1
Exhibit 2
Agreement and Plan of Merger and Reorganization
among ISB Financial Corporation, Iberia Savings Bank,
Jefferson Bancorp, Inc. and Jefferson Federal Savings Bank
dated May 24, 1996
2
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AMONG
ISB FINANCIAL CORPORATION,
IBERIA SAVINGS BANK,
JEFFERSON BANCORP, INC.
AND
JEFFERSON FEDERAL SAVINGS BANK
May 24, 1996
3
INDEX
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ARTICLE I
THE MERGER
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. Effective Date and Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. The Charter Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7. Modification of Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
CONVERSION OF JEFFERSON AND INTERIM SHARES
2.1. Conversion of Jefferson Common Stock and Options . . . . . . . . . . . . . . . . . . . 3
2.2. Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Interim Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JEFFERSON
AND JEFFERSON SAVINGS BANK
3.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3. Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6. Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7. Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.9. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11. Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.12. Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.13. Reserve for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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3.14. Employment Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16. Shareholder Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.17. Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.18. Broker's and Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.19. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.20. Jefferson Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.21. Loans, Real Estate Owned, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.22. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.23. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.24. Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
4.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.3. Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4. Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5. Ability to Pay Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6. Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.7. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.8. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.9. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.10. Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.11. Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.12. Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Business of Jefferson . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3. Approval of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.4. Current Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.5. Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.6. Regulatory Applications and Proxy Solicitation Matters . . . . . . . . . . . . . . . . 25
5.7. Further Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.8. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
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5.9. Failure to Fulfill Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.10. Employment of Jefferson Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.11. Indemnification Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12. Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Health Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(c) Jefferson 401(k) Profit Sharing Plan and ESOP . . . . . . . . . . . . . . . . . . 29
(d) The Jefferson ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) The Company ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.13. Disclosure Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.14. Operating Synergies; Conformance to Reserve Policies, Etc. . . . . . . . . . . . . . . 31
5.15. Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.16. Charter Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.17. Jefferson Board of Directors Action . . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.18. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions of Each Party's Obligations Under This Agreement . . . . . . . . . . . . . . 32
(a) Approval of Jefferson Stockholders . . . . . . . . . . . . . . . . . . . . . . . . 33
(b) Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(c) Suits and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2. Conditions to the Obligations of the Company and ISB
Under This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Representations and Warranties; Performance of
Obligations of Jefferson and Jefferson Savings Bank . . . . . . . . . . . . . . . 33
(b) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(c) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.3. Conditions to the Obligations of Jefferson Under This Agreement . . . . . . . . . . . . 34
(a) Representations and Warranties; Performance of
Obligations of the Company and ISB . . . . . . . . . . . . . . . . . . . . . . . . 34
(b) Opinion of Counsel to the Company and ISB . . . . . . . . . . . . . . . . . . . . 34
(c) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(d) Board Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
(e) Deposit of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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ARTICLE VII
TERMINATION
7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII
MISCELLANEOUS
8.1. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 37
8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3. Expenses; Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.5. Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.7. Modifications or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.9. Assignment; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.10. Consolidation of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
8.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.12. Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Exhibit A - Plan of Merger between Jefferson and Interim
Exhibit B - Agreement and Plan of Merger and Liquidation
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INDEX TO SCHEDULES
Schedule Description
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3.1 Subsidiaries of Jefferson
3.2 Arrangements Affecting Jefferson Stock
3.3 Violations
3.4(c) Extraordinary Liabilities
3.5 Title Matters
3.6 Environmental Matters
3.7 Litigation and Other Proceedings
3.8 Tax Matters
3.9(a) Contractual Matters
3.9(b) Default or Non-Compliance Under Contracts
3.10 Insurance of Jefferson, Jefferson Savings Bank and the Subsidiaries
3.11 Non-Compliance with Laws; OTS Examinations and Responses
3.12 Conduct
3.14 Employment Matters
3.15(a) Employee Benefit Plans
3.15(b) Terminated Plans
3.15(c) IRS Determination Letters
3.15(f) Unfunded Liabilities
3.18 Broker's or Finder's Fees
3.21(a) Loans of Jefferson, Jefferson Savings Bank and Subsidiaries
3.21(b) Loan Delinquencies and Defaults, Real Estate Owned and Unfunded Commercial Loan
Commitments and Letters of Credit
4.3(b) Violations
4.4 Litigation and Other Proceedings
4.8 Brokerage
4.10 Non-Compliance with Laws
5.1(b) Cash Dividend to Jefferson
5.10 Certain Severance Benefits
5.11 Directors' and Officers' Liability Insurance
6.2 Opinion of Counsel to Jefferson
6.3 Opinion of Counsel to the Company and ISB
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization ("Agreement")
dated as of May 24, 1996 is by and among ISB Financial Corporation, a Louisiana
corporation (the "Company"), Iberia Savings Bank, a Louisiana-chartered savings
bank and wholly-owned subsidiary of the Company ("ISB") and Jefferson Bancorp,
Inc. ("Jefferson"), a Louisiana corporation, and Jefferson Federal Savings
Bank, a federally-chartered stock savings bank and wholly owned subsidiary of
Jefferson ("Jefferson Savings Bank").
WHEREAS, the Company, Jefferson and Jefferson Savings Bank entered
into a Letter of Intent as of March 29, 1996 ("Letter of Intent"), which
contemplated, among other things, the Company's acquisition of all of the
issued and outstanding shares of common stock of Jefferson through a business
combination involving Jefferson;
WHEREAS, the Company and Jefferson have previously entered into a
Stock Option Agreement as of March 29, 1996 (the "Option Agreement");
WHEREAS, the Company, ISB, Jefferson and Jefferson Savings Bank desire
to enter into a definitive agreement which sets forth the terms and conditions
of the foregoing transactions;
WHEREAS, the boards of directors of the Company, ISB, Jefferson and
Jefferson Savings Bank believe that the affiliation between Jefferson and the
Company in the manner provided by, and subject to the terms and conditions set
forth in, this Agreement and all exhibits, schedules and supplements hereto is
desirable and in the best interests of their respective institutions and
shareholders;
WHEREAS, the boards of directors of the Company, ISB, Jefferson and
Jefferson Savings Bank have each approved this Agreement and the proposed
transactions substantially on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of such premises and the mutual
representations, warranties, covenants and agreements contained herein, the
Company, ISB, Jefferson and Jefferson Savings Bank do hereby mutually agree,
intending to be legally bound, as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Subject to the terms and conditions of this
Agreement and subject to and in accordance with a Plan of Merger between
Jefferson and a Louisiana-chartered corporation and wholly-owned subsidiary of
the Company ("Interim") to be formed
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in connection with the transactions contemplated hereby, a copy of which is
attached hereto as Exhibit A (the "Plan of Merger"), at the Effective Date (as
defined in Section 1.5 hereof), Interim shall be merged with and into Jefferson
(the "Merger") in accordance with the applicable provisions of the Louisiana
Business Corporation Law ("BCL"), and Jefferson shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation").
Simultaneously with or as soon as practicable after the Merger, the Surviving
Corporation shall be merged with and liquidated into the Company (the
"Liquidation") in accordance with an Agreement and Plan of Merger and
Liquidation, a copy of which is attached hereto as Exhibit B.
Section 1.2. Effect of the Merger. As of the Effective Date, the
Surviving Corporation shall be considered the same business and corporate
entity as each of Jefferson and Interim and thereupon and thereafter, all the
property, rights, powers and franchises of each of Jefferson and Interim shall
vest in the Surviving Corporation and the Surviving Corporation shall be
subject to and be deemed to have assumed all of the debts, liabilities,
obligations and duties of each of Jefferson and Interim and shall have
succeeded to all of each of their relationships, fiduciary or otherwise, as
fully and to the same extent as if such property rights, privileges, powers,
franchises, debts, obligations, duties and relationships had been originally
acquired, incurred or entered into by the Surviving Corporation. In addition,
any reference to either of Jefferson and Interim in any contract, will or
document, whether executed or taking effect before or after the Effective Date,
shall be considered a reference to the Surviving Corporation if not
inconsistent with the other provisions of the contract, will or document; and
any pending action or other judicial proceeding to which either of Jefferson
and Interim is a party, shall not be deemed to have abated or to have
discontinued by reason of the Merger, but may be prosecuted to final judgment,
order or decree in the same manner as if the Merger had not been made; or the
Surviving Corporation may be substituted as a party to such action or
proceeding, and any judgment, order or decree may be rendered for or against it
that might have been rendered for or against either of Jefferson and Interim if
the Merger had not occurred. At the Effective Date, the directors and officers
of the Surviving Corporation shall be the persons designated in Section 1.4.
It is contemplated that Jefferson Savings Bank will continue its operations,
subject to the provisions described herein, as a wholly-owned subsidiary of the
Company.
Section 1.3. Articles of Incorporation and Bylaws. As of the
Effective Date, the Articles of Incorporation and Bylaws of Jefferson shall be
the Articles of Incorporation and Bylaws of the Surviving Corporation until
otherwise amended as provided by law.
Section 1.4. Directors and Officers. As of the Effective Date, the
directors and officers of Interim shall become the directors and officers of
the Surviving Corporation.
Section 1.5. Effective Date and Closing. The Merger shall become
effective (and be consummated) upon the issuance of a certificate of merger by
the Secretary of State of the State of Louisiana ("Secretary of State"). The
term "Effective Date" shall mean the date and time when the certificate of
merger is so issued. A closing (the "Closing") shall take
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place prior to the Effective Date not later than five (5) business days
following the receipt of all necessary regulatory and governmental approvals
and consents and the expiration of all statutory waiting periods in respect
thereof and the satisfaction or waiver of the conditions to the consummation of
the Merger specified in Article VI hereof (other than the delivery of
certificates, opinions and other instruments and documents to be delivered at
the Closing), at the offices of the Company in New Iberia, Louisiana, or at
such other place, time or date as the Company and Jefferson may mutually agree
upon (the "Closing Date"). Immediately following the Closing, the Company and
Jefferson shall request the Secretary of State to issue the certificate of
merger. It is anticipated by the Company and Jefferson that the Closing and
the Effective Date will occur on the same date.
Section 1.6 The Charter Conversion. Subject to the terms and
conditions of this Agreement, Jefferson and Jefferson Savings Bank will take
all steps necessary to convert Jefferson Savings Bank from a
federally-chartered savings bank to a Louisiana chartered savings bank (the
"Charter Conversion"). It is the intent of the parties hereto that the Charter
Conversion will become effective immediately prior to the Effective Date. Upon
consummation of the Charter Conversion and the Merger, Jefferson Savings Bank
will conduct business under the name "Jefferson Savings Bank." References
herein to "Jefferson Savings Bank" shall mean the federally-chartered savings
bank or the Louisiana-chartered savings bank, as the case may be.
Section 1.7 Modification of Structure. Notwithstanding any
provision of this Agreement to the contrary, the Company, with the prior
written consent of Jefferson, which shall not be unreasonably withheld, may
elect, subject to the filing of all necessary applications and the receipt of
all required regulatory approvals, to modify the structure of the transactions
contemplated hereby so long as (i) there are no material adverse federal income
tax consequences to the stockholders of the Company as a result of such
modification, (ii) the consideration to be paid to holders of Jefferson Common
Stock (as defined below) under this Agreement is not thereby changed in kind or
reduced in amount solely because of such modification and (iii) such
modification will not be likely to materially delay or jeopardize receipt of
any required regulatory approvals.
ARTICLE II
CONVERSION OF JEFFERSON AND INTERIM SHARES
Section 2.1. Conversion of Jefferson Common Stock and Options. As
of the Effective Date, each share of common stock, par value $0.01 per share,
of Jefferson (the "Jefferson Common Stock"), issued and outstanding immediately
prior to the Effective Date (other than Dissenting Shares, as hereinafter
defined, or shares held by the Company or ISB other than in a fiduciary
capacity) shall, by virtue of the Merger and without any action on the part of
the holder thereof, be cancelled and by operation of law be converted into and
represent the right to receive from the Company, $23.00 in cash (the "Merger
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Consideration"). At or immediately prior to the Effective Date, each
outstanding option to purchase Jefferson Common Stock (other than pursuant to
the Option Agreement) issued by Jefferson ("Jefferson Option") shall be
cancelled, and each holder of any such Jefferson Option, whether or not then
vested or exercisable, shall be entitled to receive at the Effective Date for
each Jefferson Option an amount determined by multiplying (i) the excess of the
Merger Consideration over the applicable exercise price per share of such
option by (ii) the number of shares of Jefferson Common Stock subject to such
Jefferson Option ("Option Consideration"). The payment of the consideration
referred to in the immediately preceding sentence to holders of Jefferson
Options shall be subject to the execution by any such holder of such
instruments of cancellation as the Company may reasonably deem appropriate.
The aggregate consideration to be paid for the conversion of all outstanding
shares of Jefferson Common Stock is hereinafter referred to as the "Aggregate
Merger Consideration".
Section 2.2. Exchange of Shares.
(a) As of the Effective Date, the Company shall deposit
in trust with an exchange agent to be mutually agreed to by the parties hereto
(the "Exchange Agent") cash in an amount equal to the maximum Aggregate Merger
Consideration.
(b) As soon as practicable after the Effective Date but
no later than five business days after the Effective Date, the Exchange Agent
will send to each holder of record of a certificate or certificates (other
than holders of Dissenting Shares) which, immediately prior to the Effective
Date represented outstanding shares of Jefferson Common Stock ("Certificates"),
a letter of transmittal for use in exchanging such Certificates for the Merger
Consideration. The letter of transmittal shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to promptly receive in exchange therefor the Merger Consideration
for each share of Jefferson Common Stock represented by such Certificate and
the Certificates so surrendered shall be canceled; in this connection, the
Company will use its best efforts to ensure that the Exchange Agent delivers
the Merger Consideration to each former Jefferson shareholder within five
business days following receipt of surrendered Certificates and a properly
completed letter of transmittal. The Exchange Agent shall not be obligated to
deliver or cause to be delivered to any holder of Jefferson Common Stock the
Merger Consideration to which such holder of Jefferson Common Stock would
otherwise be entitled until such holder surrenders the Certificate for exchange
or, in default thereof, an appropriate Affidavit of Loss and Indemnity
Agreement and/or a bond as may be required in each case by the Surviving
Corporation. Neither the Exchange Agent nor any party hereto shall be liable
to any holder of Certificates for any amount paid to a public official pursuant
to any applicable abandoned property, escheat or similar law. Except as
required by law, no interest shall be payable with respect to the Merger
Consideration payable for the outstanding shares of Jefferson Common Stock.
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(c) After the Effective Date, there shall be no transfers
on the stock transfer books of Jefferson of the shares of Jefferson Common
Stock which were outstanding immediately prior to the Effective Date and, if
any Certificates representing such shares are presented for transfer to
Jefferson, they shall be canceled and exchanged for the Merger Consideration
provided for in Section 2.1 hereof.
(d) If payment of the Merger Consideration pursuant to
Section 2.1 hereof for shares of Jefferson Common Stock is to be made in a name
other than that in which the Certificate surrendered in exchange therefor is
registered, it shall be a condition of such payment that the Certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer) and otherwise in proper form for transfer, and that the
person requesting such payment shall pay to the Exchange Agent in advance any
transfer or other taxes required by reason of the payment to a person other
than that of the registered holder of the Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(e) Any portion of the Merger Consideration made
available to the Exchange Agent pursuant to paragraph (a) of this Section 2.2
that remains unclaimed by the stockholders of Jefferson twelve (12) months
after the Effective Date shall be returned to the Company, upon demand, and any
stockholder of Jefferson who had not exchanged his shares of Jefferson Common
Stock for the Merger Consideration in accordance with this Agreement prior to
that time shall thereafter look to the Company for payment of the Merger
Consideration in respect of such shares, subject to applicable escheat laws.
Section 2.3. Dissenting Shares. Each share of Jefferson Common Stock
issued and outstanding immediately prior to the Effective Date, the holder of
which has not voted in favor of the Merger and who has properly perfected his
dissenters' rights of appraisal by following the procedures set forth in the
BCL, is referred to herein as a "Dissenting Share." Dissenting Shares owned by
each holder thereof who has not exchanged his Certificates for the Merger
Consideration or otherwise has not effectively withdrawn or lost his
dissenters' rights, shall not be converted into or represent the right to
receive the Merger Consideration pursuant to Section 2.1 hereof and shall be
entitled only to such rights as are available to such holder pursuant to the
applicable provisions of the BCL. Each holder of Dissenting Shares shall be
entitled to receive the value of such Dissenting Shares held by him in
accordance with the applicable provisions of the BCL, provided such holder
complies with the procedures contemplated by and set forth in the applicable
provisions of the BCL. If any holder of Dissenting Shares shall effectively
withdraw or lose his dissenters' rights under the applicable provisions of the
BCL, such Dissenting Shares shall be converted into the right to receive the
Merger Consideration in accordance with the provisions of Section 2.1 hereof.
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Section 2.4. Interim Shares. Each outstanding share of common stock
of Interim, $1.00 par value per share ("Interim Common Stock"), on the
Effective Date shall be converted automatically and without any action on the
part of the holder thereof into an equal number of shares of the Surviving
Corporation, which shall constitute all of the outstanding common stock of the
Surviving Corporation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JEFFERSON
AND JEFFERSON SAVINGS BANK
Jefferson and Jefferson Savings Bank represent and warrant to the
Company as follows:
Section 3.1. Organization. Jefferson is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana and is duly registered as a unitary savings and loan holding company.
Jefferson Savings Bank currently is a federally-chartered savings association
duly organized, validly existing and in good standing under the laws of the
United States and, as of the Effective Date, is expected to be a
Louisiana-chartered savings bank duly organized, validly existing and in good
standing under the laws of the State of Louisiana and, in all instances, a
direct wholly-owned subsidiary of Jefferson. The deposits of Jefferson Savings
Bank are insured pursuant to the Federal Deposit Insurance Act, as amended, to
the fullest extent permitted by law. Jefferson and Jefferson Savings Bank have
full power and authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to own or lease their
respective properties, to engage in the business and activities now conducted
by them and each is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where the failure to
be so licensed and qualified would not have a material adverse effect on
Jefferson or Jefferson Savings Bank.
Other than Jefferson Savings Bank, the only direct or indirect
subsidiaries of Jefferson are Metro Service Corporation, a Louisiana
corporation ("Metro"), and Jefferson Insurance Corporation, a Louisiana
corporation ("Insurance"), both of which are wholly owned subsidiaries of
Jefferson Savings Bank. The term "Subsidiaries" (defined as all of the
corporations and joint ventures and partnerships in which Jefferson or
Jefferson Savings Bank has, directly or indirectly, at least a fifty-percent
interest or acts as a general partner) when used with reference to Jefferson
shall mean Metro and Insurance. Each Subsidiary is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation. Each Subsidiary has the corporate power and authority to own or
lease all of its properties and assets and to conduct its business as it is now
being conducted, and is duly licensed or qualified to do business and is in
good standing in each jurisdiction in
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which the nature of the business conducted by it or the character or location
of the properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed and
qualified would not have a material adverse effect on the Subsidiary.
Jefferson has delivered or made available to the Company true and
complete copies of the Articles of Incorporation, Charter and Bylaws or similar
governing documents of each of Jefferson, Jefferson Savings Bank and the
Subsidiaries, in each case as amended to date. Except for Jefferson Savings
Bank and the Subsidiaries, and as otherwise disclosed on Schedule 3.1 to this
Agreement, Jefferson (i) does not have any subsidiaries or affiliates, (ii) is
not a general partner or owner in any joint venture, general partnership,
limited partnership, trust or other non-corporate entity, and (iii) does not
know of any arrangement pursuant to which the stock of any corporation is or
has been held in trust (whether express, constructive, resulting or otherwise)
for the benefit of all shareholders of Jefferson.
Section 3.2. Capitalization. The authorized capital stock of
Jefferson consists of 10,000,000 shares of Jefferson Common Stock and 5,000,000
shares of preferred stock, $0.01 par value per share ("Preferred Stock"). As
of the date of this Agreement, 2,195,635 shares of Jefferson Common Stock were
issued and outstanding (including 24,130 shares of Jefferson Common Stock held,
but not awarded, as of the date hereof by Jefferson's 1993 and 1994 Management
Recognition Plans and Trusts ("Recognition Plans")) and no shares of Preferred
Stock were issued and outstanding. All of the issued and outstanding shares of
Jefferson Common Stock are validly issued, fully paid and nonassessable and
have not been issued in violation of the preemptive rights of any person. All
of the outstanding shares of capital stock or other equity ownership interests
of Jefferson Savings Bank and the Subsidiaries have been duly authorized and
validly issued, are fully paid and nonassessable and are owned, directly or
indirectly, by Jefferson free and clear of any liens, encumbrances, charges,
restrictions or rights of third parties of any kind whatsoever, and, except for
(i) an aggregate of 127,334 shares of Jefferson Common Stock issuable upon
exercise of stock options granted pursuant to Jefferson's 1992 Stock Incentive
Plan, its 1994 Directors' Stock Option Plan and its 1994 Key Employee Stock
Compensation Program (collectively, the "Stock Option Plans") and which are
outstanding on the date hereof, which, including applicable exercise prices,
are set forth on Schedule 3.2, and (ii) shares of Jefferson Common Stock
issuable pursuant to the terms of the Option Agreement, none of Jefferson,
Jefferson Savings Bank or any of the Subsidiaries has or is bound by any
outstanding subscriptions, options, warrants, calls, commitments or agreements
of any character calling for the transfer, purchase or issuance of any shares
of capital stock of Jefferson, Jefferson Savings Bank or any of the
Subsidiaries or any securities representing the right to purchase or otherwise
acquire any shares of such capital stock or any securities convertible into or
representing the right to purchase or otherwise acquire any such stock. There
are no agreements, understandings or commitments relating to the right of
Jefferson to vote or to dispose of shares of the capital stock or other
ownership interests of Jefferson Savings Bank or the Subsidiaries.
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Section 3.3. Authority; No Violation. (a) Subject to the approval of
this Agreement and the Plan of Merger and the transactions contemplated hereby
and thereby by the stockholders of Jefferson, Jefferson and Jefferson Savings
Bank have full corporate power and authority to execute and deliver this
Agreement and, with respect to Jefferson, the Plan of Merger and to consummate
the transactions contemplated hereby and thereby in accordance with the terms
hereof and thereof. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors of Jefferson and Jefferson Savings Bank in
accordance with the Articles of Incorporation, Charter and Bylaws of Jefferson
and Jefferson Savings Bank and applicable laws and regulations. Except for
such approvals referenced in the immediately preceding two sentences, no other
corporate proceedings on the part of Jefferson and Jefferson Savings Bank are
necessary to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by Jefferson and Jefferson Savings
Bank and constitutes a valid and binding obligation of Jefferson and Jefferson
Savings Bank, enforceable against each of them in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
Jefferson and Jefferson Savings Bank, nor the consummation by Jefferson and
Jefferson Savings Bank of the transactions contemplated hereby in accordance
with the terms hereof, nor compliance by Jefferson and Jefferson Savings Bank
with any of the terms or provisions hereof, will, (i) violate any provision of
Jefferson's Articles of Incorporation or Bylaws or the charter or bylaws or
other governing instrument of any of Jefferson Savings Bank or the
Subsidiaries, (ii) violate any law, statute, code, ordinance, rule, regulation,
judgment, order, writ, decree or injunction applicable to Jefferson or any of
Jefferson Savings Bank or the Subsidiaries or any of their respective
properties or assets, or (iii) except as set forth in Schedule 3.3, violate,
conflict with, result in a breach of any provisions of, constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge
or other encumbrance upon any of the respective properties or assets of
Jefferson or any of Jefferson Savings Bank or the Subsidiaries under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which Jefferson or any of Jefferson Savings Bank or the Subsidiaries is a
party, or by which they or any of their respective properties or assets may be
bound or affected, except, with respect to (ii) and (iii) above, such as
individually or in the aggregate will not have a material adverse effect on the
business, operations, assets or financial condition of Jefferson, Jefferson
Savings Bank and the Subsidiaries taken as a whole and which will not prevent
or delay the consummation of the transactions contemplated hereby. Except for
consents and approvals of or filings or registrations with or notices to the
Secretary of State of the State of Louisiana, the Board of Governors of the
Federal Reserve System ("FRB"), the Office of Thrift Supervision ("OTS"), the
Office of Financial Institutions of the State of Louisiana ("OFI") and the
Federal Deposit Insurance Corporation ("FDIC"), if applicable, and by
stockholders of Jefferson, or as set forth in Schedule 3.3, no consents or
approvals of or filings or
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registrations with or notices to any third party or any public body or
authority are necessary on behalf of Jefferson in connection with (a) the
execution and delivery by Jefferson and Jefferson Savings Bank of this Agreement
and the Plan of Merger and (b) the consummation by Jefferson and Jefferson
Savings Bank of the Merger.
Section 3.4. Financial Statements. (a) Jefferson has previously
delivered or made available to the Company true and complete copies on a
consolidated basis of (i) the unaudited statements of financial condition,
statements of income, statements of stockholders' equity and statements of cash
flows of Jefferson and its subsidiaries as of and for the three months ended
March 31, 1996, (ii) the statements of financial condition, statements of
income, statements of stockholders' equity and statements of cash flows,
together with the notes thereto, of Jefferson (or its predecessor) and its
subsidiaries on an audited basis for the years ended December 31, 1995,
December 31, 1994, and December 31, 1993 and with respect to the audited
periods in each case accompanied by the audit reports of the independent
certified public accounting firm which performed the audits (the financial
statements described in clause (i) and this clause (ii) are referred to herein
as the "Jefferson Financial Statements"). The Jefferson Financial Statements
(including the related notes) have been prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
during the periods involved, and fairly present in all material respects the
consolidated financial condition of Jefferson as of the respective dates set
forth therein, and the related consolidated statements of income, stockholders'
equity and cash flows fairly present in all material respects the results of
the consolidated operations, stockholders' equity and cash flows of Jefferson
for the respective periods set forth therein, except that the financial
statements referred to in clause (i) are subject to normal year-end adjustments
and independent audit.
(b) The books and records of Jefferson, Jefferson Savings Bank and
the Subsidiaries are being maintained in material compliance with applicable
legal and accounting requirements, and reflect only actual transactions.
(c) Except as and to the extent reflected, disclosed or reserved
against in the Jefferson Financial Statements (including the notes thereto),
none of Jefferson, Jefferson Savings Bank or the Subsidiaries had, as of the
respective dates of the Jefferson Financial Statements, any liabilities,
whether absolute, accrued, contingent or otherwise material to the business,
operations, assets or financial condition of Jefferson, Jefferson Savings Bank
and the Subsidiaries, taken as a whole. Except as provided in Schedule 3.4(c),
since December 31, 1995, Jefferson, Jefferson Savings Bank and the Subsidiaries
have not incurred any liabilities except in the ordinary course of business and
consistent with prudent banking practice.
Section 3.5. Title. Jefferson has previously delivered or made
available to the Company true and complete copies of all of the deeds and
leases and title insurance policies for all real property owned or leased by
Jefferson, Jefferson Savings Bank or the Subsidiaries and all mortgages, deeds
of trust and security agreements to which such
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property is subject. Jefferson, Jefferson Savings Bank and the Subsidiaries
have good and marketable title to all of their respective assets and properties
including, without limitation, land and improvements thereon, and all personal
and intangible properties reflected in the Jefferson Financial Statements or
acquired subsequent thereto, subject to no liens, mortgages, security
interests, encumbrances or charges of any kind except (i) as noted in the
Jefferson Financial Statements or as set forth in Schedule 3.5, (ii) statutory
liens not yet delinquent, (iii) as reflected in the title insurance policies
referenced in the immediately preceding sentence, and (iv) those assets and
properties disposed of for fair value in the ordinary course of business since
the dates of the Jefferson Financial Statements. Jefferson owns no equity
securities of or interest in any depository institution other than Jefferson
Savings Bank.
Section 3.6. Environmental Laws. Jefferson, Jefferson Savings Bank
and the Subsidiaries are in compliance with all terms and conditions of all
applicable federal and state environmental laws and permits required thereunder
(such laws and permits referred to herein as "Environmental Laws") except where
the failure to be in compliance would not be material to Jefferson, Jefferson
Savings Bank or any of the Subsidiaries, as the case may be. Except as set
forth on Schedule 3.6, (i) none of Jefferson, Jefferson Savings Bank or the
Subsidiaries have received notice of any violation of, or claim, citation,
assessment, proposed assessment or demand for abatement in connection with any
Environmental Laws, or generated, stored, or disposed of any materials
designated as hazardous materials or substances under any Environmental Laws
(such materials or substances referred to herein as "Hazardous Materials,")
and, to the best knowledge of Jefferson, none are subject to any claim or lien
under any Environmental Laws; and (ii) to the best knowledge of Jefferson,
without inquiry, no real estate currently leased by, owned, operated or
securing any loan made by Jefferson, Jefferson Savings Bank or the
Subsidiaries, or owned, operated or leased by Jefferson, Jefferson Savings Bank
or the Subsidiaries within the ten years preceding the date of this Agreement,
has been designated as requiring any environmental cleanup or response action
to comply with Environmental Laws, or to the best knowledge of Jefferson, has
been the site of release of any Hazardous Materials.
Section 3.7. Litigation and Other Proceedings. Except as set forth
in Schedule 3.7, there are no legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to the knowledge of
Jefferson, threatened, before any court or administrative body in any manner
against Jefferson, Jefferson Savings Bank or the Subsidiaries, or any of their
respective properties or capital stock. Except as previously disclosed to the
Company, none of Jefferson, Jefferson Savings Bank or the Subsidiaries have
actual knowledge or have been advised in writing of any basis on which any
litigation or proceeding could be brought which could have a materially adverse
effect on the business, operations, assets or financial condition of Jefferson,
Jefferson Savings Bank or the Subsidiaries or which could question the validity
of any action taken or to be taken in connection with this Agreement, the Plan
of Merger and the transactions contemplated hereby and thereby. None of
Jefferson, Jefferson Savings Bank or the Subsidiaries is in default with
respect to any judgment, order, writ, injunction, decree, award, rule or
regulation of any court, arbitrator or governmental
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agency or instrumentality, except for any such default that would not have a
material adverse effect on Jefferson, Jefferson Savings Bank or the
Subsidiaries. In connection with the most recent examinations of Jefferson and
Jefferson Savings Bank by the Office of Thrift Supervision ("OTS"), neither
Jefferson nor Jefferson Savings Bank was required to correct or change any
action, procedure or proceeding which Jefferson believes in good faith has not
been now corrected or changed as required.
Section 3.8. Taxes. Except as set forth on Schedule 3.8, Jefferson,
Jefferson Savings Bank and the Subsidiaries have filed with the appropriate
federal, state and local governmental agencies all tax returns and reports
required to be filed, and have paid all taxes and assessments shown or claimed
to be due, except where the failure to file tax returns and to pay taxes would
not have a material adverse effect on Jefferson, Jefferson Savings Bank and the
Subsidiaries. Except as set forth on Schedule 3.8, none of Jefferson,
Jefferson Savings Bank or the Subsidiaries have executed or filed with the
Internal Revenue Service ("IRS") any agreement extending the period for
assessment and collection of any federal tax nor is Jefferson, Jefferson
Savings Bank or the Subsidiaries a party to any action or proceeding by any
governmental authority for assessment or collection of taxes, nor has any claim
for assessment or collection of taxes been asserted against Jefferson,
Jefferson Savings Bank or the Subsidiaries. None of Jefferson, Jefferson
Savings Bank or the Subsidiaries have waived any statute of limitations with
respect to any tax or other assessment or levy, and all such taxes and other
assessments and levies which Jefferson, Jefferson Savings Bank or the
Subsidiaries is required by law to withhold or to collect have been duly
withheld and collected and have been paid over to the proper governmental
agency, domestic and foreign, or segregated and set aside for such payment and,
if so segregated and set aside, will be so paid by Jefferson, Jefferson Savings
Bank or the Subsidiaries as required by law.
Jefferson, Jefferson Savings Bank and the Subsidiaries have
established (and until the Effective Date will establish) on their books
accrued amounts that are adequate for the payment of all federal, state and
local taxes (including, but not limited to, income (including alternative
minimum tax), FICA, FUTA, backup withholding, personal property and franchise
taxes) not yet due and payable, but incurred in respect of Jefferson, Jefferson
Savings Bank or the Subsidiaries through such date. Except as set forth in
Schedule 3.8, the federal income tax returns of Jefferson, Jefferson Savings
Bank and the Subsidiaries have been examined by the IRS (or are closed to
examination due to the expiration of the applicable statute of limitations) and
no deficiencies were asserted as a result of such examinations which have not
been resolved and paid in full. Except as set forth in Schedule 3.8, the
applicable state franchise tax returns of Jefferson, Jefferson Savings Bank and
the Subsidiaries have been examined by the applicable authorities (or are
closed to examination due to the expiration of the statute of limitations) and
no deficiencies were asserted as a result of such examinations which have not
been resolved and paid in full. Except as set forth on Schedule 3.8, to the
best knowledge of Jefferson, there are no audits or other administrative or
court proceedings presently pending nor any other disputes pending, or
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claims asserted for, taxes or assessments upon Jefferson, Jefferson Savings
Bank or the Subsidiaries.
Jefferson has previously delivered or made available to the Company
true and complete copies of the federal and state income tax returns of
Jefferson, Jefferson Savings Bank and the Subsidiaries as filed by each entity
for the years ended December 31, 1994 and 1993.
Section 3.9. Contracts. Except as otherwise noted in Schedule 3.9(a)
hereto, none of Jefferson, Jefferson Savings Bank or the Subsidiaries is a
party to or bound by any (i) employment contract or severance agreement
(including without limitation any collective bargaining contract or union
agreement); (ii) bonus, stock option, deferred compensation or profit-sharing,
pension or retirement plan or other employee benefit arrangement; (iii) lease
or license with respect to any property, real or personal, whether as landlord,
tenant, licensor or licensee; (iv) contract or commitment for capital
expenditures; (v) contract or commitment made in the ordinary course of
business for the purchase of materials or supplies, or for the performance of
services, in either case, over a period of more than sixty (60) days from the
date of this Agreement; (vi) contract or option to purchase or sell any real or
personal property; (vii) contract, agreement or letter with respect to the
management of Jefferson, Jefferson Savings Bank or the Subsidiaries imposed by
any bank regulatory authority having supervisory jurisdiction over Jefferson,
Jefferson Savings Bank or the Subsidiaries, (viii) agreement, contract or
indenture related to the borrowing by Jefferson, Jefferson Savings Bank or the
Subsidiaries of money other than those entered into in the ordinary course of
business; (ix) guaranty of any obligation for the borrowing of money, excluding
endorsements made for collection, repurchase or resell agreements, letters of
credit and guaranties made in the ordinary course of business; (x) agreement
with or extension of credit to any executive officer or director of Jefferson,
Jefferson Savings Bank or the Subsidiaries or holder of more than ten percent
(10%) of the Jefferson Common Stock, or any affiliate of such person; (xi)
applications or contracts with respect to branching or site location or
relocation or (xii) contracts, other than the foregoing, and not made in the
ordinary course of business and not otherwise disclosed in this Agreement, in
any schedule attached hereto or in any document delivered or referred to or
described in writing by Jefferson to the Company.
Except as disclosed in Schedule 3.9(b), none of Jefferson, Jefferson
Savings Bank or the Subsidiaries is in default or in non-compliance under any
contract, agreement, commitment, arrangement, lease, insurance policy or other
instrument to which it is a party or by which its assets, business or
operations may be bound or affected, whether entered into in the ordinary
course of business or otherwise, and whether written or oral, 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 or non-compliance, except for a default
or non-compliance that would not have a material adverse effect on Jefferson,
Jefferson Savings Bank and the Subsidiaries.
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Section 3.10. Insurance. A true and complete list of all insurance
policies owned or held by or on behalf of Jefferson, Jefferson Savings Bank and
the Subsidiaries, including policy numbers, retention levels, insurance
carriers, and effective and termination dates, is set forth in Schedule 3.10 to
this Agreement. Each of such policies are under valid, binding and enforceable
policies or bonds issued by insurers of recognized responsibility. In the
judgment of Jefferson, such insurance policies are of an amount and scope
customary for persons engaged in the business and having assets similar to the
business conducted by Jefferson, Jefferson Savings Bank and the Subsidiaries,
respectively. As of the date hereof, none of Jefferson, Jefferson Savings Bank
or the Subsidiaries has received any notice of cancellation or notice of a
material amendment of any such insurance policy or bond and all material claims
thereunder have been filed in a timely fashion and, to the best knowledge of
Jefferson none of Jefferson, Jefferson Savings Bank or the Subsidiaries is in
default under any such policy and no coverage thereunder is being disputed.
Section 3.11. Laws. Except as otherwise noted on Schedule 3.11
hereto, Jefferson, Jefferson Savings Bank and the Subsidiaries are in
compliance with all applicable federal, state and local laws, rules,
regulations and orders, except where a failure to comply will not result in a
material adverse effect on the business, operations, assets or financial
condition of Jefferson, Jefferson Savings Bank or the Subsidiaries, as the case
may be. Jefferson, Jefferson Savings Bank and the Subsidiaries have filed all
reports, registrations and statements, together with any amendments required to
be made thereto, that were required to be filed with the OTS or any other
regulatory authority having jurisdiction over Jefferson, Jefferson Savings Bank
or the Subsidiaries, and such reports, registrations and statements, together
with any amendments thereto, were true and correct in all material respects
when filed. Schedule 3.11 lists all examinations of Jefferson, Jefferson
Savings Bank or the Subsidiaries conducted by the OTS or any other regulatory
authority having jurisdiction over Jefferson, Jefferson Savings Bank or the
Subsidiaries since January 1, 1993 and the dates of any responses thereto
submitted by Jefferson, Jefferson Savings Bank or the Subsidiaries. Jefferson
Savings Bank has a rating of "satisfactory" or better with respect to its
compliance with the Community Reinvestment Act, as amended, and the regulations
promulgated thereunder ("CRA") and knows of no reason why its primary federal
regulator or other governmental entity may seek to restrain, delay or prohibit
the transactions contemplated hereby as a result of any act or omission of
Jefferson Savings Bank under the CRA. Jefferson previously has provided the
Company with all correspondence relating to Jefferson Savings Bank's compliance
with the CRA.
Section 3.12. Conduct. Except as set forth on Schedule 3.12 or as to
actions taken subsequent to the date hereof as permitted pursuant to Section
5.1 of this Agreement, since December 31, 1995, none of Jefferson, Jefferson
Savings Bank or the Subsidiaries has (i) issued, sold or purchased any of its
capital stock or corporate debt obligations; (ii) declared or set aside or paid
any dividend, or issued or granted any option, warrant, call commitment, right
to purchase or agreement of any character regarding the authorized or issued
common stock of Jefferson, Jefferson Savings Bank or the Subsidiaries, or made
any other distribution in respect of or, directly or indirectly, purchased,
redeemed or otherwise
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acquired any shares of its issued and outstanding capital stock; (iii) incurred
any obligations or liabilities (fixed or contingent), except obligations or
liabilities incurred in the ordinary course of business, or mortgaged, pledged
or subjected any of its assets to a lien or encumbrance, other than in the
ordinary course of business and other than statutory liens not yet delinquent;
(iv) discharged or satisfied any lien or encumbrance or paid any obligation or
liability (fixed or contingent), other than accruals, accounts and notes
payable included in the balance sheet, accruals, accounts and notes payable
incurred since the date of the balance sheet in the ordinary course of business
and accruals, accounts and notes payable incurred in connection with the
transactions contemplated by this Agreement; (v) sold, exchanged or otherwise
disposed of any of its capital assets other than in the ordinary course of
business; (vi) made any general or individual wage or salary increase, paid any
bonus or instituted any employee welfare, retirement or similar plan or
arrangement; (vii) suffered any material damage, destruction or casualty loss,
whether or not covered by insurance; or (viii) except in the ordinary course of
business, entered or agreed to enter into any agreement or arrangement granting
any preferential rights to purchase any of its assets, properties or rights or
requiring the consent of any party to the transfer and assignment of any such
assets, properties or rights.
Section 3.13. Reserve for Possible Loan Losses. The reserve for
possible loan losses shown on the Jefferson Financial Statements has been
calculated in accordance with Jefferson's and Jefferson Savings Bank's
procedures and in accordance with all applicable rules and regulations
including generally accepted accounting principles. In the opinion of
Jefferson's management the reserve for possible loan losses included in the
Jefferson Financial Statements was, as of the date of the Jefferson Financial
Statements, adequate to cover all known or reasonably anticipated loan losses.
Section 3.14. Employment Relations. The relations of Jefferson,
Jefferson Savings Bank and the Subsidiaries with their respective employees are
satisfactory, and none of Jefferson, Jefferson Savings Bank or the Subsidiaries
has received any notice of any controversies with, or organizational efforts or
other pending actions by, representatives of its employees. Jefferson,
Jefferson Savings Bank and the Subsidiaries have materially complied with all
laws relating to the employment of labor with respect to their respective
employees, including any provisions thereof relating to wages, hours,
collective bargaining and the payment of workman's compensation insurance and
social security and similar taxes, and, except as disclosed in Schedule 3.14
hereto, no person has asserted that Jefferson, Jefferson Savings Bank or the
Subsidiaries is liable for any arrearage of wages, workman's compensation
insurance premiums or any taxes or penalties for failure to comply with any of
the foregoing.
Section 3.15. Employee Benefit Plans. (a) Except as disclosed in
Schedule 3.15(a), none of Jefferson, Jefferson Savings Bank or the Subsidiaries
maintain or contribute to any "employee pension benefit plan" (the "Jefferson
Pension Plan(s)"), as such term is defined in Section 3 (2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), stock option
plan, stock purchase plan, deferred compensation plan, severance
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plan, bonus plan, employment agreement or other similar plan, program or
arrangement (together with the Jefferson Pension Plans, herein referred to
collectively as the "Plans").
(b) The Plans in effect at Jefferson, Jefferson Savings Bank and the
Subsidiaries that are subject to ERISA have, to the best knowledge of
Jefferson, all been operated in all material respects in compliance with ERISA
since ERISA became applicable with respect thereto and Jefferson, Jefferson
Savings Bank and the Subsidiaries have received no written notice to the
contrary. None of the Plans nor any of their respective related trusts have
been terminated (except the termination of any Plan which is in compliance with
the requirements of ERISA and/or which will not result in any additional
liability to Jefferson, Jefferson Savings Bank or the Subsidiaries except as
disclosed in Schedule 3.15(b)).
(c) Each of the Jefferson Pension Plans intended to be a qualified
plan within the meaning of Section 401(a) of the Internal Revenue Code
("Code") has been determined by the IRS to be so qualified, and Jefferson is
not aware of any fact or circumstance which would adversely affect the
qualified status of any such plan. Copies of the most recent IRS determination
letters for each Jefferson Pension Plan intended to be so qualified are
attached hereto in Schedule 3.15(c).
(d) No Jefferson Pension Plan is now, or ever has been, subject to
Title IV of ERISA.
(e) None of Jefferson, Jefferson Savings Bank or the Subsidiaries,
nor, to the best knowledge of Jefferson, any trustee, fiduciary or
administrator of a Plan or any trust created thereunder, has engaged in a
prohibited transaction, as such term is defined in Section 4975 of the Code,
which could subject Jefferson, Jefferson Savings Bank or the Subsidiaries, or,
to the best knowledge of Jefferson, any trustee, fiduciary or administrator
thereof, to the tax or penalty on prohibited transactions imposed by said
Section 4975.
(f) Except as disclosed in Schedule 3.15(f), none of Jefferson,
Jefferson Savings Bank or the Subsidiaries have any material unfunded
liabilities with respect to employee benefits, whether vested or unvested for
any of their respective employees.
Section 3.16. Shareholder Reports. Jefferson has previously
delivered or made available to the Company a complete copy of each annual,
quarterly or special report and definitive proxy statement or other
communication (other than general advertising material) provided by Jefferson
or Jefferson Savings Bank to its shareholders since January 1, 1993, and each
such annual, quarterly or special report, definitive proxy statement or
communication, as of its date, complied in all material respects with any
applicable statutes, rules and regulations enforced or promulgated by any
applicable regulatory agency, and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided that
information as of a later date shall be deemed to modify information as of an
earlier date.
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Since January 1, 1993, Jefferson and Jefferson Savings Bank have duly filed
with the OTS and the FDIC in correct form the monthly, quarterly and annual
reports required to be filed under applicable laws and regulations, and
Jefferson has previously delivered or made available to the Company accurate
and complete copies of all such reports.
Section 3.17. Minute Books. The minute books of Jefferson, Jefferson
Savings Bank and the Subsidiaries contain accurate records of all meetings and
other corporate action held of their respective shareholders and Boards of
Directors (including committees of their respective Boards of Directors),
except where the failure to so maintain such records would not have a material
adverse effect on the business, operations, assets or financial condition of
Jefferson, Jefferson Savings Bank or the Subsidiaries, as the case may be.
Section 3.18. Broker's and Other Fees. Except as set forth in
Schedule 3.18, none of Jefferson, Jefferson Savings Bank or the Subsidiaries
nor any of their directors or officers has employed any broker or finder or
incurred any liability for any broker's or finder's fees or commissions in
connection with any of the transactions contemplated by this Agreement and the
Plan of Merger.
Section 3.19. Absence of Certain Changes or Events. There has not
been any material adverse change in the business, operations, assets or
financial condition of Jefferson, Jefferson Savings Bank and the Subsidiaries
taken as a whole since December 31, 1995 to the date hereof, and to the best of
Jefferson's knowledge, no fact or condition exists which is particular to
Jefferson and which Jefferson believes will cause such a material adverse
change in the future (other than changes since such date attributable to or
resulting from changes in general economic conditions including changes in the
prevailing level of interest rates, changes in laws or regulations, changes in
generally accepted accounting principles or interpretations thereof or expenses
associated with the disposition of any of Jefferson's or Jefferson Savings
Bank's benefit plans or severance agreements).
Section 3.20. Jefferson Information. The information to be contained
in the proxy statement to be delivered to shareholders of Jefferson in
connection with the solicitation of their approval of this Agreement and the
Plan of Merger and the transactions contemplated hereby and thereby, as of the
date the proxy statement is mailed to shareholders of Jefferson, and up to and
including the date of the meeting of shareholders to which such proxy statement
relates, will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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Section 3.21. Loans, Real Estate Owned, Etc. Except as disclosed in
Schedule 3.21(a), each loan on the books of Jefferson, Jefferson Savings Bank
and the Subsidiaries, including unfunded portions of outstanding lines of
credit and loan commitments, was made and has been serviced in all material
respects in accordance with customary lending standards in the ordinary course
of business, is evidenced in all material respects by appropriate and
sufficient documentation and, to the best knowledge of Jefferson, without
inquiry, constitutes the legal, valid and binding obligation of the obligor
named therein, subject to bankruptcy, insolvency, fraudulent conveyance and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
Schedule 3.21(b) discloses: (i) any written or, to the knowledge of
Jefferson, oral loan or similar agreement under the terms of which the obligor
is 60 or more days delinquent in payment of principal or interest, or to the
best of Jefferson's knowledge, in default of any other provision thereof; (ii)
a listing of the real estate owned by Jefferson, Jefferson Savings Bank and the
Subsidiaries; (iii) unfunded commercial loan commitments and letters of credit;
and (iv) each loan or similar agreement which has been classified or designated
"special mention," "substandard," doubtful," or "loss" by Jefferson, Jefferson
Savings Bank or any Subsidiary.
Section 3.22. Disclosure. No representation or warranty contained in
Article III of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
Section 3.23. Regulatory Approvals. Jefferson has no reason to
believe that all regulatory approvals necessary to consummate the transactions
set forth in this Agreement and the Plan of Merger will not be received.
Section 3.24 Disclosure Schedule. The Disclosure Schedule of
Jefferson and Jefferson Savings Bank sets forth, among other things, exceptions
to their representations and warranties in this Article III. While Jefferson
and Jefferson Savings Bank used their best efforts to identify in the
Disclosure Schedule the particular representation or warranty to which each
such exception relates, each such exception shall be deemed disclosed for
purposes of all representations and warranties in this Article III. The mere
inclusion of an exception in the Disclosure Schedule shall not be deemed an
admission by Jefferson and Jefferson Savings Bank that such exception
represents a material fact, event or circumstance.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Jefferson as follows:
Section 4.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Louisiana and a bank holding company duly registered under the Bank Holding
Company Act of 1956, as amended, subject to all laws, rules and regulations
applicable to bank holding companies. ISB is a Louisiana-chartered savings
bank duly organized, validly existing and in good standing under the laws of
the State of Louisiana and a direct wholly-owned subsidiary of the Company.
The deposits of ISB are insured pursuant to the Federal Deposit Insurance Act,
as amended, to the fullest extent permitted by law. The Company and ISB have
full power and authority (including all licenses, franchises, permits and other
governmental authorizations which are legally required) to own or lease their
respective properties, to engage in the business and activities now conducted
by them and each is duly licensed or qualified to do business and is in good
standing in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased by
it makes such licensing or qualification necessary, except where failure to be
so licensed and qualified would not have a material adverse effect on the
Company or ISB.
The Company has previously delivered or made available to Jefferson
true and complete copies of the Articles of Incorporation and Bylaws of the
Company and ISB, as amended to date.
Interim will be at the Effective Date an interim stock corporation
duly organized, validly existing and in good standing under the laws of the
State of Louisiana. Interim will not engage in any business other than in
connection with the transactions contemplated by this Agreement and the Plan of
Merger and Interim will have no material obligations or liabilities other than
its obligations hereunder.
Section 4.2. Capitalization. The authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock, $1.00 par value per
share ("Company Common Stock") and 5,000,000 shares of preferred stock, $1.00
par value per share. As of the date of this Agreement, 7,380,671 shares of the
Company Common Stock and no shares of preferred stock were outstanding. The
authorized capital stock of ISB consists of 1,000,000 shares of Common Stock,
$1.00 par value per share. As of the date of this Agreement, all outstanding
shares of ISB Common Stock were owned by the Company. All of the issued and
outstanding shares of the Company Common Stock are validly issued, fully paid
and nonassessable, and have not been issued in violation of the preemptive
rights of any person. The authorized capital stock of Interim will at the
Effective Date consist of 1,000 shares of Interim Common Stock, all of which
will at the Effective Date be issued and outstanding and owned by the Company.
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Section 4.3. Authority; No Violation. (a) The Company and ISB have
full corporate power and authority to execute and deliver this Agreement and
the Plan of Merger and to consummate the transactions contemplated hereby and
thereby in accordance with the terms hereof and thereof. The execution and
delivery of this Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
approved by the Boards of Directors of the Company and ISB and will at or
before the Effective Date be approved by the Company as the sole stockholder of
Interim and by the Board of Directors of Interim. Except for such approval, no
other corporate proceedings on the part of the Company and ISB are necessary to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by the Company and ISB and constitutes a valid
and binding obligation of the Company and ISB, enforceable against the Company
and ISB in accordance with and subject to its terms. At the Effective Date,
Interim will have full corporate power and authority to consummate the
transactions contemplated by the Plan of Merger, the consummation of the
transactions contemplated thereby will have been duly and validly approved by
the Board of Directors of Interim and by the Company as the sole stockholder of
Interim, and no other corporate proceedings on the part of Interim are
necessary to consummate the transactions so contemplated.
(b) Neither the execution and delivery of this Agreement and the
Plan of Merger by the Company, ISB or Interim, respectively, nor the
consummation by the Company, ISB or Interim of the transactions contemplated
hereby and thereby in accordance with the terms hereof and thereof, or
compliance by the Company, ISB or Interim with any of the terms or provisions
hereof or thereof, will, (i) violate any provision of the Articles of
Incorporation or Bylaws of the Company, ISB or Interim, (ii) violate any law,
statute, code, ordinance, rule, regulation, judgment, order, writ, decree of
injunction applicable to the Company or ISB or any of their respective
properties or assets, or (iii) except as disclosed in Schedule 4.3(b),
violate, conflict with, result in a breach of any provisions of, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
the Company or ISB under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or ISB is a party, or by
which they or any of their respective properties or assets may be bound or
affected, except, with respect to (ii) and (iii) above, such as in the
aggregate will not have a material adverse effect on the financial condition of
the Company and ISB taken as a whole and which will not prevent or delay the
consummation of the transactions contemplated hereby. Except for consents and
approvals of or filings or registrations with or notices to the Secretary of
State, the OTS, the FRB and the OFI, no consents or approvals of or filings or
registrations with or notices to any third party or any public body or
authority are necessary on behalf of the Company in connection with (a) the
execution and delivery by the Company and/or ISB of this Agreement and the Plan
of Merger and (b) the consummation by the Company and/or ISB of the Merger and
the other transactions contemplated hereby and by the Plan of Merger.
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Section 4.4. Litigation and Other Proceedings. Except as disclosed
in Schedule 4.4 hereto, there are no legal, quasi-judicial or administrative
proceedings of any kind or nature now pending or, to the knowledge of the
Company, threatened, before any court or administrative body in any manner
against the Company or ISB or any of their respective properties or capital
stock, which might have a material adverse effect on the transactions proposed
by this Agreement and the Plan of Merger. Neither the Company nor ISB knows of
any basis on which any litigation or proceeding could be brought which could
question the validity of any action taken or to be taken in connection with
this Agreement and the Plan of Merger and the transactions contemplated hereby
and thereby.
Section 4.5. Ability to Pay Merger Consideration. The Company will
have available to it as of the Effective Date sufficient cash to pay the
Aggregate Merger Consideration to shareholders of Jefferson and the
consideration to be paid to holders of Jefferson Options as set forth in
Section 2.1. Upon consummation of the Merger, ISB will continue to be a "well
capitalized" bank pursuant to 12 C.F.R. Section 325.103(b) and the Company will
continue to meet all of its regulatory capital requirements.
Section 4.6. Disclosures. No representation or warranty contained in
Article IV of this Agreement contains any untrue statement of a material fact
or omits to state a material fact necessary to make the statements herein not
misleading.
Section 4.7. Regulatory Approvals. The Company has no reason to
believe that it will not be able to obtain all requisite regulatory approvals
necessary to consummate the transactions set forth in this Agreement and the
Plan of Merger or will become subject to any conditions by any regulatory
agency which would materially impair the ability of the Company to consummate
the transactions set forth in this Agreement and the Plan of Merger.
Section 4.8. Brokerage. Except as set forth on Schedule 4.8, no
investment banker, broker, finder or other person is entitled to any brokerage
or finder's fee or similar commission in respect of this Agreement or the
transactions contemplated hereby based in any way on agreements, arrangements
or undertakings made by or on behalf of the Company, ISB or their respective
affiliates.
Section 4.9. Financial Statements. (a) The Company has previously
delivered or made available to Jefferson true and complete copies on a
consolidated basis of (i) the unaudited statements of financial condition,
statements of income, statements of stockholders' equity and statements of cash
flows of the Company and its subsidiaries as of and for the three months ended
March 31, 1996, (ii) the statements of financial condition, statements of
income, statements of stockholders' equity and statements of cash flows,
together with the notes thereto, of the Company and its subsidiaries on an
audited basis for the years ended December 31, 1995, December 31, 1994, and
December 31, 1993 and with respect to the audited periods in each case
accompanied by the audit reports of the independent certified public accounting
firm which performed the audits (the financial
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statements described in clause (i) and this clause (ii) are referred to herein
as the "Company Financial Statements"). The Company Financial Statements
(including the related notes) have been prepared in all material respects in
accordance with generally accepted accounting principles consistently applied
during the periods involved, and fairly present in all material respects the
consolidated financial condition of the Company as of the respective dates set
forth therein, and the related consolidated statements of income, stockholders'
equity and cash flows fairly present in all material respects the results of
the consolidated operations, stockholders' equity and cash flows of the Company
for the respective periods set forth therein, except that the financial
statements referred to in clause (i) are subject to normal year-end adjustments
and independent audit.
(b) Except as and to the extent reflected, disclosed or reserved
against in the Company Financial Statements (including the notes thereto),
neither the Company nor ISB had or have, as the case may be, any liabilities,
whether absolute, accrued, contingent or otherwise material to the business,
operations, assets or financial condition of the Company and ISB, taken as a
whole.
Section 4.10. Laws. Except as otherwise noted on Schedule 4.10
hereto, the Company and ISB are in compliance with all applicable federal,
state and local laws, rules, regulations and orders, except where a failure to
comply will not result in a material adverse effect on the business,
operations, assets or financial condition of the Company and ISB taken as a
whole. ISB has a rating of "satisfactory" or better with respect to its
compliance with the Community Reinvestment Act, as amended, and the regulations
promulgated thereunder ("CRA") and knows of no reason why its primary federal
regulator or other governmental entity may seek to restrain, delay or prohibit
the transactions contemplated hereby as a result of any act or omission of ISB
under the CRA.
Section 4.11. Company Information. The information provided by the
Company for inclusion in the proxy statement to be delivered to shareholders of
Jefferson in connection with the solicitation of their approval of this
Agreement and the Plan of Merger and the transactions contemplated hereby and
thereby, as of the date the proxy statement is mailed to shareholders of
Jefferson, and up to and including the date of the meeting of shareholders to
which such proxy statement relates, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
Section 4.12 Disclosure Schedule. The Disclosure Schedule of the
Company and ISB sets forth, among other things, exceptions to their
representations and warranties in this Article IV. While the Company and ISB
used their best efforts to identify in the Disclosure Schedule the particular
representation or warranty to which each such exception relates, each such
exception shall be deemed disclosed for purposes of all representations and
warranties in this Article IV. The mere inclusion of an exception in the
Disclosure Schedule shall not be deemed an admission by the Company and ISB
that such exception represents a material fact, event or circumstance.
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ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1. Conduct of the Business of Jefferson. (a) From and
after the date of this Agreement to the Effective Date, Jefferson, Jefferson
Savings Bank and the Subsidiaries shall use all reasonable efforts to (i)
conduct their businesses in substantially the same manner as they have been
conducted since December 31, 1995 and in accordance with prudent business and
banking practices; provided, however, that nothing herein shall preclude
Jefferson Savings Bank from continuing its plans to develop a new branch office
in Mandeville, Louisiana on the terms previously disclosed to the Company, (ii)
maintain and keep their properties in as good repair and condition as at
present, except for deterioration due to ordinary wear and tear and damage due
to casualty, (iii) maintain in full force and effect insurance comparable in
amount and scope of coverage to that currently maintained by them, (iv) perform
all of their obligations under contracts, leases and documents relating to or
affecting their assets, properties and business, except such obligations as
Jefferson, Jefferson Savings Bank or the Subsidiaries may in good faith
reasonably dispute, (v) maintain and preserve their business organizations and
present employees and maintain all relationships with depositors and customers
of Jefferson Savings Bank, (vi) coordinate with the Company prior to making any
material change in its practices or policies with respect to the rate of
interest to be paid on its deposit products, and (vii) comply with and perform
all obligations and duties imposed upon them by all federal, state and local
laws, and all rules, regulations and orders imposed by federal, state or local
governmental authorities.
(b) From and after the date of this Agreement to the Effective Date,
Jefferson, Jefferson Savings Bank and the Subsidiaries will not without the
prior written consent of the Company, which consent shall not be unreasonably
withheld, except with respect to the Charter Conversion, as otherwise
specifically provided for herein, and except as required by law or regulation
(i) permit any amendment or change to be made in the Articles of Incorporation
or Bylaws of Jefferson; (ii) take, or allow Jefferson Savings Bank or the
Subsidiaries to take, any action described or do any of the things listed in
Section 3.12 hereof (except that (A) Jefferson may continue its practice of
paying quarterly cash dividends on Jefferson Common Stock of $.075 per share;
(B) Jefferson may continue to make payments to its 401(k) profit sharing plan
in the ordinary course of business and consistent with past practices; (C)
immediately prior to the Effective Date, Jefferson Savings Bank will pay a cash
dividend to Jefferson as set forth on Schedule 5.1(b); (D) Jefferson may issue
additional shares of Jefferson Common Stock upon the proper exercise of
currently outstanding options issued under the Stock Option Plans or pursuant
to the terms of the Option Agreement; (E) Jefferson Savings Bank may continue
its current practice of accruing approximately $11,000 per month for bonuses to
be paid to employees of Jefferson Savings Bank, and such amounts which have
been so accrued may, in a manner consistent with past practices, be distributed
to employees of Jefferson Savings Bank immediately prior to the Effective Date;
(F) Jefferson and Jefferson Savings Bank may continue their current
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practice of accruing an aggregate of $2,083.33 per month for deferred
compensation for Karen L. Knight pursuant to the terms of a Deferred
Compensation Agreement, dated as of December 14, 1994, by and between
Jefferson, Jefferson Savings Bank and Ms. Knight; and (G) Jefferson Savings
Bank may increase the salaries of employees who are not designated as officers
or managers in the ordinary course of business and consistent with past
practices); (iii) enter into or amend, or allow Jefferson Savings Bank or the
Subsidiaries to enter into or amend, any contract, agreement or other
instrument of any of the types listed in Section 3.9 hereof; (iv) make any
material change in its accounting methods or practices, other than changes
required in accordance with generally accepted accounting principles; (v) take
any action that would result in any of its representations and warranties
contained in Article III of this Agreement not being true and correct in any
respect at the Effective Date the effect of which would have a material adverse
effect on the business, operations, assets or financial condition of Jefferson,
Jefferson Savings Bank or the Subsidiaries taken as a whole; (vi) waive any
right of substantial value; (vii) introduce any new products or services;
(viii) make any change in policies respecting extensions of credit or loan
charge-offs; (ix) change reserve requirement policies; (x) change securities
portfolio policies; (xi) make any loans to any directors, officers, employees
or affiliates of Jefferson, Jefferson Savings Bank or any Subsidiary other than
loans to non-officer employees of Jefferson Savings Bank made in the ordinary
course of business, consistent with past practices and in compliance with all
applicable laws and regulations; (xii) make any loan in an amount over
$250,000; (xiii) approve any loan, the underwriting of which varies from the
written credit policies of Jefferson Savings Bank except for loans in amounts
of less than $250,000 and with loan-to-value ratios of not more than 60%; (xiv)
propose or take any action with respect to the closing of any branches; (xv)
(A) make, or permit Jefferson Savings Bank to make, any changes in the titles
of any employee, officer or director; or (B) increase the salary of any manager
or officer; (xvi) award shares of Jefferson Common Stock pursuant to
Jefferson's Recognition Plan; or (xvii) agree to do any of the foregoing.
Jefferson further agrees that, between the date of this Agreement and the
Effective Date, they will provide reasonably detailed reports to the Company
and ISB on not less than a monthly basis regarding (i) loan portfolio
management, including management and work-out of nonperforming assets, and
credit review and approval procedures and (ii) securities portfolio and funds
management, including management of interest rate risk and the purchase or sale
of any security.
Section 5.2. No Solicitation. So long as this Agreement is in
effect, none of Jefferson, Jefferson Savings Bank or the Subsidiaries shall,
directly or indirectly, encourage or solicit or hold discussions or
negotiations with, or provide any information to, any other person, entity or
group (other than the Company) concerning any merger, acquisition, or sale of
all or substantially all of the assets or capital stock of Jefferson, Jefferson
Savings Bank or the Subsidiaries, except in response to an unsolicited possible
Acquisition Transaction (as defined in Section 8.3(c)(i)) and then only to the
extent required in order to discharge the fiduciary duties of the directors of
Jefferson to Jefferson's shareholders. Jefferson agrees to notify the Company
immediately of any such unsolicited possible Acquisition Transaction and
provide reasonable detail as to the identity of the proposed
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acquiror and the nature of the possible Acquisition Transaction unless such
notification would violate the directors' fiduciary duties to Jefferson
stockholders.
Section 5.3. Approval of Shareholders. Jefferson will (a) take all
steps necessary to call, give notice of, convene and hold a meeting of the
shareholders of Jefferson as soon as reasonably practicable for the purpose of
securing the approval of shareholders of this Agreement and the Plan of Merger,
(b) recommend to the shareholders of Jefferson the approval of this Agreement,
unless such recommendation would violate the directors' fiduciary duties to its
stockholders, and the Plan of Merger and the transactions contemplated hereby
and thereby and use its best efforts to obtain, as promptly as practicable,
such approvals, and (c) cooperate and consult with the Company with respect to
each of the foregoing matters.
Section 5.4. Current Information. During the period from the date of
this Agreement to the Effective Date, Jefferson will cause one or more of its
designated representatives to confer on a monthly or more frequent basis with
representatives of the Company regarding its business, operations, properties,
assets and financial condition and matters relating to the completion of the
transactions contemplated herein. As soon as reasonably available, but in no
event more than 45 days after the end of each fiscal quarter (other than the
last fiscal quarter of each fiscal year) ending after the date of this
Agreement, Jefferson will deliver to the Company and the Company will deliver
to Jefferson their respective quarterly financial reports.
Section 5.5. Access to Properties and Records. (a) Jefferson will
afford the executive officers, employees and authorized representatives
(including legal counsel, accountants and consultants) of the Company full
access to the properties, books and records of Jefferson, Jefferson Savings
Bank and the Subsidiaries including, but not limited to, all books of account
(including the general ledger), tax records, minute books of directors' (other
than minutes of directors' meetings with respect to this Agreement and
transactions contemplated hereby) and shareholders' meetings, organizational
documents, bylaws, material contracts and agreements, filings with any
regulatory authority, accountants' work papers (subject to receipt from
Jefferson's accountants which Jefferson will take reasonable efforts to
obtain), litigation files, plans affecting employees, and any other business
activities or prospects in which the Company and its representatives may have a
reasonable interest (other than lists of shareholders of Jefferson and
customers of Jefferson Savings Bank which shall be provided to the Company only
with the prior consent of Jefferson and Jefferson Savings Bank) and shall make
its directors, officers, employees, agents, representatives and accountants
available to confer with the Company and its representatives; provided,
however, that such investigations shall be conducted with prior notice during
normal business hours and in a manner so as not to unreasonably interfere with
the operations of Jefferson, Jefferson Savings Bank or the Subsidiaries. During
the term of this Agreement, the officers of Jefferson will furnish the Company
with such additional financial and operating data and other information as to
the business and properties of Jefferson, Jefferson Savings Bank and the
Subsidiaries as the Company shall, from time to time,
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reasonably request. Jefferson, Jefferson Savings Bank and the Subsidiaries
shall not be required to provide access to or to disclose information where
such access or disclosure would violate or prejudice the rights of any customer
or would contravene any law, rule, regulation, order or judgment. Upon the
reasonable request of the Company, Jefferson, Jefferson Savings Bank and the
Subsidiaries will use all reasonable efforts to obtain waivers of any such
restriction and in any event make appropriate substitute disclosure
arrangements, to the extent practicable, under circumstances in which the
restrictions of the preceding sentence apply.
(b) All information furnished by the parties hereto previously in
connection with transactions contemplated by this Agreement or pursuant hereto
shall be used solely for the purpose of evaluating the Merger contemplated
hereby and shall be treated as the sole property of the party delivering the
information until consummation of the Merger contemplated hereby, shall be
deemed and treated as confidential material and information by the party
receiving the same, and, if such Merger shall not occur, each party and each
party's advisors shall return to the other party all documents or other
materials containing, reflecting or referring to such information, will not
retain any copies of such information, shall use all reasonable efforts to keep
confidential all such information, and shall not directly or indirectly use
such information for any competitive or other commercial purposes. In the
event that the Merger contemplated hereby does not occur, all documents, notes
and other writings prepared by a party hereto or its advisors based on
information furnished by the other party shall be promptly destroyed. The
obligation to keep such information confidential shall continue for five years
from the date the proposed Merger is abandoned but shall not apply to (i) any
information which (A) the party receiving the information can establish by
convincing evidence was already in its possession prior to the disclosure
thereof to it by the other party; (B) was then generally known to the public;
(C) became known to the public through no fault of the party receiving such
information; or (D) was disclosed to the party receiving such information by a
third party not bound by an obligation of confidentiality; or (ii) disclosures
pursuant to a regulatory or legal requirement or in accordance with an order of
a court of competent jurisdiction, provided that the party subject to such
disclosure order or requirement shall advise the other party prior to so
disclosing, to the extent that such party can do so legally, in order to
provide such other party with the opportunity to contest the disclosure.
Section 5.6. Regulatory Applications and Proxy Solicitation Matters.
(a) The parties hereto will cooperate with each other and use all reasonable
efforts to prepare all necessary documentation, to effect in a timely manner
all necessary filings and to obtain all necessary permits, consents, approvals
and authorizations of all third parties and governmental bodies necessary to
consummate the transactions contemplated by this Agreement and the Plan of
Merger as soon as possible, including, without limitation, those required by
the FRB, the OTS and the OFI. The parties shall each have a reasonable
opportunity to review in advance all filings to be made with, or written
material submitted to, any third party or governmental body in connection with
the transactions contemplated by this Agreement and
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the Plan of Merger and to receive a copy of all such filings within two
business days subsequent to filing as well as all related regulatory
correspondence.
(b) For the purpose of holding the meeting of Jefferson
shareholders referred to in Section 5.3 hereof, the parties hereto shall
cooperate in the preparation by Jefferson of a proxy statement satisfying all
applicable requirements of applicable state and federal laws.
(c) The Company shall furnish such information concerning the
Company as is necessary in order to cause the proxy statement insofar as it
relates to the Company to comply with Sections 4.11 and 5.6(b) hereof. The
Company agrees promptly to advise Jefferson if at any time prior to the
Jefferson shareholder meeting referred to in Section 5.3 hereof, any
information provided by the Company in the proxy statement relating to such
meeting becomes incorrect or incomplete in any material respect and to provide
Jefferson with the information needed to correct such inaccuracy or omission.
The Company shall furnish Jefferson with such supplemental information as may
be necessary in order to cause the proxy statement, insofar as it relates to
the Company, to comply with Section 5.6(b) after the mailing thereof to
Jefferson shareholders.
(d) Each of the parties will promptly furnish each other with
copies of filings with governmental bodies and written communications received
by them or any of their respective subsidiaries from, or delivered by any of
the foregoing to, any governmental body in respect of the transactions
contemplated hereby and by the Plan of Merger, except that the Company shall
not be required to provide confidential information about its businesses or
plans to Jefferson that is provided to regulatory agencies in connection with,
but not involving or with respect to, the transactions contemplated by this
Agreement, the Plan of Merger, and the transactions contemplated hereby and
thereby.
Section 5.7. Further Assistance. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to satisfy the conditions to Closing expeditiously and in the
shortest reasonable time to consummate and make effective the transactions
contemplated by this Agreement and the Plan of Merger, including, without
limitation, using reasonable efforts to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated by this Agreement and the Plan of
Merger and using all reasonable efforts to prevent the breach of any
representation, warranty, covenant or agreement of such party contained or
referred to in this Agreement and the Plan of Merger and to promptly remedy the
same. In case at any time after the Effective Date any further action is
necessary or desirable to carry out the purposes of this Agreement and the Plan
of Merger, the proper officers and directors of each party to this Agreement
and the Plan of Merger shall take all such necessary action. Nothing in this
section shall be construed to require any party to participate in any
threatened or actual legal, administrative or other proceedings (other than
proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party
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or subject) in connection with the consummation of the transactions
contemplated by this Agreement and the Plan of Merger unless such party shall
consent in advance and in writing to such participation and the other party
agrees to reimburse and indemnify such party for and against any and all costs
and damages related thereto.
Section 5.8. Public Announcements. No party hereto shall make any
news release or other public disclosure with respect to this Agreement or any
of the transactions contemplated hereby without the prior consent of all other
parties, which consent shall not be unreasonably withheld, except as may be
otherwise required by law or regulation and as to which the party releasing
such information as required by law or regulation has used its best efforts to
discuss with the other party in advance.
Section 5.9. Failure to Fulfill Conditions. In the event that the
Company or Jefferson determines that a material condition to its obligation to
consummate the transactions contemplated hereby cannot be fulfilled on or prior
to February 28, 1997 and that it will not waive that condition, it will
promptly notify the other party. Jefferson and the Company will promptly
inform the other of any facts applicable to Jefferson or the Company,
respectively, or their respective directors or officers, that would be likely
to prevent or materially delay approval of the Merger by any governmental
authority or which would otherwise prevent or materially delay completion of
the Merger.
Section 5.10. Employment of Jefferson Personnel. The employment of
the current Chairman, President and Chief Executive Officer of Jefferson and
Jefferson Savings Bank, Karen L. Knight, will be terminated effective as of the
Effective Date, and Ms. Knight will thereupon be entitled to, and the Company
agrees to provide, the payments and benefits reflected on Schedule 5.10. The
Company will honor the terms of (i) the severance pay plan for certain officers
of Jefferson and Jefferson Savings Bank, as adopted December 21, 1994, (ii) the
severance pay plan for executive officers of Jefferson and Jefferson Savings
Bank, as adopted December 21, 1994, (iii) the non-employee directors' severance
plan, as adopted January 11, 1995 (which will result in the payment of
severance to the non-employee directors pursuant to the terms thereof as of the
Effective Date), (iv) the current severance agreement among Jefferson,
Jefferson Savings Bank and Ms. Knight (which will result in the payment of
severance to Ms. Knight as of the Effective Date pursuant to Section 2 of such
agreement) and (v) the separate agreement, dated May 24, 1996, between Ms.
Knight and Jefferson Savings Bank which provides for the continuation of
certain health care benefits. The Company and ISB agree to continue the
employment of all other personnel of Jefferson Savings Bank and the
Subsidiaries as of the Effective Date, except in the event of good cause for
termination, for a period of not less than six months subsequent to the
Effective Date.
Section 5.11. Indemnification Rights.
(a) For a period of six years subsequent to the Effective Date,
the Company will indemnify, defend and hold harmless persons who are or were
officers and directors of
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Jefferson, Jefferson Savings Bank and the Subsidiaries against all losses,
claims, damages, costs, expenses, judgments or liabilities arising out of
actions of omissions occurring at or prior to the Effective Date (including,
without limitation, the Merger and the other transactions contemplated hereby)
to the full extent permitted under Louisiana law, including the provisions
thereof relating to the advancement of expenses incurred in the defense of any
proceeding (legal, administrative or arbitrative). Any determination required
to be made with respect to whether an indemnified party's conduct complies with
the standards set forth under Louisiana law shall be made by independent
counsel mutually acceptable to the Company and the indemnified party.
Jefferson shall be entitled to secure continuing directors' and officers'
liability insurance with coverage substantially similar to Jefferson's current
directors' and officers' liability insurance policy to cover acts or omissions
occurring prior to the Effective Date and for the three-year period subsequent
to the Effective Date on the terms described in Schedule 5.11.
(b) In addition to the indemnification required under paragraph
(a) of this Section 5.11, the Company agrees that, for a period of six years
subsequent to the Effective Date, all rights to indemnification provided in
Jefferson's and Jefferson Savings Bank's Articles of Incorporation, Charter and
Bylaws, as in effect at the date hereof, in favor of all persons who are or
were directors, officers and employees of Jefferson and Jefferson Savings Bank,
shall survive the Merger with respect to matters occurring prior to the
Effective Date. The Company will also use its best efforts to ensure that, to
the extent permitted under applicable law, all limitations of liability
existing in favor of directors and officers as provided in Jefferson's Articles
of Incorporation and Bylaws, as in effect as of the date hereof, with respect
to claims or liabilities arising from facts or events existing or occurring
prior to the Effective Date (including, without limitation, the transactions
contemplated by this Agreement), shall survive the Merger.
Section 5.12. Employee Benefit Matters.
(a) Transferred Employees. Subject to the provisions of this Section
5.12, all employees of Jefferson Savings Bank or the Subsidiaries immediately
prior to the Effective Date who are employed by the Company, ISB or another
Company subsidiary (the "Company Employers") immediately following the
Effective Date ("Transferred Employees") will be covered by the Company's
employee benefit plans on substantially the same basis as any employee of the
Company in a comparable position. Notwithstanding the foregoing, the Company
may determine to continue any of the Jefferson benefit plans for Transferred
Employees in lieu of offering participation in the Company's benefit plans
providing similar benefits (e.g., medical and hospitalization benefits), to
terminate any of the Jefferson benefit plans, or to merge any such benefit
plans with the Company's benefit plans, provided the result is the provision of
benefits to Transferred Employees that are substantially similar to the
benefits provided to the Company's employees generally. Except as specifically
provided in this Section 5.12 and as otherwise prohibited by law, Transferred
Employees' service with Jefferson shall be recognized as service with the
Company for purposes of eligibility to participate and vesting, if applicable
(but not for purposes of benefit accrual) under the
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Company's benefit plans, subject to applicable break-in-service rules.
Employees of Jefferson Savings Bank who are designated as officers or managers
immediately prior to the Effective Date and who have accumulated sick leave as
of the Effective Date will receive credit for such accumulated sick leave,
provided that, in no event shall such credit exceed 30 days of sick leave as of
the Effective Date, and other employees of Jefferson Savings Bank who have
accumulated sick leave as of the Effective Date will receive credit for such
accumulated sick leave, provided that, in no event shall such credit exceed 10
days of sick leave as of the Effective Date.
(b) Health Plans. The Company agrees that any pre-existing
condition, limitation or exclusion in its medical, long-term disability and
life insurance plans shall not apply to Transferred Employees or their covered
dependents who are covered under a medical or hospitalization indemnity plan
maintained by Jefferson on the Effective Date and who then change coverage to
the Company's medical or hospitalization indemnity health plan at the time such
Transferred Employees are first given the option to enroll.
(c) Jefferson 401(k) Profit Sharing Plan. The Company, at its
election, may continue the 401(k) profit sharing plan maintained by Jefferson
(the "Jefferson 401(k) Plan") for the benefit of Transferred Employees (as such
plan may be amended as of the Effective Date), may amend the Jefferson 401(k)
Plan to provide current contributions and eligibility provisions identical to
those under the retirement savings plan of the Company (the "Company 401(k)
Plan"), may merge the Jefferson 401(k) Plan into the Company 401(k) Plan, or
may cease additional benefit accruals under and contributions to the Jefferson
401(k) Plan and continue to hold the assets of such Plan until they are
distributable in accordance with its terms; provided, that neither the Company
nor Jefferson shall take any action which either jeopardizes the tax-qualified
status of the Jefferson 401(k) Plan or suspends the right of any Transferred
Employee to make 401(k) contributions during the existence of the Jefferson
401(k) Plan. In the event of a merger of the Jefferson 401(k) Plan into the
Company 401(k) Plan or a cessation of accruals and contributions under the
Jefferson 401(k) Plan, the Company 401(k) Plan will recognize for purposes of
eligibility to participate, early retirement, and vesting, all Transferred
Employees' service with Jefferson, subject to applicable break-in-service
rules. Jefferson agrees to cooperate with the Company in implementing any
decision consistent with this subsection (c) with respect to its 401(k) Plan.
(d) Jefferson ESOP. (i) Each participant in the Jefferson
Employee Stock Ownership Plan ("Jefferson ESOP") not fully vested will become
fully vested in his or her Jefferson ESOP account as of the Effective Date. As
soon as practicable after the execution of this Agreement, Jefferson, Jefferson
Savings Bank and the Company will cooperate to cause the Jefferson ESOP to be
amended and other action taken in a manner reasonably acceptable to Jefferson
and the Company, to provide that the Jefferson ESOP will terminate upon the
Effective Date. Upon the repayment of the Jefferson ESOP loan, the remaining
shares in the Loan Suspense Account will be allocated (to the extent permitted
by Sections 401(a), 415 or 4975 of the Code and the applicable laws and
regulations including, without
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limitation, the applicable provisions of ERISA) to Jefferson ESOP participants
(as determined under the terms of the Jefferson ESOP). Between the date hereof
and the Effective Date, the existing Jefferson ESOP indebtedness shall be paid
in the ordinary course of business and Jefferson or Jefferson Savings Bank
shall make such contributions to the Jefferson ESOP as necessary to fund such
payments. Any indebtedness of the Jefferson ESOP remaining as of the Effective
Date shall be repaid from the Trust associated with the Jefferson ESOP through
application of the Merger Consideration received by the Jefferson ESOP.
Jefferson and the Company agree that, subject to the conditions described
herein, as soon as practicable after the Effective Date and repayment of the
Jefferson ESOP loan, participants in the Jefferson ESOP will receive lump sum
distributions of their Jefferson ESOP accounts. To the extent permitted by
applicable law, and to the extent requested by participants in the Jefferson
ESOP, the Company will permit Transferred Employee's participant accounts in
the Jefferson ESOP to be rolled over into the Company's ESOP or 401(k) plan.
(ii) The actions relating to termination of the Jefferson ESOP will
be adopted conditioned upon the consummation of the Merger and upon receiving a
favorable determination letter from the IRS with regard to the continued
qualification of the Jefferson ESOP after any required amendments. Jefferson
and the Company will cooperate in submitting appropriate requests for any such
determination letter to the IRS and will use their best efforts to seek the
issuance of such letter as soon as practicable following the date hereof.
Jefferson and the Company will adopt such additional amendments to the
Jefferson ESOP as may be reasonably required by the IRS as a condition to
granting such determination letter provided that such amendments do not
substantially change the terms outlined herein or would result in a material
adverse change in the business, operations, assets, financial condition or
prospects of Jefferson or Jefferson Savings Bank or result in an additional
material liability to the Company or ISB.
(iii) As of and following the Effective Date, the Company shall
cause the Jefferson ESOP to be maintained for the exclusive benefit of
employees and other persons who were participants or beneficiaries therein
prior to the Effective Date and proceed with termination of the Jefferson ESOP
through distribution of its assets in accordance with its terms subject to the
amendments described herein and as otherwise may be required to comply with
applicable law or to obtain a favorable determination from the IRS as to the
continuing qualified status of the Jefferson ESOP, provided, however, that no
such distributions of the Jefferson ESOP shall occur until a favorable
termination ruling has been received from the IRS. Jefferson shall cause the
Jefferson ESOP to be amended, effective as of the Effective Date, to provide
that the administrative committee thereof shall consist of three individuals
appointed by the Board of Directors of Jefferson prior to the Effective Date
(the appointment of such individuals will be subject to the prior consent of
the Company and such individuals, after their appointment, may not be
unreasonably removed or changed by the Company or its affiliates for a period
of two years after the Effective Date).
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(e) The Company ESOP. Upon termination of the Jefferson ESOP and
upon satisfaction of applicable eligibility and service requirements, all
Transferred Employees will be eligible to participate in the Company's Employee
Stock Ownership Plan ("ESOP"), however, such Transferred Employees will not be
permitted to recognize for purposes of eligibility to participate, eligibility
for early retirement benefit accrual purposes, or any other purpose, such
Transferred Employees' service with Jefferson.
Section 5.13. Disclosure Supplements. From time to time prior to
the Effective Date, each party hereto will promptly supplement or amend (by
written notice to the other) its respective Schedules delivered pursuant hereto
with respect to any matter hereafter arising which, if existing, occurring or
known at the date of this Agreement, would have been required to be set forth
or described in such Schedule or which is necessary to correct any information
in such Schedules which has been rendered inaccurate thereby; provided,
however, that any such supplements to the Schedules shall be required only with
respect to matters which represent material changes to the Schedules and the
information contained therein. For the purpose of determining satisfaction of
the conditions set forth in Article VI, no supplement or amendment to such
Schedule shall correct or cure any warranty which was untrue when made, but
shall enable the disclosure of subsequent facts or events to maintain the
truthfulness of any warranty.
Section 5.14. Operating Synergies; Conformance to Reserve Policies,
Etc. (a) Between the date hereof and the Effective Date of the Merger,
Jefferson and Jefferson Savings Bank management will work with the Company to
achieve appropriate operating efficiencies following the Closing Date.
(b) (i) ISB may, with the consent of Jefferson and Jefferson
Savings Bank, directly contact Jefferson Savings Bank's customers, provided
that all such communications are reviewed and approved in advance by Jefferson;
and (ii) as may be requested by the Company, which request shall not be earlier
than the day prior to the Effective Date and which shall be accompanied by a
written certificate from the Company's President and Chief Executive Officer
certifying that all conditions precedent to the Company's and ISB's obligations
under this Agreement have either been satisfied or waived, Jefferson Savings
Bank shall establish such additional accruals, reserves and charge-offs,
through appropriate entries in its accounting books and records, as may be
necessary to conform Jefferson Savings Bank accounting and credit loss reserve
practices and methods to those of the Company (as such practices and methods
are to be applied from and after the Effective Date) and to the Company's plans
with respect to the conduct of the business of Jefferson Savings Bank following
the Merger, as well as for the costs and expenses relating to the consummation
by Jefferson and Jefferson Savings Bank of the Merger and the other
transactions contemplated hereby. Jefferson and Jefferson Savings Bank shall
not be required to take any action pursuant to clause (ii) of the immediately
preceding sentence that (x) is not consistent with generally accepted
accounting principles or (y) is inconsistent with any requirement of any
regulatory agency with jurisdiction over Jefferson Savings Bank. Any such
accruals, reserves and charge-offs shall be made pursuant to written
instructions
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of the Company and shall not be deemed to cause any representation and warranty
of Jefferson and Jefferson Savings Bank to not be true and accurate as of the
Effective Date.
Section 5.15. Environmental Audit. As soon as possible after the
date hereof, Jefferson shall permit the Company, at its sole election to cause
a "phase I environmental audit" and such other tests, investigations and
analyses to be performed as it deems necessary to assess the potential
exposure, if any, under any environmental law at Jefferson's River Ridge,
Louisiana branch office and Jefferson Savings Bank's Marrero, Louisiana branch
office. The expense of any such environmental audit shall be the sole
responsibility of the Company. The Company shall use its best efforts to cause
any such environmental audit to be completed within 45 days of the date hereof,
but in no event later than 60 days from the date hereof. Any such
environmental audit shall identify the existence of any underground storage
tanks or Hazardous Materials located on such properties owned or occupied by
Jefferson and shall provide an estimated cost ("Remedial Cost") of a
comprehensive cleanup plan (the "Cleanup Plan") for the removal of any
underground tanks or any such Hazardous Materials and any other remedial action
required under applicable Environmental Laws.
Section 5.16. Charter Conversion. Jefferson and Jefferson
Savings Bank shall use all reasonable efforts to ensure that the Charter
Conversion becomes effective immediately prior to the Effective Date.
Section 5.17. Jefferson Board of Directors Action. Jefferson
shall use its best efforts to cause each person who serves as a director of
Jefferson, Jefferson Savings Bank (except Karen L. Knight) and, if the Company
requests, the Subsidiaries to submit their resignations in writing to become
effective upon the Effective Date.
Section 5.18 Additional Covenants. Jefferson and Jefferson Savings
Bank and the Company and ISB agree that during the term of this Agreement
neither party shall take any action which would (a) materially adversely affect
the ability of the Company to obtain, or materially delay the receipt of, the
regulatory approvals contemplated by Section 6.1(b) herein without imposition
of any term or condition of the type referenced in such section, or (b)
materially adverse affect the ability of such party to perform its covenants
and agreements under this Agreement.
ARTICLE VI
CLOSING CONDITIONS
Section 6.1. Conditions of Each Party's Obligations Under This
Agreement. The respective obligations of each party under this Agreement to
consummate the Merger shall be subject to the satisfaction, or, where
permissible under applicable law, waiver at or prior to the Effective Date, of
the following conditions:
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(a) Approval of Jefferson Stockholders. This Agreement and the
Plan of Merger and the transactions contemplated hereby and thereby shall have
been approved by the requisite vote of the stockholders of Jefferson.
(b) Regulatory Filings. All necessary regulatory or
governmental approvals and consents (including, without limitation, any
required approval of the FRB, the OTS, the FDIC and the OFI) required to
consummate the transactions contemplated hereby shall have been obtained
without any term or condition which would materially impair the value of
Jefferson and Jefferson Savings Bank, taken as a whole, to the Company (as
reasonably and in good faith determined by the Company). All conditions
required to be satisfied prior to the Effective Date by the terms of such
approvals and consents shall have been satisfied, and all statutory waiting
periods in respect thereof shall have expired.
(c) Suits and Proceedings. No order, judgment or decree shall be
outstanding against a party hereto or a third party that would have the effect
of preventing completion of the Merger; no suit, action or other proceeding
shall be pending or threatened by any governmental body in which it is sought
to restrain or prohibit the Merger; and no suit, action or other proceeding
shall be pending before any court or governmental agency in which it is sought
to restrain or prohibit the Merger or obtain other substantial monetary or
other relief against one or more parties hereto in connection with this
Agreement and which the Company and ISB determine reasonably and in good faith,
makes it inadvisable to proceed with the Merger because any such suit, action
or proceeding has a significant potential to be resolved in such a way as to
deprive the Company and ISB of any of the material benefits to it of the
Merger.
Section 6.2. Conditions to the Obligations of the Company and ISB
Under This Agreement. The obligations of the Company and ISB under this
Agreement shall be further subject to the satisfaction or waiver, at or prior
to the Effective Date, of the following conditions:
(a) Representations and Warranties; Performance of Obligations of
Jefferson and Jefferson Savings Bank. The representations and warranties of
Jefferson and Jefferson Savings Bank contained in this Agreement shall be true
and correct in all respects on the Closing Date as though made on and as of the
Closing Date except (i) as reflected on the Disclosure Schedule transmitted by
the Company and ISB to Jefferson on or prior to the date hereof (without
consideration of any Disclosure Supplements delivered pursuant to Section
5.13), and (ii) for such defects which would not have a material adverse effect
on the business, operations, assets or financial condition of Jefferson,
Jefferson Savings Bank or the Subsidiaries taken as a whole. Jefferson and
Jefferson Savings Bank shall have performed in all material respects the
agreements, covenants and obligations necessary to be performed by it prior to
the Closing Date. With respect to any representation or warranty which as of
the Closing Date has required a supplement or amendment to the Schedule to
render such representation or warranty true and correct as of the Closing Date,
the representation and warranty shall be deemed true and correct as of the
Closing Date
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only if (i) the information contained in the supplement or amendment to the
Schedule related to events occurring following the execution of this Agreement
and (ii) the facts disclosed in such supplement or amendment would not either
alone, or together with any other supplements or amendments to the Schedule,
materially adversely affect the representation as to which the supplement or
amendment relates.
(b) Opinion of Counsel. The Company and ISB shall have received
an opinion of counsel to Jefferson, dated the date of the Closing, in form and
substance reasonably satisfactory to the Company and ISB, covering the matters
set forth on Schedule 6.2 hereto.
(c) Certificates. Jefferson shall have furnished the Company and
ISB with such certificates of its officers or other documents to evidence
fulfillment of the conditions set forth in this Section 6.2 as the Company and
ISB may reasonably request.
Section 6.3. Conditions to the Obligations of Jefferson Under this
Agreement. The obligations of Jefferson under this Agreement shall be further
subject to the satisfaction or waiver, at or prior to the Effective Date, of
the following conditions:
(a) Representations and Warranties; Performance of Obligations of
the Company and ISB. The representations and warranties of the Company and ISB
contained in this Agreement shall be true and correct in all respects on the
Closing Date as though made on and as of the Closing Date except (i) as
reflected on the Disclosure Schedule transmitted by Jefferson and Jefferson
Savings Bank to the Company on or prior to the date hereof (without
consideration of any Disclosure Supplements delivered pursuant to Section
5.13), and (ii) for such defects which would not have a material adverse effect
on the business, operations, assets or financial condition of the Company or
ISB taken as a whole. The Company and ISB shall have performed in all material
respects the agreements, covenants and obligations to be performed by it prior
to the Closing Date. With respect to any representation or warranty which as
of the Closing Date has required a supplement or amendment to the Schedule to
render such representation or warranty true and correct as of the Closing Date,
the representation and warranty shall be deemed true and correct as of the
Closing Date only if (i) the information contained in the supplement or
amendment to the Schedule related to events occurring following the execution
of this Agreement and (ii) the facts disclosed in such supplement or amendment
would not either alone, or together with any other supplements or amendments to
the Schedule, materially adversely effect the representation as to which the
supplement or amendment relates.
(b) Opinion of Counsel to the Company and ISB. Jefferson shall
have received an opinion of counsel to the Company and ISB, dated the date of
the Closing, in form and substance reasonably satisfactory to Jefferson,
covering the matters set forth on Schedule 6.3 hereto.
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(c) Certificates. The Company and ISB shall have furnished
Jefferson with such certificates of its officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Section
6.3 as Jefferson may reasonably request.
(d) Board Representation. Effective as of the Effective Date,
Karen L. Knight shall have been appointed to serve as a director of the Company
for a term of not less than two years.
(e) Deposit of Funds. Jefferson shall have received from the
Exchange Agent written confirmation of receipt by the Exchange Agent of funds
in the amount equal to the Aggregate Merger Consideration.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
(a) This Agreement may be terminated by action of the Board of
Directors of either the Company or Jefferson at any time prior to the Effective
Date if:
(i) any application for regulatory or governmental
approval necessary to consummate the Merger and the other transactions
contemplated hereby shall have been denied or withdrawn at the request
or recommendation of the applicable regulatory agency or governmental
authority or by the Company and ISB upon written notice to Jefferson
if any such application is approved with conditions which materially
impair the value of Jefferson and Jefferson Savings Bank, taken as a
whole, to the Company and ISB, as reasonably and in good faith
determined by the Company and ISB; or,
(ii) (a) the Merger shall not have become effective on or
before February 28, 1997 or such later date as shall have been
approved in writing by the Boards of Directors of the Company, ISB,
Jefferson and Jefferson Savings Bank, or (b) if a vote of the
stockholders of Jefferson is taken and such stockholders fail to
approve this Agreement and the Plan of Merger at the meeting (or any
adjournment thereof) held for such purposes; provided, however, that
the right to terminate under this Section 7.1(a)(ii)(a) or (b) shall
not be available to any party whose failure to perform or observe any
obligation or agreement under this Agreement has been the cause of, or
has resulted in, the failure of the Merger to become effective on or
before such date.
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(b) This Agreement may be terminated at any time prior to the
Effective Date by the Board of Directors of Jefferson if the Company or ISB
shall fail to comply in any respect with any of its covenants, agreements or
obligations contained in this Agreement, or if any of the representations or
warranties of the Company or ISB contained herein shall be defective in any
respect which would have a materially adverse effect on the business,
operations, assets or financial condition of the Company or ISB taken as a
whole. In the event the Board of Directors of Jefferson desires to terminate
this Agreement as provided above, such Board of Directors must notify the
Company and ISB in writing of its intent to terminate stating the reason
therefor. The Company or ISB shall have thirty (30) days from the receipt of
such notice to cure the alleged breach, inaccuracy or change, subject to the
approval of Jefferson (which approval shall not be unreasonably delayed or
withheld).
(c) This Agreement may be terminated any time prior to the
Effective Date by action of the Board of Directors of the Company and ISB if
(i) Jefferson shall fail to comply in any respect with any of its covenants,
agreements or obligations contained in this Agreement, or if any of the
representations or warranties of Jefferson contained herein shall be defective
in any respect which would have a materially adverse effect on the business,
operations, assets or financial condition of Jefferson, Jefferson Savings Bank
and the Subsidiaries taken as a whole, (ii) there shall have been any change
after December 31, 1995 in the assets, deposits, properties, business or
financial condition of Jefferson, Jefferson Savings Bank or the Subsidiaries
which materially and adversely affects the financial condition, results of
operation or business of Jefferson, Jefferson Savings Bank and the Subsidiaries
taken as a whole (other than changes since such date attributable to or
resulting from changes in general economic conditions including changes in the
prevailing level of interest rates, in laws or regulations, generally accepted
accounting principles or interpretations thereof or expenses associated with
the disposition of any of Jefferson's or Jefferson Savings Bank's benefit plans
or severance agreements; and, provided further, that in no event shall any
Remedial Cost of less than $200,000 be deemed to have a material adverse affect
on the financial condition, results of operations or business of Jefferson,
Jefferson Savings Bank and the Subsidiaries) or (iii) the Remedial Cost for
actions described in the Cleanup Plan exceeds $200,000, provided, however, that
prior to terminating this Agreement pursuant to this clause (iii), the parties
hereto will discuss the Cleanup Plan and use their best efforts to consummate
the Merger on mutually agreeable terms. In the event the Boards of Directors
of the Company and ISB desire to terminate this Agreement as provided in (i) or
(ii) above, the Boards of Directors must notify Jefferson in writing of its
intent to terminate stating the cause therefor. Jefferson shall have thirty
(30) days from the receipt of such notice to cure the alleged breach,
inaccuracy or change, subject to the approval of the Company and ISB (which
approval shall not be unreasonably delayed or withheld).
(d) This Agreement may be terminated at any time prior to the
Effective Date with the mutual written consent of the Company, ISB, Jefferson
and Jefferson Savings Bank and the approval of such action by their respective
Boards of Directors notwithstanding the approval of this Agreement by the
shareholders of Jefferson.
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(e) This Agreement may be terminated by the Company and ISB if the
conditions set forth in Sections 6.1 or 6.2 are not satisfied in all material
respects as of the Effective Date, or by Jefferson and Jefferson Savings Bank
if the conditions set forth in Sections 6.1 or 6.3 are not satisfied in all
material respects as of the Effective Date, and such failure has not been
waived.
Section 7.2. Effect of Termination. In the event of termination of
this Agreement and the abandonment of the Merger pursuant to Section 7.1 by any
party hereto, this Agreement (other than Sections 5.5(b), 5.8 and 8.3) shall
become void and have no effect, without any liability on the part of any party
or its directors, officers or shareholders. Nothing contained in this Section
7.2 shall relieve any party hereto of any liability for a breach of this
Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Representations and Warranties. The
representations, warranties, covenants, and indemnities of the Company, ISB,
Jefferson and Jefferson Savings Bank contained in the Agreement shall not
survive the Effective Date, but shall terminate as of the Effective Date,
except for this Section 8.1 and Sections 5.10, 5.11, 5.12 and 8.3.
Section 8.2. Amendments. This Agreement may be amended only by a
writing signed by the Company, ISB, Jefferson and Jefferson Savings Bank, at
any time prior to the Closing Date with respect to any of the terms contained
herein, provided that, after approval of this Agreement by the Jefferson
shareholders, no amendment shall alter or change the amount or type of
consideration to be received by the Jefferson shareholders in exchange for
their shares of Jefferson Common Stock set forth in Section 2.1 hereof.
Section 8.3. Expenses; Fee.
(a) Except as otherwise provided in this Agreement, each party
hereto shall bear and pay all costs and expenses ("Costs and Expenses")
incurred by it in connection with the transactions contemplated by this
Agreement, including fees and expenses of its own financial advisors,
consultants, accountants and counsel, and other costs and expenses.
Notwithstanding anything in this Section 8.3(a) to the contrary, (i) if the
failure to consummate the Merger shall be due to the willful breach of a
representation or warranty by one of the parties hereto or to the willful
failure of one of the parties hereto to perform or observe its covenants,
agreements or obligations set forth herein to be performed or observed by it at
or before the Effective Date, then such party shall pay to the other party
hereto all Costs and Expenses incurred by such other party in connection with
this Agreement and the transactions contemplated hereby in addition to any
remedies at law or in equity which may be available to the other party for
breach of this Agreement or (ii) if
37
45
the Merger is not consummated for any reason other than the willful breach of a
representation or warranty by Jefferson or Jefferson Savings Bank or the
willful failure by either of them to perform their respective covenants,
agreements or obligations herein, then the Company shall pay to Jefferson
Savings Bank all costs and expenses incurred by it as a result of the Charter
Conversion.
(b) In order to increase the likelihood that the transactions
contemplated by this Agreement will be consummated and to induce the Company
and ISB to enter into this Agreement, Jefferson hereby agrees to pay the
Company, and the Company shall be entitled to payment of, a fee (the "Fee") of
$250,000 upon the occurrence of a Purchase Event (as defined herein) so long as
the Purchase Event occurs prior to a Fee Termination Event (as defined herein).
Such payment shall be made to the Company in immediately available funds within
five business days after the occurrence of a Purchase Event. A Fee Termination
Event shall be the first to occur of the following: (i) the Effective Date,
(ii) termination of this Agreement in accordance with the terms hereof prior to
the occurrence of a Purchase Event (other than a termination of this Agreement
by the Company pursuant to Section 7.1(c) hereof as a result of a willful
breach of any material representation, warranty, covenant or agreement of
Jefferson) or (iii) 12 months after the termination of this Agreement by the
Company pursuant to Section 7.1(c) hereof as a result of a willful breach of
any material representation, warranty, covenant or agreement of Jefferson.
(c) The term "Purchase Event" shall mean any of the following
events or transactions occurring after the date hereof:
(i) Jefferson or any Subsidiary thereof, including
Jefferson Savings Bank, without having received the Company's prior
written consent, shall have entered into an agreement to engage in an
Acquisition Transaction (as defined below) with any person (the term
"person" for purposes of this Agreement having the meaning assigned
thereto in Section 3(a)(9) and 13(d)(3) of the Exchange Act and the
rules and regulations thereunder) other than the Company or any
affiliate of the Company (including ISB) (the term "affiliate" for
purposes of this Agreement having the meaning assigned thereto in Rule
405 under the Securities Act) or the Board of Directors of Jefferson
shall have recommended that the stockholders of Jefferson approve or
accept any Acquisition Transaction with any person other than the
Company or any affiliate of the Company. For purposes of this
Agreement, "Acquisition Transaction" shall mean (x) a merger or
consolidation, or any similar transaction, involving Jefferson,
Jefferson Savings Bank or any Subsidiary, (y) a purchase, lease or
other acquisition of all or substantially all of the assets of
Jefferson, Jefferson Savings Bank or any Subsidiary or (z) a purchase
or other acquisition (including by way of merger, consolidation, share
exchange or otherwise) of securities representing 15% or more of the
voting power of Jefferson, Jefferson Savings Bank or any Subsidiary;
provided that the term "Acquisition Transaction" does not include any
internal merger or
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consolidation involving only Jefferson, Jefferson Savings Bank and/or
the Subsidiaries;
(ii) Any person (other than the Company or any affiliate
of the Company), other than in connection with a transaction to which
the Company has given its prior written consent, shall have acquired
beneficial ownership or the right to acquire beneficial ownership of
15% or more of the outstanding shares of Jefferson Common Stock (the
term "beneficial ownership" for purposes of this Agreement having the
meaning assigned thereto in Section 13(d) of the Exchange Act, and the
rules and regulations thereunder) and subsequent to such acquisition,
(x) Jefferson shall have breached any material covenant or obligation
contained in this Agreement and such breach would entitle the Company
to terminate this Agreement or (y) the holders of the Jefferson Common
Stock shall not have approved this Agreement at the meeting of such
stockholders held for the purpose of voting on this Agreement, such
meeting shall not have been held or shall have been cancelled prior to
termination of this Agreement or (z) the Board of Directors of
Jefferson shall have withdrawn or modified in a manner adverse to the
Company the recommendation of the Board of Directors of Jefferson with
respect to this Agreement;
(iii) After a bona fide proposal is made by any person
other than the Company or any affiliate of the Company to Jefferson or
its stockholders to engage in an Acquisition Transaction, (x)
Jefferson shall have breached any material covenant or obligation
contained in this Agreement and such breach would entitle the Company
to terminate this Agreement or (y) the holders of the Jefferson Common
Stock shall not have approved this Agreement at the meeting of such
stockholders held for the purpose of voting on this Agreement, such
meeting shall not have been held or shall have been cancelled prior to
termination of this Agreement or (z) the Board of Directors of
Jefferson shall have withdrawn or modified in a manner adverse to the
Company the recommendation of the Board of Directors of Jefferson with
respect to this Agreement.
(d) Jefferson shall notify the Company promptly in writing of the
occurrence of any Purchase Event.
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Section 8.4. Notices. Any notice given hereunder shall be in writing
and shall be delivered in person or mailed by certified mail, postage prepaid
or sent by facsimile, courier or personal delivery to the parties at the
following addresses unless by such notice a different address shall have been
designated:
If to the Company or ISB:
To: ISB Financial Corporation
Iberia Savings Bank
1101 E. Admiral Doyle Drive
New Iberia, Louisiana 70560
Attention: Mr. Larrey G. Mouton
President and Chief Executive Officer
With a copy to: Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, D.C. 20005
Attention: Hugh T. Wilkinson, Esq.
If to Jefferson:
To: Jefferson Bancorp, Inc.
1011 Fourth Street
Gretna, Louisiana 70053
Attention: Karen L. Knight
President and Chief Executive Officer
With a copy to: Housley, Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, D.C. 20036
Attention: Leonard Volin, Esq.
All notices sent by mail as provided above shall be deemed delivered five (5)
days after deposit in the mail. All notices sent by facsimile or courier as
provided above shall be deemed delivered one day after being sent. All other
notice shall be deemed delivered when actually received. Any party to this
Agreement may change its address for the giving of notice specified above by
giving notice as herein provided.
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Section 8.5. Controlling Law. All questions concerning the validity,
operation and interpretation of this Agreement and the Plan of Merger and the
performance of the obligations imposed upon the parties hereunder shall be
governed by the laws of the State of Louisiana except to the extent that the
laws of the United States control.
Section 8.6. Headings. The headings and titles to the sections of
this Agreement are inserted for convenience only and shall not be deemed a part
hereof or affect the construction or interpretation of any provision hereof.
Section 8.7. Modifications or Waiver. The parties may, at any time
prior to the Effective Date of the Merger, (i) extend the time for the
performance of any of the obligations or other acts of the other parties
hereto; (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto; or (iii) waive
compliance with any of the agreements or conditions contained herein. However,
no termination, cancellation, modification, amendment, deletion, addition or
other change in this Agreement, or any provision hereof, or waiver of any right
or remedy herein provided, shall be effective for any purpose unless
specifically set forth in a writing signed by the party or parties to be bound
thereby. The waiver of any right or remedy in respect to any occurrence or
event on one occasion shall not be deemed a waiver of such right or remedy in
respect to such occurrence or event on any other occasion.
Section 8.8. Severability. Any provision hereof prohibited by or
unlawful or unenforceable under any applicable law or any jurisdiction shall as
to such jurisdiction be ineffective, without affecting any other provision of
this Agreement, or shall be deemed to be severed or modified to conform with
such law, and the remaining provisions of this Agreement shall remain in force,
provided that the purpose of this Agreement can be effected. To the full
extent, however, that the provisions of such applicable law may be waived, they
are hereby waived, to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms.
Section 8.9. Assignment; Parties in Interest. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, but shall not be assigned by any party
without the prior written consent of the other party. Except with respect to
the rights to indemnification set forth in Section 5.11 and the benefits to be
provided to Ms. Knight after the Merger pursuant to Section 5.10 and related
Schedule 5.10, nothing in this Agreement is intended to confer, expressly or by
implication, upon any other person any rights or remedies under or by reason of
this Agreement.
Section 8.10. Consolidation of Agreements. All understandings and
agreements heretofore made in the Letter of Intent are merged into this
Agreement, which includes the Schedules hereto and the other documents,
agreements and instruments executed and delivered pursuant to or in connection
with this Agreement. This Agreement supersedes the Letter of Intent, which
shall be of no further force or effect.
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Section 8.11. Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original and all of
which shall be deemed to constitute one and the same instrument.
Section 8.12. Gender. Any pronoun used herein shall refer to any
gender, masculine, feminine or neuter, as the context requires.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
ISB FINANCIAL CORPORATION
By: /s/ Larrey G. Mouton
-------------------------------------
Larrey G. Mouton
President and Chief Executive Officer
ATTEST:
By: /s/ Guyton H. Watkins
---------------------------------
Guyton H. Watkins, Secretary
IBERIA SAVINGS BANK
By: /s/ Larrey G. Mouton
-------------------------------------
Larrey G. Mouton
President and Chief Executive Officer
ATTEST:
By: /s/ Guyton H. Watkins
---------------------------------
Guyton H. Watkins, Secretary
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JEFFERSON BANCORP, INC.
By: /s/ Karen L. Knight
-------------------------------------------
Karen L. Knight
President and Chief Executive Officer
ATTEST:
By: /s/ G. Robert Murphy, Jr.
-------------------------------------
G. Robert Murphy, Jr., Secretary
JEFFERSON FEDERAL SAVINGS BANK
By: /s/ Karen L. Knight
-------------------------------------------
Karen L. Knight
President and Chief Executive Officer
ATTEST:
By: /s/ G. Robert Murphy, Jr.
-------------------------------------
G. Robert Murphy, Jr., Secretary
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52
EXHIBIT A
PLAN OF MERGER OF ISB ACQUISITION CORP.
INTO
JEFFERSON BANCORP, INC.
PLAN OF MERGER, dated as of _____ __, 1996, by and between ISB
Acquisition Corp. ("Interim"), a Louisiana corporation formed by ISB Financial
Corporation, Inc. ("Company"), a Louisiana corporation, solely to facilitate
the transactions contemplated by the Reorganization Agreement, defined below,
and Jefferson Bancorp, Inc. ("Jefferson"), a Louisiana corporation. Interim
and Jefferson are hereinafter sometimes collectively referred to as the
"Merging Corporations."
This Plan of Merger is being entered into pursuant to an Agreement and
Plan of Merger and Reorganization, dated as of May 24, 1996 (the
"Reorganization Agreement") by and among the Company, Iberia Savings Bank
("ISB"), Jefferson and Jefferson Federal Savings Bank ("Jefferson Savings
Bank").
In consideration of the premises, and the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Except as otherwise provided herein, the capitalized terms set forth
below shall have the following meanings:
1.1 "Effective Date" shall mean the date at which the Merger
contemplated by this Plan of Merger becomes effective as provided in Section
1.5 of the Reorganization Agreement.
1.2 "Interim Common Stock" shall mean the common stock, par value
$1.00 per share, of Interim owned by the Company.
1.3 "Jefferson Common Stock" shall mean the common stock, par
value $0.01 per share, of Jefferson.
1.4 "Jefferson Option" shall mean an outstanding option to
purchase Jefferson Common Stock issued by Jefferson.
1.5 The "Merger" shall refer to the merger of Interim with and
into Jefferson as provided in Section 2.1 of this Plan of Merger.
53
1.6 "Stockholder Meeting" shall mean the meeting of the
stockholders of Jefferson held pursuant to Section 5.3 of the Reorganization
Agreement.
1.7 "Surviving Corporation" shall refer to Jefferson as the
surviving corporation of the Merger.
ARTICLE II
TERMS OF THE MERGER
2.1 The Merger. Subject to the terms and conditions set forth in
the Reorganization Agreement, on the Effective Date, Interim shall be merged
with and into Jefferson pursuant and subject to the Louisiana Business
Corporation Law ("BCL"). Jefferson shall be the Surviving Corporation of the
Merger and shall continue to be governed by the laws of the State of Louisiana.
On the Effective Date, the Surviving Corporation shall be considered the same
business and corporate entity as each of the Merging Corporations and thereupon
and thereafter, all the property, rights, powers, and franchises of each of the
Merging Corporations shall vest in the Surviving Corporation and the Surviving
Corporation shall be subject to and be deemed to have assumed all of the debts,
liabilities, obligations and duties of each of the Merging Corporations and
shall have succeeded to all of each of their relationships, fiduciary or
otherwise, as fully and to the same extent as if such property, rights,
privileges, powers, franchises, debts, obligations, duties and relationships
had been originally acquired, incurred or entered into by the Surviving
Corporation. In addition, any reference to either of the Merging Corporations
in any contract, will or document, whether executed or taking effect before or
after the Effective Date, shall be considered a reference to the Surviving
Corporation if not inconsistent with the other provisions of the contract, will
or document; and any pending action or other judicial proceeding to which
either of the Merging Corporations is a party, shall not be deemed to have
abated or to have discontinued by reason of the Merger, but may be prosecuted
to final judgment, order or decree in the same manner as if the Merger had not
been made; or the Surviving Corporation may be substituted as a party to such
action or proceeding, and any judgment, order or decree may be rendered for or
against it that might have been rendered for or against either of the Merging
Corporations if the Merger had not occurred.
2.2 Articles of Incorporation. The Articles of Incorporation of
Jefferson, as in effect on the Effective Date, shall continue in full force and
effect following the Effective Date as the Articles of Incorporation of the
Surviving Corporation.
2.3 Bylaws. The Bylaws of Jefferson, as in effect on the
Effective Date, shall continue in full force and effect as the bylaws of the
Surviving Corporation until amended as provided by law.
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2.4 Directors and Officers of the Surviving Corporation. The
directors and officers of Interim shall become the directors and officers of
the Surviving Corporation as of the Effective Date, each to hold office in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation.
ARTICLE III
CONVERSION OF SHARES
3.1 Conversion of Jefferson Common Stock and Options.
(a) As of the Effective Date, each share of Jefferson Common
Stock, issued and outstanding immediately prior to the Effective Date (other
than Dissenting Shares, as hereinafter defined, or shares held by the Company
or ISB other than in a fiduciary capacity) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive $23.00 in cash (such amount hereinafter referred to as the
"Merger Consideration.").
(b) At or immediately prior to the Effective Date, each Jefferson
Option to purchase Jefferson Common Stock issued by Jefferson (other than
Jefferson Options issued pursuant the Stock Option Agreement, dated as of March
29, 1996, by and between the Company and Jefferson) shall be canceled, and each
holder of any such Jefferson Option, whether or not then vested or exercisable,
shall be entitled to receive from the Company at the Effective Date for each
Jefferson Option an amount determined by multiplying (i) the excess, if any, of
the Merger Consideration over the applicable exercise price per share of such
Jefferson Option by (ii) the number of shares of Jefferson Common Stock subject
to such Jefferson Option.
3.2 Exchange of Shares.
(a) As of the Effective Date, the Company shall deposit in trust
with _______________ ("Exchange Agent") cash in an amount equal to the maximum
aggregate Merger Consideration.
(b) As soon as practicable after the Effective Date but no later
than five business days after the Effective Date, the Exchange Agent will send
to each holder of record of a certificate or certificates (other than holders
of Dissenting Shares) which, immediately prior to the Effective Date
represented outstanding shares of Jefferson Common Stock ("Certificates"), a
letter of transmittal for use in exchanging such Certificates for the Merger
Consideration. The letter of transmittal shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent. Upon surrender of a
Certificate for exchange and cancellation to the Exchange Agent, together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to promptly receive in exchange therefor the Merger Consideration
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as provided in Section 3.1 hereof and the Certificates so surrendered shall be
canceled. The Exchange Agent shall not be obligated to deliver or cause to be
delivered to any holder of Company Common Stock the Merger Consideration to
which such holder of Jefferson Common Stock would otherwise be entitled until
such holder surrenders the Certificate for exchange or, in default thereof, an
appropriate Affidavit of Loss and Indemnity Agreement and/or a bond as may be
required in each case by the Surviving Corporation. Neither the Exchange Agent
nor any party hereto shall be liable to any holder of Certificates for any
amount paid to a public official pursuant to any applicable abandoned property,
escheat or similar law. Except as required by law, no interest shall be
payable with respect to the Merger Consideration payable for the outstanding
shares of Jefferson Common Stock.
(c) After the Effective Date, there shall be no transfers on the
stock transfer books of Jefferson of the shares of Jefferson Common Stock which
were outstanding immediately prior to the Effective Date and, if any
Certificates representing such shares are presented for transfer to Jefferson,
they shall be cancelled and exchanged for the Merger Consideration.
(d) If payment of the Merger Consideration pursuant to Section 3.1
hereof for shares of Jefferson Common Stock is to be made in a name other than
that in which the Certificate surrendered in exchange therefor is registered,
it shall be a condition of such payment that the Certificate so surrendered
shall be properly endorsed (or accompanied by an appropriate instrument of
transfer) and otherwise in proper form for transfer, and that the person
requesting such payment shall pay to the Company in advance any transfer or
other taxes required by reason of the payment to a person other than the
registered holder of the Certificate surrendered, or required for any other
reason, or shall establish to the satisfaction of the Company that such tax has
been paid or is not payable.
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to this Section 3.2 that remains unclaimed by the
stockholders of Jefferson twelve (12) months after the Effective Date shall be
returned to the Company, upon demand, and any stockholder of Jefferson who had
not exchanged his shares of Jefferson Common Stock for the Merger Consideration
in accordance with this Agreement prior to that time shall thereafter look to
the Company for payment of the Merger Consideration in respect of such shares,
subject to applicable escheat laws.
3.3 Dissenting Shares. Each share of Jefferson Common Stock
issued and outstanding immediately prior to the Effective Date, the holder of
which has not voted in favor of the Merger and who has properly perfected his
dissenters' rights of appraisal by following the procedures set forth in the
BCL, is referred to herein as a "Dissenting Share." Dissenting Shares owned by
each holder thereof who has not exchanged his Certificates for the Merger
Consideration or otherwise has not effectively withdrawn or lost his
dissenter's rights, shall not be converted into or represent the right to
receive the Merger Consideration pursuant to Section 3.1 hereof and shall be
entitled only to such rights as are available to such holder pursuant to the
applicable provisions of the BCL. Each holder of Dissenting Shares shall be
entitled to receive the value of such Dissenting Shares held by him in
accordance with the
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applicable provisions of the BCL, provided such holder complies with the
procedures contemplated by and set forth in the applicable provisions of the
BCL. If any holder of Dissenting Shares shall effectively withdraw or lose his
dissenter's rights under the applicable provisions of the BCL, such Dissenting
Shares shall be converted into the right to receive the Merger Consideration in
accordance with the provisions of Section 3.1 hereof.
3.4 Interim Common Stock. Each share of Interim Common Stock
which is issued and outstanding immediately prior to the Effective Date shall
be converted automatically and without any action on the part of the holder
thereof into an equal number of issued and outstanding shares of Common Stock
of the Surviving Corporation.
ARTICLE IV
MISCELLANEOUS
4.1 Conditions Precedent. The respective obligations of each
party under this Plan of Merger shall be subject to the satisfaction, or waiver
by the party permitted to do so, of the conditions set forth in Article VI of
the Reorganization Agreement.
4.2 Termination. This Plan of Merger shall be terminated upon the
termination of the Reorganization Agreement in accordance with Article VII
thereof; provided, that any such termination of this Plan of Merger shall not
relieve any party hereto from liability on account of a breach by such party of
any of the terms hereof or thereof.
4.3 Amendments. To the extent permitted by law, this Plan of
Merger may be amended by a subsequent writing signed by all of the parties
hereto upon the approval of the Board of Directors of each of the parties
hereto.
4.4 Successors. This Plan of Merger shall be binding on the
successors of Interim and Jefferson.
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CERTIFICATE OF SECRETARY OF
JEFFERSON BANCORP, INC.
I, _____________, hereby certify that I am the duly elected Secretary
of Jefferson Bancorp, Inc., and that the foregoing Plan of Merger, after being
approved by the Board of Directors, was submitted to, and approved by,
shareholders of Jefferson Bancorp, Inc. in accordance with the applicable
provisions of the Louisiana Business Corporation Law.
----------------------------------------
Secretary of Jefferson Bancorp, Inc.
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IN WITNESS WHEREOF, Interim and Jefferson have caused this Plan of
Merger to be executed by their duly authorized officers and their corporate
seals to be hereunto affixed as of the date first above written.
ISB ACQUISITION CORP.
Attest:
By:
- -------------------------------- -------------------------------------
Larrey G. Mouton
President and Chief Executive Officer
- --------------------------------
ACKNOWLEDGEMENT
THE STATE OF LOUISIANA )
) ss.
PARISH OF )
Before me appeared Larrey G. Mouton, to me personally known, who,
being by me duly sworn did say that he is the President of ISB Acquisition
Corp. and that the instrument was signed on behalf of said corporation by
authority of its Board of Directors and that Larrey G. Mouton acknowledged the
instrument to be the free act and deed of the corporation and that the
corporation has no corporate seal.
Witness my hand and seal of Office, this ___ day of _____, 1996.
------------------------------------
Notary Public
------------------------------------
(Printed Name of Notary Public)
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JEFFERSON BANCORP, INC.
Attest:
By:
- -------------------------- ----------------------------------------
Karen L. Knight
President and Chief Executive Officer
- --------------------------
ACKNOWLEDGEMENT
THE STATE OF LOUISIANA )
) ss.
PARISH OF )
Before me appeared Karen L. Knight, to me personally known, who, being
by me duly sworn did say that she is the President and Chief Executive Officer
of Jefferson Bancorp, Inc. and that the seal affixed to said instrument is the
corporate seal of said corporation and that the instrument was signed and
sealed on behalf of said corporation by authority of its Board of Directors and
that Karen L. Knight acknowledged the instrument to be the free act and deed of
the corporation.
Witness my hand and seal of Office, this ___ day of _____, 1996.
------------------------------------
Notary Public
------------------------------------
(Printed Name of Notary Public)
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EXHIBIT B
AGREEMENT AND PLAN OF MERGER AND LIQUIDATION OF
JEFFERSON BANCORP, INC.
BY ISB FINANCIAL CORPORATION
AGREEMENT AND PLAN OF MERGER AND LIQUIDATION agreed to this __ day of
____, 1996, between ISB Financial Corporation, a Louisiana corporation
("Company"), and Jefferson Bancorp, Inc., a Louisiana corporation
("Jefferson").
WHEREAS, the Company owns all of the issued and outstanding capital
stock of Jefferson; and
WHEREAS, the Company wishes to approve, authorize, and consent to (i)
the merger of Jefferson with and into the Company pursuant to Section 12:112 of
the Business Corporation Law of the State of Louisiana ("BCL") and (ii) the
voluntary liquidation of Jefferson in accordance with Section 332 of the
Internal Revenue Code of 1986, as amended ("Code") and pursuant to an Agreement
and Plan of Merger and Reorganization, dated as of May 24, 1996; and
WHEREAS, ISB Acquisition Corp., a Louisiana corporation and former
subsidiary of the Company, previously has merged with and into Jefferson.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Company approves, authorizes, and consents to the merger
and liquidation of Jefferson.
2. Following the consummation of this Agreement and Plan of
Merger and Liquidation, Jefferson shall be liquidated in accordance with the
provisions of Section 332 of the Internal Revenue Code of 1986, as amended.
3. The officers of Jefferson are authorized and directed to
distribute Jefferson's assets (subject to its liabilities) within one year in
cancellation of its stock to the Company, as owner of all of its issued and
outstanding stock.
4. The officers of Jefferson are further authorized and directed
to take all appropriate and necessary actions to liquidate Jefferson in
accordance with the Code.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger and Liquidation to be executed by their respective duly
authorized officers as of the day and year first above written.
ISB FINANCIAL CORPORATION
Attest:
By:
- --------------------------- --------------------------------------
Larrey G. Mouton
President and Chief Executive Officer
- ---------------------------
JEFFERSON BANCORP, INC.
Attest:
By:
- --------------------------- --------------------------------------
Larrey G. Mouton
President and Chief Executive Officer
- ---------------------------
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ACKNOWLEDGEMENT
THE STATE OF LOUISIANA )
) ss.
PARISH OF )
Before me appeared Larrey G. Mouton, to me personally known, who,
being by me duly sworn did say that he is the President of each of ISB
Financial Corporation and Jefferson Bancorp, Inc. and that the seals affixed to
said instrument are the corporate seals of said corporations and that the
instrument was signed and sealed on behalf of said corporations by authority of
their respective Board of Directors and that Larrey G. Mouton acknowledged the
instrument to be the free act and deed of each of the corporation.
Witness my hand and seal of Office, this ___ day of ___, 1996.
----------------------------------
Notary Public
----------------------------------
(Printed Name of Notary Public)
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