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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __________)
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Jefferson Bancorp, Inc.
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(Name of Registrant as Specified in Its Charter)
Jefferson Bancorp, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box): (previously paid by wire
transfer)
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction
applies: common stock
-------------------
(2) Aggregate number of securities to which transaction applies:
2,064,505
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: $23.00
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
$48,737,243.36*
--------------------
/X/ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
_______________________________________________________________
(2) Form, schedule or registration statement no.:
_______________________________________________________________
(3) Filing party:
_______________________________________________________________
(4) Date filed:
_______________________________________________________________
* Includes $1,253,628.36 to be paid in settlement of outstanding stock
options.
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[JEFFERSON BANCORP LETTERHEAD]
August 19, 1996
Dear Stockholder:
You are cordially invited to attend the Special Meeting of
Stockholders (the "Special Meeting") of Jefferson Bancorp, Inc. ("Jefferson"),
which will be held at Jefferson's main office located at 1011 Fourth Street,
Gretna, Louisiana, on Thursday, September 19, 1996 at 10:00 a.m., Central Time.
At the Special Meeting, stockholders will be asked to approve the
Agreement and Plan of Merger and Reorganization (the "Reorganization
Agreement") and a related Plan of Merger (the "Plan of Merger"), both dated as
of May 24, 1996, whereby ISB Acquisition Corp. will be merged into Jefferson
(the "Merger"), with Jefferson as the surviving corporation. If the Merger is
consummated, each share of common stock of Jefferson, par value $.01 per share
(the "Common Stock"), outstanding immediately prior to consummation of the
Merger (other than shares as to which dissenters' rights have been asserted and
duly perfected in accordance with Louisiana law, and shares held by ISB
Financial Corporation ("ISBF") or Iberia Savings Bank ("ISB") in other than a
fiduciary capacity) shall be converted into and represent the right to receive
$23.00 in cash without any interest thereon (the "Merger Consideration").
As a result of the Merger, Jefferson will become a wholly owned
subsidiary of ISBF. Immediately thereafter, Jefferson will be merged with and
liquidated into ISBF (the "Liquidation"). Immediately prior to the Merger,
Jefferson Federal Savings Bank ("Jefferson Federal"), the wholly owned
subsidiary of Jefferson, will convert to a Louisiana-chartered savings bank
known as "Jefferson Savings Bank," which will be operated as a separate
subsidiary of ISBF following the Merger. Approval by Jefferson's stockholders
of the Reorganization Agreement and the Plan of Merger is a condition to
consummation of the Merger. The terms of the Merger are explained in detail in
the accompanying Proxy Statement, which we urge you to read carefully.
YOUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND RECOMMENDS THAT YOU VOTE IN FAVOR OF THE SAME
BECAUSE THE BOARD BELIEVES THEM TO BE IN THE BEST INTERESTS OF STOCKHOLDERS.
Enclosed is a Notice of Special Meeting of Stockholders, the Proxy
Statement, a proxy card, and Jefferson's 1995 Annual Report to Stockholders and
Form 10-Q for the quarter ended June 30, 1996. Your vote is important,
regardless of the number of shares you own. Please complete, sign and date the
enclosed proxy card and return it as soon as possible in the envelope provided.
If you decide to attend the meeting, you may vote your shares in person whether
or not you have previously submitted a proxy. On behalf of the Board, I thank
you for your attention to this important matter.
Sincerely,
Karen L. Knight
President and Chief Executive Officer
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JEFFERSON BANCORP, INC.
1011 Fourth Street
Gretna, Louisiana 70053
(504) 368-1011
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 19, 1996
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of
Jefferson Bancorp, Inc. ("Jefferson") will be held at Jefferson's main office
located at 1011 Fourth Street, Gretna, Louisiana, on Thursday, September 19,
1996, commencing at 10:00 a.m., Central Time, for the following purposes, all
of which are more completely set forth in the accompanying Proxy Statement:
1. To consider and vote upon the Agreement and Plan of Merger and
Reorganization (the "Reorganization Agreement") dated as of May 24, 1996, by
and among ISB Financial Corporation ("ISBF"), Iberia Savings Bank ("ISB"),
Jefferson and Jefferson Federal Savings Bank ("Jefferson Federal"), and a
related Plan of Merger (the "Plan of Merger"), pursuant to which (i) ISB
Acquisition Corp. ("Interim") will be merged into Jefferson (the "Merger"),
with Jefferson as the surviving corporation; and (ii) each share of common
stock of Jefferson, par value $.01 per share ("Common Stock"), outstanding
immediately prior to consummation of the Merger (other than shares as to which
dissenters' rights have been asserted and duly perfected in accordance with
Louisiana law, and shares held by ISBF or ISB in other than a fiduciary
capacity) shall be converted into and represent the right to receive $23.00 in
cash ("Merger Consideration"), as described in the Proxy Statement and in the
Reorganization Agreement which is attached as Appendix A thereto;
2. To adjourn the Special Meeting, if necessary, to solicit
additional proxies; and
3. To transact such other business, if any, as may properly come
before the Special Meeting or any adjournment thereof.
Only holders of record of the Common Stock at the close of business on
August 9, 1996 are entitled to notice of and to vote at the Special Meeting or
any adjournments thereof.
Dissenting stockholders who comply with the procedural requirements of
the Business Corporation Law of Louisiana will be entitled to receive payment
of the fair cash value of their shares if the Merger is effected upon approval
by less than 80% of Jefferson's total voting power. For a summary of the
rights of stockholders of Jefferson to dissent, see "The Merger - Dissenters'
Rights" in the attached Proxy Statement and Appendix D thereto.
BY ORDER OF THE BOARD OF DIRECTORS
Dr. G. Robert Murphy, Jr., Secretary
Gretna, Louisiana
August 19, 1996
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YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE NUMBER YOU
OWN. EVEN IF YOU PLAN TO BE PRESENT, YOU ARE URGED TO COMPLETE, SIGN, DATE
AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE ENVELOPE PROVIDED. IF YOU
ATTEND THE MEETING, YOU MAY VOTE EITHER IN PERSON OR BY YOUR PROXY. ANY
PROXY GIVEN MAY BE REVOKED BY YOU IN WRITING OR IN PERSON AT ANY TIME PRIOR
TO THE EXERCISE THEREOF.
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TABLE OF CONTENTS
Page
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INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Background of and Reasons for the Merger; Recommendation of the
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Terms of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Representations and Warranties; Conditions to the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Regulatory and Other Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Business Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Effective Date of the Merger; Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Interests of Certain Persons in the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Certain Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Accounting Treatment of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Expenses of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ADJOURNMENT OF SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
STOCKHOLDER PROPOSALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Appendix A -- Agreement and Plan of Reorganization and
the exhibits thereto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Appendix B -- Stock Option Agreement Dated as of
March 29, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
Appendix C -- Opinion of Jefferson's Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1
Appendix D -- Statutory Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1
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JEFFERSON BANCORP, INC.
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is being furnished to the stockholders of
Jefferson Bancorp, Inc. ("Jefferson") in connection with the solicitation of
proxies by the Board of Directors of Jefferson for use at the special meeting
of stockholders, and any adjournment thereof, to be held at the time and place
set forth in the accompanying notice of special meeting ("Special Meeting").
It is anticipated that the mailing of this Proxy Statement and the enclosed
proxy card will commence on or about August 19, 1996.
At the Special Meeting, stockholders of Jefferson will be asked to
approve and adopt an Agreement and Plan of Merger and Reorganization (the
"Reorganization Agreement") and a related Plan of Merger of ISB Acquisition
Corp. ("Interim") with and into Jefferson (the "Plan of Merger"). The
Reorganization Agreement and related Plan of Merger each are dated as of May
24, 1996, and copies of each are attached hereto as Appendix A.
Upon the Effective Date (as defined in the Reorganization Agreement)
of the merger transaction underlying the Plan of Merger (the "Merger"), each
share of the common stock of Jefferson, par value $.01 per share ("Common
Stock"), issued and outstanding immediately prior to the Effective Date (other
than shares as to which dissenters' rights have been asserted and duly
perfected in accordance with Louisiana law, and shares held by ISBF or ISB in
other than a fiduciary capacity) shall be converted into and represent the
right to receive $23.00 in cash without any interest thereon (the "Merger
Consideration"). Immediately after effectiveness of the Merger, Jefferson will
be merged, liquidated and dissolved (the "Liquidation") pursuant to the Plan of
Merger and Liquidation of Jefferson Bancorp, Inc. by ISB Financial Corporation
("Plan of Liquidation"). The Merger and the Liquidation will occur
consecutively and are expected to occur contemporaneously, or with each
transaction occurring as soon as practicable after consummation of the
preceding transaction. For a more complete description of the Reorganization
Agreement and the terms of the Merger, see "The Merger."
The Common Stock is quoted and traded from time to time on the Nasdaq
National Market System ("Nasdaq/NMS") under the symbol "JEBC". The last
reported closing sales price per share of Common Stock as of August ___, 1996,
the latest practicable trading day before printing of this Proxy Statement, was
$_______. See "Summary - Market Prices."
ALL STOCKHOLDERS ARE URGED TO READ THIS PROXY STATEMENT CAREFULLY AND
IN ITS ENTIRETY.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission ("SEC") by Jefferson (File No. 0-24618) pursuant to the Securities
Exchange Act of 1934, as amended ("Exchange Act") are incorporated by reference
in this Proxy Statement:
1. Jefferson's Annual Report on Form 10-K for the year ended
December 31, 1995 (including certain information contained in
Jefferson's Proxy Statement dated March 15, 1996, used in
connection with Jefferson's 1996 Annual Meeting of
Stockholders and incorporated by reference in the Form 10-K
and the portions of Jefferson's 1995 Annual Report to
Stockholders incorporated by reference herein pursuant to
clause 4 below);
2. Jefferson's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1996 and June 30, 1996;
3. Jefferson's Current Reports on Form 8-K dated January 25,
1996, January 31, 1996, March 29, 1996, May 24, 1996 and July
15, 1996; and
4. The following portions of Jefferson's Annual Report to
Stockholders for the year ended December 31, 1995:
management's discussion and analysis of financial condition
and results of operation (pages 4 through 11); selected
consolidated financial and operating data (page 14); and
audited consolidated financial statements and notes thereto
(pages 15 through 35).
Accompanying this Proxy Statement are Jefferson's 1995 Annual Report
to Stockholders and Quarterly Report on Form 10-Q for the quarter ended June
30, 1996.
The Reorganization Agreement between ISBF, ISB, Jefferson and
Jefferson Federal Savings Bank ("Jefferson Federal") dated as of May 24, 1996
and the exhibits thereto are included herewith as Appendix A and are
incorporated by reference herein. Discussions of the terms and conditions of
the Reorganization Agreement are summary in nature, and holders of Common Stock
are referred to the Reorganization Agreement for a more complete discussion of
the terms and conditions of the Merger, the Reorganization Agreement and
related transactions.
Any statement contained herein, in any supplement hereto or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Proxy Statement to the
extent that a statement contained herein, in any supplement hereto or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Proxy Statement or any supplement
hereto.
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Also incorporated herein by reference are the documents attached
hereto as Appendices B, C and D to this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES BY REFERENCE DOCUMENTS FILED BY
JEFFERSON WITH THE SEC WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
ALL OF SUCH DOCUMENTS WITH RESPECT TO JEFFERSON ARE AVAILABLE, UPON WRITTEN OR
ORAL REQUEST, FROM DR. G. ROBERT MURPHY, JR., SECRETARY, JEFFERSON BANCORP,
INC., 1011 FOURTH STREET, GRETNA, LOUISIANA 70053; TELEPHONE NUMBER (504)
368-1011. COPIES WILL BE FURNISHED (WITHOUT EXHIBITS UNLESS THE EXHIBITS HAVE
BEEN SPECIFICALLY INCORPORATED BY REFERENCE) FREE OF CHARGE BY FIRST CLASS MAIL
OR OTHER EQUALLY PROMPT MEANS WITHIN ONE BUSINESS DAY OF RECEIPT OF SUCH
REQUEST. IN ORDER TO ENSURE TIMELY DELIVERY OF SUCH DOCUMENTS, ANY REQUEST
SHOULD BE MADE BY SEPTEMBER 6, 1996.
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT AND IS NOT INTENDED TO BE A COMPLETE STATEMENT OF THE
MATTERS DESCRIBED HEREIN. REFERENCE IS MADE TO, AND THIS SUMMARY IS QUALIFIED
IN ITS ENTIRETY BY, THE MORE DETAILED INFORMATION CONTAINED, OR INCORPORATED BY
REFERENCE, IN THIS PROXY STATEMENT AND IN THE APPENDICES ATTACHED HERETO.
STOCKHOLDERS ARE URGED TO READ THIS PROXY STATEMENT AND THE APPENDICES HERETO
IN THEIR ENTIRETY.
THE PARTIES TO THE MERGER
JEFFERSON AND JEFFERSON FEDERAL. Jefferson is a Louisiana corporation
and a unitary savings and loan holding company registered under the Home
Owners' Loan Act, as amended (the "HOLA"). Jefferson is the parent holding
company of Jefferson Federal, a federally chartered savings bank. Jefferson
has no significant assets other than the shares of Jefferson Federal's common
stock and United States Government and federal agency obligations. The
deposits of Jefferson Federal are insured to the maximum extent provided by law
by the Savings Association Insurance Fund ("SAIF"), which is administered by
the Federal Deposit Insurance Corporation ("FDIC"). The principal business of
Jefferson Federal consists of attracting deposits from the general public
through its offices and using those and other available funds to purchase
mortgage-backed securities and investment securities and to originate loans.
At June 30, 1996, mortgage-backed securities, investment securities and the net
loan portfolio amounted to $116.2 million, $71.0 million and $62.8 million,
respectively, representing 43.8%, 26.7% and 23.6% of total assets,
respectively, at such date. The loan portfolio consists primarily of loans
secured by single-family residences located in the New Orleans, Louisiana
metropolitan area and consumer loans. Jefferson's executive offices are
located at 1011 Fourth Street, Gretna, Louisiana 70053, and its telephone
number is (504) 368-1011. At June 30, 1996, Jefferson had total consolidated
assets of $265.6 million, total liabilities of $229.5 million, including
deposits of $227.5 million, and stockholders' equity of $36.1 million.
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For additional information concerning Jefferson, its business,
financial condition and results of operations, see "Incorporation Of Certain
Documents By Reference" and "Selected Consolidated Financial and Other
Information."
ISBF AND ISB. ISBF is a Louisiana corporation and a registered bank
holding company under the Bank Holding Company Act of 1956, as amended (the
"BHCA"). ISBF is the parent holding company of ISB, a Louisiana-chartered
savings bank which conducts its business from its main office located in New
Iberia, Louisiana and 18 full-service branch offices located in New Iberia,
Lafayette, Jeanerette, Franklin, Morgan City, Crowley, Rayne, Kaplan, St.
Martinville and Abbeville, all of which are in southwestern Louisiana. ISB
attracts retail deposits from the general public and the business community
through a variety of deposit products and uses such funds to originate first
and second liens on single-family (one-to-four units) residences as well as
consumer and commercial loans in ISB's primary market in southwestern
Louisiana. ISB's deposits are insured primarily by the SAIF and, to a much
lesser extent, the Bank Insurance Fund ("BIF"), each of which is administered
by the FDIC, within applicable limits. ISBF's executive offices are located at
1101 East Admiral Doyle Drive, New Iberia, Louisiana 70560, and its telephone
number is (318) 365-2361. At June 30, 1996, ISBF had total consolidated assets
of $686.5 million, total liabilities of $569.0 million, including deposits of
$515.3 million, and stockholders' equity of $117.5 million.
THE SPECIAL MEETING
The Special Meeting will be held at Jefferson's main office located at
1011 Fourth Street, Gretna, Louisiana on September 19, 1996 at 10:00 a.m.,
Central Time. Only the holders of record of the outstanding shares of Common
Stock at the close of business on August 9, 1996 (the "Voting Record Date") are
entitled to notice of and to vote at the Special Meeting. At the Voting
Record Date, 2,195,635 shares of Common Stock were both outstanding and
entitled to vote. A majority of the outstanding shares of Common Stock must be
represented in person or by proxy at the Special Meeting in order for a quorum
to be present. Shares as to which the "ABSTAIN" box has been marked on the
proxy will be counted as present for determining if a quorum is present. Each
share of Common Stock entitles the holder thereof to one vote on each matter to
be submitted to Jefferson's stockholders at the Special Meeting.
At the Special Meeting, Jefferson's stockholders will be asked to
consider and vote upon (a) a proposal to approve the Reorganization Agreement
and a related Plan of Merger, and (b) an adjournment of the Special Meeting if
necessary to solicit additional proxies, as well as the transaction of such
other business as may properly come before the Special Meeting and any
adjournment thereof. The affirmative vote of at least two-thirds of the total
votes present in person or by proxy at the Special Meeting is required to adopt
and approve the Reorganization Agreement and the related Plan of Merger. The
affirmative vote of the holders of a majority of the total votes present in
person or by proxy at the Special Meeting is required to adjourn the Special
Meeting, if such adjournment is
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necessary. Because of the required votes, abstentions will have the effect of
a vote against each of the proposals. Under rules of the New York Stock
Exchange ("NYSE"), each of the proposals to approve the Reorganization
Agreement and related Plan of Merger and to approve any necessary adjournment
of the Special Meeting are "non-discretionary" items upon which brokerage firms
may not vote in the absence of voting instructions from their clients. Because
there are no "discretionary" proposals being submitted to stockholders, there
will be no broker non-votes (i.e., the withholding of a vote by a broker on a
non-discretionary proposal as to shares that are being voted on a discretionary
proposal by the broker).
The directors of Jefferson intend to vote or cause to be voted all
shares of Common Stock which they have the right to vote for approval and
adoption of the Reorganization Agreement. As of the Voting Record Date, the
directors and executive officers of Jefferson and their associates in the
aggregate beneficially owned 110,172 shares, or 5.0% of the issued and
outstanding Common Stock, excluding shares subject to options.
Revocability of Proxies. Holders of Common Stock may revoke a proxy
at any time prior to its exercise by filing with the Secretary of Jefferson
(Dr. G. Robert Murphy, Jr., Secretary, 1011 Fourth Street, Gretna, Louisiana
70053) a written notice of revocation or a proxy bearing a later date, or by
voting in person at the Special Meeting. Attendance at the Special Meeting
will not of itself constitute revocation of a proxy. If your shares are not
registered in your own name, you will need additional documentation from your
recordholder in order to vote personally at the Special Meeting.
HOLDERS OF COMMON STOCK ARE URGED TO COMPLETE, DATE AND SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID
ENVELOPE, EVEN IF THEY ARE PLANNING TO ATTEND THE MEETING. ALL PROPERLY
EXECUTED PROXIES RECEIVED PRIOR TO OR AT THE MEETING WILL BE VOTED WITH RESPECT
TO THE MATTERS IDENTIFIED ON THE PROXY CARDS IN ACCORDANCE WITH ANY
INSTRUCTIONS THEREON AND, IF NO INSTRUCTIONS ARE GIVEN, WILL BE VOTED FOR
ADOPTION AND APPROVAL OF THE REORGANIZATION AGREEMENT AND THE RELATED PLAN OF
MERGER AND FOR ANY NECESSARY ADJOURNMENT OF THE SPECIAL MEETING.
TERMS OF THE MERGER
In accordance with the terms of the Reorganization Agreement, on the
Effective Date, Interim will be merged with and into Jefferson (the "Merger"),
with Jefferson as the surviving corporation. Each share of Common Stock
outstanding immediately prior to consummation of the Merger (other than shares
as to which dissenters' rights have been asserted and duly perfected in
accordance with Louisiana law, and shares held by ISBF or ISB in other than a
fiduciary capacity) shall be converted into and represent the right to receive
$23.00 in cash without any interest thereon (the "Merger Consideration"). As
of
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the date of this Proxy Statement, ISBF owns 107,000 shares of Common Stock in
other than a fiduciary capacity, which shares will be cancelled as of the
Effective Date. In addition, each outstanding option to purchase Common Stock
(other than pursuant to the Stock Option Agreement, dated as of March 29, 1996)
issued by Jefferson ("Jefferson Option") shall be cancelled, and each holder
shall be entitled to receive, whether or not vested or exercisable, an amount
determined by multiplying the excess of the Merger Consideration over the
applicable exercise price per share of such option by the number of shares of
Common Stock subject to such Jefferson Option. Immediately prior to the
Merger, Jefferson Federal will convert from a federally chartered stock savings
bank to a Louisiana-chartered stock savings bank to be known as "Jefferson
Savings Bank". Also, on the Effective Date, Jefferson will be merged,
liquidated and dissolved into ISBF (the "Liquidation") pursuant to the Plan of
Liquidation. As a result, ISBF will become a multiple bank holding company
with ISB and Jefferson Savings Bank as wholly-owned, Louisiana-chartered
savings bank subsidiaries.
FAIRNESS OPINION
The Board of Directors of Jefferson has received a written opinion
from Charles Webb & Company ("Webb"), dated as of August 19, 1996, to the
effect that the consideration to be paid to Jefferson's stockholders pursuant
to the Reorganization Agreement is fair to the stockholders of Jefferson from a
financial point of view. A copy of the fairness opinion of Webb is attached
hereto as Appendix C and should be read in its entirety. See "The Merger -
Opinion of Financial Advisor."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF JEFFERSON
The Board of Directors of Jefferson has determined that the Merger is
in the best interests of the stockholders and, accordingly, has unanimously
approved the Merger. THE BOARD OF DIRECTORS OF JEFFERSON UNANIMOUSLY
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE REORGANIZATION AGREEMENT AND THE
RELATED PLAN OF MERGER. SEE "THE MERGER - BACKGROUND OF AND REASONS FOR THE
MERGER; RECOMMENDATION OF THE BOARD OF DIRECTORS."
OPTION AGREEMENT
In fulfillment of a condition to ISBF's entry into a Letter of Intent
on March 29, 1996 and to induce such entry, Jefferson and ISBF entered into a
Stock Option Agreement dated as of March 29, 1996 ("Option Agreement"), a copy
of which is attached hereto as Appendix B. Pursuant to the Option Agreement,
Jefferson granted to ISBF a stock option (the "ISBF Option"), exercisable in
whole or in part only under certain circumstances, to purchase up to 241,000
authorized but unissued shares of Common Stock at a price of $19.375 per share,
which would represent approximately 9.99% of the issued and outstanding shares
of Common Stock in the event of a full exercise of the ISBF Option. The per
share exercise
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price of the ISBF Option was determined by arm's length negotiations and was
based on the historical market price of the Common Stock prior to the
announcement of the Merger. The purpose of the ISBF Option is to increase the
likelihood that the Merger will occur by making it more difficult and expensive
for another party to acquire Jefferson. See "The Merger - Option Agreement."
CONDITIONS TO THE MERGER
The obligations of the parties to the Reorganization Agreement to
consummate the transactions contemplated thereunder are subject to a variety of
conditions, including the approval by the stockholders of Jefferson, the
receipt of all required regulatory approvals, the receipt of opinions from
counsel to Jefferson and ISBF, the absence of any order, judgment or decree or
any suit, action or proceeding pending or threatened which seeks to restrain or
prohibit the Merger, the continued accuracy of the representations and
warranties of each party to the Reorganization Agreement, the appointment of
Karen L. Knight to the Board of Directors of ISBF for a period of not less than
two years, and the delivery of certain documentation contemplated by the
Reorganization Agreement. See "The Merger - Representations and Warranties;
Conditions to the Merger."
DISSENTERS' RIGHTS
Holders of shares of Common Stock who object to the Merger and comply
with the prescribed statutory procedures may be entitled to have the fair value
of their shares determined in accordance with the Louisiana Business
Corporation Law ("BCL") and paid to them in cash in lieu of the cash they would
otherwise be entitled to receive in the Merger. Dissenting shareholders who
comply with the procedural requirements of the BCL will be entitled to receive
payment of the fair cash value of their shares if the Merger is effected upon
approval by less than 80% of Jefferson's total voting power. A copy of the
pertinent statutory provisions of the BCL is attached to this Proxy Statement
as Appendix D. FAILURE TO FOLLOW SUCH PROVISIONS PRECISELY MAY RESULT IN A
LOSS OF DISSENTERS' RIGHTS. See "The Merger - Dissenters' Rights."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The payment of cash for the Common Stock and for outstanding options
pursuant to the terms of the Reorganization Agreement and the Plan of Merger
will be a taxable transaction to the stockholders and optionees of Jefferson
for federal income tax purposes and may also be a taxable transaction under
state, local and other tax laws. The stockholders and optionees of Jefferson
are urged to consult their personal tax advisors regarding the tax consequences
of the proposed transaction as it may relate to them. See "The Merger -
Certain Federal Income Tax Consequences."
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ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a purchase for accounting
purposes. See "The Merger - Accounting Treatment of the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Reorganization Agreement contains provisions which require ISBF to
(i) appoint Karen L. Knight, the Chairman of the Board, President and Chief
Executive Officer of Jefferson, as a director of ISBF upon consummation of the
Merger, (ii) pay Ms. Knight the amounts required to be paid under the
agreement, dated as of December 7, 1994, among Ms. Knight, Jefferson and
Jefferson Federal as well as provide Ms. Knight for a period ending the earlier
of two years from the Effective Date or the date Ms. Knight begins full-time
employment with another employer with continued participation in all life
insurance, accident and disability plans, programs and arrangements, (iii)
assume and honor the agreement between Ms. Knight and Jefferson Federal, dated
December 27, 1989 and as re-affirmed on May 24, 1996, relating to the
continuation of health, major medical and hospitalization insurance on behalf
of Ms. Knight for life, with coverage no less than the coverage presently
received by Ms. Knight, (iv) pay Ms. Knight her accrued but unused vacation as
well as any benefits which Ms. Knight may be entitled under the Deferred
Compensation Agreement, dated as of December 14, 1994, by and among Jefferson,
Jefferson Federal and Ms. Knight and any benefits Ms. Knight may be entitled
under Jefferson's Employee Stock Ownership Plan, (v) continue the employment of
all other personnel of Jefferson Federal and its subsidiaries for a period of
not less than six months subsequent to the Effective Date, except in the event
of good cause for termination, (vi) honor the terms of the severance pay plan
for executive officers of Jefferson and Jefferson Federal as adopted December
21, 1994, (vii) honor the terms of the severance pay plan for certain officers
of Jefferson and Jefferson Federal as adopted December 21, 1994, (viii) honor
the terms of Jefferson's non-employee directors' severance plan, as adopted
January 11, 1995, (ix) provide the employees of Jefferson and its subsidiaries
who become employed by ISBF immediately following consummation of the Merger
with service credit from their hire date at Jefferson or its subsidiaries under
various employee benefit plans offered by ISBF, to the extent permissible in
accordance with the provisions of the applicable plan, insurance policies,
contract and underlying law, and (x) indemnify all former and then-existing
directors, officers, employees and agents of Jefferson or of any of its
subsidiaries for a period of six years after the Effective Date with respect to
any matter based in whole or in part on or arising in whole or in part out of
the fact that such person is or was a director, officer, employee or agent of
Jefferson or any of its subsidiaries. ISBF also contemplates entering into a
two-year consulting agreement with Ms. Knight following the Effective Date,
pursuant to which ISBF will pay Ms. Knight a fee of $50,000 per year. See "The
Merger - Interests of Certain Persons in the Merger."
Other than as set forth above, no director or executive officer of
Jefferson or ISBF has any direct or indirect material interest in the Merger,
except in the case of the directors and
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executive officers of Jefferson insofar as ownership of Common Stock and
existing options to purchase such stock might be deemed such an interest.
MARKET PRICES
The Common Stock is included for quotation on the Nasdaq National
Market System ("Nasdaq/NMS") under the symbol "JEBC." The table below sets
forth, for the calendar quarters indicated, the reported high and low closing
sales prices of the Common Stock based on published financial sources and cash
dividends paid or declared per share by Jefferson. The per share sales prices
and the amount of dividends paid per share for periods prior to August 18, 1994
have been adjusted to give effect to the exchange ratio used to convert the
common stock of Jefferson Federal into Jefferson's Common Stock.
Cash
Dividends
Paid Per
1994 High Low Share
---- ---------- ----------- -------------
First Quarter $13.25 $12.75 $.06
Second Quarter 14.00 12.75 .06
Third Quarter 14.50 12.50 .06
Fourth Quarter 14.25 12.75 .0375
1995
----
First Quarter 17.25 13.875 .075
Second Quarter 20.00 16.75 .075
Third Quarter 21.75 19.625 .075
Fourth Quarter 21.75 19.25 .075
1996
----
First Quarter 20.50 19.00 .075
Second Quarter 22.50 21.50 .075
On March 28, 1996, the last full trading day prior to the execution
and delivery of the Letter of Intent between ISBF and Jefferson and the public
announcement thereof, the closing sales price per share of Common Stock on the
Nasdaq/NMS as reported in the Wall Street Journal was $19.50. On August __,
1996, the most recent practicable date prior to the printing of this Proxy
Statement, the closing sales price per share of Common Stock on the Nasdaq/NMS
was $_____.
STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
COMMON STOCK, TO THE EXTENT POSSIBLE, PRIOR TO THE SPECIAL MEETING.
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SELECTED CONSOLIDATED FINANCIAL AND OTHER INFORMATION
(Dollars in Thousands, Except Per Share Data)
The following tables set forth certain consolidated financial and
other data of Jefferson at the dates and for the periods indicated.
December 31,
June 30, ---------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
--------------- ----------- ----------- ------------ ---------- ------------
SELECTED BALANCE SHEET DATA:
Assets $265,594 $265,870 $260,965 $256,140 $256,922 $249,153
Cash and cash equivalents 8,049 7,485 9,128 31,638 25,738 32,988
Other interest-bearing deposits 100 400 100 1,583 11,336 22,481
Investment securities 70,964 81,996 103,984 85,052 68,720 15,909
Mortgage-backed securities, net 116,207 106,352 79,651 61,954 50,403 51,140
Loans receivable, net 62,766 62,306 61,354 68,994 93,114 118,302
Loans held for sale -- 87 -- 32 252 --
Deposits 227,495 229,065 226,996 238,645 242,613 236,337
FHLB advances and other borrowings -- -- -- 112 -- --
Stockholders' equity(1) 36,060 34,814 32,186 15,612 12,403 10,547
Full service offices(2) 7 7 7 7 7 7
Six Months Ended
June 30, Year Ended December 31,
----------------------- -----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
---------- --------- ---------- ---------- ---------- ---------- ------------
SELECTED OPERATING DATA:
Total interest income $8,713 $8,573 $17,476 $15,002 $15,238 $17,727 $20,075
Total interest expense 4,383 4,166 8,621 7,480 8,139 10,402 14,466
----- ----- ------ ------ ------ ------ ------
Net interest income 4,330 4,407 8,855 7,522 7,099 7,325 5,609
Provision (recovery) for loan losses (22) 99 101 (27) 131 243 432
----- ----- ------ ------ ------ ------ ------
Net interest income after provision
(recovery) for loan losses 4,352 4,308 8,754 7,549 6,968 7,082 5,177
Noninterest income 548 563 1,116 1,210 1,373 1,416 1,248
Noninterest expense 3,023 2,908 6,087 5,382 5,420 5,434 5,558
----- ----- ------ ------ ------ ------ ------
Income before income taxes 1,877 1,963 3,783 3,377 2,921 3,064 867
Income taxes 585 510 1,109 1,048 1,029 1,208 417
----- ----- ------ ------ ------ ------ ------
Net income $1,292 $1,453 $ 2,674 $ 2,329 $ 1,892 $1,856 $ 450
===== ===== ====== ====== ====== ===== ======
Earnings per share(3) $ 0.62 $ 0.71 $ 1.29 $ 1.12 $ 0.89 N/A N/A
===== ===== ======= ====== ======
SELECTED OPERATING RATIOS:
Return on average assets 0.97% 1.10% 1.01% .90% 0.74% 0.72% 0.18%
Return on average equity 7.29 8.87 8.35 10.65 12.97 15.70 4.33
Average equity to average assets 13.27 12.45 12.10 8.43 5.68 4.60 4.23
Dividend payout ratio(3)(4) 24.19 21.13 23.26 19.42 19.10 N/A N/A
- - -------------------
(1) Retained earnings prior to 1993.
(2) Jefferson Federal's branch office located at 2330 Barataria Boulevard,
Marrero, Louisiana does not accept loan applications.
(3) No shares of Common Stock were outstanding prior to consummation of
the mutual holding company formation on January 1, 1993.
(4) Earnings per share for 1993 have been restated to reflect the 1994
Conversion.
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SPECIAL MEETING
This Proxy Statement is being furnished to Jefferson's stockholders in
connection with the solicitation of proxies by the Board of Directors of
Jefferson for use at the Special Meeting to be held on September 19, 1996, and
at any adjournment thereof.
STOCKHOLDERS SHOULD NOT FORWARD ANY STOCK CERTIFICATES WITH THEIR
PROXY CARDS. Jefferson stock certificates should NOT be forwarded until after
receipt of a letter of transmittal, which will be provided to stockholders
promptly following consummation of the Merger.
This Proxy Statement, the Notice of Special Meeting of Stockholders
and the accompanying proxy solicited by the Board of Directors of Jefferson are
first being mailed to the stockholders of Jefferson on or about August 19,
1996.
All information contained in this Proxy Statement relating to
Jefferson and its subsidiaries has been supplied by Jefferson, and all
information contained in this Proxy Statement relating to ISBF and its
subsidiaries has been supplied by ISBF.
The principal executive offices of Jefferson are located at 1011
Fourth Street, Gretna, Louisiana 70053, and its telephone number is (504)
368-1011.
Purpose of Meeting. The purpose of the Special Meeting is to consider
and vote upon a proposal to approve the Reorganization Agreement and the
related Plan of Merger, a proposal to adjourn the Special Meeting if necessary
to solicit additional votes, and the transaction of such other business as may
properly come before the Special Meeting and any adjournment thereof. It is
not anticipated that any other matter will be brought before the Special
Meeting. If any other matter is properly presented at the Special Meeting for
consideration, the persons named in the enclosed form of proxy card and acting
thereunder will have discretion to vote on such matter in accordance with their
best judgment.
Shares Outstanding and Entitled to Vote; Voting Record Date. The
close of business on August 9, 1996 has been fixed by the Board of Directors of
Jefferson as the Voting Record Date for the determination of holders of Common
Stock entitled to notice of and to vote at the Special Meeting and any
adjournment thereof. At the close of business on the Voting Record Date, there
were 2,195,635 shares of Common Stock outstanding, held by approximately
_______ holders of record. Each share of Common Stock entitles the holder
thereof to one vote on each matter to be submitted to stockholders at the
Special Meeting.
Vote Required. A quorum, consisting of a majority of the voting power
of the issued and outstanding Common Stock of Jefferson entitled to vote at the
Special Meeting, must be present in person or by proxy before any action may be
taken at the Special Meeting. Shares as to which the "ABSTAIN" box has been
marked on the proxy will be counted as present for determining if a quorum is
present. Under the BCL, the affirmative vote of the
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holders of at least two-thirds of the Common Stock present in person or by
proxy at the Special Meeting is required to approve the Reorganization
Agreement and the Plan of Merger. The affirmative vote of the holders of a
majority of the total votes present in person or by proxy at the Special
Meeting is required to adjourn the Special Meeting, if such adjournment is
necessary. Because of the required votes, abstentions will have the effect of
a vote against each of the proposals. Under rules of the NYSE, each of the
proposals to approve the Reorganization Agreement and related Plan of Merger
and to approve any necessary adjournment of the Special Meeting are
"non-discretionary" items upon which brokerage firms may not vote in the
absence of voting instructions from their clients. Because there are no
"discretionary" proposals being submitted to stockholders, there will be no
broker non-votes (i.e., the withholding of a vote by a broker on a
non-discretionary proposal as to shares that are being voted on a discretionary
proposal by the broker).
As of the Voting Record Date, the directors and executive officers of
Jefferson and their associates in the aggregate beneficially owned and are
entitled to vote 110,172 shares or 5.0% of the outstanding shares of Common
Stock (exclusive of shares of Common Stock which may be acquired upon the
exercise of outstanding stock options). The directors of Jefferson intend to
vote or cause to be voted all shares of Jefferson which they have the right to
vote for approval and adoption of the Reorganization Agreement and the related
Plan of Merger.
Voting; Solicitation and Revocation of Proxies. A proxy for use at
the Special Meeting is being furnished to each Jefferson stockholder together
with this Proxy Statement and is solicited by the Board of Directors of
Jefferson. Any stockholder executing a proxy may revoke it at any time before
it is voted by filing with the Secretary of Jefferson, at the address of the
set forth on the Notice of Special Meeting of Stockholders, written notice of
such revocation; by executing a later-dated proxy; or by attending the Special
Meeting and giving notice of such revocation in person. Attendance at the
Special Meeting will not, in and of itself, constitute revocation of a proxy.
Each proxy returned to Jefferson (and not revoked) will be voted in accordance
with the instructions indicated thereon. IF NO INSTRUCTIONS ARE INDICATED, THE
PROXY WILL BE VOTED FOR APPROVAL OF THE REORGANIZATION AGREEMENT AND THE
RELATED PLAN OF MERGER AND FOR ANY NECESSARY ADJOURNMENT OF THE SPECIAL
MEETING.
THE MERGER
The following description of the material terms of the Merger does not
purport to be complete and is qualified in its entirety by reference to the
Reorganization Agreement, a copy of which is attached to this Proxy Statement
as Appendix A. All stockholders are urged to read such document carefully.
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BACKGROUND OF AND REASONS FOR THE MERGER; RECOMMENDATION OF THE BOARD OF
DIRECTORS
Background of the Merger. During the second half of 1995 and early
1996, Jefferson was contacted by and had preliminary discussions with certain
financial institutions or their holding companies regarding a possible
acquisition of Jefferson. In connection with such preliminary discussions, the
Board of Directors and management of Jefferson considered whether the
implementation of a long-term strategy to improve earnings by means of a growth
strategy that would result in additional credit and interest rate risk was in
the best interest of Jefferson's stockholders in view of the consequent adverse
impact on the existing level of earnings in the short term and the uncertainty
of ultimate success. Consideration was also given to the consolidation of the
thrift and banking industries; the fact that larger savings institutions and
banks are able to compete more effectively for new customers; the uncertainty
of congressional and other proposals to eliminate the thrift charter; and the
competitive disadvantages currently faced by SAIF-insured institutions in
having to pay a substantially higher rate for deposit insurance than
BIF-insured institutions.
As the directors considered the foregoing factors, they focused on
whether the sale of Jefferson might be in the best interests of stockholders
because of the risks associated with implementing various long-term strategies.
As a result, the directors decided to investigate the possible sale of
Jefferson and in January 1996 Jefferson retained the services of Webb, the
investment banking firm which advised Jefferson in connection with the 1994
reorganization of Jefferson Federal from the mutual holding to the stock
holding company structure, to assist in such an investigation.
Beginning in late January 1996, the Board of Directors conducted
through Webb a confidential inquiry into the possible interest of 16 entities
in pursuing a merger with or acquisition of Jefferson. Of such entities, eight
expressed an interest and were provided certain information on Jefferson,
including financial statements, loan and deposit summaries and other data,
after signing a confidentiality agreement. In late February 1996, ISBF and two
other companies submitted a merger proposal to acquire Jefferson. The bidder
with the lowest proposal dropped out. ISBF and one other company then
conducted more extensive due diligence in March 1996. The bidder other than
ISBF was proposing merger consideration consisting of 50% stock and 50% cash
which, as of mid-March 1996, had a combined value lower than $23.00 per share
of Jefferson Common Stock. In mid-March 1996, Jefferson determined to commence
negotiations with ISBF regarding a cash acquisition of Jefferson.
Because of the structure of the transaction, Iberia proposed a
non-binding Letter of Intent specifying the general terms and structure of the
Merger and the price to be paid to Jefferson's stockholders. On March 29,
1996, the Board of Directors of Jefferson met to consider the Letter of Intent
and questioned Webb about the financial aspects of the proposed transaction,
specifically inquiring into the key financial components of comparable
transactions. Following such questioning, Webb provided the Board of Directors
with its opinion that the transaction was fair to Jefferson's stockholders from
a financial point of
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view. Based on all the foregoing, the Board of Directors concluded that a
merger with ISBF in a transaction in which Jefferson's stockholders would
receive $23.00 cash per share was preferable to the implementation of an
uncertain, long-term strategy to enhance earnings and was, therefore, in the
best interests of the stockholders. Accordingly, the Board of Directors
unanimously approved the Letter of Intent on March 29, 1996 and publicly
announced the transaction on such date.
Following the execution of the Letter of Intent, Iberia filed an
application with the Office of Thrift Supervision ("OTS") on April 9, 1996
seeking OTS approval to make a formal offer to acquire all of Jefferson's
Common Stock. The prior approval of the OTS was required because the 1994
conversion of Jefferson Federal from the mutual holding company structure to
the stock holding company structure had been completed within the preceding
three years.
From mid-April to mid-May, the management of Jefferson reviewed and
revised several drafts of the definitive agreement with the assistance of its
legal counsel and investment banker. The terms of the Reorganization Agreement
were reviewed in detail and actively negotiated. Following ISBF's receipt of
OTS approval on May 8, 1996 of the initial application to make an offer to
acquire Jefferson, negotiations continued.
On May 24, 1996, the Board of Directors of Jefferson reviewed the
proposed definitive Reorganization Agreement in detail. After consideration of
all factors deemed relevant and in conjunction with advice from Jefferson's
financial and legal advisors, the Board of Directors determined that the
proposed Merger was in Jefferson's best interests and the best interests of
Jefferson's stockholders and unanimously approved the Merger. ISBF and
Jefferson executed the Reorganization Agreement and related agreements on May
24, 1996.
Reasons for the Merger. The terms of the Reorganization Agreement,
including the Merger Consideration to be paid to Jefferson's stockholders, were
the result of arm's-length negotiations between the representatives of
Jefferson and ISBF. Among the factors considered by the Board of Directors of
Jefferson in deciding to approve and recommend the terms of the Merger were (i)
the Merger Consideration to be paid to Jefferson's stockholders in relation to
the market value, book value, earnings per share and dividend rates of the
Common Stock, (ii) information concerning the financial condition, results of
operations, capital levels, asset quality and prospects of Jefferson, (iii)
industry and economic conditions, (iv) the impact of the Merger on the
depositors, employees, customers and communities served by Jefferson through
expanded consumer lending and retail banking products and services, (v) the
opinion of Jefferson's financial advisor as to the fairness of the Merger
Consideration from a financial point of view to the holders of the Common
Stock, (vi) the general structure of the transaction and the compatibility of
management and business philosophy, (vii) the likelihood of receiving the
requisite regulatory approvals in a timely manner, and (viii) the ability of
the combined enterprise to compete in relevant banking and non-banking markets.
In making its determination, the Board of Directors of Jefferson did not
ascribe relative weights to the factors which it considered.
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The Board of Directors of Jefferson believes that the Merger is in the
best interest of Jefferson and its stockholders. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
REORGANIZATION AGREEMENT AND THE RELATED PLAN OF MERGER.
OPINION OF FINANCIAL ADVISOR
In January 1996, Webb was retained by Jefferson to evaluate
Jefferson's strategic alternatives and, in certain circumstances, to act as its
financial advisor in connection with its ongoing consideration and/or
implementation of such alternatives. Webb, as part of its investment banking
business, is continuously engaged in the evaluation of businesses and
securities in connection with mergers and acquisitions, negotiated
underwritings, and distributions of listed and unlisted securities. Webb is
familiar with the market for common stocks of publicly traded banks, savings
institutions and bank and savings institution holding companies. The Board of
Directors of Jefferson selected Webb on the basis of the firm's reputation and
its experience and expertise in transactions similar to the Merger and its
prior work for and relationship with Jefferson in connection with the August
1994 reorganization of Jefferson Federal from the mutual holding company to the
stock holding company structure and the concurrent offering of Jefferson's
Common Stock to the public. Except as described herein, Webb is not affiliated
with Jefferson, ISBF or their respective affiliates.
Pursuant to its engagement, Webb was asked to render an opinion as to
the fairness, from a financial point of view, of the Merger Consideration to
the stockholders of Jefferson. Webb delivered a fairness opinion dated as of
May 24, 1996 to the Board of Directors of Jefferson that the Merger
Consideration is fair to the stockholders of Jefferson from a financial point
of view. No limitations were imposed by Jefferson upon Webb with respect to
the investigations made or procedures followed by Webb in rendering its
opinion. Webb has consented to the inclusion herein of the summary of its
opinion to the Board of Directors of Jefferson and to the entire opinion being
attached hereto as Appendix C.
THE FULL TEXT OF THE OPINION OF WEBB, UPDATED AS OF THE DATE OF THIS
PROXY STATEMENT, WHICH SETS FORTH CERTAIN ASSUMPTIONS MADE, MATTERS CONSIDERED
AND LIMITATIONS ON THE REVIEWS UNDERTAKEN, IS ATTACHED AS APPENDIX C TO THE
PROXY STATEMENT AND SHOULD BE READ IN ITS ENTIRETY. THE SUMMARY OF THE OPINION
OF WEBB SET FORTH IN THIS PROXY STATEMENT IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE OPINION. SUCH OPINION DOES NOT CONSTITUTE A RECOMMENDATION BY
WEBB TO ANY JEFFERSON STOCKHOLDER AS TO HOW SUCH STOCKHOLDER SHOULD VOTE WITH
RESPECT TO THE MERGER.
In rendering its opinion, Webb (i) reviewed the financial and business
data supplied to it by Jefferson, including Jefferson's prospectus dated July
7, 1994, Jefferson's Annual Reports, Proxy Statements and Form 10-Ks for the
years ended December 31, 1995 and 1994, and Jefferson's quarterly reports on
Form 10-Q for the quarters ended March 31, 1995, June 30, 1995, September 30,
1995 and March 31, 1996; (ii) reviewed ISBF's Annual
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Report and Form 10-K for the year ended December 31, 1995 and Form 10-Q for the
quarter ended March 31, 1996; (iii) discussed with senior management and the
Boards of Directors of Jefferson and Jefferson Federal the possibility of
obtaining other acquisition proposals, and the board's reasons for seeking
affiliation and merger; (iv) discussed with senior management of ISBF the
current and prospective outlook for ISBF and the reasons for seeking
affiliation and merger; (v) considered historical quotations and the prices of
recorded transactions in Jefferson's Common Stock since the 1994 reorganization
of Jefferson Federal from the mutual holding company to the stock holding
company structure; and (vi) reviewed the financial and stock market data of
other savings institutions, particularly in the Southern region of the United
States, the financial and structural terms of several other recent transactions
involving mergers or acquisitions of savings institutions or proposed changes
of control of comparably situated companies.
In rendering its opinion, Webb assumed and relied upon the accuracy
and completeness of the information provided to it by ISBF and Jefferson and
obtained by it from public sources. In its review, with the consent of the
Jefferson board, Webb did not undertake any independent verification of the
information provided to it, nor did it make any independent appraisal or
evaluation of the assets or liabilities of Jefferson or ISBF, or of potential
or contingent liabilities of ISBF or Jefferson. With respect to the financial
information, including forecasts and asset valuations received from Jefferson,
Webb assumed (with Jefferson's consent) that such information had been
reasonably prepared reflecting the best currently available estimates and
judgments of Jefferson's management. Webb also assumed that no restrictions or
conditions would be imposed by regulatory authorities that would have a
material adverse effect on the contemplated benefits of the Merger to Jefferson
or the ability to consummate the Merger.
Webb's review of comparable transactions included the compilation of
pending or recently completed acquisitions of savings institutions sorted into
five groups. The groups were identified with some characteristic similar to
Jefferson and compiled as follows: (i) all acquisitions of savings
institutions since June 30, 1995; (ii) acquisitions of savings institutions
with a total transaction value between $30 million and $70 million; (iii)
acquisitions of savings institutions where the target had tangible equity to
assets between 10% and 16%; (iv) acquisitions where the target had return on
average assets ("ROAA") between .90% and 1.10%; and (v) acquisitions of savings
institutions where the target is located in the Southeast or Southwest region
of the United States. The results of the analysis are summarized below. The
proposal by ISBF to acquire Jefferson was evaluated from a financial
perspective along five industry-accepted ratios.
The information in the following table summarizes the material
information analyzed by Webb with respect to the Merger. The summary does not
purport to be a complete description of the analysis performed by Webb and
should not be construed independently of the other information considered by
Webb in rendering its opinion. Selecting portions of Webb's analysis or
isolating certain aspects of the comparable transactions without considering
all analyses and factors could create an incomplete or potentially misleading
view of the evaluation process.
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SUMMARY OF SELECTED ACQUISITIONS
WHERE THE TARGET IS A SAVINGS INSTITUTION
Price to
------------------------------------------------------------------- Tangible
Tangible LTM Deposit Equity to
Book EPS(a) Assets Deposits Premium Assets
----------- --------- ---------- ------------ ------------ ------------
GROUP 1 - MEDIANS FOR ALL DEALS SINCE 6/30/95 (b)
Completed (#=84) 150.3% 18.2x 13.5% 17.7% 6.2% 8.4%
Pending (#=44) 147.7% 19.9x 14.0% 17.6% 6.0% 8.7%
ISBF/Jefferson Merger 147.1% 19.0x 19.3% 22.4% 7.2% 13.1%
GROUP 2 - MEDIANS FOR DEALS WHERE PURCHASE VALUE IS BETWEEN $30 MILLION AND $70 MILLION (b)
Completed (#=17) 149.5% 14.4x 11.9% 18.4% 5.3% 8.7%
Pending (#=7) 135.7% 19.3x 14.1% 19.8% 5.3% 11.5%
ISBF/Jefferson Merger 147.1% 19.0x 19.3% 22.4% 7.2% 13.1%
GROUP 3 - MEDIANS FOR DEALS WHERE TARGET'S TANGIBLE EQUITY TO ASSETS IS BETWEEN 10% AND 16% (b)
Completed (#=22) 145.4% 20.9x 18.6% 23.3% 8.1% 11.9%
Pending (#=10) 123.9% 27.1x 19.2% 23.8% 5.9% 14.0%
ISBF/Jefferson Merger 147.1% 19.0x 19.3% 22.4% 7.2% 13.1%
GROUP 4 - MEDIAN FOR DEALS WHERE TARGET'S ROAA IS BETWEEN 0.9% AND 1.1% (b)
Completed (#=12) 147.5% 18.1x 13.4% 16.1% 6.8% 8.4%
Pending (#=6) 156.1% 15.7x 14.7% 16.9% 8.3% 8.8%
ISBF/Jefferson Merger 147.1% 19.0x 19.3% 22.4% 7.2% 13.1%
GROUP 5 - MEDIAN FOR DEALS WHERE TARGET IS LOCATED IN SOUTHEAST OR SOUTHWEST (b)
Completed (#=26) 156.4% 18.1x 13.6% 15.9% 6.3% 7.4%
Pending (#=15) 167.3% 15.7x 12.9% 16.4% 8.3% 8.2%
ISBF/Jefferson Merger 147.1% 19.0x 19.3% 22.4% 7.2% 13.1%
- - -------------------
(a) Last twelve months earnings per share.
(b) Deals completed as of June 30, 1996 or, if pending, announced as of June
30, 1996.
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In its analysis of comparable transactions, Webb evaluated each
pricing ratio against the proposed pricing analysis of the ISBF acquisition of
Jefferson. Slightly more weight was given to the price to tangible book value
ratio, the price to last twelve month earnings per share and the price to core
deposit premium ratio. Jefferson's tangible equity as a percentage of assets
was 13.1%, which is higher than the median levels of tangible equity to assets
in each of the five groups analyzed (except the pending group of acquisitions
of savings institutions with capital between 10% and 16%).
In preparing its analyses, Webb made numerous assumptions with respect
to industry performance, business and economic conditions and other matters,
many of which are beyond the control of Webb and Jefferson. The analyses
performed by Webb are not necessarily indicative of actual values or future
results, which may be significantly more or less favorable than suggested by
such analyses and do not purport to be appraisals or reflect the prices at
which a business may be sold.
In January 1996, Jefferson engaged Webb to, among other things, assist
Jefferson in determining appropriate and desirable values that could be
realized in a merger, prepare a summary of recent merger and acquisition trends
in the financial service industry, advise Jefferson as to the structure and
form of any proposed merger, and render an opinion as to the fairness of the
consideration to be paid in any proposed merger. Jefferson agreed to pay Webb
for such services a fee of $100,000 for the delivery of a fairness opinion upon
the execution of a definitive agreement, which fee was paid in May 1996. In
addition, Jefferson agreed to pay Webb a success fee upon consummation of the
Merger equal to the sum of (i) .50% of the Purchase Price (as defined below)
paid to Jefferson's stockholders up to $21.00 per share of Common Stock, plus
(ii) 1.00% of that portion of the Purchase Price which exceeds $21.00 per share
of Common Stock. The term "Purchase Price" includes the aggregate cash
consideration to be paid to holders of Common Stock plus, with respect to
outstanding stock options which remain unexercised immediately prior to the
Effective Date, the difference between the aggregate purchase price for the
Common Stock underlying such options and the aggregate exercise price of such
options. Based upon the 2,195,635 shares of Common Stock outstanding and the
cash to be paid upon settlement of outstanding stock options, the success fee
will be approximately $279,000. The $100,000 fee already paid by Jefferson
will be deducted from the success fee payable as of the Effective Date.
Jefferson has also agreed to reimburse Webb for its reasonable out-of-pocket
expenses, which reimbursement will be deducted from the fees otherwise payable
to Webb. Webb's compensation, including the success fee which is contingent
upon completion of the Merger, was determined by arm's-length negotiations
between Jefferson and Webb. Jefferson has further agreed to indemnify Webb and
its affiliates, and their respective directors, officers and employees and each
such other person controlling Webb or any of its affiliates from and against
any and all losses, claims, damages and liabilities, joint and several, to
which such indemnified parties may become subject under any applicable federal
or state law, or otherwise, and related to or arising out of the Merger or the
engagement of Webb pursuant to, and the performance by Webb of the services
contemplated by, Jefferson's agreement with Webb.
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TERMS OF THE MERGER
On the Effective Date, the Merger will be effectuated pursuant to
which Interim, a wholly owned subsidiary of ISBF formed solely for the purpose
of effecting the transactions contemplated by the Reorganization Agreement,
will be merged with and into Jefferson and the separate existence of Interim
will cease. Each outstanding share of Common Stock issued and outstanding
immediately prior to the consummation of the Merger (other than shares as to
which dissenters' rights have been asserted and duly perfected in accordance
with Louisiana law, and shares held by ISBF and ISB in other than a fiduciary
capacity) shall be converted into and represent the right to receive $23.00 in
cash without any interest thereon, representing the Merger Consideration. The
aggregate amount of the Merger Consideration to be paid by ISBF in connection
with the Merger is expected to be approximately $50.4 million if all
outstanding and exercisable stock options of Jefferson are exercised prior to
the Effective Date. Such amount excludes the 107,000 shares of Common Stock
held by ISBF as of the date of this Proxy Statement, which shares will be
cancelled as of the Effective Date. Immediately prior to the Merger, Jefferson
Federal will convert from a federally chartered stock savings bank to a
Louisiana-chartered stock savings bank to be known as Jefferson Savings Bank.
Also, on the Effective Date, the Liquidation will occur pursuant to which the
separate corporate existence of Jefferson will cease and Jefferson Savings will
become a wholly owned subsidiary of ISBF. The end result of consummating these
transactions is that on the Effective Date, the separate existence of Jefferson
will cease, ISBF will succeed to the rights, benefits and obligations of
Jefferson in accordance with the provisions of the Reorganization Agreement,
and ISBF will become a multiple bank holding company with ISB and Jefferson
Savings as wholly owned, Louisiana-chartered savings bank subsidiaries.
Jefferson has in effect a variety of stock option plans, programs and
arrangements pursuant to which directors, officers and key employees of
Jefferson have been granted options to purchase Common Stock. The
Reorganization Agreement provides that at or immediately prior to the Effective
Date, each holder of a Jefferson Option then outstanding shall receive cash
(whether or not such option is then exercisable) in settlement thereof from
ISBF in an amount determined by multiplying the excess, if any, of the $23.00
per share Merger Consideration over the applicable exercise price per share of
such option, multiplied by the number of shares of Common Stock subject to such
Jefferson Option. All such options will automatically be deemed cancelled and
of no further effect as of the Effective Date.
SURRENDER OF CERTIFICATES
As soon as practicable after the Effective Date, but no later than
five business days after the Effective Date, the exchange agent of ISBF will
mail to all holders of Common Stock a letter of transmittal, together with
instructions for the exchange of their Common Stock certificates for cash.
Until so exchanged, each certificate representing Common Stock outstanding
immediately prior to the Effective Date shall be deemed for all purposes to
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evidence ownership of the Merger Consideration, consisting of cash in the
amount of $23.00 into which each such share is to be converted. JEFFERSON'S
STOCKHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES OF COMMON STOCK UNTIL THEY
RECEIVE FURTHER INSTRUCTIONS.
REPRESENTATIONS AND WARRANTIES; CONDITIONS TO THE MERGER
The Reorganization Agreement contains representations and warranties
by ISBF, Jefferson and Jefferson Federal regarding a variety of matters. In
the case of Jefferson and Jefferson Federal, representations and warranties
have been made concerning their organization, authority to conduct business,
capitalization, the power and authority to enter into the Reorganization
Agreement and to consummate the transactions thereunder, material accuracy of
financial statements, compliance with applicable laws, the absence of certain
legal proceedings and other events including material adverse changes in their
business or financial condition, the adequacy of insurance coverage generally,
the validity of loans, taxes, employee benefit plans, certain contracts,
undisclosed liabilities, environmental matters, properties and the accuracy of
information prepared and provided in connection with the Reorganization
Agreement, among other things. In the case of ISBF, representations and
warranties have been provided concerning its organization, capitalization,
authority to conduct business, the power and authority to enter into the
Reorganization Agreement and to consummate the transactions thereunder, the
ability to pay the Merger Consideration, material accuracy of financial
statements, compliance with applicable laws, absence of certain legal
proceedings and the accuracy of information prepared and provided in connection
with the Reorganization Agreement, among other things.
The obligations of Jefferson, Jefferson Federal and ISBF to consummate
the Merger are subject to the fulfillment, at or prior to the Effective Date,
of a variety of conditions, the material conditions of which are as follows:
(i) the approval of the Reorganization Agreement and related Plan of Merger by
the requisite vote of the stockholders of Jefferson; (ii) the receipt of all
requisite regulatory approvals for the Merger, the expiration of all waiting
periods and the satisfaction of all pre-consummation conditions in any such
approval, without any term or condition which would materially impair the value
of Jefferson and Jefferson Federal, taken as a whole, to ISBF (as reasonably
and in good faith determined by ISBF); (iii) the absence of any order, judgment
or decree or any suit, action or proceeding to restrain or prohibit the Merger
or which, because of the monetary or other relief sought, has a significant
potential (as determined by ISBF and ISB reasonably and in good faith) to
deprive ISBF and ISB of any material benefits of the Merger; (iv) the
continuing accuracy and applicability of the representations and warranties of
the other party to the Reorganization Agreement; (v) compliance with all
covenants not otherwise waived; (vi) the appointment of Karen L. Knight to
ISBF's Board of Directors for a term not less than two years; (vii) the deposit
of funds with the exchange agent by ISBF in an amount equal to the aggregate
Merger Consideration; and (viii) the receipt of certain certificates, legal
opinions, auditors' letters and fairness opinions.
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Except with respect to any required stockholder or regulatory
approvals and the absence of any order, decree or injunction enjoining or
prohibiting the consummation of the Merger, all of the conditions of
consummating the Merger may be waived at any time by the party for whose
benefit they were created, and the Reorganization Agreement may be amended or
supplemented at any time by written agreement of the parties, except that no
such waiver, amendment or supplement executed after approval by Jefferson's
stockholders shall alter the Merger Consideration.
REGULATORY AND OTHER APPROVALS
A variety of regulatory applications have been filed and are pending
in connection with the consummation of the transactions contemplated under the
Reorganization Agreement. Receipt of all requisite regulatory approvals is a
condition precedent to consummating the transactions contemplated by the
Reorganization Agreement. There can be no assurance, however, that any or all
of such regulatory approvals will be forthcoming or, if received, the timing of
such receipt.
ISBF has filed an application with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") under the BHCA. The Federal
Reserve will take into consideration the financial and managerial resources and
future prospects of ISBF and its subsidiaries as well as the convenience and
needs of the communities to be served after the Merger in reaching a decision
as to whether to approve the application.
Jefferson Federal has filed an application with the Office of
Financial Institutions for the State of Louisiana ("OFI") in accordance with
applicable provisions of Louisiana banking law to convert to a
Louisiana-chartered stock savings bank. In addition, Jefferson Federal filed a
notice for the Merger with the OFI.
Jefferson Federal has also filed with the OTS the requisite notice of
its intention to convert to a Louisiana-chartered stock savings bank
immediately prior to consummation of the Merger. In addition, the
Reorganization Agreement provides for Jefferson Federal to pay a cash dividend
to Jefferson immediately prior to the Effective Date, which will be used by
ISBF to partially fund the aggregate Merger Consideration. Jefferson Federal
intends to file with the OTS the requisite 30-day notice of its intention to
pay such dividend.
ISBF and Jefferson are unaware of any other governmental approvals or
actions that are required for consummation of the Merger except as described
above. Should any such approval or action be required, it is presently
contemplated that such approval or action will be sought. There can be no
assurance, however, that any such approval or action, if needed, could be
obtained, would not delay the consummation of the transactions contemplated
under the Reorganization Agreement and would not be conditioned in a manner
that would cause ISBF to terminate the Reorganization Agreement. Moreover,
there can be no assurance that no action will be brought challenging the Merger
on antitrust or other grounds.
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BUSINESS PENDING THE MERGER
The provisions of the Reorganization Agreement provide that, until the
Effective Date, Jefferson, Jefferson Federal and their subsidiaries are
required to conduct their businesses in accordance with past practices and in
accordance with prudent business and banking practices. In addition, during
the period prior to the Effective Date, Jefferson, Jefferson Federal and their
subsidiaries are required to maintain properties and insurance coverage,
perform obligations under contractual agreements, maintain and preserve their
businesses, employees and relationships with depositors and borrowers, comply
with all obligations and duties imposed by law and coordinate with ISBF prior
to making material changes to policies regarding interest rates paid on deposit
products.
Jefferson, Jefferson Federal and their subsidiaries have also
undertaken to refrain, without the prior written consent of ISBF, to change the
Articles of Incorporation or Bylaws of Jefferson, pay dividends other than
regular quarterly cash dividends on Common Stock of $.075 per share and a cash
dividend from Jefferson Federal to Jefferson pursuant to the Reorganization
Agreement, issue shares of capital stock, securities convertible into capital
stock or debt obligations other than pursuant to existing stock benefit plans
or the ISBF Option, incur any obligations or liabilities other than in the
ordinary course of business, discharge or satisfy any liens, encumbrance or
liability other than in the ordinary course of business, sell or dispose of any
capital assets other than in the ordinary course of business, make any general
or individual wage or salary increases or pay bonuses other than any wage
increases to employees who are not officers and managers or bonuses accrued
under established past practice for employees of Jefferson Federal, enter into
any agreement or arrangement not in the ordinary course of business granting
preferential rights to purchase their assets, properties or rights, enter into
or amend certain types of contracts, make any material change to accounting
methods other than as may be required under generally accepted accounting
principles, take any action that would constitute a breach of a representation
or warranty set forth in the Reorganization Agreement, waive any right of
substantial value, introduce new products or services, change policies
regarding extensions of credit or loan charge-offs, change reserve requirement
policies, change securities portfolio policies, make any loans to officers,
directors, employees or affiliates, make any loan over $250,000, approve any
loan which varies from written credit policies, propose or take any action to
close any branch, change any titles, or increase salaries or award shares under
Jefferson's management recognition plan to any officer, director or employee
unless otherwise provided by the Reorganization Agreement, or agree to do any
of the aforementioned actions.
In addition, Jefferson, Jefferson Federal and their subsidiaries have
agreed not to solicit inquiries or proposals from, or furnish information to or
participate in any discussions or negotiations with, third parties concerning
any merger, acquisition or sale acquisition of all or substantially all of
their assets or equity interests. Jefferson, Jefferson Federal and their
subsidiaries are required to notify ISBF immediately if any such inquiries or
proposals are forthcoming. Notwithstanding the foregoing, Jefferson, Jefferson
Federal and their
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subsidiaries are permitted to respond to unsolicited inquiries from third
parties and/or engage in discussions or negotiations with third parties only to
the extent required in order to discharge the fiduciary duties of the directors
of Jefferson to Jefferson's stockholders.
EFFECTIVE DATE OF THE MERGER; TERMINATION
The Effective Date shall be the date and time of the issuance of a
certificate of merger by the Secretary of State of the State of Louisiana. The
closing of the transactions contemplated by the Reorganization Agreement (the
"Closing") will take place not later than five (5) business days following the
receipt of all necessary regulatory approvals and consents and the expiration
of all statutory waiting periods unless otherwise agreed to by the parties. It
is anticipated that the Closing and the Effective Date will occur on the same
date.
ISBF and Jefferson each anticipate that the Merger will be consummated
in the fourth quarter of 1996. Consummation of the Merger could be delayed,
however, as a result of delays in obtaining the necessary governmental and
regulatory approvals or if any other condition to the consummation of the
Merger is not satisfied. There can be no assurance as to if or when such
approvals will be obtained or conditions satisfied.
The Reorganization Agreement may be terminated by either ISBF or
Jefferson at any time prior to the Effective Date if: (i) any application for
regulatory or governmental approval necessary to consummate the Merger is
denied, withdrawn at the recommendation of the applicable regulatory agency or
governmental authority or by ISBF and ISB upon written notice to Jefferson if
such application is approved with conditions which materially impair the value
of Jefferson and Jefferson Federal, taken as a whole; (ii) (a) the Merger does
not become effective on or before February 28, 1997 or such later date as
approved in writing by the parties or (b) if the stockholders of Jefferson fail
to approve the Reorganization Agreement and related Plan of Merger, provided,
however, the right to terminate shall not be available to any party whose
failure to perform or observe any obligation or agreement in the Reorganization
Agreement resulted in the failure of the Merger to become effective on or
before such date; (iii) by Jefferson upon the expiration of 30 days from the
date of notice to ISBF of a failure by ISBF to comply with any covenant,
agreement or obligation contained in the Reorganization Agreement or if any
ISBF representations or warranties are defective in any respect which would
have a material adverse effect on ISBF's and ISB's business, operations, assets
or financial condition, taken as a whole; (iv) by ISBF upon the expiration of
30 days from the date of notice to Jefferson of (A) a failure by Jefferson to
comply with any covenant, agreement or obligation contained in the
Reorganization Agreement or if any representations or warranties of Jefferson
or Jefferson Federal are defective in any respect which would have a material
adverse effect on Jefferson, Jefferson Federal and their subsidiaries, taken as
a whole, or (B) a material adverse change in Jefferson's, Jefferson Federal's
and their subsidiaries' assets, properties, deposits, business or financial
condition after December 31, 1995, provided, however, the parties will use
their best efforts to consummate the Merger on mutually agreeable terms prior
to termination; (v) at any time by the mutual written consent
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of the parties to the Reorganization Agreement and the approval of such action
by their respective Boards of Directors; or (vi) by either party if certain
closing conditions are not satisfied in all material respects.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Board of Directors of
Jefferson, stockholders should be aware that members of Jefferson's management
and the Jefferson Board of Directors have interests in the Merger that are in
addition to the interests of stockholders generally. The Jefferson Board of
Directors was aware of these interests and considered them, among other
matters, in approving the Reorganization Agreement and the transactions
contemplated thereby.
Board of Directors of ISBF. Upon consummation of the Merger, ISBF
will appoint Karen L. Knight, the Chairman, President and Chief Executive
Officer of Jefferson and Jefferson Federal, as a director of ISBF for a term of
not less than two years.
Benefits to Ms. Knight. The employment of Ms. Knight as the Chairman,
President and Chief Executive Officer (the "Executive") of Jefferson and
Jefferson Federal will be terminated as of the Effective Date. Upon such
termination, Jefferson and/or Jefferson Savings shall pay to the Executive the
amount required to be paid to her under the agreement, dated as of December 7,
1994, among the Executive, Jefferson and Jefferson Federal ("1994 Agreement").
As permitted by the 1994 Agreement, the Executive shall be entitled to receive
the severance benefits provided by Section 2(a) of the 1994 Agreement either in
a lump sum or in equal monthly installments over a period of up to 36 months.
In addition, ISBF will provide the Executive for a period ending the earlier of
(i) two years from the date of the Effective Date, or (ii) the date of the
Executive's full-time employment by another employer (provided that the
Executive is entitled under the terms of such employment to benefits
substantially similar to those described in this sentence), the Executive's
continued participation in all life insurance, accident and disability plans,
programs and arrangements in which the Executive was entitled to participate
immediately prior to consummation of the Merger at no cost to the Executive.
ISBF and the Executive have agreed that if the Effective Date is on or before
December 31, 1996, then the sum of (i) the present value of the cash severance
benefits to be paid pursuant to Section 2(a) of the 1994 Agreement, and (ii)
the deemed parachute payments that arise from (A) the present value of the
fringe benefits to be provided pursuant to Section 2(b) of the 1994 Agreement,
and (B) the accelerated vesting of the 5,600 shares granted to the Executive
under Jefferson's Management Recognition Plans which will be treated as
contingent on the change in control for purposes of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), shall be $487,050.80.
Upon termination of Executive's employment, ISBF agrees to assume and
honor the separate agreement between the Executive and Jefferson Federal dated
December 27, 1989 and as re-affirmed on May 24, 1996, relating to the
continuation of health, major medical
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and hospitalization insurance on behalf of the Executive for life, with
coverage no less than the coverage presently received by the Executive.
Upon payment of the foregoing amounts and provision of the foregoing
benefits, none of ISBF, ISB, Jefferson or Jefferson Savings shall have any
further obligations to the Executive other than the following: (1) the payment
of not more than $57,078.88 in accrued but unused vacation benefits; (2) the
provision of such other benefits, if any, to which the Executive is entitled
under any relevant indemnification provisions of the Reorganization Agreement;
and (3) any rights to additional payments or benefits which the Executive may
be entitled to under (i) the Deferred Compensation Agreement, dated as of
December 14, 1994, by and among Jefferson, Jefferson Federal and the Executive,
pursuant to which amounts have been set aside each year since 1994 as an
additional retirement benefit for the Executive, (ii) Jefferson's Employee
Stock Ownership Plan ("Jefferson ESOP"), or (iii) the provisions of the
Reorganization Agreement regarding the payment of the Merger Consideration with
respect to her shares of Common Stock and stock options to purchase Common
Stock.
In addition to the above, while there is no legally binding agreement
to do so, ISBF currently contemplates entering into a consulting agreement with
the Executive following the Effective Date for a two-year period, pursuant to
which the Executive will provide certain services and ISBF will (i) pay the
Executive a fee of $50,000 per year and (ii) provide the Executive with office
space and secretarial support services.
Employment of Jefferson Personnel. ISBF and ISB have agreed to
continue the employment of all personnel of Jefferson Federal and its
subsidiaries (other than Ms. Knight) 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. Jefferson has agreed to use its best efforts
to cause each director of Jefferson, Jefferson Federal (except Ms. Knight, who
will continue as a director of Jefferson Savings) and, if ISBF so requests, the
subsidiaries of Jefferson Federal, to submit their written resignations to
become effective upon the Effective Date.
Bonuses to Jefferson Federal Personnel. The Reorganization Agreement
permits Jefferson Federal to continue its current practice of accruing
approximately $11,000 per month for bonuses to be paid to employees of
Jefferson Federal, and such amounts which have been so accrued may, in a manner
consistent with past practices, be distributed to employees of Jefferson
Federal immediately prior to the Effective Date.
Severance Plans. ISBF has agreed to honor the terms of (1) Jefferson
Federal's non-employee directors' severance plan, as adopted January 11, 1995
("Directors' Severance Plan"), (2) the severance pay plan for executive
officers of Jefferson and Jefferson Federal, as adopted December 21, 1994
("Executives' Severance Plan"), and (3) the severance pay plan for certain
officers of Jefferson and Jefferson Federal, as adopted December 21, 1994
("Officers' Severance Plan"). Under the Directors' Severance Plan, each
non-employee
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director of Jefferson Federal shall receive as of the Effective Date a lump sum
payment equal to the greater of (a) the monthly directors' fee for service as a
non-employee director (excluding fees for committee meetings) being paid as of
the date the non-employee director ceases to serve as a director, multiplied by
12, or (b) $15,000. Under the Executives' Severance Plan, if the employment
of an executive officer (other than Ms. Knight) is terminated during the
two-year period following the Effective Date for any reason other than for
cause or as a result of retirement or death, or if the executive terminates his
employment during such period for Good Reason (as defined), then the executive
officer shall receive (1) cash severance pay equal to his highest level of base
salary during any of the three preceding calendar years, plus (2) continued
coverage for up to one year under certain plans, programs and arrangements.
Under the Officers' Severance Plan, if the employment of an Assistant Vice
President, Senior Manager or Manager (as defined) is terminated during the
two-year period following the Effective Date for any reason other than for
cause or as a result of retirement or death, or if the officer terminates his
employment during such period for Good Reason (as defined), then the officer
shall receive (i) severance pay equal to 0.5, 0.33 and 0.25 of the person's
highest level of base salary during any of the three preceding calendar years
for Assistant Vice Presidents, Senior Managers and Managers, respectively, and
(ii) continued coverage for up to six, four and three months for Assistant Vice
Presidents, Senior Managers and Managers, respectively, under certain plans,
programs and arrangements. With regard to each of the severance pay plans, the
amount of severance pay and benefits is subject to the limitations of Section
280G of the Code.
Transferred Employees. All employees of Jefferson Federal or its
subsidiaries immediately prior to the Effective Date who are employed by ISBF,
ISB or another ISBF subsidiary immediately following the Effective Date
("Transferred Employees") will be covered by ISBF's employee benefit plans on
substantially the same basis as any employee of ISBF in a comparable position.
Notwithstanding the foregoing, ISBF may determine to continue any of the
Jefferson benefit plans for Transferred Employees in lieu of offering
participation in ISBF'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 ISBF's benefit plans, provided the
result is the provision of benefits to Transferred Employees that are
substantially similar to the benefits provided to ISBF's employees generally.
Except as specifically provided in the Reorganization Agreement and as
otherwise prohibited by law, Transferred Employees' service with Jefferson
shall be recognized as service with ISBF for purposes of eligibility to
participate and vesting, if applicable (but not for purposes of benefit
accrual) under ISBF's benefit plans, subject to applicable break-in-service
rules. Employees of Jefferson Federal 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 Federal 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.
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Health Plans. ISBF has agreed 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 ISBF's medical
or hospitalization indemnity health plan at the time such Transferred Employees
are first given the option to enroll.
Jefferson 401(k) Profit Sharing Plan. Until the Effective Date,
Jefferson may continue to make payments to its 401(k) profit sharing plan (the
"Jefferson 401(k) Plan") in the ordinary course of business and consistent with
past practices. Following the Effective Date, ISBF, at its election, may
continue 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 ISBF (the "ISBF 401(k)
Plan"), may merge the Jefferson 401(k) Plan into the ISBF 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 ISBF 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
ISBF 401(k) Plan or a cessation of accruals and contributions under the
Jefferson 401(k) Plan, the ISBF 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 ESOP. The Jefferson ESOP will terminate upon the Effective
Date. 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. Upon
the repayment of the Jefferson ESOP loan, the remaining shares in the ESOP loan
suspense account will be allocated (to the extent permitted by applicable laws
and regulations) to Jefferson ESOP participants (as determined under the terms
of the Jefferson ESOP). Each participant in the Jefferson ESOP not fully
vested will become fully vested in his or her Jefferson ESOP account as of the
Effective Date. Subject to the conditions described in the Reorganization
Agreement, as soon as practicable after the Effective Date, repayment of the
Jefferson ESOP loan and the receipt of a favorable termination ruling from the
IRS, 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, ISBF will permit
a Transferred Employee's participant account in the Jefferson ESOP to be rolled
over into ISBF's ESOP or 401(k) plan.
As of and following the Effective Date, ISBF 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
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Jefferson ESOP through distribution of its assets in accordance with its terms,
except 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. 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 ISBF and such individuals, after their appointment, may not be
unreasonably removed or changed by ISBF or its affiliates for a period of two
years after the Effective Date).
The ISBF 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 ISBF's Employee Stock
Ownership Plan ("ISBF ESOP"). However, for purposes of the ISBF ESOP, 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.
Indemnification Rights. For a period of six years subsequent to the
Effective Date, ISBF will indemnify, defend and hold harmless persons who are
or were officers and directors of Jefferson, Jefferson Federal and their
subsidiaries against all losses, claims, damages, costs, expenses, judgments or
liabilities arising out of actions or omissions occurring at or prior to the
Effective Date (including, without limitation, the Merger and the other
transactions contemplated by the Reorganization Agreement) 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 ISBF and the indemnified party. Jefferson is 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.
In addition to the indemnification required under the preceding
paragraph, ISBF has agreed that, for a period of six years subsequent to the
Effective Date, all rights to indemnification provided in Jefferson's and
Jefferson Federal's Articles of Incorporation, Charter and Bylaws, as in effect
at the date of the Reorganization Agreement, in favor of all persons who are or
were directors, officers and employees of Jefferson and Jefferson Federal,
shall survive the Merger with respect to matters occurring prior to the
Effective Date. ISBF 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 of the Reorganization
Agreement, with respect to claims or liabilities arising from facts or
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events existing or occurring prior to the Effective Date (including, without
limitation, the transactions contemplated by the Reorganization Agreement),
shall survive the Merger.
Other than as set forth above, no director or executive officer of
Jefferson or ISBF has any direct or indirect material interest in the Merger,
except in the case of Jefferson insofar as ownership of Common Stock and
existing options might be deemed such an interest.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The exchange of Jefferson's Common Stock for cash pursuant to the
terms of the Reorganization Agreement and the Plan of Merger will be a taxable
transaction for federal income tax purposes under the Code, and may also be a
taxable transaction under state, local and other tax laws. Similarly,
stockholders of Jefferson who exercise their dissenters' appraisal rights and
receive cash in exchange for their shares of Common Stock will realize and
recognize income for federal tax purposes and may recognize income under state,
local and other tax laws. A stockholder of Jefferson will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Merger and the tax basis in the Common Stock
exchanged by such stockholder pursuant to the Merger. Gain or loss must be
determined separately for each block of Common Stock (i.e., shares of Common
Stock acquired by the stockholder at the same time and price) exchanged
pursuant to the Merger.
Gain or loss recognized by the stockholder exchanging his or her
Common Stock pursuant to the Merger or pursuant to the exercise of dissenters'
rights will be capital gain or loss if such Common Stock is a capital asset in
the hands of the stockholder. If the Common Stock has been held for more than
one year, the gain or loss will be long-term. Capital gains recognized by an
exchanging individual stockholder generally will be subject to tax at the top
marginal rate applicable to the stockholder (up to a maximum of 39.6% for
short-term capital gains and 28% for long-term capital gains), and capital
gains recognized by an exchanging corporate stockholder generally will be
subject to tax at a maximum rate of 35%.
The exchange of outstanding stock options to acquire Common Stock for
cash pursuant to the terms of the Reorganization Agreement and the Plan of
Merger will also be a taxable transaction for federal income tax purposes under
the Code and may also be a taxable transaction under state, local and other
laws. Each optionee will recognize ordinary income equal to the amount of cash
received by the optionee pursuant to the Merger in exchange for his stock
options.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS BASED UPON
CURRENT LAW AND IS INTENDED FOR GENERAL INFORMATION ONLY. EACH JEFFERSON
STOCKHOLDER AND OPTIONEE IS URGED TO CONSULT HIS TAX ADVISOR CONCERNING THE
SPECIFIC TAX CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER OR OPTIONEE,
INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL OR OTHER TAX LAWS AND OF
ANY PROPOSED CHANGES IN THE CODE.
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ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for as a purchase for financial reporting
purposes. Under this method of accounting, ISBF will record the acquisition of
Jefferson at its cost at the Effective Time of the Merger, which cost would
include the cash paid in the Merger and all direct acquisition costs. The
acquisition cost will be allocated to the acquired assets and liabilities of
Jefferson based upon their fair values at the Effective Time of the Merger in
accordance with generally accepted accounting principles. Acquisition cost in
excess of the fair values of the net assets acquired, if any, will be recorded
as an intangible asset and amortized for financial accounting purposes. The
reported income of ISBF will include the operations of Jefferson after the
Effective Date of the Merger.
OPTION AGREEMENT
In connection with the Merger, ISBF and Jefferson entered into the
Option Agreement, pursuant to which Jefferson granted to ISBF the ISBF Option,
exercisable in whole or in part only if certain triggering events were to
occur, to purchase up to 241,000 authorized but unissued shares of Common Stock
at a price of $19.375 per share, which would represent approximately 9.99% of
the issued and outstanding shares of Common Stock after the exercise of the
ISBF Option. The Option Agreement is in a form customary to cash acquisitions
of publicly traded companies, the purpose of which is, among other things, to
provide additional assurance that the proposed Merger will be consummated. The
ISBF Option becomes exercisable only upon the occurrence of certain "purchase
events" which include the following: (i) Jefferson entering into an acquisition
agreement with another party; (ii) any person acquiring 15% or more of the
voting power of Jefferson without ISBF's consent, and subsequent to such
acquisition either (x) Jefferson breaches a material covenant or obligation
contained in the Reorganization Agreement, (y) the stockholders of Jefferson do
not approve the Reorganization Agreement or (z) the Board of Directors
withdraws or modifies its recommendation that stockholders approve the
Reorganization Agreement; or (iii) after a bona fide acquisition proposal is
made by a third party, either (x) Jefferson breaches a material covenant or
obligation contained in the Reorganization Agreement, (y) the stockholders of
Jefferson do not approve the Reorganization Agreement or (z) the Board of
Directors withdraws or modifies its recommendation that stockholders approve
the Reorganization Agreement. The Option Agreement is attached hereto as
Appendix B and should be read in its entirety.
EXPENSES OF THE MERGER
Except as otherwise provided in the Reorganization Agreement, each
party to the Reorganization Agreement shall bear and pay all costs and expenses
("Costs and Expenses") incurred by it in connection with the transactions
contemplated by the Reorganization Agreement, including fees and expenses of
its own financial advisors, consultants, accountants and counsel, and other
costs and expenses. However, (i) if the failure to consummate the Merger shall
be due to the willful breach of a representation or warranty
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by one of the parties to the Reorganization Agreement or to the willful failure
of one of the parties to perform or observe its covenants, agreements or
obligations set forth therein to be performed or observed by it at or before
the Effective Date, then such party shall pay to the other party to the
Reorganization Agreement all Costs and Expenses incurred by such other party in
connection with the Reorganization Agreement and the transactions contemplated
thereby in addition to any remedies at law or in equity which may be available
to the other party for breach of the Reorganization Agreement or (ii) if the
Merger is not consummated for any reason other than the willful breach of a
representation or warranty by Jefferson or Jefferson Federal or the willful
failure by either of them to perform their respective covenants, agreements or
obligations, then ISBF shall pay to Jefferson Federal all costs and expenses
incurred by it as a result of Jefferson Federal's proposed conversion to a
Louisiana savings bank.
In order to increase the likelihood that the transactions contemplated
by the Reorganization Agreement will be consummated and to induce ISBF and ISB
to enter into the Reorganization Agreement, Jefferson agreed to pay ISBF a fee
(the "Fee") of $250,000 upon the occurrence of a Purchase Event (as defined) so
long as the Purchase Event occurs prior to a Fee Termination Event (as
defined). A Fee Termination Event shall be the first to occur of the
following: (i) the Effective Date, (ii) termination of the Reorganization
Agreement in accordance with the terms thereof prior to the occurrence of a
Purchase Event (other than a termination by ISBF 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 the Reorganization
Agreement by ISBF as a result of a willful breach of any material
representation, warranty, covenant or agreement of Jefferson. The term
Purchase Event shall mean any of the following events or transactions: (i) the
execution by Jefferson or any subsidiary thereof of an agreement to engage in
an acquisition transaction without ISBF's prior written consent or a
recommendation by the Board of Directors of Jefferson that the stockholders of
Jefferson approve or accept any acquisition transaction with any person other
than ISBF or any affiliate of ISBF; (ii) any person (other than ISBF or any
affiliate of ISBF), other than in connection with a transaction to which ISBF
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 Common Stock and subsequent to such acquisition, (x) Jefferson shall
have breached any material covenant or obligation contained in the
Reorganization Agreement and such breach would entitle ISBF to terminate the
Reorganization Agreement or (y) the holders of the Common Stock shall not have
approved the Reorganization Agreement or (z) the Board of Directors of
Jefferson shall have withdrawn or modified in a manner adverse to ISBF the
recommendation of the Board of Directors of Jefferson with respect to the
Reorganization Agreement; and (iii) after a bona fide proposal is made by any
person other than ISBF or any affiliate of ISBF to Jefferson or its
stockholders to engage in an acquisition transaction, (x) Jefferson shall have
breached any material covenant or obligation contained in the Reorganization
Agreement and such breach would entitle ISBF to terminate the Reorganization
Agreement or (y) the holders of the Common Stock shall not have approved the
Reorganization Agreement or (z) the Board of Directors of Jefferson shall have
withdrawn or modified in
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a manner adverse to ISBF the recommendation of the Board of Directors of
Jefferson with respect to the Reorganization Agreement.
DISSENTERS' RIGHTS
Dissenting stockholders who comply with the procedural requirements of
the BCL will be entitled to receive payment of the fair cash value of their
shares if the Merger is effected with the approval of less than eighty percent
of Jefferson's total voting power. Section 12:131 of the BCL sets forth the
procedures which must be complied with in order to qualify for dissenters'
rights. THE FOLLOWING DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
PROVISIONS OF SECTION 12:131 OF THE BCL AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THOSE PROVISIONS, A COPY OF WHICH IS ATTACHED HERETO AS APPENDIX
D. SUCH PROVISIONS MUST BE STRICTLY COMPLIED WITH OR A STOCKHOLDER'S
DISSENTERS' RIGHTS WILL BE LOST.
If an owner of shares of Common Stock wishes to exercise the right to
dissent, such owner must file with Jefferson, prior to or at the Special
Meeting, a written objection to the Merger and the owner must vote his shares
against the Merger at the Special Meeting. Failure to vote against the Merger
proposal will constitute a waiver of the stockholder's dissenters' rights, and
the written objection required by the BCL must be filed with Jefferson in
addition to voting against the Merger if a stockholder wishes to exercise his
dissenters' rights. If the Merger is approved by the required vote,
but by less than eighty percent of the total voting power, Jefferson shall
promptly give written notice thereof, by registered mail, to each stockholder
who filed a written objection. Each stockholder may, within twenty days after
the mailing of such notice to him, file with Jefferson a demand in writing for
the fair cash value of his shares as of the day before the vote was taken at
the Special Meeting; provided that the stockholder (i) states in such demand
the value demanded, (ii) states in such demand a post office address to which
the reply of Jefferson may be sent, and (iii) deposits in escrow in a chartered
bank or trust company located in the parish of Jefferson's registered office
the certificates of Common Stock duly endorsed and transferred to Jefferson
upon the sole condition that such certificates of Common Stock will be
delivered to Jefferson upon payment of the value of the Common Stock determined
in accordance with Section 12:131 of the BCL. The stockholder shall deliver to
Jefferson, with his demand, the written acknowledgement of such bank or trust
company that so holds his certificates of Common Stock. Unless the objection,
demand and acknowledgement discussed above are made and delivered by the
stockholder within the appropriate time period, the stockholder shall
conclusively be presumed to have acquiesced to the Merger and related
transactions.
If Jefferson does not agree to the value stated and demanded by a
dissenting stockholder, or does not agree that a payment is due, it shall,
within twenty days after receipt of such demand and acknowledgement, notify the
stockholder in writing of its disagreement and shall state in such notice the
value it will agree to pay; otherwise Jefferson shall be liable to pay the
value demanded by the dissenting stockholder.
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In the case of disagreement as to the fair cash value, within sixty
days after receipt of Jefferson's notice of disagreement, the dissenting
stockholder may file suit against Jefferson, or ISBF after the Merger, in the
district court in Jefferson's or ISBF's registered office, as the case may be,
praying the court to fix and decree the fair cash value of the Common
Stock as of the day before the vote at the Special Meeting. The court shall,
on such evidence as may be adduced in relation thereto, determine whether
payment is due, and if so, the cash value of the Common Stock. Any other
dissenting stockholder entitled to file suit may, within such sixty day period,
intervene as a plaintiff in such suit filed by another stockholder. No order
or decree can be made by the court staying the proposed corporate action.
Failure of the dissenting stockholder to bring suit, or intervene in such suit,
within the sixty days after receipt of notice of disagreement by Jefferson
shall conclusively bind the stockholder to accept the value as fixed by
Jefferson in its notice of disagreement.
Upon institution of a suit by a dissenting stockholder, if Jefferson,
or ISBF after the Merger, deposits in the registry of the court the amount it
deemed to be the fair cash value of the dissenting stockholder's Common Stock
in its notice of disagreement, then if the amount finally awarded to such
stockholder, exclusive of interest and costs, is more than the amount offered
and deposited, the costs of the proceeding will be taxed against Jefferson or
ISBF after the Merger. Otherwise, if the amount deposited exceeds the amount
awarded to the dissenting stockholder, the costs of such a proceeding shall be
taxed against the dissenting stockholder.
ADJOURNMENT OF SPECIAL MEETING
Each proxy solicited hereby requests authority to vote for an
adjournment of the Special Meeting, if an adjournment is deemed to be
necessary. Jefferson may seek an adjournment of the Special Meeting for not
more than 29 days in order to enable Jefferson to solicit additional votes in
favor of the proposal to adopt the Reorganization Agreement and the related
Plan of Merger in the event that such proposal has not received the requisite
vote of stockholders at the Special Meeting and such proposal has not received
the negative votes of the holders of a majority of Jefferson's Common Stock.
If Jefferson desires to adjourn the meeting with respect to such proposal, it
will request a motion that the meeting be adjourned for up to 29 days with
respect to such proposal, and no vote will be taken on such proposal at the
originally scheduled Special Meeting. Each proxy solicited hereby, if properly
signed and returned to Jefferson and not revoked prior to its use, will be
voted on any motion for adjournment in accordance with the instructions
contained therein. If no contrary instructions are given, each proxy received
will be voted in favor of any motion to adjourn the meeting. Unless revoked
prior to its use, any proxy solicited for the Special Meeting will continue to
be valid for any adjournment of the Special Meeting, and will be voted in
accordance with instructions contained therein, and if no contrary instructions
are given, for the proposal in question.
Any adjournment will permit Jefferson to solicit additional proxies
and will permit a greater expression of the stockholders' views with respect to
the Merger proposal. Such an
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adjournment would be disadvantageous to stockholders who are against
the Merger proposal, because an adjournment will give Jefferson additional time
to solicit favorable votes and thus increase the chances of passing the Merger
proposal.
If a quorum is not present at the Special Meeting, no proposal will be
acted upon and the Board of Directors of Jefferson will adjourn the Special
Meeting to a later date in order to solicit additional proxies on each of the
proposals being submitted to stockholders.
An adjournment for up to 29 days will not require either the setting
of a new record date or notice of the adjourned meeting as in the case of an
original meeting. Jefferson has no reason to believe that an adjournment of
the Special Meeting will be necessary at this time.
BECAUSE THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
THE PROPOSAL TO ADOPT THE REORGANIZATION AGREEMENT AND THE RELATED PLAN OF
MERGER, AS DISCUSSED ABOVE, THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE POSSIBLE ADJOURNMENT OF THE SPECIAL MEETING. THE HOLDERS OF A
MAJORITY OF THE COMMON STOCK PRESENT, IN PERSON OR BY PROXY, AT THE SPECIAL
MEETING WILL BE REQUIRED TO APPROVE A MOTION TO ADJOURN THE SPECIAL MEETING.
STOCKHOLDER PROPOSALS
If the Merger is not consummated prior to Jefferson's next annual
meeting of stockholders, any proposal which a stockholder wishes to have
included in Jefferson's proxy statement and form of proxy relating to
Jefferson's 1997 Annual Meeting of Stockholders must be received by Jefferson
at 1011 Fourth Street, Gretna, Louisiana 70053, no later than November 15,
1996. If such proposal is in compliance with all of the requirements of Rule
14a-8 of the Exchange Act, it will be included in the Proxy Statement and set
forth on the form of proxy issued for the next annual meeting of stockholders.
It is urged that any such proposals be sent by certified mail, return receipt
requested.
Stockholder proposals which are not submitted for inclusion in
Jefferson's proxy materials pursuant to Rule 14a-8 under the Exchange Act may
be brought before an annual meeting provided that the requirements set forth in
Article 9.D of Jefferson's Articles of Incorporation are satisfied in a timely
manner. To be timely, a stockholder's notice must be delivered to, or mailed
and received at, the principal executive offices of Jefferson not less than 60
days prior to the anniversary date of the immediately preceding annual meeting
of stockholders of Jefferson. A stockholder's notice must set forth as to each
matter the stockholder proposes to bring before an annual meeting (a) a brief
description of the business desired to be brought before the annual meeting
and the reasons for conducting such business at the annual meeting and (b)
certain other information set forth in Article 9.D of Jefferson's Articles of
Incorporation.
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OTHER MATTERS
Each proxy solicited hereby also confers discretionary authority on
Karen L. Knight and Dr. G. Robert Murphy, Jr., Directors of Jefferson, to vote
the proxy with respect to the approval of the minutes of the last
meeting of stockholders, matters incident to the conduct of the meeting, and
upon such other matters as may properly come before the Special Meeting.
Management is not aware of any business that may properly come before the
Special Meeting other than those matters described above in this Proxy
Statement. However, if any other matters should properly come before the
Special Meeting, it is intended that the proxies solicited hereby will be voted
with respect to those other matters in accordance with the judgment of the
persons voting the proxies.
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APPENDIX A
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
A-1
41
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
A-2
42
INDEX
Page
----
ARTICLE I
THE MERGER
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-8
1.2. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
1.3. Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . A-9
1.4. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
1.5. Effective Date and Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-9
1.6. The Charter Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
1.7. Modification of Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-10
ARTICLE II
CONVERSION OF JEFFERSON AND INTERIM SHARES
2.1. Conversion of Jefferson Common Stock and Options . . . . . . . . . . . . . . . . . . . A-10
2.2. Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-11
2.3. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-12
2.4. Interim Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF JEFFERSON
AND JEFFERSON SAVINGS BANK
3.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-13
3.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-14
3.3. Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-15
3.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
3.5. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-16
3.6. Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
3.7. Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . A-17
3.8. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-18
3.9. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-19
3.10. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
3.11. Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
3.12. Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-20
3.13. Reserve for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
A-3
43
Page
----
3.14. Employment Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
3.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-21
3.16. Shareholder Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-22
3.17. Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
3.18. Broker's and Other Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
3.19. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . A-23
3.20. Jefferson Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-23
3.21. Loans, Real Estate Owned, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
3.22. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
3.23. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
3.24. Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-24
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
4.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
4.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-25
4.3. Authority; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-26
4.4. Litigation and Other Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
4.5. Ability to Pay Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
4.6. Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
4.7. Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
4.8. Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
4.9. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-27
4.10. Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
4.11. Company Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
4.12. Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-28
ARTICLE V
COVENANTS OF THE PARTIES
5.1. Conduct of the Business of Jefferson . . . . . . . . . . . . . . . . . . . . . . . . . A-29
5.2. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-30
5.3. Approval of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
5.4. Current Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
5.5. Access to Properties and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . A-31
5.6. Regulatory Applications and Proxy Solicitation Matters . . . . . . . . . . . . . . . . A-32
5.7. Further Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-33
5.8. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
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Page
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5.9. Failure to Fulfill Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
5.10. Employment of Jefferson Personnel . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
5.11. Indemnification Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-34
5.12. Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
(a) Transferred Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-35
(b) Health Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-36
(c) Jefferson 401(k) Profit Sharing Plan and ESOP . . . . . . . . . . . . . . . . . . A-36
(d) The Jefferson ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-36
(e) The Company ESOP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-38
5.13. Disclosure Supplements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-38
5.14. Operating Synergies; Conformance to Reserve Policies, Etc. . . . . . . . . . . . . . . A-38
5.15. Environmental Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
5.16. Charter Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
5.17. Jefferson Board of Directors Action . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
5.18. Additional Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-39
ARTICLE VI
CLOSING CONDITIONS
6.1. Conditions of Each Party's Obligations Under This Agreement . . . . . . . . . . . . . . A-39
(a) Approval of Jefferson Stockholders . . . . . . . . . . . . . . . . . . . . . . . . A-40
(b) Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
(c) Suits and Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
6.2. Conditions to the Obligations of the Company and ISB
Under This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-40
(a) Representations and Warranties; Performance of
Obligations of Jefferson and Jefferson Savings Bank . . . . . . . . . . . . . . . A-40
(b) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
(c) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-41
6.3. Conditions to the Obligations of Jefferson Under This Agreement . . . . . . . . . . . . A-41
(a) Representations and Warranties; Performance of
Obligations of the Company and ISB . . . . . . . . . . . . . . . . . . . . . . . . A-41
(b) Opinion of Counsel to the Company and ISB . . . . . . . . . . . . . . . . . . . . A-41
(c) Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
(d) Board Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
(e) Deposit of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
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Page
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ARTICLE VII
TERMINATION
7.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-42
7.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-44
ARTICLE VIII
MISCELLANEOUS
8.1. Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . A-44
8.2. Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-44
8.3. Expenses; Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-44
8.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-47
8.5. Controlling Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
8.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
8.7. Modifications or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
8.8. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
8.9. Assignment; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
8.10. Consolidation of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-48
8.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-49
8.12. Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-49
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
-------- -----------
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
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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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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.
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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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APPENDIX B
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 29, 1996, by and between ISB
Financial Corporation (the "Company"), a Louisiana corporation and the parent
holding company for Iberia Savings Bank ("ISB"), a Louisiana-chartered savings
bank, and Jefferson Bancorp, Inc. ("Jefferson"), a Louisiana-chartered
corporation and the parent holding company for Jefferson Federal Savings Bank
(the "Bank"), a wholly owned federally chartered stock subsidiary savings bank
(the "Agreement").
W I T N E S S E T H
WHEREAS, the Company, Jefferson and the Bank have entered into a letter
of intent dated as of the date hereof (the "Letter"), which is being executed
simultaneously with the execution of this Agreement; and
WHEREAS, the Company has requested the execution of this Agreement by
Jefferson in order to increase the likelihood that the transactions
contemplated by the Letter and the Definitive Agreement (as such term is
defined in the Letter) will be consummated in accordance with their terms and
as a condition to the Company's obligation to complete the transactions
contemplated by the Letter and the Definitive Agreement and, in consideration
for such obligation, Jefferson has agreed to issue to the Company an option
entitling the Company to purchase shares of its common stock upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the execution of the Letter and the
premises therein and herein contained, the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms and conditions hereof,
Jefferson irrevocably grants to the Company the option ("Option") to purchase
at one time or from time to time an aggregate of 241,000 shares of common
stock, $0.01 par value per share, of Jefferson ("Common Stock") at a price per
share equal to $19.375 (the price per share is referred to below as the
"Purchase Price" and the price when used with respect to a number of shares is
referred to below as the "aggregate Purchase Price" for such shares). As used
in this Agreement, the term "Shares" means the shares of Common Stock subject
to the Option.
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2. EXERCISE OF OPTION.
(a) Subject to the terms and conditions hereof, the Company may
exercise the Option, in whole at any time or in part from time to time, to the
extent not previously exercised, upon the occurrence of a Purchase Event (as
defined below) so long as the Purchase Event occurs prior to the Termination
Date (as defined below). The Termination Date shall be the first to occur of
the following: (i) the effective time of the merger of Jefferson with and into
a subsidiary corporation formed by the Company in order to effectuate the
acquisition of Jefferson pursuant to the Definitive Agreement, (ii) 12 months
following the first occurrence of a Purchase Event (as defined below), (iii)
termination of the Letter or the Definitive Agreement in accordance with its
respective terms prior to the occurrence of a Purchase Event or (iv) 12 months
after the termination of the Definitive Agreement by the Company as a result of
a willful breach of any material representation, warranty, covenant or
agreement of Jefferson.
(b) 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 the Bank
(such entities hereinafter referred to as "Jefferson Subsidiaries"),
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 Sections 3(a)(9) and
13(d)(3) of the Securities Exchange Act of 1934 (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 of 1933 (the "Securities Act")) or the
Board of Directors of Jefferson shall have recommended that the
shareholders 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 or any Jefferson Subsidiary, (y) a purchase, lease or other
acquisition of all or substantially all of the assets of Jefferson or
any Jefferson 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
or any Jefferson Subsidiary; provided that the term "Acquisition
Transaction" does not include any internal merger or consolidation
involving only Jefferson and/or Jefferson 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 Common Stock (the term "beneficial
ownership" for purposes of this Agreement having the meaning
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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 the Definitive Agreement and such breach would entitle the
Company to terminate the Letter or the Definitive Agreement or (y) the
holders of the Common Stock shall not have approved the Definitive
Agreement at the meeting of such shareholders held for the purpose of
voting on the Definitive Agreement, such meeting shall not have been
held or shall have been canceled prior to termination of the Definitive
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
the Definitive 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
shareholders to engage in an Acquisition Transaction, (x) Jefferson
shall have breached any material covenant or obligation contained in the
Letter or the Definitive Agreement and such breach would entitle the
Company to terminate the Letter or the Definitive Agreement, (y) the
holders of the Common Stock shall not have approved the Letter or the
Definitive Agreement at the meeting of such shareholders held for the
purpose of voting on the Definitive Agreement, such meeting shall not
have been held or shall have been canceled prior to termination of the
Definitive 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
the Definitive Agreement; or
(c) Jefferson shall promptly give written notice to the Company of
the occurrence of a Purchase Event known to Jefferson; however, the giving of
such notice by Jefferson shall not be a condition to the right of the Company
to exercise the Option. If more than one transaction or event giving rise to a
Purchase Event is undertaken or effected, then all such transactions shall give
rise to only one Purchase Event, as applicable, which Purchase Event shall be
deemed continuing for all purposes hereunder until all such transactions or
events are abandoned.
(d) Notwithstanding anything to the contrary contained in this
Agreement, Jefferson shall not be obligated to issue Shares upon exercise of
the Option (i) in the absence of any required governmental or regulatory
approval or consent necessary for Jefferson to issue the Shares or for the
Company to exercise the Option or prior to the expiration or termination of any
waiting period required by law, (ii) in the event that the Company is in
material breach of its covenants or obligations contained in the Letter or the
Definitive Agreement or (iii) so long as any injunction or other order, decree
or ruling issued by any federal or state court of competent jurisdiction is in
effect which prohibits the sale or delivery of the Shares. If the Option is
otherwise exercisable but cannot be exercised prior to termination as specified
in Section 2(a) solely because of any injunction, order or similar restraint
issued by a court of competent jurisdiction, the Option shall continue and will
expire on the
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twentieth business day after such injunction, order or restraint shall have
been dissolved or when such injunction, order or restraint shall have become
permanent and no longer subject to appeal, as the case may be.
3. NOTICE OF EXERCISE; PAYMENT AND DELIVERY OF SHARES.
(a) In the event that the Company desires to exercise the Option, the
Company shall send a written notice to Jefferson specifying the total number of
Shares it will purchase and a place and date for the closing (the "Closing") of
such purchase, which date shall be not later than 15 business days nor earlier
than two business days from the date such notice is given (the "Closing Date").
If prior notification to or approval of the FRB, the FDIC, the OTS or any other
regulatory authority is required in connection with such purchase, Jefferson
shall cooperate with the Company in the filing of the required notice of
application for approval and the obtaining of such approval and the closing
shall occur immediately following such regulatory approvals (and any mandatory
waiting periods).
(b) On each Closing Date, the Company shall (i) pay to Jefferson, in
immediately available funds by wire transfer to a bank account designated by
Jefferson, an amount equal to the Purchase Price multiplied by the number of
Shares to be purchased on such Closing Date, and (ii) present and surrender
this Agreement to Jefferson at the address of Jefferson specified in Section
13(b) hereof. Jefferson shall pay any and all stamp taxes in connection with
the issuance and sale of the Shares and in connection with the exercise of the
Option, and will save the Company harmless against any and all liabilities with
respect to such taxes.
(c) At each Closing, simultaneously with the delivery of immediately
available funds and surrender of this Agreement as provided in Section 3(b),
(i) Jefferson shall deliver to the Company (A) a certificate or certificates
representing the Shares to be purchased at such Closing, which Shares shall be
free and clear of all liens, claims, charges and encumbrances of any kind
whatsoever and subject to no pre-emptive rights, and (B) if the Option is
exercised in part only, an executed new agreement with the same terms as this
Agreement evidencing the right to purchase the balance of the shares of Common
Stock purchasable hereunder, and (ii) the Company shall deliver to Jefferson a
letter agreeing that the Company shall not offer to sell or otherwise dispose
of such Shares in violation of applicable federal and state law or the
provisions of this Agreement.
(d) In addition to any other legend that is required by applicable
law, certificates for the Shares delivered at each Closing shall be endorsed
with a restrictive legend which shall read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF AN OPTION AGREEMENT
DATED AS OF MARCH 29, 1996. A COPY OF SUCH AGREEMENT WILL BE
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PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY
ISSUER OF A WRITTEN REQUEST THEREFOR.
It is understood and agreed that the above legend shall be removed by
delivery of substitute certificate(s) without such legend if the Company shall
have delivered to Jefferson a copy of a letter from the staff of the Securities
and Exchange Commission, or an opinion of counsel in form and substance
reasonably satisfactory to Jefferson and its counsel, to the effect that such
legend is not required for purposes of the Securities Act.
4. REPRESENTATIONS AND WARRANTIES OF JEFFERSON. Jefferson hereby
represents and warrants to the Company as follows:
(a) Due Authorization. Jefferson has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Jefferson. This Agreement has
been duly executed and delivered by Jefferson. The execution and delivery of
this Agreement, the consummation of the transactions contemplated hereby and
compliance by Jefferson with any of the provisions hereof will not (i) conflict
with or result in a breach of any provision of its Certificate of Incorporation
or Bylaws or a default (or give rise to any right of termination, cancellation
or acceleration) under any of the terms, conditions or provisions of any note,
bond, debenture, mortgage, indenture, license, material agreement or other
material instrument or obligation to which Jefferson is a party, by which it or
any of its properties or assets may be bound, or (ii) violate any order, writ,
injunction, decree, statute, rule or regulations applicable to Jefferson or any
of its properties or assets. No consent or approval by any governmental
authority, other than compliance with applicable federal and state securities
and banking laws or regulations, is required of Jefferson in connection with
the execution and delivery by Jefferson of this Agreement or the consummation
by Jefferson of the transactions contemplated hereby.
(b) Authorized Stock. Jefferson has taken all necessary corporate and
other action to authorize and reserve and to permit it to issue, and, at all
times from the date hereof until the obligation to deliver Common Stock upon
the exercise of the Option terminates, will have reserved for issuance, upon
exercise of the Option, the number of shares of Common Stock necessary for the
Company to exercise the Option, and Jefferson will take all necessary corporate
action to authorize and reserve for issuance all additional shares of Common
Stock or other securities which may be issued pursuant to Section 6 upon
exercise of the Option. The shares of Common Stock to be issued upon due
exercise of the Option, including all additional shares of Common Stock or
other securities which may be issuable pursuant to Section 6, upon issuance
pursuant hereto, shall be duly and validly issued, fully paid and
nonassessable, and shall be delivered free and clear of all liens, claims,
charges and
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encumbrances of any kind or nature whatsoever, including any preemptive rights
of any stockholder of Jefferson.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to Jefferson that:
(a) Due Authorization. The Company has all requisite corporate power
and authority to enter into this Agreement and, subject to any approvals or
consents referred to herein, to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been duly
executed and delivered by the Company.
(b) Purchase Not for Distribution. This Option is not being, and any
Shares or other securities acquired by the Company upon exercise of the Option
will not be, acquired with a view to the public distribution thereof and will
not be transferred or otherwise disposed of except in a transaction registered
or exempt from registration under the Securities Act.
6. ADJUSTMENT UPON CHANGES IN CAPITALIZATION, ETC.
(a) In the event of any change in Common Stock by reason of a stock
dividend, stock split, split-up, recapitalization, combination, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Purchase Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that the Company shall receive, upon exercise of the
Option, the number and class of shares or other securities or property that the
Company would have received in respect of Common Stock if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable. If any additional shares of Common Stock are issued after the date
of this Agreement (other than pursuant to employee stock options or an event
described in the first sentence of this Section 6(a)), the number of shares of
Common Stock subject to the Option shall be adjusted so that, after such
issuance, it, together with all shares of Common Stock previously issued
pursuant hereto, equals 9.99% of the number of shares of Common Stock then
issued and outstanding, without giving effect to any shares subject to or
issued pursuant to the Option.
(b) In the event that Jefferson shall enter into an agreement: (i)
to consolidate with or merge into any person, other than the Company or one of
its subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger; (ii) to permit any person, other than the Company
or one of its subsidiaries, to merge into Jefferson and Jefferson shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Common Stock shall be changed into or exchanged for
stock or other securities of Jefferson or any other person or cash or any other
property or the outstanding shares of Jefferson Common Stock immediately prior
to such merger
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shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the merged company; or (iii) to sell or otherwise transfer
all or substantially all of its assets to any person, other than the Company or
one of its subsidiaries, then, and in each such case, the agreement governing
such transaction shall make proper provision so that upon the consummation of
any such transaction and upon the terms and conditions set forth herein, the
Company shall receive for each Share with respect to which the Option has not
been exercised an amount of consideration in the form of and equal to the per
share amount of consideration that would be received by the holder of one share
of Common Stock less the Purchase Price (and, in the event of an election or
similar arrangement with respect to the type of consideration to be received by
the holders of Common Stock, subject to the foregoing, proper provision shall
be made so that the holder of the Option would have the same election or
similar rights as would the holder of the number of shares of Common Stock for
which the Option is then exercisable).
7. REGISTRATION OF THE SHARES.
(a) If the Company requests Jefferson in writing to register under
the Securities Act or any other applicable securities registration requirements
any Shares which have been purchased by the Company hereunder, Jefferson will
use its best efforts to cause the Shares so specified in such request to be
registered as soon as practicable so as to permit the sale or other
distribution by the Company of such Shares (and to keep such registration in
effect for a period of at least 180 days) and in connection therewith shall
prepare and file as promptly as reasonably possible (but in no event later than
45 days from receipt of the Company's request) a registration statement under
the Securities Act to effect such registration on an appropriate form, which
would permit the sale of the Shares by the Company in the manner specified by
the Company in its request. In connection with such registration, Jefferson
shall use its best efforts to cause to be delivered to the Company (and any
other holder whose Shares are the subject of such registration) such
certificates, opinions, accountants' letters and other documents as the Company
(or any such other holder) shall reasonably request and are customarily
rendered in connection with the registration of securities under the Securities
Act. The Company shall provide all information reasonably requested by
Jefferson for inclusion in any documents to be prepared hereunder. All
expenses incurred by Jefferson in complying with the provisions of this Section
7, including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for Jefferson and blue sky fees and
expenses shall be paid by Jefferson. Underwriting discounts and commissions to
brokers and dealers relating to the Shares, fees and disbursements of counsel
to the Company any other expenses incurred by the Company in connection with
such registration shall be borne by the Company. Jefferson shall not be
obligated to make effective more than one registration statement pursuant to
this Section 7(a).
(b) Jefferson shall notify the Company in writing not less than ten
business days prior to filing a registration statement under the Securities Act
with respect to any Common Stock (other than a filing on Form S-8) of
Jefferson's intention so to file. If the Company
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wishes to have any portion of its Shares purchased hereunder included in such
registration statement, it shall advise Jefferson in writing to that effect
within five business days following receipt of such notice from Jefferson
pursuant to the preceding sentence, and Jefferson will thereupon include the
number of shares indicated by the Company under such registration statement,
provided, however, that if the managing underwriter determines and advises
Jefferson and the Company in writing that the inclusion in the registration
statement of the number of shares indicated by the Company would be likely to
materially and adversely affect the successful marketing of the Common Stock
proposed to be registered and sold by Jefferson, then the number of shares
indicated by the Company to be included in the underwriting shall be reduced or
eliminated pro rata among all holders of shares of Common Stock requesting such
registration, and further provided, however, that nothing herein shall prevent
Jefferson from, at any time, abandoning or delaying any registration.
(c) The rights provided under this Section 7 shall expire upon the
third annual anniversary of the first acquisition of Shares by the Company
hereunder.
8. INDEMNIFICATION.
(a) In connection with any registration under the provisions of
Section 7 hereof, Jefferson shall indemnify and hold harmless the Company and
any underwriter (as defined in the Securities Act) for the Company and each
person who controls the Company or such underwriter within the meaning of the
Securities Act, from and against any and all loss, damage, liability, cost and
expense to which the Company or any such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by or arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any preliminary or final
offering prospectus contained therein or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; provided, however, that Jefferson will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue or alleged untrue statement or
omission so made in conformity with information furnished by the Company such
underwriter or such controlling persons in writing specifically for use in the
preparation thereof.
(b) The Company will indemnify and hold harmless Jefferson, any
underwriter for Jefferson and each person who controls Jefferson or such
underwriter within the meaning of the Securities Act, from and against any and
all loss, damage, liability, cost and expense to which Jefferson or any such
underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, damages, liabilities, costs or expenses
are caused by or arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any preliminary or final offering prospectus contained therein or any amendment
or supplement thereto, or
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arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, in each case to the extent, but only to the extent, that such
untrue or allegedly untrue statement or omission was so made in conformity with
information furnished by the Company in writing specifically for use therein.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of Section 8(a) or (b) of notice of the commencement of any action
involving the subject matter of the foregoing indemnity provisions, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party pursuant to the provisions of Section 8(a) or (b), promptly
notify the indemnifying party of the commencement thereof; except to the extent
of any actual prejudice to the indemnifying party, the omission to so notify
the indemnifying party will not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise hereunder. In
case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any action include both the
indemnified party and the indemnifying party and there is a conflict of
interests which would prevent counsel for the indemnifying party from also
representing the indemnified party, the indemnified party or parties shall have
the right to select one separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of Section 8(a) or (b) for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation, unless (i) the
indemnified party shall have employed counsel in accordance with the provisions
of the preceding sentence, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the notice of the commencement
of the action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
(d) If recovery is not available under the foregoing indemnification
provisions, for any reason other than as expressly specified therein, the
parties entitled to indemnification by the terms thereof shall be entitled to
contribution to liabilities and expenses, except to the extent that
contribution is not permitted under Section 11(f) of the Securities Act. In
determining the amount of contribution to which the respective parties are
entitled, there shall be considered the parties' relative fault, knowledge and
access to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and/or prevent any statement or omission,
and any other equitable considerations appropriate under the circumstances.
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9. QUOTATION. If the Common Stock or any other securities to be
acquired upon exercise of the Option are then authorized for quotation or
trading or listing on the Nasdaq Stock Market's National Market or any
securities exchange, Jefferson, upon the request of the Company after the
occurrence of a Purchase Event, will promptly file an application, if required,
to authorize for quotation or trading or listing the shares of Common Stock or
other securities to be acquired upon exercise of the Option on the Nasdaq Stock
Market's National Market or such other securities exchange and will use its
best efforts to obtain approval, if required, of such quotation or listing as
soon as practicable.
10. DIVISION OF OPTION. Upon the occurrence of and following a
Purchase Event, this Agreement (and the Option granted hereby) shall be
exchangeable, without expense, at the option of the Company, upon presentation
and surrender of this Agreement at the principal office of Jefferson, for other
agreements providing for options of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. The terms "Agreement" and "Option" as used herein
include any other agreements and related options for which this Agreement (and
the Option granted hereby) may be exchanged. Upon receipt by Jefferson of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and in the case of loss, theft or destruction of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, Jefferson will execute and deliver a new
agreement of like tenor and date.
11. FURTHER ASSURANCES. Jefferson agrees to execute and deliver such
documents and instruments and take such further actions as may be necessary or
appropriate or the Company may reasonably request in order to ensure that the
Company receives the full benefits of this Agreement (including, without
limitation, the prompt filing of any required notice or application for
approval with any applicable federal or state regulatory agency and the
expeditious processing of the same). Prior to the Termination Date, Jefferson
will refrain from taking any action which would have the effect of preventing
or interfering with the delivery by Jefferson of the Shares (or other
securities deliverable pursuant to Section 6 hereof) to the Company upon any
exercise of the Option or from otherwise performing its obligations under this
Agreement.
12. REMEDIES. The parties agree that the Company would be
irreparably damaged if for any reason Jefferson failed to issue any of the
Shares (or other securities deliverable pursuant to Section 6 hereof) upon
exercise of the Option or to perform any of its other obligations under this
Agreement, and that the Company would not have an adequate remedy at law in
such event. Accordingly, the Company shall be entitled to specific performance
and injunctive and other equitable relief to enforce the performance of this
Agreement by Jefferson. This provision is without prejudice to any other
rights that the Company may have against Jefferson for any failure to perform
its obligations under this Agreement.
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13. MISCELLANEOUS.
(a) Expenses. Except as otherwise provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial consultants, investment
bankers, accountants and counsel.
(b) Notices. All notices or other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
prepaid registered or certified mail (return receipt requested) or by cable,
telegram, telecopy or telex addressed as follows:
(i) If to the Company, to:
ISB Financial Corporation
1101 E. Admiral Doyle Drive
New Iberia, Louisiana 70560
ATTN: Larrey G. Mouton
President and Chief Executive Officer
Copy to:
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
Washington, DC 20005
ATTN: Hugh T. Wilkinson, Esq.
(ii) If to Jefferson, to:
Jefferson Bancorp, Inc.
1011 Fourth Street
Gretna, Louisiana 70053
ATTN: Karen L. Knight
President and Chief Executive Officer
Copy to:
Housley, Kantarian & Bronstein, P.C.
Suite 700
1220 19th Street, N.W.
Washington, D.C. 20036
ATTN: Leonard Volin, Esq.
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or such other address as shall be furnished in writing by any party, and any
such notice or communication shall be deemed to have been given as of the date
so mailed.
(c) Severability. If any term, provision, covenant or restriction
of this Agreement is held to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated.
If for any reason any court or regulatory agency determines that the
Option will not permit the holder to acquire the full number of Shares, it is
the express intention of Jefferson to allow the holder to acquire such lesser
number of shares as may be permissible, without any amendment or modification
hereof, and any such delivery or deliveries of Shares by Jefferson shall be in
full satisfaction of Jefferson's obligation to deliver Shares hereunder.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Louisiana without giving
effect to the principles of conflicts of laws thereof.
(e) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(f) Headings. The section headings herein are for convenience
only and shall not affect the construction hereof.
(g) Assignment. The Company may assign this Agreement to any
wholly owned subsidiary of the Company or ISB. The Company may not, without
the prior written consent of Jefferson, assign this Agreement to any other
person in whole or in part, provided that upon the occurrence of and following
a Purchase Event, the Company may sell, transfer, assign or otherwise dispose
of its rights and obligations hereunder in whole or in part without such
consent. In the case of any permitted sale, transfer, assignment or
disposition in part of this Option, Jefferson shall do all things necessary to
facilitate the same and the person to whom this Option is sold, transferred
assigned or disposed of shall agree in writing to the terms and conditions
hereof. This Agreement shall not be assignable by Jefferson except by
operation of law. Subject to the foregoing, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
(h) Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person
(other than an assignee or transferee of the Company pursuant to Section 13(g)
hereof) any rights or remedies of any nature whatsoever under or by any reason
of this Agreement.
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14. ENTIRE AGREEMENT. This Agreement, including the documents and
other writings referred to herein or delivered pursuant hereto, contains the
entire agreement and understanding of the parties with respect to its subject
matter. There are no restrictions, agreements, promises, warranties, covenants
or undertakings between the parties other than those expressly set forth herein
or therein. This Agreement supersedes all prior agreements and understandings
between the parties, both written and oral, with respect to its subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
ISB FINANCIAL CORPORATION
Attest:
/s/Wayne L. Robideaux By: /s/Larrey G. Mouton
- - ------------------------------------ --------------------------------
Larrey G. Mouton
President and Chief Executive
Officer
JEFFERSON BANCORP, INC.
Attest:
/s/G. Robert Murphy, Jr. By: /s/Karen L. Knight
- - ------------------------------------ --------------------------------
Karen L. Knight
President and Chief Executive
Officer
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APPENDIX C
[Charles Webb letterhead]
August 19, 1996
Board of Directors
Jefferson Bancorp, Inc.
1011 Fourth Street
Gretna, Louisiana 70053
Dear Ladies and Gentlemen:
You have requested our opinion as an independent investment banking firm
regarding the fairness, from a financial point of view, to the stockholders of
Jefferson Bancorp, Inc. ("Jefferson"), of the consideration to be received by
such stockholders in the merger (the "Merger") between Jefferson and a wholly
owned subsidiary of ISB Financial Corporation, a Louisiana Corporation
("ISBF"). We have not been requested to opine as to, and our opinion does not
in any matter address, Jefferson's underlying business decision to proceed with
or effect the Merger.
Pursuant to the Agreement and Plan of Merger and Reorganization, dated May 24,
1996, by and among Jefferson and its wholly owned subsidiary, Jefferson Federal
Savings Bank ("Jefferson Federal"), and ISBF and its wholly owned subsidiary,
Iberia Savings Bank (the "Agreement"), at the effective time of the Merger,
ISBF will acquire all of Jefferson's issued and outstanding shares of common
stock (2,195,635) shares as of the date of the Agreement, which includes 24,130
shares that, while allocated to Jefferson's Management and Recognition Plan,
have not been granted) and the holders of such shares of common stock will
receive $23.00 in cash in exchange for each share of Jefferson common stock.
In addition, the holders of unexercised and outstanding options awarded
pursuant to Jefferson's 1994 Directors' Stock Option Plan, 1994 Key Employee
Stock Compensation Program and the 1992 Stock Incentive Plan will receive, for
each share subject to such option, the difference between $23.00 and the price
the holder was required to pay for such share upon the exercise of the option
(127,336 unexercised options outstanding as of the date of the Agreement). The
complete terms of the proposed transaction are described in the Agreement, and
this summary is qualified in its entirety by reference thereto.
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Jefferson Bancorp, Inc.
August 19, 1996
Page 2
Charles Webb & Company, as part of its investment banking business, is
regularly engaged in the evaluation of businesses and securities in connection
with mergers and acquisitions, negotiated underwritings, and distributions of
listed and unlisted securities. We are familiar with the market for common
stocks of publicly traded banks, savings institutions and bank and savings
institution holding companies.
In connection with this opinion we reviewed certain financial and other
business data supplied to us by Jefferson, including (i) the prospectus dated
July 7, 1994 for Jefferson's offering of common stock in connection with the
reorganization of Jefferson Federal from the mutual holding company to the
stock holding company structure, (ii) Annual Reports, Proxy Statements and Form
10-Ks for the years ended December 31, 1994 and 1995, (iii) Form 10-Qs for the
quarters ended March 31, 1995, June 30, 1995, September 30, 1995, and March 31,
1996, and (iv) certain other information we deemed relevant. We discussed with
senior management and the Boards of Directors of Jefferson and its wholly owned
subsidiary, Jefferson Federal, the current position and prospective outlook for
Jefferson. We considered historical quotations and the prices of recorded
transactions in Jefferson's common stock since its public offering in August
1994. We reviewed financial and stock market data of other savings
institutions, particularly in the southern region of the United States, and the
financial and structural terms of several other recent transactions involving
mergers and acquisitions of savings institutions or proposed changes of control
of comparably situated companies.
For ISBF, we reviewed the audited financial statements for the year ended
December 31, 1995, quarterly financial statements (unaudited) for the preceding
quarters since its initial public offering in April 1995, and certain other
information deemed relevant.
For purposes of this opinion we have relied, without independent verification,
on the accuracy and completeness of the material furnished to us by Jefferson
and ISBF and the material otherwise made available to us, including information
from published sources, and we have not made any independent effort to verify
such data. With respect to the financial information, including forecasts and
asset valuations we received from Jefferson, we assumed (with your consent)
that they had been reasonably prepared reflecting the best currently available
estimates and judgment of Jefferson's management. In addition, we have not
made or obtained any independent appraisals or evaluations of the assets or
liabilities, or of potential and/or contingent liabilities of Jefferson or
ISBF. We have further relied on the assurances of management of Jefferson and
ISBF that they are not aware of any facts that would make such information
inaccurate or misleading. We express no opinion on matters of a legal,
regulatory, tax or accounting nature or the ability of the Merger, as set forth
in the Agreement, to be consummated.
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Jefferson Bancorp, Inc.
August 19, 1996
Page 3
In rendering our opinion, we have assumed that in the course of obtaining the
necessary approvals for the Merger, no restrictions or conditions will be
imposed that would have a material adverse effect on the contemplated benefits
of the Merger to Jefferson or the ability to consummate the Merger. Our
opinion is based on the market, economic and other relevant considerations as
they exist and can be evaluated on the date hereof.
Consistent with the engagement letter with you, we have acted as financial
advisor to Jefferson in connection with the Merger and will receive a fee for
such services, a majority of which is contingent upon the consummation of the
Merger. In addition, Jefferson has agreed to indemnify us for certain
liabilities arising out of our engagement by Jefferson in connection with the
Merger. We have also performed various investment banking services for
Jefferson in the past and have received customary fees for such services.
Based upon and subject to the foregoing, as outlined in the foregoing
paragraphs and based on such other matters as we considered relevant, it is our
opinion that as of the date hereof, the consideration to be received by the
stockholders of Jefferson in the Merger is fair, from a financial point of
view, to the stockholders of Jefferson.
This opinion may not, however, be summarized, excerpted from or otherwise
publicly referred to without our prior written consent, although this opinion
may be included in its entirety in the proxy statement of Jefferson used to
solicit stockholder approval of the Merger. It is understood that this letter
is directed to the Board of Directors of Jefferson in its consideration of the
Agreement, and is not intended to be and does not constitute a recommendation
to any stockholder as to how such stockholder should vote with respect to the
Merger.
Very truly yours,
Charles Webb & Company
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APPENDIX D
STATUTORY DISSENTERS' RIGHTS
UNDER THE LOUISIANA BUSINESS CORPORATION LAW
12: 131 RIGHTS OF SHAREHOLDER DISSENTING FROM CERTAIN CORPORATE
ACTIONS. - A. Except as provided in subsection B of this Section, if a
corporation has, by vote of its shareholders, authorized a sale, lease or
exchange of all of its assets, or has, by vote of its shareholders, become a
party to a merger or consolidation, then, unless such authorization or action
shall have been given or approved by at least eighty per cent of the total
voting power, a shareholder who voted against such corporate action shall have
the right to dissent. If a corporation has become a party to a merger pursuant
to R.S. 12:112(H), the shareholders of any subsidiaries party to the merger
shall have the right to dissent without regard to the proportion of the voting
power which approved the merger and despite the fact that the merger was not
approved by vote of the shareholders of any of the corporations involved.
B. The right to dissent provided by this Section shall not exist
in the case of:
(1) A sale pursuant to an order of a court having
jurisdiction in the premises.
(2) A sale for cash on terms requiring distribution of all
or substantially all of the net proceeds to the
shareholders in accordance with their respective
interests within one year after the date of the sale.
(3) Shareholders holding shares of any class of stock
which, at the record date fixed to determine
shareholders entitled to receive notice of and to vote
at the meeting of shareholders at which a merger or
consolidation was acted on, were listed on a national
securities exchange, or were designated as a national
market system security on an inter-dealer quotation
system by the National Association of Securities
Dealers, unless the articles of the corporation
issuing such stock provide otherwise or the shares of
such shareholders were not converted by the merger or
consolidation solely into shares of the surviving or
new corporation.
C. Except as provided in the last sentence of this subsection,
any shareholder electing to exercise such right of dissent shall file with the
corporation, prior to or at the meeting of shareholders at which such proposed
corporate action is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action. If such
proposed corporate action be taken by the required vote, but by less than
eighty per cent of the total voting power, and the merger, consolidation or
sale, lease or
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exchange of assets authorized thereby be effected, the corporation shall
promptly thereafter give written notice thereof, by registered mail, to each
shareholder who filed such written objection to, and voted his shares against,
such action, at such shareholder's last address on the corporation's records.
Each such shareholder may, within twenty days after the mailing of such notice
to him, but not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote was taken;
provided that he state in such demand the value demanded, and a post office
address to which the reply of the corporation may be sent, and at the same time
deposit in escrow in a chartered bank or trust company located in the parish of
the registered office of the corporation, the certificates representing his
shares, duly endorsed and transferred to the corporation upon the sole
condition that said certificates shall be delivered to the corporation upon
payment of the value of the shares determined in accordance with the provisions
of this Section. With his demand the shareholder shall deliver to the
corporation, the written acknowledgement of such bank or trust company that it
so holds his certificates of stock. Unless the objection, demand and
acknowledgement aforesaid be made and delivered by the shareholder within the
period above limited, he shall conclusively be presumed to have acquiesced in
the corporate action proposed or taken. In the case of a merger pursuant to
R.S. 12:112(H), the dissenting shareholder need not file an objection with the
corporation nor vote against the merger, but need only file with the
corporation, within twenty days after a copy of the merger certificate was
mailed to him, a demand in writing for the cash value of his shares as of the
day before the certificate was filed with the Secretary of State, state in such
demand the value demanded and a post office address to which the corporation's
reply may be sent, deposit the certificates representing his shares in escrow
as hereinabove provided, and deliver to the corporation with his demand the
acknowledgement of the escrow bank or trust company as hereinabove prescribed.
D. If the corporation does not agree to the value so stated and
demanded, or does not agree that a payment is due, it shall, within twenty days
after receipt of such demand and acknowledgement, notify in writing the
shareholder, at the designated post office address, of its disagreement, and
shall state in such notice the value it will agree to pay if any payment should
be held to be due; otherwise it shall be liable for, and shall pay to the
dissatisfied shareholder, the value demanded by him for his shares.
E. In the case of disagreement as to such fair cash value, or as
to whether any payment is due, after compliance by the parties with the
provisions of subsections C and D of this Section, the dissatisfied
shareholder, within sixty days after receipt of notice in writing of the
corporation's disagreement, but not thereafter, may file suit against the
corporation, or the merged or consolidated corporation, as the case may be, in
the district court of the parish in which the corporation or the merged or
consolidated corporation, as the case may be, has its registered office,
praying the court to fix and decree the fair cash value of the dissatisfied
shareholder's shares as of the day before such corporate action complained of
was taken, and the court shall, on such evidence as may be adduced in relation
thereto, determine summarily whether any payment is due, and, if so, such cash
value, and render judgment accordingly. Any shareholder entitled to file such
suit may, within such sixty-day
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period but not thereafter, intervene as a plaintiff in such suit filed by
another shareholder, and recover therein judgment against the corporation for
the fair cash value of his shares. No order or decree shall be made by the
court staying the proposed corporate action, and any such corporate action may
be carried to completion notwithstanding any such suit. Failure of the
shareholder to bring suit, or to intervene in such a suit, within sixty days
after receipt of notice of disagreement by the corporation shall conclusively
bind the shareholder (1) by the corporation's statement that no payment is due,
or (2) if the corporation does not contend that no payment is due, to accept
the value of his shares as fixed by the corporation in its notice of
disagreement.
F. When the fair value of the shares has been agreed upon between
the shareholder and the corporation, or when the corporation has become liable
for the value demanded by the shareholder because of failure to give notice of
disagreement and of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because of his failure
to bring suit within sixty days after receipt of notice of the corporation's
disagreement, the action of the shareholder to recover such value must be
brought within five years from the date the value was agreed upon, or the
liability of the corporation became fixed.
G. If the corporation or the merged or consolidated corporation,
as the case may be, shall, in its notice of disagreement, have offered to pay
to the dissatisfied shareholder on demand an amount in cash deemed by it to be
the fair cash value of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the amount so offered,
the corporation, or the merged or consolidated corporation, as the case may be,
shall deposit in the registry of the court, there to remain until the final
determination of the cause, the amount so offered, then, if the amount finally
awarded such shareholder, exclusive of interest and costs, be more than the
amount offered and deposited as aforesaid, the costs of the proceeding shall be
taxed against the corporation, or the merged or consolidated corporation, as
the case may be; otherwise the costs of the proceeding shall be taxed against
such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a shareholder except the
rights accorded by this Section. Such a demand may be withdrawn by the
shareholder at any time before the corporation gives notice of disagreement, as
provided in subsection D of this Section. After such notice of disagreement is
given, withdrawal of a notice of election shall require the written consent of
the corporation. If a notice of election is withdrawn, or the proposed
corporate action is abandoned or rescinded, or a court shall determine that the
shareholder is not entitled to receive payment for his shares, or the
shareholder shall otherwise lose his dissenter's rights, he shall not have the
right to receive payment for his shares, his share certificates shall be
returned to him (and, on his request, new certificates shall be issued to him
in exchange for the old ones endorsed to the corporation), and he shall be
reinstated to all his rights as a shareholder as of the filing of his demand
for value, including any intervening preemptive rights, and the right to
payment of any intervening dividend or other distribution,
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or, if any such rights have expired or any such dividend or distribution other
than in cash has been completed, in lieu thereof, at the election of the
corporation, the fair value thereof in cash as determined by the board as of
the time of such expiration or completion, but without prejudice otherwise to
any corporate proceedings that may have been taken in the interim.
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JEFFERSON BANCORP, INC. REVOCABLE PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
JEFFERSON BANCORP, INC. FOR USE ONLY AT A SPECIAL MEETING OF STOCKHOLDERS TO BE
HELD ON SEPTEMBER 19, 1996 AND ANY ADJOURNMENT THEREOF.
The undersigned, being a stockholder of Jefferson Bancorp, Inc.
("Jefferson"), hereby authorizes Karen L. Knight and Dr. G. Robert Murphy,
Jr., or any of their successors, as proxies, with full powers of substitution,
to represent the undersigned at the Special Meeting of Stockholders of
Jefferson to be held at Jefferson's office located at 1011 Fourth Street,
Gretna, Louisiana 70053 on September 19, 1996, at 10:00 a.m., Central Time, and
at any adjournment of said meeting, and thereat to act with respect to all
votes that the undersigned would be entitled to cast, if then personally
present, as follows:
1. To approve and adopt the Agreement and Plan of Merger and
Reorganization (the "Reorganization Agreement") dated as of May 24, 1996, by
and among ISB Financial Corporation ("ISBF"), Iberia Savings Bank ("ISB"),
Jefferson and Jefferson Federal Savings Bank, and a related Plan of Merger (the
"Plan of Merger"), pursuant to which (i) ISB Acquisition Corp. will be merged
into Jefferson (the "Merger"), with Jefferson as the surviving corporation; and
(ii) each share of common stock of Jefferson, par value $.01 per share,
outstanding immediately prior to consummation of the Merger (other than shares
as to which dissenters' rights have been asserted and duly perfected in
accordance with Louisiana law, and shares held by ISBF or ISB in other than a
fiduciary capacity) shall be converted into and represent the right to receive
$23.00 in cash.
/ / FOR / / AGAINST / / ABSTAIN
2. To adjourn the Special Meeting, if necessary, to solicit
additional proxies.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the proxies are authorized to vote with respect
to approval of the minutes of the last meeting of stockholders, matters
incident to the conduct of the meeting, and upon such other matters as may
properly come before the meeting.
(Continued and to be signed on other side)
123
THIS PROXY, IF EXECUTED, WILL BE VOTED FOR PROPOSALS 1 AND 2 IF NO
CHOICE IS MADE HEREIN. PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT IN
THE ENCLOSED ENVELOPE.
The undersigned hereby acknowledges receipt of a Notice of Special
Meeting of the Stockholders of Jefferson Bancorp, Inc. called for September
19, 1996 and a Proxy Statement for the Special Meeting prior to the signing of
this Proxy.
Date: , 1996
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Signature
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Signature
Note: Please sign exactly your name(s)
appear(s) on this Proxy. Only one
signature is required in the case of a
joint account. When signing in a
representative capacity, please give title.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE.