is in
compliance with all laws, rules, regulations, reporting and licensing
requirements, and orders applicable to its business or employees conducting its
business (including, but not limited to, those relating to consumer disclosure
and currency transaction reporting) the breach or violation of which would
reasonably be expected to have a material adverse effect on the financial
condition or operations of Lakeview and the Lakeview Subsidiaries, taken as
whole, or which would reasonably be expected to subject Lakeview or any Lakeview
Subsidiary or any of its directors or officers to civil money penalties; and
(b) Neither Lakeview nor Lakeview Bank is a party to
any cease and desist order, written agreement or memorandum of understanding
with, or a party to any commitment letter or similar undertaking to, or is
subject to any order to directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the request of,
federal or state governmental authorities (the "Regulatory Authorities") charged
with the supervision or regulation of the operations of any of them not has it
been advised by any such government authority that it is contemplating issuing
or requesting (or is considering the appropriateness of issuing or requesting)
any such order, directive, written agreement, memorandum or understanding,
extraordinary supervisory letter, commitment letter, board resolutions or
similar undertaking.
3.15 Material Contract Defaults. Neither Lakeview nor any
Lakeview Subsidiary is in default in any respect under any material contract,
agreement, commitment, arrangement, lease, insurance policy, or other instrument
to which it is a party or by which its respective assets, business, or
operations may be bound or affected or under which it or its respective assets,
business, or operations receives benefits, and which default would reasonably be
expected to have either individually or in the aggregate a material adverse
effect on Lakeview and the Lakeview Subsidiaries, taken as a whole, and there
has not occurred any event that, with the lapse of time or the giving of notice
or both, would constitute such a default.
3.16 Disclosure. The information concerning, and the
representations or warranties made by, Lakeview and Lakeview Bank, as set forth
in this Reorganization Agreement, or in any document, statement, certificate or
other writing furnished or to be furnished by Lakeview or Lakeview Bank to WFC
and Westwood Bank pursuant hereto, do not and will not contain any untrue
statement of a material fact or omit and will not omit to state a material fact
required to be stated herein or therein which is necessary to make the
statements and facts contained herein or therein, in light of the circumstances
under which they were or are made, not false or misleading. Without limiting the
foregoing, at the time the prospectus included in the registration statement of
Lakeview to be filed with the SEC as provided herein is mailed to the holders of
WFC Common Stock and at all times subsequent
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to such mailing, up to and including the Effective Time of the Merger, such
registration statement (including any amendments and supplements thereto), with
respect to all information relating to Lakeview, Lakeview Bank and this
Reorganization Agreement as it relates to Lakeview (i) will comply in all
material respects with the applicable provisions of the Securities Act of 1933,
as amended (the "Securities Act") and the 1934 Act (collectively, the
"Securities Laws") and (ii) will not contain any statement which, at the time
and in the light of the circumstances under which it is made, is false or
misleading with respect to any material fact or omit to state any material fact
necessary in order to make the statements made therein not false or misleading
or required to be stated therein or necessary to correct any statement made in
an earlier communication with respect to such matters which have become false or
misleading. Copies of all documents heretofore or hereafter delivered or made
available to WFC and Westwood Bank by Lakeview and Lakeview Bank pursuant hereto
were or will be complete and accurate copies of such documents.
3.17 Certain Regulatory Matters.
(a) Lakeview Bank is a qualified thrift lender under
Section 10(m) of HOLA and is a member of the Federal Home Loan Bank of New York.
(b) Lakeview Bank has not paid any dividends to
Lakeview or any affiliate thereof that (i) caused the regulatory capital of
Lakeview Bank to be less than the amount then required by applicable law or (ii)
exceeded any other limitation on the payment of dividends imposed by law,
agreement or regulatory policy. Other than as required by applicable law, there
are no restrictions on the payment of dividends by Lakeview or Lakeview Bank.
3.18 Delays. Neither Lakeview nor Lakeview Bank is aware of
any matter that could cause a delay in receiving the approval required by this
Agreement.
3.19 Corporate Approval. At a duly constituted meeting of the
Board of Directors of Lakeview directors constituting at least a majority of the
Directors granted their prior approval to the Merger and, accordingly, the
provisions of Article XV of Lakeview's Certificate of Incorporation do not and
will not apply to this Reorganization Agreement or the consummation of any of
the transactions contemplated hereby or thereby.
3.20 Charter Documents. Included in Schedule 3.20 hereto are
true and correct copies of the Certificate of Incorporation and Bylaws of
Lakeview and Lakeview Bank.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF WFC AND WESTWOOD BANK
Except as otherwise disclosed in one or more schedules (the "WFC
Schedule(s)") dated as of the date hereof and delivered concurrently with this
Reorganization Agreement, both as of the date hereof and as of the Effective
Time of the Merger, each of WFC and Westwood Bank represents and warrants to
Lakeview and Lakeview Bank as follows:
4.1 Organization and Qualification of WFC and Subsidiaries.
WFC is a corporation duly organized, validly existing and in good standing under
the laws of the State of New Jersey and (i) has all requisite corporate power
and authority to own, operate and lease its properties and to carry on
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its business as it is currently being conducted; (ii) is in good standing and is
duly qualified to do business in each jurisdiction where the character of its
properties owned or held under lease or the nature of its business is such that
a failure to be so qualified would have a material adverse effect on WFC and
Westwood Bank taken as a whole; and (iii) is registered as a bank holding
company with the Board of Governors of the Federal Reserve System ("Federal
Reserve System"). Westwood Bank is a state chartered stock savings bank, duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and engages only in activities (and holds properties only of the
types) permitted by the State of New Jersey and the rules and regulations
promulgated by the NJDB thereunder and the FDIC for insured depository
institutions. Westwood Bank's deposit accounts are insured by the Savings
Association Insurance Fund (the "SAIF") as administered by the FDIC to the
fullest extent permitted under applicable law.
4.2 Authorization, Execution and Delivery; Reorganization
Agreement Not in Breach.
(a) WFC and Westwood Bank have all requisite
corporate power and authority to execute and deliver this Reorganization
Agreement and the Plan of Merger and to consummate the transactions contemplated
hereby. The execution and delivery of this Reorganization Agreement and the Plan
of Merger and the consummation of the proposed transactions have been duly
authorized by at least a majority of the entire Boards of Directors of both WFC
and Westwood Bank and no other corporate proceedings on the part of WFC and
Westwood Bank are necessary to authorize the execution and delivery of this
Reorganization Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby. This Reorganization Agreement and
all other agreements and instruments herein contemplated to be executed by WFC
and Westwood Bank have been (or upon execution will have been) duly executed and
delivered by WFC and Westwood Bank and constitute (or upon execution will
constitute) legal, valid and enforceable obligations of WFC and Westwood Bank,
subject, as to enforceability, to applicable bankruptcy, insolvency,
receivership, conservatorship, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and to the application
of equitable principles and judicial discretion.
(b) The execution and delivery of this
Reorganization Agreement and the Plan of Merger, the consummation of the
transactions contemplated hereby and thereby, and the fulfillment of the terms
hereof and thereof will not result in a material violation or breach of any of
the terms or provisions of, or constitute a material default under (or an event
which, with the passage of time or the giving of notice, or both, would
constitute such a default under), or conflict with, or permit the acceleration
of, any material obligation under, any material mortgage, lease, covenant,
agreement, indenture or other instrument to which WFC or any WFC Subsidiary is a
party or by which WFC or any WFC Subsidiary is bound, the Certificate of
Incorporation and Bylaws of WFC or the Certificate of Incorporation and bylaws
of Westwood Bank; or any material judgment, decree, order, regulatory letter of
understanding or award of any court, governmental body, authority or arbitrator
by which WFC or any WFC Subsidiary is bound, or any material permit, concession,
grant, franchise, license, law, statute, ordinance, rule or regulation
applicable to WFC or any WFC Subsidiary or the properties of any of them; or
result in the creation of any material lien, claim, security interest,
encumbrance, charge, restriction or right of any third party of any kind
whatsoever upon the properties or assets of WFC or any WFC Subsidiary, except
the Government approvals shall be required for WFC and Westwood Bank to
consummate the Merger and Subsidiary Merger.
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4.3 No Legal Bar. Neither WFC nor Westwood Bank is a party to,
or subject to or bound by, any material agreement, judgment, order, letter of
understanding, writ, prohibition, injunction or decree of any court or other
governmental authority or body of competent jurisdiction, or any law which would
prevent the execution of this Reorganization Agreement or the Plan of Merger by
WFC or Westwood Bank, the delivery thereof to Lakeview and Lakeview Bank or the
consummation of the transactions contemplated hereby and thereby, and no action
or proceeding is pending against WFC or Westwood Bank in which the validity of
this Reorganization Agreement, any of the transactions contemplated hereby or
any action which has been taken by any of the Parties in connection herewith,
or, in connection with any of the transactions contemplated hereby, is at issue.
4.4 Government and Other Approvals. Except for the Government
Approvals described in Section 3.4, no consent, approval, order or authorization
of, or registration, declaration or filing with, any federal, state or local
governmental authority is required to be made or obtained by WFC or Westwood
Bank in connection with the execution and delivery of this Reorganization
Agreement or the consummation of the transactions contemplated by this
Reorganization Agreement nor is any consent or approval required from any
landlord, licensor or other non-governmental party which has granted rights to
WFC or Westwood Bank in order to avoid forfeiture or impairment of such rights.
Neither WFC nor Westwood Bank is aware of any facts, circumstances or reasons
why such Government Approvals should not be forthcoming or which would prevent
or hinder such approvals from being obtained.
4.5 Licenses, Franchises and Permits. WFC and all WFC
Subsidiaries hold all licenses, franchises, permits and authorizations necessary
for the lawful conduct of their respective businesses. Except as disclosed in
Schedule 4.5, the benefits of all of such licenses, franchises, permits and
authorizations are in full force and effect and may continue to be enjoyed by
WFC and Westwood Bank subsequent to the Closing of the transactions contemplated
herein without any consent or approval. Neither WFC nor any WFC Subsidiary has
received notice of any proceeding for the suspension or revocation of any such
license, franchise, permit, or authorization and no such proceeding is pending
or, to the best knowledge of WFC and the WFC Subsidiaries, has been threatened
by any governmental authority.
4.6 Charter Documents. Included in Schedule 4.6 hereto are
true and correct copies of the Certificate of Incorporation and Bylaws of WFC
and Westwood Bank.
4.7 WFC Financial Statements. WFC has delivered or will
deliver to Lakeview copies of the consolidated statements of financial condition
of WFC as of March 31, for the fiscal years 1996 and 1997, and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the fiscal years 1995 through 1997, inclusive, as incorporated by
reference in WFC's Annual Report to Stockholders in each case accompanied by the
audit report of RD Hunter LLP, independent public accountants with respect to
WFC (the "Audited Financial Statements"), and the unaudited consolidated
statements of financial condition of WFC as of September 30, 1997 and the
related unaudited consolidated statements of operations, changes in
stockholders' equity and cash flows for the six month periods then ended as
reported in WFC's quarterly report to shareholders. The consolidated statements
of financial condition of WFC referred to herein (including the related notes,
where applicable) fairly present the consolidated financial condition of WFC as
of the respective dates set forth therein, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows
(including the related notes, where applicable) fairly present the results of
the consolidated operations, changes in stockholders' equity and cash flows
(including the related notes, where applicable) fairly
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present the results of the consolidated operations, changes in stockholders'
equity and cash flows of WFC for the respective periods or as of the respective
dates set forth therein, in each case in conformity with GAAP consistently
applied, it being understood that WFC's interim financial statements are not
audited, not prepared with related notes and are subject to normal year-end
adjustments.
4.8 Absence of Certain Changes. Except as disclosed in
Schedule 4.8 or as provided for or contemplated in this Reorganization
Agreement, since June 30, 1997 (the "Balance Sheet Date") there has not been:
(a) any material transaction by WFC or Westwood Bank
not in the ordinary course of business and in conformity with past practice;
(b) any material adverse change in the business,
property, assets (including loan portfolios), liabilities (whether absolute,
accrued, contingent or otherwise), operations, liquidity, income, condition or
net worth of WFC and Westwood Bank taken as a whole;
(c) any damage, destruction or loss, whether or not
covered by insurance, which has had or may have a material adverse effect on any
of the properties or business prospects of WFC and Westwood Bank taken as a
whole or their future use and operation by WFC and Westwood Bank taken as a
whole;
(d) any acquisition or disposition by WFC or
Westwood Bank of any property or asset of WFC or Westwood Bank, whether real or
personal, having a fair market value, singularly or in the aggregate, in an
amount greater than One Hundred Thousand Dollars ($100,000) other than
acquisitions or dispositions made in the ordinary course of business;
(e) any mortgage, pledge or subjection to lien,
charge or encumbrance of any kind on any of the respective properties or assets
of WFC or Westwood Bank, except to secure extensions of credit in the ordinary
course of business and in conformity with past practice (pledges of and liens on
assets to secure Federal Home Loan Bank advances being deemed both in the
ordinary course of business and consistent with past practice);
(f) any amendment, modification or termination of
any contract or agreement in excess of $100,000, relating to WFC or Westwood
Bank, to which WFC or Westwood Bank is a party which would have a material
adverse effect upon the financial condition or operations of WFC and Westwood
Bank taken as a whole;
(g) any increase in, or commitment to increase, the
compensation payable or to become payable to any officer, director, employee or
agent of WFC or Westwood Bank, or any bonus payment or similar arrangement made
to or with any of such officers, directors, employees or agents, other than
routine increases made in the ordinary course of business and consistent with
past practice not exceeding the lesser of five percent (5%) per annum or $5,000
for any of them individually;
(h) any incurring of, assumption of, or taking of,
by WFC or Westwood Bank, any property subject to, any liability in excess of
$100,000, except for liabilities incurred or assumed or property taken
subsequent to the Balance Sheet Date in the ordinary course of business and in
conformity with past practice; or
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(i) any material alteration in the manner of keeping
the books, accounts or Records of WFC or Westwood Bank, or in the accounting
policies or practices therein reflected, except as required by GAAP and
requirements of Regulatory Authorities.
4.9 Deposits. Except as set forth in Schedule 4.9, none of the
Westwood Bank deposits (consisting of certificate of deposit, savings accounts,
NOW accounts and checking account), is a brokered deposit.
4.10 Properties. Except as described in Schedule 4.10 hereto
or adequately reserved against in the Audited Financial Statements of WFC or
disposed of since the Balance Sheet Date, WFC and each WFC Subsidiary has good
and, as to real property, marketable title free and clear of all material liens,
encumbrances, charges, defaults, or equities of whatever character to all of the
material properties and assets, reflected in the Audited Financial Statements of
WFC as being owned by WFC or any WFC Subsidiary as of the dates thereof. All
buildings, and all fixtures, equipment, and other property and assets that are
material to the business of WFC and the WFC Subsidiaries on a consolidated
basis, held under leases or subleases by WFC or any WFC Subsidiary, are held
under valid instruments enforceable in accordance with their respective terms
(except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other laws affecting the enforcement of
creditors' rights generally, or by equitable principles).
4.11 Condition of Fixed Assets and Equipment. Except as
disclosed in Schedule 4.11 hereto, each item of WFC's or Westwood Bank's fixed
assets and equipment having a net book value in excess of Fifty Thousand Dollars
($50,000) included in the Fixed Assets is in good operating condition and
repair, normal wear and tear excepted.
4.12 Tax Matters. Except as described in Schedule 4.12 hereto:
----------- -------------
(a) All federal, state and local tax returns
required to be filed by or on behalf of WFC and Westwood Bank have been timely
filed or requests for extensions have been timely filed, granted and have not
expired for periods ended on or before the date of this Reorganization
Agreement, and all returns filed are, and the information contained therein is,
complete and accurate. All tax obligations reflected in such returns have been
paid. As of the date of this Reorganization Agreement, there is no audit
examination, deficiency, or refund litigation or matter in controversy with
respect to any taxes that might reasonably be expected to result in a
determination materially adverse to WFC and Westwood Bank taken as a whole
except as fully reserved for in the Audited Financial Statements of WFC. All
taxes, interest, additions, and penalties due with respect to completed and
settled examinations or concluded litigation have been paid;
(b) Neither WFC nor Westwood Bank has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any tax due that is currently in effect;
(c) Adequate provision for any federal, state or
local taxes due or to become due for WFC and Westwood Bank for all periods
through and including March 31, 1997, has been made and is reflected on the
March 31, 1997 financial statements included in the Audited Financial Statements
of WFC, and have been and will continue to be made with respect to periods
ending after March 31, 1997;
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(d) Deferred taxes of WFC and Westwood Bank have
been and will be provided for in accordance with GAAP; and
(e) To the best knowledge of WFC and Westwood Bank,
neither the Internal Revenue Service nor any state, local or other taxing
authority is now asserting or threatening to assert against WFC or Westwood Bank
any deficiency or claim for additional taxes, or interest thereon or penalties
in connection therewith. All material income, payroll, withholding, property,
excise, sales, use, franchise and transfer taxes, and all other taxes, charges,
fees, levies or other assessments, imposed upon WFC by the United States or by
any state, municipality, subdivision or instrumentality of the United States or
by any other taxing authority, including all interest, penalties or additions
attributable thereto, which are due and payable by WFC or Westwood Bank, either
have been paid in full or have been properly accrued and reflected in the
Audited Financial Statements of WFC.
4.13 Litigation. Except as set forth in Schedule 4.13 hereto,
there is no action, suit or proceeding pending against WFC or Westwood Bank, or
to the best knowledge of WFC or Westwood Bank, threatened against or affecting
WFC, Westwood Bank or any of their assets, before any court or arbitrator or any
governmental body, agency or official that may, if decided against WFC or
Westwood Bank, have a material adverse effect on the business, properties,
assets, liabilities, or condition (financial or other) of WFC and Westwood Bank
taken as a whole and that are not reflected in the Audited Financial Statements
of WFC.
4.14 Environmental Materials. Except as set forth in Schedule
4.14 to the knowledge of WFC and Westwood Bank, the real property owned by WFC
associated with its two offices as well as other real property held as an asset
and real property held as real estate owned ("Real Properties") are in material
compliance with all Environmental Laws, as hereinafter defined, and there are no
conditions existing currently which would subject WFC to damages, penalties,
injunctive relief or cleanup costs under any Environmental Laws or assertions
thereof, or which require cleanup, removal, remedial action or other response
pursuant to Environmental Laws by WFC. Copies of all environmental studies,
reports, notices and the like known to exist with regard to the Real Properties
is contained at Schedule 4.14. WFC is not a party to any litigation or
administrative proceeding, nor has WFC (either in its own capacity or as trustee
or fiduciary), materially violated Environmental Laws nor, to its knowledge and
except as set forth in Schedule 4.14, is WFC (either in its own capacity or as
trustee or fiduciary) required to clean up, remove or take remedial or other
responsive action due to the disposal, depositing, discharge, leaking or other
release of any hazardous substances or materials. To the knowledge of WFC, none
of the Real Properties are, nor is WFC, subject to any judgment, decree, order
or citation related to or arising out of any Environmental Laws. To the
knowledge of WFC, no material permits, licenses or approvals are required under
Environmental Laws relative to the Real Properties; and, except as disclosed in
Schedule 4.14, WFC has not stored, deposited, treated, recycled, used or
disposed of any materials (including, without limitation, asbestos) on, under or
at the Real Properties (or tanks or other facilities thereon containing such
materials), which materials if known to be present on the Real Properties or
present in soils or ground water, would require cleanup, removal or some other
remedial action under the Environmental Laws. The term "Environmental Laws"
shall mean all federal, state and local laws, including statutes, regulations,
ordinances, codes, rules and other governmental restrictions, standards and
requirements relating to the discharge of air pollutants, water pollutants or
process waste water or substances, as now or at any time hereafter in effect,
including, but not limited to, the Federal Solid Waste Disposal Act, the Federal
Hazardous Materials Transportation Act, the Federal Clean Air Act, the Federal
Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the
Federal Comprehensive Environmental Responsibility Cleanup and Liability Act of
1980, as amended
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("CERCLA"), regulations of the Environmental Protection Agency, regulations of
the Nuclear Regulatory Agency, regulations of the Occupational Safety and Health
Administration, and any so-called "Superfund" or "Superlien" Laws.
4.15 Insurance. WFC and Westwood Bank have paid all amounts
due and payable under any insurance policies and guaranties applicable to WFC
and Westwood Bank and WFC's or Westwood Bank's assets and operations; all such
insurance policies and guaranties are in full force and effect; and WFC and
Westwood Bank and all of WFC's and Westwood Bank's Realty and other material
properties are insured against fire, casualty, theft, loss, and such other
events against which it is customary to insure, all such insurance policies
being in amounts that are adequate and are consistent with past practices and
experience.
4.16 Books and Records. The minute books of WFC and Westwood
Bank contain, in all material respects, complete and accurate records of and
fairly reflect all actions taken at all meetings and accurately reflect all
other corporate action of the shareholders and the boards of directors and each
committee thereof. The books and records of WFC and Westwood Bank fairly and
accurately reflect the transactions to which WFC and Westwood Bank is or has
been a party or by which their properties are subject or bound, and such books
and records have been properly kept and maintained.
4.17 Capitalization of WFC. The authorized capital stock of
WFC consists of 5,000,000 shares of Common Stock having a par value of $.10 per
share, 2,000,000 shares of preferred stock, no par value per share, the "WFC
Preferred Stock" and no other class of equity security. As of the date of this
Reorganization Agreement, 645,295 shares of WFC Common Stock were issued and
outstanding and no shares of WFC Preferred Stock were issued and outstanding.
All of the outstanding WFC Common Stock is validly issued, fully-paid and
nonassessable and has not been issued in violation of any preemptive rights of
any WFC Shareholder. Except as described in Section 1.5 of this Reorganization
Agreement as of the date hereof, there are no outstanding securities or other
obligations which are convertible into WFC Common Stock or into any other equity
or debt security of WFC, and there are no outstanding options, warrants, rights,
scrip, rights to subscribe to, calls or other commitments of any nature which
would entitle the holder, upon exercise thereof, to be issued WFC Common Stock
or any other equity or debt security of WFC. Accordingly, immediately prior to
the Effective Time of the Merger, there will be not more than 703,630 shares of
WFC Common Stock issued and outstanding (645,295 shares currently outstanding
plus 58,335 unexercised options). WFC owns and is the beneficial record holder
of, and has good and freely transferable title to, all of the 1,000 shares of
Westwood Bank Common Stock issued and outstanding, and recorded on the books and
Records of Westwood Bank as being held in its name, free and clear of all liens,
charges or encumbrances, and such stock is not subject to any voting trusts,
agreements or similar arrangements or other claims which could affect the
ability of WFC to freely vote such stock in support of the transactions
contemplated herein.
4.18 Sole Agreement. With the exception of this Reorganization
Agreement, neither WFC, nor Westwood Bank, nor any Subsidiary of either has been
or is a party to: any letter of intent or agreement to merge, to consolidate, to
sell or purchase assets (other than in the normal course of its business) or to
any other agreement which contemplates the involvement of WFC or Westwood Bank
or any Subsidiary of either (or any of their assets) in any business combination
of any kind; or any agreement obligating WFC or Westwood Bank to issue or sell
or authorize the sale or transfer of WFC Common Stock or the capital stock of
Westwood Bank. There are no (nor will there be at the Effective Time of the
Merger any) shares of capital stock or other equity securities of WFC
outstanding, except for shares of WFC Common Stock presently issued and
outstanding (or issuable upon the exercise of
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outstanding stock options), and there are no (nor will there be at the Effective
Time of the Merger any) outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of the capital
stock of WFC or Westwood Bank, or contracts, commitments, understandings, or
arrangements by which WFC or Westwood Bank is or may be bound to issue
additional shares of their capital stock or options, warrants, or rights to
purchase or acquire any additional shares of their capital stock. There are no
(nor will there be at the Effective Time of the Merger any) contracts,
commitments, understandings, or arrangements by which WFC or Westwood Bank is or
may be bound to transfer or issue to any third party any shares of the capital
stock of Westwood Bank, and there are no (nor will there be at the Effective
Time of the Merger any) contracts, agreements, understandings or commitments
relating to the right of WFC to vote or to dispose of any such shares.
4.19 Disclosure. The information concerning, and
representations and warranties made by, WFC and Westwood Bank set forth in this
Reorganization Agreement, or in the Schedule of WFC hereto, or in any document,
statement, certificate or other writing furnished or to be furnished by WFC or
Westwood Bank to Lakeview and Lakeview Bank, pursuant hereto, do not and will
not contain any untrue statement of a material fact or omit and will not omit to
state a material fact required to be stated herein or therein which is necessary
to make the statements and facts contained herein or therein, in light of the
circumstances in which they were or are made, not false or misleading. Without
limiting the foregoing, at the time the prospectus included in the registration
statement of Lakeview to be filed with the SEC as provided herein is mailed to
WFC Record Holders and at all times subsequent to such mailing, up to and
including the Effective Time of the Merger, such registration statement
(including any amendments and supplements thereto), with respect to all
information relating to WFC, Westwood Bank and this Reorganization Agreement as
it relates to WFC, (i) will comply in all material respects with the applicable
provisions of the Securities Laws and (ii) will not contain any statement which,
at the time and in light of the circumstances under which it is made, is false
or misleading with respect to any material fact or omit to state any material
fact necessary in order to make the statements made therein not false or
misleading, or required to be stated therein or necessary to correct any
statement made in an earlier communication with respect to such matters which
have become false or misleading. Copies of all documents heretofore or hereafter
delivered or made available to Lakeview by WFC or Westwood Bank pursuant hereto
were or will be complete and accurate copies of such documents.
4.20 Absence of Undisclosed Liabilities. Except as described
in Schedule 4.22 hereto, to their knowledge neither WFC nor Westwood Bank has
any obligation or liability that is material to the financial condition or
operations of WFC or Westwood Bank, or that, when combined with all similar
obligations or liabilities, would be material to the financial condition or
operations of WFC or Westwood Bank (i) except as disclosed in the Audited
Financial Statements of WFC delivered to Lakeview prior to the date of this
Reorganization Agreement, (ii) except obligations or liabilities incurred in the
ordinary course of its business consistent with past practices or (iii) except
as contemplated under this Reorganization Agreement. Since June 30, 1997,
neither WFC nor Westwood Bank has incurred or paid any obligation or liability
which would be material to the financial condition or operations of WFC or
Westwood Bank, except for obligations paid in connection with transactions made
by it in the ordinary course of its business consistent with past practices,
laws and regulations applicable to WFC or Westwood Bank.
4.21 Allowance for Possible Loan or REO Losses. The allowance
for possible loan losses shown on the Audited Financial Statements of WFC is in
the opinion of management of WFC adequate in all material respects to provide
for anticipated losses inherent in loans outstanding. Except
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as disclosed in Schedule 4.21 hereto, as of the date thereof, neither WFC nor
Westwood Bank has any loan which has been criticized, designated or classified
by management of WFC, or by regulatory examiners representing any Regulatory
Authority or by WFC's independent auditors as "Special Mention," "Substandard,"
"Doubtful", "Loss" or as a "Potential Problem Loan."
The allowance for possible losses in real estate owned,
if any, shown on the Audited Financial Statements of WFC in the opinion of
management is or will be adequate in all respects to provide for anticipated
losses inherent in REO owned or held by WFC or Westwood Bank and the net book
value of real estate owned on the Balance Sheet of the Audited Financial
Statements of WFC is the fair value of the real estate owned in accordance with
Statement of Position 92-3.
4.22 Loan Portfolio. To the best knowledge of WFC and Westwood
Bank, with respect to each mortgage loan owned by WFC or Westwood Bank in whole
or in part (each, a "Mortgage Loan"):
(a) Enforceability. The mortgage note and the
related mortgage are each legal, valid and binding obligations of the maker or
obligor thereof, enforceable against such maker or obligor in accordance with
their terms.
(b) No Modification. Neither WFC nor Westwood Bank
nor any prior holder of a Mortgage Loan has modified the related documents in
any material respect or satisfied, canceled or subordinated such mortgage or
mortgage note except as otherwise disclosed by documents in the applicable
mortgage file.
(c) Owner. WFC or Westwood Bank is the sole holder
of legal and beneficial title to each Mortgage Loan (or Westwood Bank's
applicable participation interest), as applicable and there has not been any
assignment or pledge of any Mortgage Loan (other than as security for Federal
Home Loan Bank advances).
(d) Collateral Documents. The mortgage note,
mortgage and any other collateral documents, copies of which are included in the
Mortgage Loan files, are true and correct copies of the documents they purport
to be and have not been superseded, amended, modified, canceled or otherwise
changed except as otherwise disclosed by documents in the applicable mortgage
file.
(e) Litigation. There is no litigation or proceeding
pending or threatened, relating to the mortgaged property which would have a
material adverse effect upon the related Mortgage Loan.
(f) Participation. With respect to each Mortgage
Loan held in the form of a participation, the participation documentation is
legal, valid, binding and enforceable and the interest in such Mortgage Loan of
WFC or Westwood Bank created by such participation would not be a part of the
insolvency estate of the Mortgage Loan originator or other third party upon the
insolvency thereof.
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4.23 Compliance with Laws.
(a) WFC and Westwood Bank are in compliance with all
laws, rules, regulations, reporting and licensing requirements, and orders
applicable to its business or employees conducting its business (including, but
not limited to, those relating to consumer disclosure and currency transaction
reporting) the breach or violation of which would or could reasonably be
expected to have a material adverse effect on the financial condition or
operations of WFC and Westwood Bank taken as a whole, or which would or could
reasonably be expected to subject WFC or Westwood Bank or any of its directors
or officers to civil money penalties; and
(b) Neither WFC nor Westwood Bank has received
notification or communication from any agency or department of federal, state,
or local government or any of the Regulatory Authorities, or the staff thereof
(i) asserting that WFC or Westwood Bank is not in compliance with any of the
statutes, rules, regulations, or ordinances which such governmental authority or
Regulatory Authority enforces, and which, as a result of such noncompliance,
would or could reasonably be expected to have a material adverse effect on WFC
and Westwood Bank taken as a whole, (ii) threatening to revoke any license,
franchise, permit, or governmental authorization which is material to the
financial condition or operations of WFC and the Westwood Bank, taken as a
whole, or (iii) requiring WFC or Westwood Bank to enter into a cease and desist
order, consent, agreement or memorandum of understanding.
4.24 Employee Benefit Plans. Schedule 4.24 to the WFC
Disclosure Schedule lists (i) each pension, profit sharing, stock bonus, thrift,
savings, employee stock ownership or other plan, program or arrangement, which
constitutes an "employee pension benefit plan" within the meaning of Section
3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), which is maintained by WFC and/or Westwood Bank or to which WFC
and/or Westwood Bank contribute for the benefit of any current or former
employee, officer, director, consultant or agent; (ii) each plan, program or
arrangement for the provision of medical, surgical, or hospital care or
benefits, benefits in the event of sickness, accident, disability, death,
unemployment, severance, vacation, apprenticeship, day care, scholarship,
prepaid legal services or other benefits which constitute an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA, which is maintained
by WFC and/or Westwood Bank or to which WFC and/or Westwood Bank contribute for
the benefit of any current or former employee, officer, director, consultant or
agent; and (iii) every other retirement or deferred compensation plan, bonus or
incentive compensation plan or arrangement, stock option plan, stock purchase
plan, severance or vacation pay arrangement, or other fringe benefit plan,
program or arrangement through which WFC and/or Westwood Bank provide benefits
for or on behalf of any current or former employee, officer, director,
consultant or agent.
(b) All of the plans, programs and arrangements
described in Schedule 4.24 (hereinafter referred to as the "WFC Benefit Plans")
that are subject to ERISA are in material compliance with all applicable
requirements of ERISA and all other applicable federal and state laws, including
the reporting and disclosure requirements of Part I of Title I of ERISA. Each of
the WFC Benefit Plans that is intended to be a pension, profit sharing, stock
bonus, thrift, savings or employee stock ownership plan that is qualified under
Section 401(a) of the Code satisfies the applicable requirements of such
provision and there exist no circumstances that would adversely affect the
qualified status of any such Plan under that section, except with respect to any
required retroactive amendment for which the remedial amendment period has not
yet expired. Except as set forth in Schedule 4.24, there is no pending or, to
the best knowledge of WFC, threatened litigation, governmental proceeding or
investigation against or
- 25 -
relating to any WFC Benefit Plan and there is no reasonable basis for any
material proceedings, claims, actions or proceedings against any such WFC
Benefit Plan. No WFC Benefit Plan (or WFC Benefit Plan fiduciary, in his
capacity as such) has engaged in a non-exempt "Prohibited Transaction" (as
defined in Section 406 of ERISA and Section 4975(c) of the Code) since the date
on which said sections became applicable to such Plan. There have been no acts
or omissions by WFC that have given rise to any fines, penalties, taxes or
related charges under Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of
the Code, or that may give rise to any material fines, penalties, taxes or
related damages under such laws for which WFC may be liable. All group health
plans of WFC, including any plans of current and former Affiliates of WFC that
must be taken into account under Section 4980B of the Code or Section 601 of
ERISA or the requirements of any similar state law regarding insurance
continuation, have been operated in material compliance with the group health
plan continuation coverage requirements of Section 4980B of the Code and Section
601 of ERISA to the extent such requirements are applicable. All payments due
from any WFC Benefit Plan (or from WFC with respect to any WFC Benefit Plan)
have been made, and all amounts properly accrued to date as liabilities of WFC
that have not yet been paid have been properly recorded on the books of WFC.
4.25 Material Contracts. Except as described in Schedule 4.25
hereto, neither WFC nor Westwood Bank, nor any of their respective assets,
businesses, or operations, is as of the date of this Reorganization Agreement a
party to, or bound or affected by, or receives benefits under, any contract or
agreement or amendment thereto that require annual payments of over $50,000 per
year.
4.26 Material Contract Defaults. Neither WFC nor Westwood Bank
is in default in any respect under any material contract, agreement, commitment,
arrangement, lease, insurance policy, or other instrument to which it is a party
or by which its respective assets, business, or operations may be bound or
affected or under which it or its respective assets, business, or operations
receives benefits, and which default would reasonably be expected to have either
individually or in the aggregate a material adverse effect on WFC and Westwood
Bank taken as a whole, and there has not occurred any event that, with the lapse
of time or the giving of notice or both, would constitute such a default.
4.27 Reports. Since June 6, 1996, WFC and Westwood Bank have
filed all reports and statements, together with any amendments required to be
made with respect thereto, that it was required to file with (i) the NJDB; (ii)
the FDIC, (iii) the SEC, including, but not limited to, Annual Reports on Form
10-KSB, Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K and proxy
statements; and (iv) any other applicable federal or state securities or banking
authorities (except, in the case of federal or state securities authorities,
filings that are not material). As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all of the
requirements of their respective forms and all of the statutes, rules, and
regulations enforced or promulgated by the Regulatory Authority with which they
were filed. All such reports were true and complete in all material respects 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 to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
4.28 1934 Act and Nasdaq Small Cap Market
(a) The WFC Common Stock is registered with the SEC
pursuant to the 1934 Act and WFC has filed with the SEC all material forms and
reports required by law to be filed by WFC with the SEC, which forms and
reports, taken as a whole, are true and correct in all material respects,
- 26 -
and do not misstate a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(b) The outstanding shares of WFC Common Stock are
listed for trading on the Nasdaq Small Cap Market (under the symbol "WWFC")
pursuant to the listing rules of the Nasdaq and WFC has filed with the Nasdaq
all material forms and reports required by law to be filed by WFC, which forms
and reports, taken as a whole, are true and correct in all material respects,
and do not misstate a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
4.29 Statements True and Correct. None of the information
prepared by, or on behalf of, WFC or any WFC Subsidiary regarding WFC, Westwood
Bank or any other WFC Subsidiary included or to be included in the
Prospectus/Proxy Statement to be mailed to WFC's Shareholders in connection with
the WFC Shareholders' Meeting, and any other documents to be filed with the SEC,
or any other Regulatory Authority in connection with the transactions
contemplated herein, will, at the respective times such documents are filed,
and, with respect to the Prospectus/Proxy Statement, when first mailed to the of
WFC Shareholders, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or, in
the case of the Prospectus/Proxy Statement or any amendment thereof or
supplement thereto, at the time of the WFC Shareholders' Meeting, 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 the WFC Shareholders' Meeting. All documents
which WFC or any WFC Subsidiary is responsible for filing with the SEC or any
other Regulatory Authority in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of the Securities Laws and the
rules and regulations promulgated thereunder.
4.30 Investment Securities. Section 1 of Schedule 4.30 sets
forth the book and market value as of June 30, 1997 of the investment
securities, mortgage-backed securities and securities held for sale of WFC and
Westwood Bank as of such date. Section 2 of Schedule 4.30 sets forth an
investment securities report which includes (to the extent known or reasonably
obtainable) security descriptions, CUSIP or Agency Pool numbers, current pool
face values, book values, coupon rates, market values and book yields in each
case as of June 30, 1997.
4.31 Certain Regulatory Matters.
(a) Westwood Bank is a qualified thrift lender under
Section 10(m) of HOLA and is a member of the Federal Home Loan Bank of New York.
(b) Westwood Bank has not paid any dividends to WFC
or any affiliate thereof that (i) caused the regulatory capital of Westwood Bank
to be less than the amount then required by applicable law or (ii) exceeded any
other limitation on the payment of dividends imposed by law, agreement or
regulatory policy. Other than as reflected on Schedule 4.31 and as required by
applicable law, there are no restrictions on the payment of dividends by WFC or
Westwood Bank.
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(c) WFC and Westwood Bank have adopted policies and
procedures designed to promote overall compliance with the Bank Secrecy Act (31
U.S.C. Section 5301), the Truth-in-Lending Act (15 U.S.C. Section 1601 et seq.),
the Expedited Funds Availability Act (12 U.S.C. Section 4001) and the
regulations adopted under each such act and have materially complied with the
reporting requirements under the Bank Secrecy Act and the regulations
thereunder.
4.32 Corporate Approval.
(a) The affirmative vote of a majority of the votes
cast by shareholders of WFC entitled to vote at a meeting is required to adopt
this Reorganization Agreement and approve the Merger and the other transactions
contemplated hereby. No other vote of the stockholders of WFC is required by
law, the Certificate of Incorporation or Bylaws of WFC or otherwise to adopt
this Reorganization Agreement and approve the Merger and the other transactions
contemplated hereby.
(b) At a duly constituted meeting of the Board of
Directors of WFC directors constituting at least a majority of the Directors
granted their prior approval to the Merger and, accordingly, the provisions of
Article XV of WFC's Certificate of Incorporation do not and will not apply to
this Reorganization Agreement or the consummation of any of the transactions
contemplated hereby or thereby.
(c) The provisions of the New Jersey Shareholders'
Protection Act of the NJBCA will not apply to this Reorganization Agreement, the
Merger or the transactions contemplated hereby and thereby.
4.33 Broker's and Finder's Fees. Except for payments to
FinPro, Inc., which has been engaged by WFC as its financial advisor (pursuant
to an agreement, a copy of which has been separately provided to Lakeview),
neither WFC nor any of its subsidiaries has any liability to any broker, finder,
or similar agent, nor have any of them agreed to pay any broker's fee, finder's
fee or commission, with respect hereto or to the transactions contemplated
hereby.
ARTICLE 5
COVENANTS OF LAKEVIEW
5.1 Regulatory and Other Approvals. Within a reasonable time
after execution of this Reorganization Agreement, Lakeview shall file any and
all applications with the appropriate government Regulatory Authorities in order
to obtain the Government Approvals and shall take such other actions as may be
reasonably required to consummate the transactions contemplated in this
Reorganization Agreement and the Plan of Merger with reasonable promptness.
Lakeview shall pay all fees and expenses arising in connection with such
applications for regulatory approval. Lakeview agrees to use its best efforts to
provide the appropriate Regulatory Authorities with the information required by
such authorities in connection with Lakeview's applications for regulatory
approval and to use its best efforts to obtain such regulatory approvals, and
any other approvals and consents as may be required for the Closing, as promptly
as practicable; provided, however, that nothing in this Section shall be
construed to obligate Lakeview to take any action to meet any condition required
to obtain prior regulatory approval if Lakeview shall, in its sole discretion,
deem such condition to be unreasonable or to constitute a significant impediment
upon its ability to carry on its business or acquisition programs. Lakeview
shall provide WFC the opportunity to review and comment on all required
applications within a reasonable period prior
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to the filing thereof and provide WFC with copies of all written communications
with Regulatory Authorities regarding the transactions provided for herein and
related applications and proceedings. Subject to the terms and conditions of
this Reorganization Agreement, Lakeview and Lakeview Bank agree to use all
reasonable efforts and to take, or to cause to be taken, all actions, and to do,
or to cause to be done, all things necessary, proper, or advisable under
applicable laws and regulations to consummate and make effective, with
reasonable promptness after the date of this Reorganization Agreement, the
transactions contemplated by this Reorganization Agreement, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining or other order adversely affecting the ability of the Parties to
consummate the transaction contemplated by this Reorganization Agreement.
Subject to the provisions of this Section, Lakeview shall use, and shall cause
each of its Subsidiaries to use, its best efforts to obtain consents of all
third parties and Regulatory Authorities necessary or desirable for the
consummation of each of the transactions contemplated by this Reorganization
Agreement.
5.2 Approvals and Registrations. Lakeview will use its best
efforts to prepare and file (a) with the SEC, the Registration Statement on Form
S-4 (the "Registration Statement"), (b) with the FDIC, an application for
approval of the Merger, if applicable, (c) with the NJDB, an application for
approval of the Merger, (d) with the OTS, an application for approval of
Lakeview as a savings and loan holding company, and (e) with the Nasdaq National
Market, an application for the listing of the Shares of Lakeview Stock issuable
upon the Merger, subject to official notice of issuance, except that Lakeview
shall have no obligations to file a new registration statement or a
post-effective amendment to the Registration Statement covering any reoffering
of Lakeview Stock by WFC Affiliates. Lakeview, reasonably in advance of making
such filings, will provide WFC and its counsel a reasonable opportunity to
comment on such filings and regulatory applications and will give due
consideration to any comments of WFC and its counsel before making any such
filing or application; and Lakeview will provide WFC and its counsel with copies
of all such filings and applications at the time filed if such filings and
applications are made at any time before the Effective Time of the Merger.
Lakeview covenants and agrees that all information furnished by Lakeview for
inclusion in the Registration Statement, the Prospectus/Proxy Statement, and all
applications and submissions for the Required Consents (as defined in Section
6.1 herein) will comply in all material respects with the provisions of
applicable law, including the Securities Act and the Exchange Act and the rules
and regulations of the SEC, the FDIC, the NJDB, and OTS, and will not contain
any untrue statement of a material fact and will not omit to state any material
fact required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading, Lakeview will furnish to FinPro, investment bankers advising WFC,
such information as they may reasonably request for purposes of the opinion
referred to in Section 7.1.
5.3 Employee Benefits. Following the consummation of the
transactions contemplated herein, Lakeview shall not be obligated to make
further contributions to any of the Employee Plans or Benefit Arrangements of
WFC or Westwood Bank and all employees of WFC and Westwood Bank immediately
prior to the Effective Time of the Merger who shall continue as employees of
Lakeview as the Surviving Corporation or as employees of any other Lakeview
Subsidiary will be afforded the opportunity to participate in any employee
benefit plans maintained by Lakeview or Lakeview's Subsidiaries, including but
not limited to any "employee benefit plan," as that term is defined in ERISA, on
an equal basis with employees of Lakeview or any Lakeview Subsidiary with
comparable positions, compensation, and tenure, subject to the provisions of
this Section. Service with WFC or with any WFC Subsidiary prior to the Effective
Time of the Merger by such former WFC employees will be deemed service with
Lakeview for purposes of determining eligibility for participation and for
crediting of service
- 29 -
for vesting purposes in such employee benefit plans of Lakeview and Lakeview's
Subsidiaries; provided, however, that in no event shall any former WFC employee
be entitled to or be given credit for past service with such former WFC for
purposes of the accrual, calculation, or determination of benefit amounts under
any pension plan maintained by Lakeview or any Lakeview subsidiaries. The
employees of WFC will be treated as new employees for purposes of Lakeview
Bank's ESOP and other qualified pension plans. Lakeview shall take all steps
necessary to cause the 401(k) plan maintained by WFC to be terminated, and
distributions made thereunder in accordance with the provisions of Code Section
401(k)(10)(A)(i), as soon as practicable after the Effective Time of the Merger.
Following the transfer of the former WFC employees to Lakeview's health plan,
there shall be no exclusion from coverage for any pre-existing medical condition
of any such employee to the extent such condition was covered under a health
plan of Westwood.
5.4 Notification. Lakeview shall notify WFC promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event that would constitute a breach on its part of any obligation under
this Reorganization Agreement or the occurrence of any event that would cause
any representation or warranty made by it herein to be false or misleading, or
if it becomes a party or is threatened with becoming a party to any legal or
equitable proceeding or governmental investigation or upon the occurrence of any
event that would result in a change in the circumstances described in the
representations and warranties contained herein. At all times up to and
including, and as of, the Closing, Lakeview and Lakeview Bank shall inform WFC
in writing of any and all facts necessary to amend or supplement the
representations and warranties made herein and the Lakeview Schedules attached
hereto as necessary so that the information contained herein and therein will
accurately reflect the current status of Lakeview and Lakeview Bank; provided,
however, that any such updates to the Lakeview Schedules shall be required prior
to the Closing only with respect to matters which represent material changes to
the Lakeview Schedules and the information contained therein.
5.5 Tax Representations. Neither Lakeview nor any of its
Subsidiaries has taken, agreed to take, or will take any action or has any
knowledge of any fact or circumstance that would prevent the transactions
contemplated hereby, including the Merger, from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
5.6 Directors and Officers Indemnification and Insurance
Coverage.
(a) Lakeview will continue to indemnify officers,
directors, and employees of WFC and Westwood Bank to the full extent required
under the provisions of Article XVII of Lakeview's Certificate of Incorporation
from the Effective Time of the Merger.
(b) For a period of three (3) year after the
Effective Time, Lakeview will provide to the persons who served as directors or
officers of WFC or any subsidiary of WFC on or before the Effective Time of the
Merger insurance against liabilities and claims (and related expenses) made
against them resulting from their service as such prior to the Effective Time
substantially similar in all material respects to the insurance coverage
provided to them in such capacities at the date hereof; provided, however, that
if Lakeview is unable to maintain or obtain the insurance called for by this
Section on commercially reasonable terms, Lakeview shall use its best efforts to
obtain as much comparable insurance as available. In lieu of the foregoing, WFC
shall renew any existing insurance or purchase any "discovery period" insurance
provided for thereunder at Lakeview's request and expense.
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5.7 Conduct of Lakeview and Lakeview Bank Prior to the
Effective Time. Except as expressly provided in this Agreement, as agreed to by
WFC or as required by applicable law, rules or regulations, during the period
from the date of this Agreement to the Effective Time, Lakeview and Lakeview
Bank shall, and shall cause its subsidiaries to, (i) take no action which would
adversely affect or delay the ability of WFC, Lakeview or Lakeview Bank to
obtain any necessary approvals, consents or waivers of any governmental
authority required for the transactions contemplated hereby or to perform its
covenants and agreements on a timely basis under this Agreement, (ii) take no
action that could reasonably be expected to have a material adverse effect on
Lakeview and Lakeview Bank and (iii) continue to conduct its business consistent
with past practices.
ARTICLE 6
COVENANTS OF WFC AND WESTWOOD BANK
6.1 Preparation of Registration Statement and Applications for
Required Consents. WFC will cooperate with Lakeview in the preparation of a
Registration Statement to be filed with the SEC under the Securities Act for the
registration of the offering of Lakeview Stock to be issued in connection with
the Merger and the Prospectus/Proxy Statement constituting part of the
Registration Statement that will be used by WFC to solicit shareholders of WFC
for approval of the Merger. In connection therewith, WFC will furnish all
financial or other information, including using best efforts to obtain customary
consents, certificates, opinions of counsel and other items concerning WFC
reasonably deemed necessary by counsel to Lakeview for the filing or preparation
for filing under the Securities Act and the Exchange Act of the Registration
Statement (including the proxy statement portion thereof). WFC will cooperate
with Lakeview and provide such information as may be advisable in obtaining an
order of effectiveness for the Registration Statement, appropriate permits or
approvals under state securities and "blue sky" law, the required approval under
the NJDB, the required approval under HOLA of the OTS, the listing of the Shares
on the Nasdaq National Market (subject to official notice of issuance) and any
other governmental or regulatory consents or approvals or the taking of any
other governmental or regulatory action necessary to consummate the Merger
without a material adverse effect on the business, results of operations, assets
or financial condition of the Surviving Corporation and its subsidiaries, taken
as a whole (the "Required Consents"). WFC covenants and agrees that all
information furnished by WFC for inclusion in the Registration Statement, the
Prospectus/Proxy Statement, all applications to appropriate regulatory agencies
for approval of the Merger, and all information furnished by WFC to Lakeview
pursuant to this Agreement or in connection with obtaining Required Consents,
will comply in all material respects with the provisions of applicable law,
including the Securities Act and the rules and regulations of the SEC
thereunder, and will not contain any untrue statement of a material fact and
will not omit to state any material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading. WFC will furnish to
FinPro such information as FinPro may reasonably request for purposes of the
opinion referred to in Section 7.1
6.2 Conduct of Business -- Affirmative Covenants. Unless the
prior written consent of Lakeview shall have been obtained:
(a) WFC and Westwood Bank shall:
(i) Operate its business only in the usual,
regular, and ordinary course;
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(ii) Preserve intact its business
organizations and assets and to maintain its rights and franchises;
(iii) Take no action, unless otherwise
required by law, rules or regulation, that would reasonably be considered to (A)
adversely affect the ability of any of them or Lakeview to obtain any necessary
approvals of Regulatory Authorities required to consummate the transactions
contemplated by this Reorganization Agreement, or (B) adversely affect the
ability of such Party to perform its covenants and agreements under this
Reorganization Agreement;
(iv) Except as they may terminate in
accordance with their terms, keep in full force and effect, and not default in
any of their obligations under, all material contracts;
(v) Keep in full force and effect insurance
coverage with responsible insurance carriers which is reasonably adequate in
coverage and amount for companies the size of WFC or such WFC Subsidiary and for
the businesses and properties owned by each and in which each is engaged, to the
extent that such insurance is reasonably available;
(vi) Use its best efforts to retain Westwood
Bank's present customer base and to facilitate the retention of such customers
by Westwood Bank and its branches after the Effective Time of the Merger; and
(vii) Maintain, renew, keep in full force
and effect, and preserve its business organization and material rights and
franchises, permits and licenses, and to use its best efforts to maintain
positive relations with its present employees so that such employees will
continue to perform effectively and will be available to WFC, Westwood Bank or
Lakeview and Lakeview's Subsidiaries at and after the Effective Time of the
Merger, and to use its best efforts to maintain its existing, or substantially
equivalent, credit arrangements with banks and other financial institutions and
to assure the continuance of Westwood Bank's customer relationships.
(b) WFC and Westwood Bank agree to use their best
efforts to assist Lakeview in obtaining the Government Approvals necessary to
complete the transactions contemplated hereby and do not know of any reason that
such Government Approvals can not be obtained, and WFC and Westwood Bank shall
provide to Lakeview or to the appropriate governmental authorities all
information reasonably required to be submitted in connection with obtaining
such approvals.
(c) WFC and Westwood Bank, at their own cost and
expense, shall use their best efforts to secure all necessary consents and all
consents and releases, if any, required of WFC, Westwood Bank or third parties
and shall comply with all applicable laws, regulations and rulings in connection
with this Reorganization Agreement and the consummation of the transactions
contemplated hereby.
(d) At all times to and including, and as of, the
Closing, WFC and Westwood Bank shall inform Lakeview of any and all facts
necessary to amend or supplement the representations and warranties made herein
and the WFC Schedules attached hereto as necessary so that the information
contained herein and therein will accurately reflect the current status of WFC
and Westwood Bank; provided, however, that any such updates to the WFC Schedules
shall be required prior to the Closing
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only with respect to matters which represent material changes to the WFC
Schedules and the information contained therein.
(e) Subject to the terms and conditions of this
Reorganization Agreement, WFC and Westwood Bank agree to use all reasonable
efforts and to take, or to cause to be taken, all actions, and to do, or to
cause to be done, all things necessary, proper, or advisable under applicable
laws and regulations to consummate and make effective, with reasonable
promptness after the date of this Reorganization Agreement, the transactions
contemplated by this Reorganization Agreement, including, without limitation,
using reasonable efforts to lift or rescind any injunction or restraining or
other order adversely affecting the ability of the Parties to consummate the
transaction contemplated by this Reorganization Agreement. WFC shall use, and
shall cause each of its Subsidiaries to use, its best efforts to obtain consents
of all third parties and Regulatory Authorities necessary or desirable for the
consummation of each of the transactions contemplated by this Reorganization
Agreement.
(f) WFC shall notify Lakeview promptly after
becoming aware of the occurrence of, or the impending or threatened occurrence
of, any event that would constitute a breach on its part of any obligation under
this Agreement or the occurrence of any event that would cause any
representation or warranty made by it herein to be false or misleading, or if it
becomes a party or is threatened with becoming a party to any legal or equitable
proceeding or governmental investigation or upon the occurrence of any event
that would result in a change in the circumstances described in the
representations and warranties contained herein.
(g) On the business day immediately prior to the
Effective Time of the Merger or on such other day after the satisfaction of all
conditions precedent to the Merger as Lakeview may require WFC shall, at the
request of Lakeview, take all legally permissible action necessary to convert to
the accounting policies and practices of Lakeview, such actions to include,
without limitation, at Lakeview's option, adjustments to loan loss reserves,
reserves for federal income taxes, accounting for post-retirement medical
benefits, and accruals for severance and related costs and accrued vacation and
disability leave. WFC's and Westwood Bank's representations, warranties and
covenants contained in this Reorganization Agreement shall not be deemed to be
untrue or breached in any respect for any purpose as a consequence of any
modifications or changes undertaken solely on account of this Section 6.2(g).
6.3 Conduct of Business -- Negative Covenants. From the date
of this Reorganization Agreement until the earlier of the Effective Time of the
Merger or the termination of this Reorganization Agreement, WFC and Westwood
Bank covenant and agree that they will neither do, nor agree or commit to do,
nor permit any WFC Subsidiary to do or commit or agree to do, any of the
following without requesting Lakeview's approval and receiving the prior written
consent of the president of Lakeview, which consent will not be unreasonably
withheld and shall be deemed given unless Lakeview disapproves the same within
five (5) business days of having received WFC's written request for such
approval:
(a) Except as expressly contemplated by this
Reorganization Agreement or the Plan of Merger, amend its Certificate of
Incorporation or Bylaws; or
(b) Impose on any share of capital stock held by it
or by any of its Subsidiaries of any lien, charge, or encumbrance, or permit any
such lien, charge, or encumbrance to exist; or
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(c) (i) Repurchase, redeem, or otherwise acquire or
exchange, directly or indirectly, any shares of its capital stock or other
equity securities or any securities or instruments convertible into any shares
of its capital stock, or any rights or options to acquire any shares of its
capital stock or other equity securities except as expressly permitted by this
Reorganization Agreement or the Plan of Merger; or (ii) split or otherwise
subdivide its capital stock; or (iii) recapitalize in any way; or (iv) declare a
stock dividend on the WFC Common Stock; or (v) pay or declare a cash dividend or
make or declare any other type of distribution on the WFC Common Stock except
for any cash dividend already declared prior to this Reorganization Agreement or
regular quarterly cash dividends payable in the same amount and during the same
time periods as past quarterly dividends; or
(d) Except as expressly permitted by this
Reorganization Agreement, acquire direct or indirect control over any
corporation, association, firm, organization or other entity, other than in
connection with (i) mergers, acquisitions, or other transactions approved in
writing by Lakeview, (ii) internal reorganizations or consolidations involving
existing Subsidiaries, (iii) acquisitions of control in its fiduciary capacity,
or (iv) the creation of new subsidiaries organized to conduct or continue
activities otherwise permitted by this Reorganization Agreement;
(e) Except as expressly permitted by this
Reorganization Agreement or the Plan of Merger, to (i) issue, sell, agree to
sell, or otherwise dispose of or otherwise permit to become outstanding any
additional shares of WFC Common Stock (not including shares issuable upon the
exercise of validly issued and WFC Stock Options outstanding as of the date of
this Reorganization Agreement), or any other capital stock of WFC or of any WFC
Subsidiary, or any stock appreciation rights, or any option, warrant,
conversion, call, scrip, or other right to acquire any such stock, or any
security convertible into any such stock, unless any such shares of such stock
are directly sold or otherwise directly transferred to WFC or any WFC
Subsidiary, (ii) sell, agree to sell, or otherwise dispose of any substantial
part of the assets or earning power of WFC or of any WFC Subsidiary; (iii) sell,
agree to sell, or otherwise dispose of any asset of WFC or any WFC Subsidiary
other than in the ordinary course of business for reasonable and adequate
consideration or (iv) buy, agree to buy or otherwise acquire a substantial part
of the assets or earning power of any other Person or entity;
(f) Incur, or permit any WFC Subsidiary to incur,
any additional debt obligation or other obligation for borrowed money other than
(i) in replacement of existing short-term debt with other short-term debt of an
equal or lesser amount, (ii) financing of banking related activities, or (iii)
indebtedness of WFC or any WFC Subsidiary to Westwood Bank or another WFC
Subsidiary in excess of an aggregate of $50,000 (for WFC and its Subsidiaries on
a consolidated basis) except in the ordinary course of the business of WFC or
such WFC Subsidiary (and such ordinary course of business shall include, but
shall not be limited to, creation of deposit liabilities, entry into repurchase
agreements or reverse repurchase agreements, purchases or sales of federal
funds, Federal Home Loan Bank advances, and sales of certificates of deposit);
(g) Grant any increase in compensation or benefits
to any of its employees or officers in excess of the lesser of five percent (5%)
per annum or $5,000 for any of them individually, except in accordance with past
practices or as required by law; pay any bonus except in accordance with past
practices or any plan or arrangement disclosed in WFC Schedule 6.3(g); enter
into any severance agreements with any of its officers or employees; grant any
material increase in fees or other increases in new compensation or other
benefits to any director of WFC or of any WFC Subsidiary; or effect any change
in retirement benefits for any class of its employees or officers, unless such
change is required by applicable law;
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(h) Amend any existing employment contract between
it and any person to increase the compensation or benefits payable thereunder;
or enter into any new employment contract with any person that WFC or Westwood
Bank do not have the unconditional right to terminate without liability (other
than liability for services already rendered), at any time on or after the
Effective Time of the Merger;
(i) Adopt any new employee benefit plan or terminate
or make any material change in or to any existing employee benefit plan other
than any change that is required by law or that, in the opinion of counsel, is
necessary or advisable to maintain the tax-qualified status of any such plan;
(j) Enter into any new service contracts, purchase
or sale agreements or lease agreements in excess of $25,000 that are material to
WFC or any WFC Subsidiary;
(k) Make any capital expenditure exceeding $50,000;
(l) Knowingly take any action that is intended or
may reasonably be expected to result in any of its representations and
warranties set forth in this Reorganization Agreement being or becoming untrue
in any material respect, or in any of the conditions to the Merger set forth in
Article 7 not being satisfied, or in violation of any provision of this
Reorganization Agreement, except, in every case, as may be required by
applicable law;
(m) Change its methods of accounting in effect at
March 31, 1997, except as required by changes in generally accepted accounting
principles as concurred in, in writing, by WFC's independent auditors (a copy of
which shall be provided to Lakeview) or regulatory accounting principles;
(n) Except as required by applicable law, knowingly
take or cause to be taken any action that could reasonably be expected to
jeopardize or delay the receipt of any of the required regulatory approvals or
which would reasonably be expected to result in any such required regulatory
approval containing a condition that is determined by Lakeview to be unduly
burdensome;
(o) Fail to use its best efforts to keep in full
force and effect its insurance and bonds in such amounts as are reasonable to
cover such risks customary in relation to the character and location of its
properties and the nature of its business and in any event at least equal in
scope and amount of coverage of insurance and bonds now carried;
(p) Fail to notify Lakeview promptly of its receipt
of any letter, notice or other communication, whether written or oral, from any
governmental entity advising WFC that it is contemplating issuing, requiring, or
requesting any agreement, memorandum of understanding, or similar undertaking,
order or directive;
(q) Fail promptly to notify Lakeview of (i) the
commencement or threat of any audit, action, or proceeding involving any
material amount of taxes against either WFC or any WFC Subsidiary or (ii) the
receipt by WFC or any WFC Subsidiary of any deficiency or audit notices or
reports in respect of any material deficiencies asserted by any federal, state,
local or other tax authorities;
(r) Fail to maintain and keep its properties in good
repair and condition, except for depreciation due to ordinary wear and tear;
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(s) Engage in any off-balance sheet hedge
transactions.
6.4 Conduct of Business -- Certain Actions.
Except to the extent necessary to consummate the
transactions specifically contemplated by this Reorganization Agreement, WFC and
Westwood Bank shall not, and shall use their respective best efforts to ensure
that their respective directors, officers, employees, and advisors do not,
directly or indirectly, institute, solicit, or knowingly encourage (including by
way of furnishing any information not legally required to be furnished) any
inquiry, discussion, or proposal, or participate in any discussions or
negotiations with, or provide any confidential or non-public information to, any
corporation, partnership, person or other entity or group (other than to
Lakeview or any Lakeview Subsidiary) concerning any "Acquisition Proposal" (as
defined below), except for actions reasonably considered by the Board of
Directors of WFC, based upon the advice of outside legal counsel, to be required
in order to fulfill its fiduciary obligations. WFC shall notify Lakeview
immediately if any Acquisition Proposal has been or should hereafter be received
by WFC or Westwood Bank, such notice to contain, at a minimum, the identity of
such persons, and, subject to disclosure being consistent with the fiduciary
obligations of WFC's Board of Directors, a copy of any written inquiry, the
terms of any proposal or inquiry, any information requested or discussions
sought to be initiated, and the status of any reports, negotiations or
expressions of interest. For purposes of this Section, "Acquisition Proposal"
means any tender offer, agreement, understanding or other proposal of any nature
pursuant to which any corporation, partnership, person or other entity or group,
other than Lakeview or any Lakeview Subsidiary, would directly or indirectly (i)
acquire or participate in a merger, share exchange, consolidation or any other
business combination involving WFC or Westwood Bank; (ii) acquire the right to
vote ten percent (10%) or more of the WFC Common Stock or Westwood Bank Common
Stock; (iii) acquire a significant portion of the assets or earning power of WFC
or of Westwood Bank; or (iv) acquire in excess of ten percent (10%) of the
outstanding WFC Common Stock or Westwood Bank common stock.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to the Obligations of WFC. Unless waived in
writing by WFC, the obligation of WFC to consummate the transaction contemplated
by this Reorganization Agreement is subject to the satisfaction at or prior to
the Closing Date of the following conditions:
(a) Performance. Each of the material acts and
undertakings of Lakeview to be performed at or prior to the Closing Date
pursuant to this Reorganization Agreement shall have been duly performed in all
material respects;
(b) No Material Adverse Change. No material adverse
change in the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or otherwise), operations, liquidity,
income, or financial condition of Lakeview and Lakeview Bank taken as a whole
shall have occurred since the date of this Reorganization Agreement;
(c) Representations and Warranties. The
representations and warranties of Lakeview and Lakeview Bank contained in this
Reorganization Agreement shall be true and correct, in
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all material respects, on and as of the Closing Date with the same effect as
though made on and as of the Effective Time of the Merger;
(d) Documents. In addition to the other deliveries
of Lakeview described elsewhere in this Reorganization Agreement, WFC shall have
received the following documents and instruments:
(i) a certificate signed by the Secretary
or an assistant secretary of Lakeview and Lakeview Bank dated as of the Closing
Date certifying that:
(A) Lakeview's and Lakeview Bank's
Boards of Directors have duly adopted resolutions (copies of
which shall be attached to such certificate) approving the
substantive terms of this Reorganization Agreement (including the
Plan of Merger) and authorizing the consummation of the
transactions contemplated by this Reorganization Agreement and
certifying that such resolutions have not been amended or
modified and remain in full force and effect;
(B) the persons executing this
Reorganization Agreement on behalf of Lakeview and Lakeview Bank
are officers of Lakeview and Lakeview Bank, respectively, holding
the offices so specified with full power and authority to execute
this Reorganization Agreement and any and all other documents in
connection with the Merger, and that the signature of such person
set forth on such certificate is his genuine signature;
(C) the organization documents of
Lakeview and Lakeview Bank attached to such certificate remain in
full force and effect; and
(ii) a certificate signed respectively by
duly authorized officers of Lakeview and Lakeview Bank stating that
the conditions set forth in Sections 7.1(a), 7.1(b) and 7.1(c) of this
Reorganization Agreement have been satisfied;
(e) Consideration. WFC shall have received a
certificate executed by an authorized officer of the Exchange Agent to the
effect that the Exchange Agent has received and holds in its possession proper
authorization to issue certificates evidencing shares of Lakeview Common Stock
and cash or other good funds sufficient to meet the obligations of Lakeview to
the WFC Record Holders to deliver the Consideration under this Reorganization
Agreement and the Plan of Merger; and
(f) Opinion of Lakeview's Counsel. WFC shall have
been furnished with an opinion of counsel to Lakeview, dated as of the Closing
Date, addressed to WFC, substantially to the effect that:
(i) Lakeview is incorporated and validly
existing as a corporation in good standing under the laws of the State of New
Jersey; Lakeview Bank is a wholly-owned subsidiary of Lakeview organized and
validly existing and in good standing as a state stock savings bank chartered
under the laws of the State of New Jersey;
(ii) The authorized capital stock of
Lakeview consists of 10,000,000 shares of Lakeview Common Stock, par value $2.00
per share, of which 2,254,527 shares of Lakeview
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Common Stock are validly issued and outstanding; all necessary corporate
proceedings have been taken in order to validly authorize such Lakeview Common
Stock; and to the best of their knowledge, all outstanding shares of Lakeview
Common Stock have been duly and validly issued, are fully paid and
nonassessable, were not issued in violation of or subject to any statutory
preemptive rights;
(iii) The certificates evidencing the
Lakeview Common Stock to be delivered pursuant to the Reorganization Agreement
are in all material respects in due and proper form under New Jersey Law, and
when fully countersigned by Lakeview's transfer agent and register and issued in
accordance with the provisions of the Reorganization Agreement, the Lakeview
Common Stock represented thereby will be duly authorized and validly issued,
fully paid and nonassessable, and will not have been issued in violation of or
subject to any statutory preemptive rights;
(iv) Lakeview and Lakeview Bank have full
corporate power and authority to enter into the Reorganization Agreement and
Lakeview has full corporate power and authority to issue the Lakeview Common
Stock pursuant to the Reorganization Agreement, the Reorganization Agreement has
been duly and validly authorized by all necessary corporate action by Lakeview
and Lakeview Bank and has been duly and validly executed and delivered by and on
behalf of Lakeview and Lakeview Bank and no approval, authorization, order
consent, registration, filing, qualification, license or permit of or with any
court, regulatory, administrative or other governmental body is required under
any federal or New Jersey statute or regulation for the execution and delivery
of the Reorganization Agreement by Lakeview and Lakeview Bank or the
consummation of the transactions contemplated by the Reorganization Agreement,
except such as have been obtained and are in full force and effect;
(v) Neither the execution and delivery by
Lakeview of this Reorganization Agreement nor any of the documents to be
executed and delivered by Lakeview in connection herewith violates or conflicts
with Lakeview's Certificate of Incorporation or Bylaws.
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of Lakeview or appropriate government
officials; (ii) in the case of matters of law governed by the laws of the states
in which they are not licensed, reasonably rely upon the opinions of legal
counsel duly licensed in such states and may be limited, in any event, to
Federal Law and the State of New Jersey; and (iii) incorporate, be guided by,
and be interpreted in accordance with, the Legal Opinion Accord of the ABA
Section of Business Law (1991); and
(g) Fairness Opinion. WFC shall have received a
"fairness opinion" letter from its independent financial adviser, FinPro, dated
the date hereof and to the effect that, in the opinion of such adviser the
Consideration to be received by the WFC Record Holders is fair to the WFC Record
Holders from a financial point of view, and WFC shall have received an updated
"fairness opinion" letter from such advisers at the time of the mailing of the
proxy statement for the WFC Shareholders' Meeting confirming the opinions
provided in the initial "fairness opinion" letter.
7.2 Conditions to the Obligations of Lakeview. Unless waived
in writing by Lakeview, the obligation of Lakeview to consummate the
transactions contemplated by this Reorganization Agreement is subject to the
satisfaction at or prior to the Closing Date of the following conditions:
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(a) Performance. Each of the material acts and
undertakings of WFC and Westwood Bank to be performed at or before the Closing
Date pursuant to this Reorganization Agreement shall have been duly performed;
(b) Representations and Warranties. The
representations and warranties of WFC and Westwood Bank contained in Article 5
of this Reorganization Agreement shall be true and correct, in all material
respects, on and as of the Closing Date with the same effect as though made on
and as of the Closing Date;
(c) Documents. In addition to the documents
described elsewhere in this Reorganization Agreement, Lakeview shall have
received the following documents and instruments:
(i) a certificate signed by the Secretary
or an assistant secretary of WFC and Westwood Bank dated as of the
Closing Date certifying that:
(A) WFC's and Westwood Bank's
respective Boards of Directors and shareholders have duly adopted
resolutions (copies of which shall be attached to such
certificate) approving the substantive terms of this
Reorganization Agreement (including the Plan of Merger) and
authorizing the consummation of the transactions contemplated by
this Reorganization Agreement and certifying that such
resolutions have not been amended or modified and remain in full
force and effect;
(B) each person executing this
Reorganization Agreement on behalf of WFC and Westwood Bank is an
officer of WFC or Westwood Bank, as the case may be, holding the
office or offices specified therein, with full power and
authority to execute this Reorganization Agreement and any and
all other documents in connection with the Merger, and that the
signature of each person set forth on such certificate is his or
her genuine signature;
(C) the charter documents of WFC
and Westwood Bank attached to such certificate remain in full
force and effect; and
(ii) a certificate signed by the respective
Chairman of the Board, President and Chief Financial Officer of
each of WFC and Westwood Bank stating that the conditions set
forth in Sections 7.2(a), 7.2(b) and 7.2(e) this Reorganization
Agreement have been satisfied.
(d) Inspections Permitted. Between the date of this
Reorganization Agreement and the Closing Date, WFC and Westwood Bank shall have
afforded Lakeview and its authorized agents and representatives reasonable
access during normal business hours to the properties, operations, books,
records, contracts, documents, loan files and other information of or relating
to WFC and Westwood Bank. Lakeview will provide WFC and Westwood Bank at least
48 hours notice of any inspection and conduct any inspection in a reasonable
manner that will not interfere with business operations. WFC and Westwood Bank
shall have caused all WFC or Westwood Bank personnel to provide reasonable
assistance to Lakeview in its investigation of matters relating to WFC and
Westwood Bank.
(e) No Material Adverse Change. No material adverse
change in the business, property, assets (including loan portfolios),
liabilities (whether absolute, contingent or
- 39 -
otherwise), operations, liquidity, income, or financial condition of WFC and
Westwood Bank taken as a whole shall have occurred since the date of this
Reorganization Agreement.
(f) Opinion of WFC's Counsel. Lakeview shall have
been furnished with an opinion of legal counsel to WFC and Westwood Bank, dated
the Closing Date, addressed to Lakeview, substantially to the effect that:
(i) WFC is a corporation validly existing
and in good standing under the laws of the State of New Jersey;
(ii) Westwood Bank is a state stock savings
bank, validly existing, and in good standing under the laws of
the State of New Jersey;
(iii) WFC and Westwood Bank have full corporate
power and authority to enter into the Reorganization Agreement; the
Reorganization Agreement has been duly and validly authorized by all necessary
corporate action by WFC and Westwood Bank and has been duly and validly executed
and delivered by and on behalf of WFC and Westwood Bank; and no approval,
authorization, order, consent, registration, filing, qualification, license or
permit of or with any court, regulatory, administrative or other governmental
body is required under any federal or New Jersey statute or regulation for the
execution and delivery of the Reorganization Agreement by WFC and Westwood Bank
or the consummation of the transactions contemplated by the Reorganization
Agreement, except such as have been obtained and are in full force and effect;
and
Such opinion may (i) expressly rely as to matters of fact upon certificates
furnished by appropriate officers of WFC or Westwood Bank or appropriate
government officials; (ii) in the case of matters of law governed by the laws of
the states in which they are not licensed, reasonably rely upon the opinions of
legal counsel duly licensed in such states and may be limited, in any event, to
federal law and the NJBCA and (iii) incorporate, be guided by, and be
interpreted in accordance with, the Legal Opinion Accord of the ABA Section of
Business Law (1991);
(g) Other Business Combinations, Etc. Neither WFC
nor Westwood Bank shall have entered into any agreement, letter of intent,
understanding or other arrangement pursuant to which WFC or Westwood Bank would
merge, consolidate with; effect a business combination with, sell any
substantial part of WFC's or Westwood Bank's assets to, or; acquire a
significant part of the shares or assets of, any other Person or entity
(financial or otherwise); adopt any "poison pill" or other type of anti-takeover
arrangement, any shareholder rights provision, any "golden parachute" or similar
program which would have the effect of materially decreasing the value of WFC or
Westwood Bank or the benefits of acquiring the WFC Common Stock;
(h) Regulatory Approvals. Except for the filing of
the Certificate of Merger with the Secretary of State of the State of New
Jersey, all Regulatory Approvals for the transactions contemplated by this
Reorganization Agreement shall have been obtained without the imposition of any
conditions not typically imposed in similar transactions which Lakeview
determines in its sole judgment to be materially burdensome upon the conduct of
the business of Lakeview or which would so adversely impact the economic and
business benefits of the Merger to Lakeview as to render it inadvisable in the
sole judgment of Lakeview to proceed with the Merger; such approvals shall be in
effect and no proceedings shall have been instituted or threatened with respect
thereto; all applicable waiting periods
- 40 -
with respect to such approvals shall have expired; and all conditions and
requirements prescribed by law or otherwise imposed in connection with the
Regulatory Approvals shall have been satisfied;
(i) WFC Stockholder Approval. WFC shall have
furnished Lakeview with a certified copy of resolutions duly adopted by the
holders of a vote of the outstanding shares of WFC Common Stock entitled to vote
thereon approving this Reorganization Agreement, the Merger, and the
transactions contemplated hereby; such resolutions shall be in full force and
effect and shall not have been modified, rescinded or annulled; and
(j) No Lakeview Stockholder Approval. Lakeview,
pursuant to applicable laws, its certificate of incorporation, and NASD rules,
will not be required to obtain approval of the Merger from its stockholders.
7.3 Conditions to Obligations of All Parties. The obligations
of each party to effect the transactions contemplated hereby shall be subject to
the fulfillment, at or prior to the Closing, of the following conditions:
(a) No Pending or Threatened Claims. No claim,
action, suit, investigation or other proceeding shall be pending or threatened
before any court or governmental agency which presents a substantial risk of the
restraint or prohibition of the transactions contemplated by this Reorganization
Agreement or the obtaining of material damages or other relief in connection
therewith;
(b) Governmental Approvals and Acquiescence
Obtained. The Parties hereto shall have received all applicable Governmental
Approvals for the consummation of the transactions contemplated herein and all
waiting periods incidental to such approvals or notices given shall have
expired; and
(c) Approval of Stockholders. Approval of this
Agreement and the transactions contemplated hereby by the stockholders of WFC,
as required by applicable law, the rules of the Nasdaq Small Cap Market or
applicable provisions of WFC's Certificate of Incorporated and Bylaws.
(d) Effectiveness of Registration Statement. The
Registration Statement has become effective under the 1933 Act, and no stop
order suspending the effectiveness of the Registration Statement or preventing
the use of the Proxy Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated by the SEC or any
state securities or other regulatory authority.
(e) Tax Opinion. Lakeview and WFC shall receive an
opinion of Lakeview's counsel to the effect that the transaction will constitute
a tax free reorganization within the meaning of Section 368 of the Internal
Revenue Code and that no gain or loss will be recognized by WFC shareholders who
receive solely shares of Lakeview Common Stock in exchange for their shares of
WFC Common Stock.
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ARTICLE 8
TERMINATION
8.1 Termination. This Reorganization Agreement and the Plan of
Merger may be terminated at any time prior to the Closing, as follows:
(a) By mutual consent in writing of the Parties;
(b) By Lakeview or WFC in the event the Closing
shall not have occurred by June 30, 1998 (the "Target Date"), unless the failure
of the Closing to occur shall be due to the failure of the Party seeking to
terminate this Agreement to perform its obligations hereunder in a timely
manner;
(c) By either Lakeview or WFC upon written notice to
the other Party, upon (i) denial of any Governmental Approval necessary for the
consummation of the Merger (or should such approval be conditioned upon a
substantial deviation from the transactions contemplated); provided, however,
that either Lakeview or WFC may, upon written notice to the other, extend the
term of this Reorganization Agreement for only one or more sixty (60) day
periods to prosecute diligently and overturn such denial, provided that such
denial has been appealed within twenty (20) business days of the receipt thereof
or (ii) upon the failure to obtain the approval of the WFC shareholders at the
WFC shareholders meeting;
(d) By Lakeview or WFC in the event that there shall
have been a material breach of any obligation or covenant of the other Party
hereunder and such breach shall not have been remedied within sixty (60) days
after receipt by the breaching Party of written notice from the other Party
specifying the nature of such breach and requesting that it be remedied;
(e) By Lakeview or WFC should WFC or any WFC
Subsidiary enter into any letter of intent or agreement with a view to being
acquired by or effecting a business combination with any other Person; or any
agreement to merge, to consolidate, to combine or to sell a material portion of
its assets or to be acquired in any other manner by any other Person or to
acquire a material amount of assets or a material equity position in any other
Person, whether financial or otherwise;
(f) By Lakeview should either WFC or Westwood Bank
enter into any formal agreement, letter of understanding, memorandum or other
similar arrangement with any bank regulatory authority establishing a formal
capital plan requiring WFC or Westwood Bank to raise additional capital or to
sell a substantial portion of its assets.
If a Party should elect to terminate this Reorganization Agreement pursuant to
subsections (b), (c), (d), (e) or (f) of this Section, it shall give notice to
the other Party, in writing, of its election in the manner prescribed in Section
9 ("Notices") of this Reorganization Agreement.
8.2 Effect of Termination. In the event that this
Reorganization Agreement should be terminated pursuant to this Section, all
urther obligations of the Parties under this Reorganization Agreement shall
terminate without further liability of any Party to another; provided, however,
that a termination under this Section shall not relieve any Party of any
liability for breach of this Reorganization Agreement or for any misstatement or
misrepresentation made hereunder prior to such termination, or
- 42 -
be deemed to constitute a waiver of any available remedy for any such breach,
misstatement or misrepresentation.
8.3 Fees.
(a) WFC hereby agrees to pay Lakeview and Lakeview
shall be entitled to receipt of a fee (the "Fee") of $900,000 following the
occurrence of a Purchase Event (as defined below). Such payment shall be made
immediately available funds within five business days after delivery of notice
of entitlement by Lakeview. Notwithstanding the foregoing, payments pursuant to
this Section shall not be required in the event of termination of this
Reorganization Agreement pursuant to Section 8.1(a), (b), (c)(i), (d) (in the
event terminated by WFC due to a material breach by Lakeview) or (f) prior to
the occurrence of a Purchase Event.
(b) The term "Purchase Event" shall mean any of the
following events, or the WFC or its Subsidiary agreeing to, orally or in
writing, to enter into an agreement relating to any of the following events,
occurring after the date hereof and before the Effective Time or occurring
within 12 months of the date of termination of this Agreement pursuant to this
Article:
(i) the acquisition by any person, other
than Lakeview or any of its
subsidiaries, alone or together with
such person's affiliates and
associates or any group, of
beneficial ownership of 25% or more
of the WFC Common Stock (for
purposes of this Subsection (b)(i),
the terms "group" and "beneficial
ownership" shall be as defined in
Section 13(d) of the Exchange Act
and regulations promulgated
thereunder and as interpreted
thereunder);
(ii) a merger, consolidation, share
exchange, business combination or
any other similar transaction
involving WFC or Westwood Bank;
(iii) any sale, lease, exchange, mortgage,
pledge, transfer or other
disposition of 50% or more of the
assets of the WFC or Westwood Bank,
in a single transaction or series of
transactions; or
(iv) the Board of Directors of WFC does
not recommend approval of the
Reorganization to their shareholders
and the transaction contemplated
thereby unless Lakeview has
materially breached its
representations, warranties or
covenants provided herein and has
not attempted to cure such breach to
the reasonable satisfaction of WFC.
(c) WFC shall notify Lakeview promptly in writing of
its knowledge of the occurrence of any Purchase Event; provided, however, that
the giving of such notice by WFC shall not be a condition to the right of
Lakeview to the Fee.
- 43 -
ARTICLE 9
GENERAL PROVISIONS
9.1 Notices. Any notice, request, demand and other
communication which either Party hereto may desire or may be required hereunder
to give shall be in writing and shall be deemed to be duly given if delivered
personally or mailed by certified or registered mail (postage prepaid, return
receipt requested), air courier or facsimile transmission, addressed or
transmitted to such other Party as follows:
If to WFC:
Westwood Financial Corporation
700-88 Broadway
Westwood, New Jersey 07675
Fax: (201) 666-4265
Attn: William J. Woods, Chairman of the Board
With a copy to:
Breyer & Aguggia
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
Fax: (202) 737-7979
Attn: John F. Breyer, Jr., Esq.
If to Lakeview:
Lakeview Financial Corp.
989 McBride Avenue
Paterson, New Jersey 07424
Fax: (201) 890-3182
Attn: Kevin J. Coogan, President
With a copy to:
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Fax: (202) 434-4661
Attn: Samuel J. Malizia, Esq.
or to such other address as any Party hereto may hereafter designate to the
other Parties in writing. Notice shall be deemed to have been given on the date
reflected in the proof or evidence of delivery, or if none, on the date actually
received.
9.2 Governing Law. This Reorganization Agreement shall be
governed by, and construed and enforced in accordance with, the internal laws,
and not the laws pertaining to choice or
- 44 -
conflicts of laws, of the State of New Jersey, unless and to the extent that
federal law controls. Any dispute arising between the Parties in connection with
the transactions which are the subject of this Reorganization Agreement shall be
heard in a court of competent jurisdiction located in New Jersey.
9.3 Counterparts. This Reorganization Agreement may be
executed simultaneously in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute but one and the same
instrument.
9.4 Publicity. The Parties hereto will consult with each other
with regard to the terms and substance of any press releases, announcements or
other public statements with respect to the transactions contemplated hereby. To
the extent practicable, each Party shall provide the proposed text of any such
press release, announcement or public statement to the other Party prior to its
publication and shall permit such other Party a reasonable period to provide
comments thereon.
9.5 Entire Agreement. This Reorganization Agreement, together
with the Plan of Merger which is Exhibit A hereto, the Schedules, Annexes,
Exhibits and certificates required to be delivered hereunder and any amendments
or addenda hereafter executed and delivered in accordance with this Section
constitute the entire agreement of the Parties hereto pertaining to the
transactions contemplated hereby and supersede all prior written and oral (and
all contemporaneous oral) agreements and understandings of the Parties hereto
concerning the subject matter hereof. The Schedules, Annexes, Exhibits and
certificates attached hereto or furnished pursuant to this Reorganization
Agreement are hereby incorporated as integral parts of this Reorganization
Agreement. Except to the extent otherwise, provided herein, by specific language
and not by mere implication, this Reorganization Agreement is not intended to
confer upon any other person not a Party to this Reorganization Agreement any
rights or remedies hereunder.
9.6 Severability. If any portion or provision of this
Reorganization Agreement should be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any jurisdiction, such
portion or provision shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without affecting in any way
the validity or enforceability of the remaining portions or provisions hereof in
such jurisdiction or rendering that or any other portions or provisions of this
Reorganization Agreement invalid, illegal or unenforceable in any other
jurisdiction.
9.7 Modifications, Amendments and Waivers. At any time prior
to the Closing or termination of this Reorganization Agreement, the Parties may,
solely by written agreement executed by their duly authorized officers:
(a) extend the time for the performance of any of
the obligations or other acts of the other Party hereto;
(b) waive any inaccuracies in the representations
and warranties made by the other Party contained in this Reorganization
Agreement or in the Schedules or Exhibits hereto or any other document delivered
pursuant to this Reorganization Agreement;
(c) waive compliance with any of the covenants or
agreements of the other Party contained in this Reorganization Agreement to the
extent permitted by applicable law; and
- 45 -
(d) amend or add to any provision of this
Reorganization Agreement or the Plan of Merger; provided, however, that no
provision of this Reorganization Agreement may be amended or added to except by
an agreement in writing signed by the Parties hereto or their respective
successors in interest and expressly stating that it is an amendment to this
Reorganization Agreement.
9.8 Interpretation. The headings contained in this
Reorganization Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Reorganization Agreement.
9.9 Payment of Expenses. Except as set forth herein, Lakeview
and WFC shall each pay its own fees and expenses (including, without limitation,
legal fees and expenses) incurred by it in connection with the transactions
contemplated hereunder.
9.10 Attorneys' Fees. If any Party hereto shall bring an
action at law or in equity to enforce its rights under this Reorganization
Agreement (including an action based upon a misrepresentation or the breach of
any warranty, covenant, agreement or obligation contained herein), the
prevailing Party in such action shall be entitled to recover from the other
Party its reasonable costs and expenses necessarily incurred in connection with
such action (including fees, disbursements and expenses of attorneys and costs
of investigation).
9.11 No Survival of Representations and Warranties. Except for
the agreements of the parties in Sections 1.2(d), 1.6, 1.7, 5.3, 5.6 and 9.14,
which shall survive the Closing, none of the representations, warranties and
conditions of the Parties contained in this Reorganization Agreement or in any
instrument of transfer or other document delivered in connection with the
transactions contemplated by this Reorganization Agreement shall survive the
Closing or other termination of this Reorganization Agreement. The agreements of
the parties in Sections 1.2(d), 1.6, 1.7, 5.3 and 5.6 shall be enforceable
directly by each person benefitted or intended to be benefitted by such
sections.
9.12 No Waiver. No failure, delay or omission of or by any
Party in exercising any right, power or remedy upon any breach or default of any
other Party shall impair any such rights, powers or remedies of the Party not in
breach or default, nor shall it be construed to be a waiver of any such right,
power or remedy, or an acquiescence in any similar breach or default; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any Party of any
provisions of this Reorganization Agreement must be in writing and must be
executed by the Parties to this Reorganization Agreement and shall be effective
only to the extent specifically set forth in such writing.
9.13 Remedies Cumulative. All remedies provided in this
Reorganization Agreement, by law or equity, shall be cumulative and not
alternative.
9.14 Confidentiality. Any non-public or confidential
information disclosed by either WFC (including any WFC Subsidiaries) or Lakeview
(including any Lakeview Subsidiary) to the other Parties pursuant to this
Agreement or as a result of the discussions and negotiations leading to this
Agreement, or otherwise disclosed, or to which any other party has acquired or
may acquire access, and indicated (either expressly, in writing or orally, or by
the context of the disclosure or access) by the disclosing Party to be
non-public or confidential, or which by the content thereof reasonably appears
to be non-public or confidential, shall be kept strictly confidential and shall
not be used in any manner by
- 46 -
the recipient except in connection with the transactions contemplated by this
Reorganization Agreement. To that end, the Parties hereto will each, to the
maximum extent practicable, restrict knowledge of and access to non-public or
confidential information of the other Party to its officers, directors,
employees and professional advisors who are directly involved in the
transactions contemplated hereby and reasonably need to know such information.
Further to that end, all non-public or confidential documents (including all
copies thereof) obtained hereunder by any Party shall be returned as soon as
practicable after any termination of this Reorganization Agreement.
- 47 -
I WITNESS WHEREOF, each of the Parties hereto has duly executed and
delivered this Reorganization Agreement or has caused this Reorganization
Agreement to be executed and delivered in its name and on its behalf by its
representative thereunto duly authorized, all as of the date first written
above.
WESTWOOD FINANCIAL CORPORATION
By: /s/William J. Woods
--------------------------------------
William J. Woods
Chairman of the Board and Chief
Executive Officer
ATTEST:
/s/Joanne Miller
- ---------------------------------
Joanne Miller, Secretary
WESTWOOD SAVINGS BANK
By: /s/Joanne Miller
--------------------------------------
Joanne Miller
President
ATTEST:
/s/Catherine Solimando
- ---------------------------------
Catherine Solimando, Secretary
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LAKEVIEW FINANCIAL CORPORATION
By: /s/Kevin J. Coogan
-------------------------------------
Kevin J. Coogan
President and Chief Executive Officer
ATTEST:
/s/Helen Saco
- ---------------------------------
Helen Saco, Secretary
LAKEVIEW SAVINGS BANK
By: /s/Kevin J. Coogan
-------------------------------------
Kevin J. Coogan
President Chief Executive Officer
ATTEST:
/s/Helen Saco
- ---------------------------------
Helen Saco, Secretary
- 49 -
EXHIBIT A
PLAN OF MERGER
Setting Forth the Plan of Merger
of
WESTWOOD FINANCIAL CORPORATION
(a New Jersey corporation)
with and into
LAKEVIEW FINANCIAL CORP.
(a New Jersey Corporation)
THIS PLAN OF MERGER ("Plan of Merger") is made and entered into as of
the 10th day of September, 1997, by and between WESTWOOD FINANCIAL CORPORATION
("WFC"), a corporation chartered and existing under the laws of the State of New
Jersey which is a registered bank holding company and whose principal offices
are located at 700-88 Broadway, Westwood, New Jersey 07675; and LAKEVIEW
FINANCIAL CORP. ("Lakeview" or "Surviving Corporation"), a corporation organized
and existing under the laws of the State of New Jersey having its executive
office at 989 McBride Avenue, Paterson, New Jersey 07424 and which is registered
as a savings and loan holding company.
PREAMBLE
WHEREAS, Lakeview and WFC have entered into an Agreement and Plan of
Reorganization dated as of the 10th day of September, 1997 ("Reorganization
Agreement") to which this Plan of Merger is Exhibit A and is incorporated by
reference as an integral part thereof providing for the merger of WFC with and
into Lakeview (which would be the Surviving Corporation) and the acquisition of
all of the WFC Common Stock outstanding immediately prior to the Effective Time
of the Merger by Lakeview for the Consideration set forth in the Reorganization
Agreement and this Plan of Merger; and
WHEREAS, The Boards of Directors of Lakeview and WFC are each of the
opinion that the interests of their respective corporations and their
corporations' respective shareholders would best be served if WFC were to be
merged with and into Lakeview, which would survive the Merger, on the terms and
conditions provided in the Reorganization Agreement and in this Plan of Merger,
and as a result of such Merger becoming effective, the Surviving Corporation
would be Lakeview.
- 50 -
NOW, THEREFORE, in consideration of the covenants and agreements of the
Parties contained herein, WFC and Lakeview hereby make, adopt and approve this
Plan of Merger in order to set forth the terms and conditions for the merger of
WFC with and into Lakeview (the "Merger").
ARTICLE I.
DEFINITIONS
1.1 As used in this Plan of Merger and in any amendments hereto, all
capitalized terms herein shall have the meanings assigned to such terms in the
Reorganization Agreement unless otherwise defined herein.
ARTICLE 2
CAPITALIZATION
2.1 WESTWOOD FINANCIAL CORPORATION The authorized capital stock of WFC
consists of 5,000,000 shares of common stock having a par value of $.10 per
share (the "WFC Common Stock") and 2,000,000 shares of Serial Preferred Stock
having no par value (the "WFC Preferred Stock). As of the date hereof, 645,295
shares of WFC Common Stock were issued and outstanding, and no shares of WFC
Preferred Stock were issued and outstanding.
ARTICLE 3
PLAN OF MERGER
3.1 Constituent Corporations. The name of each constituent corporation
to the Merger is:
WESTWOOD FINANCIAL CORPORATION
and
LAKEVIEW FINANCIAL CORP.
3.2 Surviving Corporation. The Surviving Corporation shall be:
LAKEVIEW FINANCIAL CORP.
which as of the Effective Time of the Merger shall continue to be named:
LAKEVIEW FINANCIAL CORP.
3.3 Terms and Conditions of Merger. The Merger shall be consummated
only pursuant to, and in accordance with this Plan of Merger and the
Reorganization Agreement. Conditioned upon the satisfaction or lawful waiver (by
the Party or Parties entitled to the benefit thereof) of all conditions
precedent to consummation of the Merger, the Merger will become effective on the
date and at the time (the "Effective Time of the Merger") of the filing of a
Articles of Merger with the Secretary of State of the State of New Jersey, or at
such later time and/or date as may be agreed upon by the parties and set forth
in the Articles of Merger. At the Effective Time of the Merger, WFC shall be
merged with and
- 51 -
into Lakeview, which will survive the Merger, and the separate existence of WFC
shall cease thereupon, and without further action, Lakeview shall thereafter
possess all of the assets, rights, privileges, appointments, powers, licenses,
permits and franchises of both Lakeview and WFC, whether of a public or private
nature, and shall be subject to all of the liabilities, restrictions,
disabilities, and duties of both WFC and Lakeview.
3.4 Certificates of Incorporation. At the Effective Time of the Merger,
the Certificate of Incorporation of Lakeview, as in effect immediately prior to
the Effective Time of the Merger, shall constitute the Certificate of
Incorporation of Lakeview as the Surviving Corporation, unless and until the
same shall be amended as provided by law and the terms of such Articles of
Incorporation.
3.5 Bylaws. At the Effective Time of the Merger, the Bylaws of
Lakeview, as in effect immediately prior to the Effective Time of the Merger,
shall continue to be its Bylaws as the Surviving Corporation, unless and until
amended or repealed as provided by law, its Articles of Incorporation and such
Bylaws.
3.6 Directors and Officers. The directors and officers of Lakeview in
office immediately prior to the Effective Time of the Merger shall continue to
be the directors and officers of the Surviving Corporation, to hold office as
provided in the Certificate of Incorporation and Bylaws of the Surviving
Corporation, unless and until their successors shall have been elected or
appointed and shall have qualified or they shall be removed as provided therein.
3.7 Name. The name of Lakeview as the Surviving Corporation following
the Merger, shall remain:
LAKEVIEW FINANCIAL CORP.
ARTICLE 4
DESCRIPTION OF THE TRANSACTION
4.1 Terms of the Merger.
(a) Satisfaction of Conditions to Closing. After the
transactions contemplated herein have been approved by the shareholders of WFC
and each other condition to the obligations of the Parties hereto, other than
those conditions which are to be satisfied by delivery of documents by any Party
to any other Party, has been satisfied or, if lawfully permitted, waived by the
Party or Parties entitled to the benefits thereof, a closing (the "Closing")
will be held on the date and at the time of day and place referred to in this
Reorganization Agreement. At the Closing the Parties shall use their respective
best efforts to deliver the certificates, letters and opinions which constitute
conditions to effecting the Merger and the Subsidiary Merger and each Party will
provide the other Parties with such proof or indication of satisfaction of the
conditions to the obligations of such other Parties to consummate the Merger as
such other Parties may reasonably require. If all conditions to the obligations
of each of the Parties shall have been satisfied or lawfully waived by the Party
entitled to the benefits thereof, the Parties shall, at the Closing, duly
execute Articles of Merger for filing with the Secretary of State of the State
of New Jersey and promptly thereafter WFC and Lakeview shall take all steps
necessary or desirable to consummate the Merger in accordance with all
applicable laws, rules and regulations and the Plan of Merger. The Parties
- 52 -
shall thereupon take such other and further actions as Lakeview shall direct or
as may be required by law or this Reorganization Agreement to consummate the
transactions contemplated herein.
(b) Effective Time of the Merger. Upon the
satisfaction of all conditions to Closing, the Merger shall become effective on
the date and at the time of filing of the Articles of Merger with the Secretary
of State of the State of New Jersey or at such later date and/or time as may be
agreed upon by the Parties and set forth in the Articles of Merger so filed (the
"Effective Time of the Merger").
4.2 Conversion of Stock.
(a) Consideration. At the Effective Time of the
Merger, each share of common stock of WFC, par value $0.10 per share (the "WFC
Common Stock") then issued and outstanding (other than shares held directly or
indirectly by Lakeview, excluding shares held in a fiduciary capacity or in
satisfaction of a debt previously contracted) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
represent the right to receive the cash and/or shares of stock of Lakeview
constituting the Per Share Merger Consideration (as defined in paragraph (b)
below). As of the Effective Time of the Merger, each share of the WFC Common
Stock held directly or indirectly by Lakeview, excluding shares held in a
fiduciary capacity or in satisfaction of a debt previously contracted, shall be
cancelled, retired and cease to exist, and no exchange or payment shall be made
with respect thereto.
(b) Cash or Stock Merger Consideration. As used
herein, the term "Per Share Merger Consideration" shall mean either the amount
of cash set forth in clause (i) below (the "Cash Merger Consideration") or that
number of shares of common stock of Lakeview, par value $2.00 per share
("Lakeview Common Stock") as set forth in clause (ii) below (the "Stock Merger
Consideration"), at the election of the holder of each share of WFC Common
Stock, subject however to proration as set forth below.
(i) If Cash Merger Consideration is to
be paid with respect to a share of
WFC Common Stock, the Per Share
Merger Consideration with respect to
such share of WFC Common Stock shall
be in the amount of Twenty-nine
dollars and Twenty-five Cents
($29.25).
(ii) If Stock Merger Consideration is to
be paid with respect to a share of
WFC Common Stock, the Per Share
Merger Consideration with respect to
such share of WFC Common Stock shall
be that number of shares of Lakeview
Stock (the "Conversion Number")
equal to Twenty-nine Dollars and
Twenty-five Cents ($29.25) divided
by the Final Market Price as defined
below.
(c) Final Market Price. The "Final Market Price"
shall be the average closing price per share of the "last" real time trades
(i.e., closing price) of the Lakeview Common Stock as reported on the Nasdaq
National Market for each of the fifteen (15) Nasdaq National Market general
market trading days preceding one week prior to the Closing Date on which the
Nasdaq National Market was open for business (the "Pricing Period"). In the
event the Lakeview Common Stock does not trade on one or more of the trading
days during the Pricing Period (a "No Trade Date"), any such No Trade
- 53 -
Date shall be disregarded in computing the average closing price per share of
Lakeview Common Stock and the average shall be based upon the "last" real time
trades and number of days on which the Lakeview Common Stock actually traded
during the Pricing Period.
(d) Fractional Shares. Fractional shares of Lakeview
Common Stock shall not be issued and each holder of WFC Common Stock who would
otherwise be entitled to receive any such fractional shares (taking into account
all share amounts to which such holder is otherwise entitled hereunder) shall
receive cash (without interest) in lieu thereof in an amount equal to the
fraction of the share of Lakeview Common Stock to which such holder would
otherwise be entitled multiplied by the Final Market Price. No such holder will
be entitled to dividends, voting rights or any other rights of a stockholder of
Lakeview or WFC in respect of any such fractional share.
(e) Calculation Schedule. The calculations of the
respective amounts of cash and Lakeview Common Stock payable and issuable
pursuant to the terms of this Reorganization Agreement shall be jointly prepared
and agreed to by Lakeview and WFC and set forth in reasonable detail in a
schedule that shall be delivered to Registrar and Transfer Company (the
"Exchange Agent") prior to the Closing Date.
4.3 Election and Allocation Procedures.
(a) Subject to and in accordance with the allocation
and election procedures set forth herein, each record holder of a share of WFC
Common Stock (the "Shareholders") shall, prior to the Election Deadline (as
hereinafter defined) specify (i) the number of whole shares of WFC Common Stock
held by such Shareholder as to which such Shareholder shall desire to receive
the Cash Merger Consideration, and (ii) the number of whole shares of WFC Common
Stock held by such Shareholder as to which such Shareholder shall desire to
receive the Stock Merger Consideration.
(b) At the Effective Time of the Merger, each
unexercised WFC Stock Option shall be deemed cancelled and as consideration
therefor, at the election of each holder of a WFC Stock Option (the "Option
Holders," and together with the Shareholders the "Holders") shall be converted
into the right to receive either (i) solely a cash payment amount (the "Cash
Out") equal to the excess of (A) $29.25 over the exercise price per share of WFC
Common Stock covered by the WFC Stock Option, multiplied by (B) the total number
of shares of WFC Common Stock covered by the WFC Stock Option or (ii) solely a
number of shares of Lakeview Common Stock (the "Stock Exchange") equal to the
excess of (A) $29.25 over the exercise price per share of WFC Common Stock
covered by the WFC Stock Option, multiplied by (B) the total number of shares of
WFC Common Stock covered by the WFC Stock Option and divided by (C) the Final
Market Price.
(c) An election as described in clause (i) of
Paragraph (a) or Paragraph (b) is herein referred to as a "Cash Election," and
shares of WFC Common Stock as to which a Cash Election has been made are herein
referred to as "Cash Election Shares." An election as described in clause (ii)
of Paragraph (a) or Paragraph (b) is herein referred to as a "Stock Election,"
and shares as to which a Stock Election has been made are herein referred to as
"Stock Election Shares." A failure to indicate a preference in accordance
herewith is herewith referred to as a "Non-Election," and shares as to which
there is a Non-Election are herein referred to as "Non-Electing Shares."
(d) Payment of cash pursuant to the Cash Merger
Consideration, and issuance of Lakeview Common Stock pursuant to the Stock
Merger Consideration, shall be allocated to Holders
- 54 -
such that the number of shares of WFC Common Stock (outstanding or subject to
WFC Stock Options) as to which cash is paid shall equal 49.9% of the aggregate
number of shares of WFC Common Stock outstanding plus those subject to WFC Stock
Options (the "Aggregate Shares"), and the number of shares of WFC Common Stock
(outstanding or subject to WFC Stock Options) as to which WFC Stock are issued
shall equal 50.1% of the Aggregate Shares, as follows:
(1) If the number of Cash Election
Shares in excess of 49.9% of the
Aggregate Shares, then (i)
Non-Electing Shares shall be deemed
to be Stock Election Shares, (ii)
Cash Election Shares of Option
Holders shall be treated as Cash
Election Shares without adjustment,
and (iii)(A) Cash Election Shares of
each Shareholder shall be reduced
pro rata by multiplying the number
of Cash Election Shares of such
Shareholder by a fraction, the
numerator of which is the number of
shares of WFC Common Stock equal to
49.9% of the Aggregate Shares minus
the aggregate number of Cash
Election Shares of Option Holders
and the denominator of which is the
aggregate number of Cash Election
Shares of all Shareholders, and (B)
the shares of such Shareholder
representing the difference between
such Shareholder's initial Cash
Election and such Shareholder's
reduced Cash Election pursuant to
clause (A) shall be converted into
and be deemed to be Stock Election
Shares.
(2) If the number of Stock Election
Shares is in excess of 50.1% of the
Aggregate Shares, then (i)
Non-Electing Shares shall be deemed
to be Cash Election Shares, and
(ii)(A) Stock Election Shares of
each Holder shall be reduced pro
rata by multiplying the number of
Stock Election Shares of such Holder
by a fraction, the numerator of
which is the number of shares of WFC
Common Stock equal to 50.1% of the
Aggregate Shares and the denominator
of which is the aggregate number of
Stock Election Shares of all
Holders, and (B) the shares of such
Holder representing the difference
between such Holder's initial Stock
Election and such Holder's reduced
Stock Election pursuant to clause
(A) shall be converted into to and
be deemed to be Cash Election
Shares.
(3) If the number of Cash Election
Shares is less than or equal to
49.9% of the Aggregate Shares and
the number of Stock Election Shares
is less than or equal to 50.1% of
the Aggregate Shares, then (i) there
shall be no adjustment to the
elections made by electing Holders,
and (ii) Non-Electing Shares of each
Holder shall be treated as Stock
Elections Shares and/or as Cash
Election Shares in proportion to the
respective amounts by which the Cash
Election Shares and the Stock
Election Shares are less than the
49.9% and 50.1% limits,
respectively.
- 55 -
(e) After taking into account the foregoing
adjustment provisions, each Cash Election Share (including those deemed to be
Cash Election Shares) shall receive in the Merger the Cash Merger Consideration,
and each Stock Election Share (including those deemed to be Stock Election
Shares) shall receive in the Merger the Stock Merger Consideration (and cash in
lieu of fractional shares).
(f) Satisfaction of Conditions to Closing.
Notwithstanding any other provision of this Agreement, if the application of the
provisions of this Section would result in any Holder receiving a number of
shares of Lakeview Common Stock that would prevent the Per Share Merger
Consideration to consist in the aggregate of 49.9% Cash Merger Consideration and
50.1% Stock Merger Consideration or otherwise prevent the satisfaction of any of
the conditions set forth in Article 7 hereof, the number of shares otherwise
allocable to Holders pursuant to this section shall be adjusted as shall be
necessary to enable the satisfaction of all conditions.
4.4 Election Procedures.
(a) WFC and Lakeview shall prepare a form for
purposes of making elections and containing instructions with respect thereto
(the "Election Form"). The Election Form shall be distributed to each Holder at
such time as WFC and Lakeview shall determine and shall specify the date by
which all such elections must be made (the "Election Deadline") which date shall
be the date of the meeting of WFC Stockholders to approve the Merger or such
other date determined by WFC and Lakeview.
(b) Elections shall be made by Holders by mailing to
the Exchange Agent, a duly completed Election Form. To be effective, an Election
Form must be properly completed, signed and submitted to the Exchange Agent
accompanied by certificates representing the shares of WFC Common Stock or by
the Outstanding Option as to which the election is being made (or by an
appropriate guaranty of delivery by a commercial bank or trust company in the
United States or a member of a registered national security exchange or the
National Association of Security Dealers, Inc.), or by evidence that such
certificates have been lost, stolen or destroyed accompanied by such security or
indemnity as shall be reasonably requested by Lakeview. An Election Form and
accompanying share certificates or Outstanding Options, as the case may be, must
be received by the Exchange Agent by the close of business on the Election
Deadline. An election may be changed or revoked but only by written notice
received by the Exchange Agent prior to the Election Deadline including, in the
case of a change, a properly completed revised Election Form.
(c) Lakeview will have the discretion, which it may
delegate in whole or in part to the Exchange Agent, to determine whether the
Election Forms have been properly completed, signed and submitted or changed or
revoked and to disregard immaterial defects in Election Forms. The decision of
Lakeview (or the Exchange Agent) in such matters shall be conclusive and
binding. Neither Lakeview nor the Exchange Agent will be under any obligation to
notify any person of any defect in an Election Form submitted to the Exchange
Agent.
(d) For the purposes hereof, a Holder who does not
submit an effective Election Form to the Exchange Agent prior to the Election
Deadline shall be deemed to have made a Non-Election.
- 56 -
(e) In the event that this Agreement is terminated
pursuant to the provisions hereof and any shares or Outstanding Options have
been transmitted to the Exchange Agent pursuant to the provisions hereof,
Lakeview and WFC shall cause the Exchange Agent to promptly return such shares
to the person submitting the same.
4.5 Mechanics of Payment of Consideration.
(a) Surrender of Certificates pursuant to Section
2.2(b) or the Stock Exchange pursuant to Section 2.3(b), as applicable. Within
five business days after the Effective Time of the Merger, the Exchange Agent
shall deliver to each of the WFC Record Holders who have not previously
submitted properly completed Election Forms, accompanied by all certificates (or
other appropriate documentation) in respect of all shares of WFC Common Stock
held of record by such WFC Record Holders, such materials and information deemed
necessary by the Exchange Agent to advise the WFC Record Holders of the
procedures required for proper surrender of their certificates evidencing and
representing shares of the WFC Common Stock in order for the WFC Record Holders
to receive the Consideration to which they are entitled as provided herein. Such
materials shall include, without limitation, a Letter of Transmittal, an
Instruction Sheet, and a return mailing envelope addressed to the Exchange Agent
(collectively the "Shareholder Materials"). All Shareholder Materials shall be
sent by United States mail to the WFC Record Holders at the addresses set forth
on a certified shareholder list to be delivered by WFC to Lakeview at the
Closing (the "Shareholder List"). Lakeview shall also make appropriate
provisions with the Exchange Agent to enable WFC Record Holders to obtain the
Shareholder Materials from, and to deliver the certificates formerly
representing shares of WFC Common Stock to, the Exchange Agent in person,
commencing on or not later than the second business day following the Closing
Date. Upon receipt of the appropriate Shareholder Materials, together with the
certificates formerly evidencing and representing all of the shares of WFC
Common Stock which were validly held of record by such holder, the Exchange
Agent shall take prompt action to process such certificates formerly evidencing
and representing shares of WFC Common Stock received by it (including the prompt
return of any defective submissions with instructions as to those actions which
may be necessary to remedy any defects) and to mail to the former WFC Record
Holders in exchange for the certificate(s) surrendered by them, the
Consideration to be issued or paid for each such WFC Record Holder's shares
pursuant to the terms hereof. After the Effective Time of the Merger and until
properly surrendered to the Exchange Agent, each outstanding certificate or
certificates which formerly evidenced and represented the shares of WFC Common
Stock of a WFC Record Holder, subject to the provisions of this Section, shall
be deemed for all corporate purposes to represent and evidence only the right to
receive the Consideration into which such WFC Record Holder's shares of WFC
Common Stock were converted and aggregated at the Effective Time of the Merger.
Unless and until the outstanding certificate or certificates, which immediately
prior to the Effective Time of the Merger evidenced and represented the WFC
Record Holder's WFC Common Stock shall have been properly surrendered as
provided above, the Consideration issued or payable to the WFC Record Holder(s)
of the canceled shares as of any time after the Effective Date of the Merger
shall not be paid to the WFC Record Holder(s) of such certificate(s) until such
certificates shall have been surrendered in the manner required. Each WFC Record
Holder will be responsible for all federal, state and local taxes which may be
incurred by him on account of his receipt of the Consideration to be paid in the
Merger. The WFC Record Holder(s) of any certificate(s) which shall have been
lost or destroyed may nevertheless, subject to the provisions of this Article,
receive the Consideration to which each such WFC Record Holder is entitled,
provided that each such WFC Record Holder shall deliver to Lakeview and to the
Exchange Agent: (i) a sworn statement certifying such loss or destruction and
specifying the circumstances thereof and (ii) a lost instrument bond in form
satisfactory to Lakeview and the Exchange Agent which has been duly executed by
a corporate
- 57 -
surety satisfactory to Lakeview and the Exchange Agent, indemnifying the
Surviving Corporation, Lakeview, the Exchange Agent (and their respective
successors) to their satisfaction against any loss or expense which any of them
may incur as a result of such lost or destroyed certificates being thereafter
presented. Any costs or expenses which may arise from such replacement
procedure, including the premium on the lost instrument bond, shall be paid by
the WFC Record Holder.
4.6 Stock Transfer Books. At the Effective Time of the Merger, the
stock transfer books of WFC shall be closed and no transfer of shares of WFC
Common Stock shall be made thereafter.
4.7 Effects of the Merger. At the Effective Time of the Merger, the
separate existence of WFC shall cease, and WFC shall be merged with and into
Lakeview which, as the Surviving Corporation, shall thereupon and thereafter
possess all of the assets, rights, privileges, appointments, powers, licenses,
permits and franchises of the two merged corporations, whether of a public or a
private nature, and shall be subject to all of the liabilities, restrictions,
disabilities and duties of WFC and Lakeview.
4.8 Transfer of Assets. At the Effective Time of the Merger, all
rights, assets, licenses, permits, franchises and interests of WFC and Lakeview
in and to every type of property, whether real, personal, or mixed, whether
tangible or intangible, and to chose in action shall be deemed to be vested in
Lakeview as the Surviving Corporation by virtue of the Merger and without any
deed or other instrument or act of transfer whatsoever.
4.9 Assumption of Liabilities. At the Effective Time of the Merger, the
Surviving Corporation shall become and be liable for all debts, liabilities,
obligations and contracts of WFC as well as those of the Surviving Corporation,
whether the same shall be matured or unmatured; whether accrued, absolute,
contingent or otherwise; and whether or not reflected or reserved against in the
balance sheets, other financial statements, books of account or records of WFC
or the Surviving Corporation.
4.10 Appraisal Rights of WFC Shareholders. Pursuant to the provisions
of the NJBCA, WFC Shareholders shall not be entitled to assert Appraisal Rights
in connection with the Merger or to seek those appraisal remedies afforded by
the NJBCA because the WFC Common Stock is listed for trading on the Nasdaq Small
Cap Market pursuant to the listing rules of Nasdaq, and therefore, pursuant to
the provisions of the NJBCA, no WFC Record Holder may assert Appraisal Rights in
connection with the Merger or the transactions contemplated in this
Reorganization Agreement.
4.11 Approvals of Shareholders of WFC. In order to become effective,
the Merger must be approved by the shareholders of WFC at a meeting to be called
for that purpose by WFC's Board of Directors, or by their unanimous action by
written consent complying fully with the laws of New Jersey.
WFC shall be liable for and, prior to Closing, shall pay all
taxes on WFC Stock Options, including, but not limited to, payroll and
withholding taxes.
- 58 -
ARTICLE 5
AMENDMENTS AND WAIVERS
5.1 Amendments. To the extent permitted by law, this Plan of Merger may
be amended unilaterally by Lakeview and WFC as set forth in Section 9.8(d) of
this Reorganization Agreement; provided, however, that the provisions of Section
4.2 herein relating to the manner or basis upon which shares of WFC Common Stock
will be converted into the exclusive right to receive the Consideration from
Lakeview shall not be amended in such a manner as to reduce the amount of the
Consideration payable to the WFC Record Holders determined as provided herein of
this Plan of Merger nor shall this Plan of Merger be amended to permit Lakeview
to utilize assets other than cash or good funds to make payment of the
Consideration as provided in the Reorganization Agreement at any time after the
Shareholders' Meeting without the requisite approval (except as provided for in
the Reorganization Agreement) of the WFC Record Holders of the shares of WFC
Common Stock outstanding, and that no amendment to this Plan of Merger shall
modify the requirements of regulatory approval as set forth in this
Reorganization Agreement.
5.2 Authority for Amendments and Waivers. Prior to the Effective Time
of the Merger, Lakeview, acting through its Board of Directors or chief
executive officers and presidents or other authorized officers, shall have the
right to amend this Plan of Merger to postpone the Effective Time of the Merger
to a date and time subsequent to the time of filing of the Plan of Merger with
the New Jersey Secretary of State, to waive any default in the performance of
any term of this Plan of Merger by WFC, to waive or extend the time for the
compliance or fulfillment by WFC of any and all of its obligations under this
Plan of Merger, and to waive any or all of the conditions precedent to the
obligations of Lakeview and WFC under this Plan of Merger, except any condition
that, if not satisfied, would result in the violation of any law or applicable
governmental regulation. Prior to the Effective Time of the Merger, WFC, acting
through its Board of Directors or chief executive officer or president or other
authorized officer, shall have the right to amend this Plan of Merger to
postpone the Effective Time of the Merger to a date and time subsequent to the
time of filing of the Plan of Merger with the New Jersey Secretary of State, to
waive any default in the performance of any term of this Plan of Merger by
Lakeview or WFC, to waive or extend the time for the compliance or fulfillment
by Lakeview or WFC of any and all of their obligations under this Plan of
Merger, and to waive any or all of the conditions precedent to the obligations
of WFC under this Plan of Merger except any condition that, if not satisfied,
would result in the violation of any law or applicable governmental regulation.
ARTICLE 6
MISCELLANEOUS
6.1 Notices. All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered by hand, by
facsimile transmission, or by registered or certified mail, postage pre-paid to
the persons at the addresses set forth below (or at such other addresses or
facsimile numbers as may hereafter be designated as provided below), and shall
be deemed to have been delivered as of the date received by the Party to which,
or to whom it is addressed:
- 59 -
If to WFC:
Westwood Corporation
700-88 Broadway
Westwood, New Jersey 07675
Fax: (201) 666-4265
Attn: William J. Woods, Chairman of the Board
With a copy to:
Breyer & Aguggia
1300 I Street, N.W.
Suite 470 East
Washington, D.C. 20005
Fax: (202) 737-7979
Attn: John F. Breyer, Jr., Esq.
If to Lakeview:
Lakeview Financial, Inc.
989 McBride Avenue
Paterson, New Jersey 07424
Fax: (201) 890-3182
Attn: Kevin J. Coogan, President
With a copy to:
Malizia, Spidi, Sloane & Fisch, P.C.
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
Fax: (202) 434-4661
Attn: Samuel J. Malizia, Esq.
or at such other address as shall be furnished in writing by any of the Parties
to the others by notice given as provided in this section 6.1.
6.2 Governing Law. Except to the extent federal law shall be
controlling, this Plan of Merger shall be governed by and construed and enforced
in accordance with the laws of the State of New Jersey with respect to those
provisions of this Plan of Merger expressly required by New Jersey law to be
included in this Plan of Merger, disregarding, however, the New Jersey conflicts
of laws rules. In all other instances, this Plan of Merger shall be governed by
and construed and enforced in accordance with the laws of the State of New
Jersey disregarding, however, the New Jersey conflicts of laws rules.
6.3 Captions. The Captions heading the Sections in this Plan of Merger
are for convenience only and shall not affect the construction or interpretation
of this Plan of Merger.
6.4 Counterparts. This Plan of Merger may be executed in two or more
counterparts, each of which shall be deemed an original instrument, but all of
which together shall constitute one and the same instrument.
- 60 -
I WITNESS WHEREOF, each of the Parties has caused this Plan of Merger
to be duly executed and delivered by its duly authorized officers as of the date
first above written.
ATTEST: WESTWOOD FINANCIAL CORPORATION
/s/Joanne Miller By: /s/William J. Woods
- --------------------------------- --------------------------------------
Joanne Miller William J. Woods
Secretary Chairman of the Board and Chief
Executive Officer
ATTEST: LAKEVIEW FINANCIAL CORP.
/s/Helen Saco By: /s/Kevin J. Coogan
- --------------------------------- ----------------------------------
Helen Saco Kevin J. Coogan
Secretary President and Chief Executive Officer
- 61 -
EXHIBIT B
PLAN OF MERGER
--------------
(Lakeview Bank Savings Bank and Westwood Savings Bank)
This Plan of Merger is made by and between Lakeview Savings Bank, a
state stock savings bank ("Lakeview Bank") and Westwood Savings Bank, a state
stock savings bank ("Westwood Bank") in connection with the transactions
described in an Agreement and Plan of Reorganization dated September 10, 1997
(the "Reorganization Agreement") among Lakeview Financial Corp. ("Lakeview"),
Lakeview Bank, First Western Financial Corporation ("WFC") and Westwood Savings
Bank. Terms not otherwise defined herein shall have the meaning given them in
the Reorganization Agreement.
As of the date hereof, Westwood Bank has authorized capital stock of
1,000 shares of common stock, par value $2.00 per share (the "Westwood Bank
Common Stock"). As of the date hereof, 1,000 shares of Westwood Bank Common
Stock are issued and outstanding and no shares of preferred stock are issued and
outstanding. As of the date hereof, Lakeview Bank has authorized capital stock
of 10,000,000 shares of common stock, par value $2.00 par share (the "Lakeview
Bank Common Stock"), of which 2,420,000 shares of Lakeview Bank Common Stock are
issued and outstanding.
As of the date hereof, WFC owns all of the issued and outstanding stock
of Westwood Bank, and Lakeview owns all of the issued and outstanding stock of
Lakeview Bank. Immediately prior to the Effective Time of this Merger, WFC shall
be merged with and into Lakeview, with Lakeview being the resulting corporation,
so that as of the Effective Time of this Merger, Lakeview shall own all of the
outstanding stock of both Westwood Bank and Lakeview Bank.
Lakeview Bank and Westwood Bank hereby agree as follows:
1. Merger. At and on the Effective Time of the Merger, Westwood Bank
shall be merged with and into Lakeview Bank in accordance with the terms hereof.
Lakeview Bank shall be the resulting association.
2. Effective Time. The effective time ("Effective Time") of this Merger
shall be the date the articles of combination are endorsed by the New Jersey
Department of Banking and Insurance or such later date specified in such
articles.
3. Name. The name of the resulting association shall continue to
be "Lakeview Savings Bank".
4. Directors and Principal Officers. The directors and the principal
officers of Lakeview Bank immediately prior to the Effective Time shall continue
to serve as directors and principal officers of Lakeview Bank after the
Effective Time. Lakeview Bank, as the resulting institution, shall have seven
directors. There shall be three classes of directors; members of each class
shall have a three-year term. The name and term of each director is set forth
below:
- 62 -
Term
Name Expires
- ---- -------
Robert J. Davenport 2000
Dennis D. Pedra 2000
Kevin J. Coogan 1998
Michael R. Rowe 1998
Vincent A. Scola 1998
Leo J. Costello 1999
Leo J. Dean 1999
5. Offices. The location of the executive office of the resulting institution
shall continue to be 989 McBride Avenue, Paterson, New Jersey 07424, and the
other seven branch offices of the resulting association are located in Ramsey,
West Paterson, Totowa, Haledon, North Haledon, and Hawthorne, New Jersey.
6. Terms and Conditions of Merger.
At the Effective Time of the Merger:
(a) Each share of Westwood Bank Common Stock outstanding
immediately prior to the Effective Time shall at the Effective Time be converted
into the right to receive 1,000 shares of Lakeview Bank Common Stock and
Lakeview Bank shall deliver to Lakeview a stock certificate evidencing such
shares.
(b) Each share of Lakeview Bank Common Stock issued and
outstanding immediately prior to the Effective Time shall remain outstanding and
unchanged and shall continue to be owned by Lakeview.
At and after the Effective Time, Lakeview shall be the owner of all of
the issued and outstanding shares of Lakeview Bank.
7. Certificate of Incorporation and Bylaws. At and after the Effective
Time, the Certificate of Incorporation and Bylaws of Lakeview Bank as in effect
immediately prior to the Effective Time shall continue to be the Certificate of
Incorporation and Bylaws of the resulting association until amended in
accordance with law.
8. Rights and Duties of the Resulting Association.
At the Effective Time, Westwood Bank shall be merged with and into
Lakeview Bank, which, as the resulting association, shall be the same
association as Lakeview Bank. The business of the resulting association shall be
that of a state stock savings bank chartered under the laws of the State of New
Jersey and as provided for in the Certificate of Incorporation of Lakeview Bank
as now existing, the business of which shall be continued at its head office and
at its legally established branches and other offices. All assets, rights,
privileges, powers, franchises and property (real, personal and mixed) shall
- 63 -
be automatically transferred to and vested in the resulting association by
virtue of the Merger without any deed or other document of transfer. The
resulting association, without any order or action on the part of any court or
otherwise and without any documents of assumption or assignment, shall hold and
enjoy all of the properties, franchises and interests, including appointments,
powers, designations, nominations and all other rights and interest as agent or
other fiduciary in the same manner and to the same extent as such rights,
franchises and interest and powers were held or enjoyed by Lakeview Bank and
Westwood Bank, respectively. The resulting association shall be responsible for
all the liabilities of every kind and description of both Lakeview Bank and
Westwood Bank immediately prior to the Effective Time, including liabilities for
all debts, savings accounts, deposits, obligations and contracts of Lakeview
Bank and Westwood Bank, respectively, matured or unmatured, whether accrued,
absolute, contingent or otherwise and whether or not reflected or reserved
against on balance sheets, books or accounts or records of either Lakeview Bank
or Westwood Bank. All rights of creditors and other obligees and all liens on
property of either Lakeview Bank or Westwood Bank shall be preserved and shall
not be released or impaired.
9. Execution This Plan of Merger may be executed in any number of
counterparts each of which shall be deemed an original and all of such
counterparts shall constitute one and the same instrument.
Dated as of September 10, 1997
LAKEVIEW SAVINGS BANK
By: /s/Kevin J. Coogan
-----------------------------------------
Kevin J. Coogan
President and Chief Executive Officer
By: /s/Helen Saco
-----------------------------------------
Helen Saco, Secretary
WESTWOOD SAVINGS BANK
By: /s/Joanne Miller
-----------------------------------------
Joanne Miller, President
By: /s/Catherine Solimando
-----------------------------------------
Catherine Solimando, Secretary
- 64 -
Appendix II
FINPRO 26 Church Street . P.O. Box 323
Liberty Corner, NJ 07938
(908) 604-9336 . (908) 604-5951 (FAX)
- --------------------------------------------------------------------------------
September 9, 1997
Board of Directors
WFC Financial Corporation
700-88 Broadway
Westwood, NJ 07675-9956
Members of the Board:
You have requested our opinion, as an independent financial analyst to the
common shareholders of WFC Financial Corporation and its wholly owned subsidiary
WFC Savings Bank, WFC, New Jersey ("WFC"), as to the fairness, from a financial
point of view to the common shareholders of WFC, of the terms of the proposed
merger of WFC with LFC Financial LFC, West Paterson, New Jersey, ("LFC") and
LFC's subsidiary bank LFC Savings Bank, West Paterson, New Jersey. Pursuant to
the Agreement and Plan of Merger dated September 9, 1997, and discussions with
management, each share of WFC common stock issued and outstanding immediately
prior to the Effective Time shall, at the election of the holder, be converted
at the Effective Time into the right to receive either shares of common stock,
$2.00 par value, of LFC, with a value of $29.25 based on an exchange ratio to be
set prior to closing or $29.25 in cash; provided that 50.1% of the aggregate
merger consideration shall be paid in LFC common stock and 49.9% of the
aggregate merger consideration will be paid in cash. It is understood that WFC's
outstanding options, of 58,335 common shares, will either be exercised prior to
the merger, be converted into LFC common stock at the exchange ratio less the
exercise price or paid out in cash at the difference between the purchase price
of $29.25 per share and the exercise price. Based upon an exchange value of
$29.25, LFC will issue common shares and cash to WFC shareholders for a total
transaction value of $20,581,178. This transaction will be accounted for under
the purchase method of accounting.
As part of its banking analysis business, FinPro, Inc. is continually engaged in
the valuation of bank, bank holding company and thrift securities in connection
with mergers and acquisitions nationwide. Prior to being retained for this
assignment, FinPro, Inc. had provided professional services and products to WFC.
The revenues derived from such services and products are insignificant when
compared to the firm's total gross revenues.
In connection with this assignment, we reviewed: (i) the Agreement and Plan of
Merger dated September 9, 1997; (ii) the most recent external auditor's reports
to the Boards of Directors of each organization; (iii) the last 10-Ks and recent
10-Qs for both companies; (iv) the June 30, 1997 Report of Condition and Income
for each organization; (v) the Rate Sensitivity Analysis reports for each
organization; (vi) each organization's listing of marketable securities showing
rate, maturity, and market value as compared to book value; (vii) each
organization's internal loan classification list; (viii) a listing of other real
estate owned for each organization; (ix) the budget and long range operating
plan of each organization; (x) the Minutes of the Board of Directors meetings
for WFC; (xi) the most recent Board report for WFC; (xii) the listing and
description of significant real properties for each organization; and (xiii) the
directors and officers liability and blanket bond insurance policies for each
organization. FinPro conducted an on-site review of each organization's
historical performance and current financial condition and performed a market
area analysis.
We have also had discussions with the management of WFC and LFC regarding their
respective financial results and have analyzed the most current financial data
available on WFC and LFC. We also considered such other information, financial
studies, analyses and investigations, and economic and market criteria which we
deemed relevant. We have met with the management of WFC and LFC to discuss the
foregoing information with them.
We also considered: (a) a transaction summary of the financial terms of the
merger, including the aggregate merger consideration relative to fully diluted
book value, fully diluted earnings, fully diluted assets, and deposit
liabilities of WFC; (b) the financial terms, financial condition, operating
performance, and market areas of other recently completed mergers and
acquisitions of comparable financial institution entities, including evaluating
Northeast U.S. transactions both generally and specifically; (c) discounted cash
flow analyses for WFC on a stand-alone basis, incorporating the current business
plan and future prospects; and (d) the pro forma impact of the Merger to the
holders of WFC Common Stock (incorporating the Exchange Ratio, transaction
adjustments and potential earnings improvements), including the resulting impact
to the market value per share, tangible book value per share, earnings per
share, and dividends per share of the WFC Common Stock. We also considered the
improved liquidity characteristics of LFC Common Stock relative to the WFC
Common Stock, the enhanced competitive position of LFC resulting from the
merger, the greater return on equity of LFC Common Stock relative to the WFC
Common Stock, and the opportunities for LFC to increase earnings in the future.
The results of these analyses and the other factors considered were evaluated as
a whole, with the aggregate results indicating a range of financial parameters
utilized to assess the merger consideration as described in the Agreement.
We have not independently verified any of the information reviewed by us and
have relied on its being complete and accurate in all material respects. In
addition, we have not made an independent evaluation of the assets of WFC and
LFC.
In reaching our opinion we took into consideration the financial benefits of the
proposed transaction to all WFC shareholders. Based on all factors that we deem
relevant and assuming the accuracy and completeness of the information and data
provided by us by WFC and LFC, it is our opinion as of September 9, 1997, that
the proposed transaction is fair and equitable to all WFC shareholders from a
financial point of view.
We hereby consent to the reference to our firm in the proxy statement or
prospectus related to the merger transaction and to the inclusion of our opinion
as an exhibit to the proxy statement or prospectus related to the merger
transaction.
Respectfully submitted,
FinPro, Inc.
Liberty Corner, New Jersey
By /s/Donald J. Musso
------------------
Donald J. Musso
President
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 20. Indemnification of Directors and Officers
(i) Limitation of Liability of Directors and Officers. Section
14A:2-7(3) of the New Jersey Business Corporation Act permits a corporation to
provide in its Certificate of Incorporation that a director or officer shall not
be personally liable to the corporation or its shareholders for breach of any
duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such person's duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of any
improper personal benefit. LFC's Certificate of Incorporation includes
limitations on the liability of officers and directors to the fullest extent
permitted by New Jersey law.
(ii) Indemnification of Directors, Officers, Employees and Agents.
Under Article XVI and XVII of its Certificate of Incorporation, LFC must, to the
fullest extent permitted by law, indemnify its directors, officers, employees
and agents. Section 14A:3-5 of the New Jersey Business Corporation Act provides
that a corporation may indemnify its directors, officers, employees and agents
against judgments, fines, penalties, amounts paid in settlement and expenses,
including attorneys' fees, resulting from various types of legal actions or
proceedings if the actions of the party being indemnified meet the standards of
conduct specified therein. Determinations concerning whether or not the
applicable standard of conduct has been met can be made by (a) a disinterested
majority of the Board of Directors, (b) independent legal counsel, or (c) an
affirmative vote of a majority of shares held by the shareholders. No
indemnification is permitted to be made to or on behalf of a corporate director,
officer, employee or agent if a judgment or other final adjudication adverse to
such person establishes that his acts or omissions (A) were in breach of his
duty of loyalty to the corporation or its shareholders, (B) were not in good
faith or involved a knowing violation of law or (C) resulted in receipt by such
person of an improper personal benefit.
(iii) Insurance. LFC's directors and officers are insured against
losses arising from any claim against them such as wrongful acts or omissions,
subject to certain limitations.
Item 21. Exhibits
2.1 Agreement and Plan of Reorganization dated as of September 10, 1997,
by and between Lakeview Financial Corp., Lakeview Savings Bank,
Westwood Financial Corporation and Westwood Savings Bank (attached as
Appendix I to the Proxy Statement/Prospectus filed as a part of this
Registration Statement).
5.1 Opinion of Malizia, Spidi, Sloane & Fisch, P.C. as to the legality of
the securities being registered and the Merger.*
8.1 Opinion of Malizia, Spidi, Sloane & Fisch, P.C. concerning certain
federal tax consequences.*
23.1 Consent of Malizia, Spidi, Sloane & Fisch, P.C. (contained in its
Opinions 5.1 and 8.1).*
23.2 Consent of KPMG Peat Marwick LLP.*
23.3 Consent of RD Hunter & Company.*
23.4 Consent of FinPro, Inc..*
99.1 Opinion of FinPro, Inc. (attached as Appendix II to the Proxy
Statement/Prospectus filed as a part of this Registration Statement).
99.2 Form of Proxy of Westwood Financial Corporation.*
99.3 Westwood Financial Corporation - Portions of the 1997 Annual Report
and Portions of the Quarterly Report to Shareholders as of September
30, 1997.*
* To be filed by amendment
Item 22. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high
and of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(4) The undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Item 4, 10(b), 11 or 13 of this form, within
one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through
the date of responding to the request.
(5) The undersigned registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a
transaction, and the Company being acquired involved therein, that was
not the subject of and included in the registration statement when it
became effective.
SIGNATURES
Pursuant to the requirements of the Securities Act, LFC has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Paterson, New Jersey, on December 17, 1997.
LAKEVIEW FINANCIAL CORP.
By: /s/Kevin J. Coogan
-----------------------------------
Kevin J. Coogan
President, Chief Executive
Officer and Director
(Duly Authorized Representative)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities as of December 17, 1997.
By: /s/Kevin J. Coogan By: /s/Leo J. Dean
------------------------------------- -------------------------------------------
Kevin J. Coogan Leo J. Dean
President, Chief Executive Officer Director
and Director
(Principal Executive Officer)
By: /s/Leo J. Costello By: /s/Michael R. Rowe
------------------------------------- -------------------------------------------
Leo J. Costello Michael R. Rowe
Director Director
By: /s/Robert J. Davenport By: /s/Dennis D. Pedra
------------------------------------- -------------------------------------------
Robert J. Davenport Dennis D. Pedra
Director Director
By: /s/Vincent A. Scola By: /s/Anthony G. Gallo
------------------------------------- --------------------------------------------
Vincent A. Scola Anthony G. Gallo
Director Vice President and Chief Financial Officer
Principal Financial and Accounting Officer)