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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LAFAYETTE COMMUNITY BANCORP
(Name of small business issuer as in its charter)
Indiana 6021
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
35-2082918
(I.R.S. Employee Identification Number)
2 North 4th Street
Lafayette, Indiana 47901
(765) 420-8111
(Address and telephone number of principal executive offices and principal place
of business or intended principal place of business)
David R. Zimmerman, President
Lafayette Community Bancorp
2 North 4th Street
Lafayette, Indiana 47901
(765) 420-8111
(Name, address, and telephone number of agent for service)
Copies to:
Timothy M. Harden, Esq. M. Patricia Oliver, Esq.
John W. Tanselle, Esq. Daniel G. Berick, Esq.
Krieg DeVault Alexander & Capehart, LLP Squire, Sanders & Dempsey L.L.P.
2800 One Indiana Square 4900 Key Tower
Indianapolis, Indiana 46204-2017 127 Public Square
(317) 636-4341 Cleveland, Ohio 44114-1304
(216) 479-8500
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Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
------------------------------------------------------------------------
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _______________
<PAGE>
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ] _______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
------------------------------- ------------------------------------
Offering Aggregate Amount of
Title of Each Class of Securities Amount to be Price Per Offering Registration
to be Registered Registered Security Price Fee
- ---------------------------------------------- --------------- ------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common Shares, without par value 1,200,000 $ 10.00 $ 12,000,000 $ 3,168
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INITIAL PUBLIC OFFERING
PROSPECTUS
Subject to Completion
[logo]
LAFAYETTE COMMUNITY BANCORP
900,000 TO 1,200,000 COMMON SHARES TO THE PUBLIC AT
$10.00 PER SHARE
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We are offering for sale to the public with this prospectus a minimum of 900,000
and a maximum of 1,200,000 common shares at a price of $10.00 per share to fund
the start-up of a new community bank to be named Lafayette Community Bank.
Lafayette Community Bancorp will be the holding company and sole shareholder of
Lafayette Community Bank. Lafayette Community Bank will initially have two
banking centers located in Tippecanoe County, Indiana and we expect to open for
business in the second quarter of 2000. The minimum subscription is 500 shares
or $5,000. This is our initial public offering and no market currently exists
for our shares. We intend to apply to have our common shares listed on the OTC
bulletin board under the symbol "LCB".
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Our organizers have invested significant time and effort to form Lafayette
Community Bancorp and Lafayette Community Bank and have already invested $10,000
by purchasing 1,000 shares, at $10.00 per share, prior to this offering.
Moreover, we expect our organizers, directors and advisory board members to
purchase approximately 210,000 shares in this offering.
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Keefe, Bruyette & Woods, Inc. has agreed to serve as our sales agent and use its
best efforts to solicit subscriptions for our shares. The offering is scheduled
to end on _____, 2000, but we may extend the offering to ______, 2000, at the
latest. All of the money which we receive will be placed with our escrow agent,
The Farmers & Merchants Bank of Boswell, Indiana, 47921, which will hold the
money until we sell at least 900,000 shares. If we do not succeed in selling at
least 900,000 shares before the end of the offering period and the extension
period, we will promptly return all funds received to the subscribers with
interest.
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<TABLE>
<CAPTION>
Terms of the Offering
Minimum Offering Maximum Offering
--------------------------------------- --------------------------------------
Per Share Total Per Share Total
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Public offering price.............$ 10.00 $ 9,000,000 $ 10.00 $ 12,000,000
Sales agent commissions........... 0.54 490,000 0.58 700,000
Offering expenses................. 0.35 311,000(1) 0.26 311,000(1)
------------------ ------------------ ------------------ ------------------
Net Proceeds...................... 9.11 $ 8,199,000 9.16 $ 10,989,000
</TABLE>
- ------------------------------------------------------
(1) Amount includes the following: SEC, Nasdaq and NASD registration and
filing fees, printing and mailing costs, fees and expenses of
counsel, accounting and related expenses, Blue Sky fees and expenses
and other miscellaneous expenses associated with the offering.
------------------------------------------------------------------------
This investment involves a high degree of risk. See "Risk Factors" beginning on
page ___.
------------------------------------------------------------------------
These securities are not deposits or accounts and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
------------------------------------------------------------------------
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
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KEEFE, BRUYETTE & WOODS, INC.
------------------------------------------------------------------------
This prospectus is dated _______, 2000.
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TABLE OF CONTENTS
Page
Questions and Answers.......................................................6
Prospectus Summary..........................................................7
Risk Factors...............................................................12
Forward-Looking Statements.................................................20
Use of Proceeds............................................................21
Plan of Distribution.......................................................22
Business ................................................................27
Description of Property....................................................35
Plan of Operation..........................................................36
Supervision and Regulation.................................................37
Management ................................................................49
Principal Shareholders.....................................................57
Description of Securities..................................................58
Sales Agent................................................................65
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities..........................................................66
Share Eligible for Future Sale.............................................66
Legal Matters..............................................................67
Experts ................................................................67
Where You Can Find More Information........................................67
Financial Statements......................................................F-1
APPENDIX A - Form of Stock Order Form.....................................A-1
APPENDIX B - Form of Escrow Agreement.....................................B-1
------------------------------------------------------------------------
Until _____________, 2000, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
------------------------------------------------------------------------
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QUESTIONS AND ANSWERS
Q. Why is Lafayette Community Bancorp offering these securities and why has it
chosen this time for the offering?
A. We are offering these shares to fund the start-up of a community bank with
banking operations initially located in Tippecanoe County, Indiana. We
believe that an opportunity exists in this market because of recent
consolidation in the banking industry.
Q. Once I have read this prospectus and determined that I would like to buy
some shares, how do I subscribe?
A. You must complete and return the Stock Order Form attached as Appendix A to
this prospectus and enclose a check or money order payable to "The Farmers
& Merchants Bank, Trust No. 40-4410-2" for your entire subscription in the
enclosed reply envelope.
Q. When will the offering expire and how soon should I send in my
subscription?
A. Send in your subscription as soon as possible. This offering expires at
5:00 p.m. Eastern Time on ________, 2000 unless we decide to extend it to
________, 2000. All subscriptions with payments must be received by the
expiration date of the offering.
Q. How many shares may I purchase?
A. The minimum purchase is 500 shares and the maximum purchase is 50,000
shares. However, we reserve the right to reject all or any part of any
subscription, including subscriptions for a greater or lesser amount.
Q. Can I purchase through an IRA or other qualified retirement plan?
A. Yes. The administrator or trustee will need to fill out the appropriate
forms and return them on a timely basis.
Q. Is this offering registered in all 50 states?
A. No. At this time we plan to register in Indiana, Ohio, Michigan, Idaho,
Illinois, Kentucky, Maryland, Oklahoma and Florida. We may register in
additional states depending on interest in
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the offering. If you are not a resident of any of these states, please call
the Keefe, Bruyette & Woods, Inc. Stock Information Center at (877)
298-6520 before subscribing.
Q. If my subscription is accepted, when will I receive my shares?
A. We will mail you share certificates promptly after the closing of the
offering.
Q. Can I get my money back after I have mailed my subscription?
A. No, unless we do not close the offering, in which case we will refund your
full subscription.
Q. When will I receive dividends?
A. You will not receive any dividends in the foreseeable future. We plan to
reinvest our earnings in our business.
Q. Who can I call if I have further questions?
A. For answers to any other questions, we encourage you to read this
prospectus. If you still have questions, please call the Keefe, Bruyette &
Woods, Inc. Stock Information Center at (877) 298-6520 between 8:30 a.m.
and 5:30 p.m., Eastern time, Monday through Friday.
PROSPECTUS SUMMARY
This summary highlights information contained in other parts of this
prospectus. Because this is a summary, it may not contain all of the information
you should consider before investing in our common shares. You should carefully
read this entire prospectus.
The Companies
LAFAYETTE COMMUNITY BANCORP AND LAFAYETTE COMMUNITY BANK
We incorporated Lafayette Community Bancorp in January of 1999 to
serve as the holding company for Lafayette Community Bank, a new bank to be
chartered by the State of Indiana. Our principal executive office will be
located at 2 North 4th Street, Lafayette, Indiana 47901, (765) 420-8111.
Lafayette Community Bank will focus on the local community, emphasizing personal
service to individuals and businesses in the Tippecanoe County, Indiana market,
primarily consisting of the
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communities of Lafayette and West Lafayette. We have filed for regulatory
approval to open Lafayette Community Bank with the Indiana Department of
Financial Institutions, for deposit insurance with the FDIC, and for approval to
become a member of the Federal Reserve System with the Federal Reserve Board. We
have also filed for approval of the Federal Reserve Board to become a bank
holding company and acquire all of the stock of Lafayette Community Bank. We
expect to receive all final regulatory approvals, and to open for business, in
the second quarter of 2000. However, we cannot assume when, if ever, such
approvals will be received or what, if any, conditions such approvals may
contain. See "Risk Factors" beginning on page __.
Our Market Opportunities
We believe an opportunity exists as a result of the consolidation in
the banking industry. We believe this consolidation has created an attractive
market for community banks. Larger financial institutions do not generally
provide the personalized service expected or demanded by many small to
medium-sized businesses and their principals. Members of our executive
management team have had established careers in the financial services industry
and recognize this market opportunity. We have selected Tippecanoe County,
Indiana for our initial activities because of our management team's extensive
experience in this market, local customer relationships, and what we believe to
be the area's favorable economic and demographic environment.
Our Organizers and Management Team
Our organizers consist of eight businesspeople who reside and work in
Tippecanoe County, Indiana. As a group, they have significant banking and
business experience, a high level of community involvement and many close
personal ties to our planned market area. The organizers have already invested a
total of $10,000 in Lafayette Community Bancorp. The organizers are not expected
to invest additional funds in Lafayette Community Bancorp prior to completion of
this offering. If we do not successfully complete this offering, our organizers
will lose some, if not all, of their initial investment. We expect our
organizers, directors and advisory board members to purchase approximately
210,000 shares in this offering.
Our executive management team includes individuals who have
significant experience serving our target markets. David R. Zimmerman, the
President and Chief Executive Officer of Lafayette Community Bancorp, has over
seventeen years of banking experience in the Lafayette market. Prior to founding
Lafayette Community Bancorp, Mr. Zimmerman served as Vice-President - Commercial
Lending of a $650 million commercial bank in Lafayette, Indiana. Michael T.
Mootz, the Senior Vice- President, Controller, and J. Michael Pechin, the Senior
Vice-President, Senior Loan Officer,
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respectively, of Lafayette Community Bank have over 23 combined years of banking
experience in the financial institutions industry. Prior to joining Lafayette
Community Bank, Mr. Mootz served as Vice- President, Controller of a commercial
bank in Indianapolis. Mr. Pechin served as Vice-President of a commercial bank
in Lafayette.
Our Banking Philosophy
Our retail banking strategy provides for a wide range of basic
banking products and services that are reasonably priced and easily understood
by customers, with an emphasis on technology and electronic self-service
features. Our lending strategy is focused on small to medium-sized businesses,
with 70% of the loan portfolio projected to be in commercial loans.
Our Advantages
We believe that we are well positioned to capitalize on the market
opportunity created by the consolidation in the banking industry for the
following reasons:
o Experienced Management Team. Our executive management team
has significant banking experience which has allowed them
to develop valuable customer relationships within our
target markets.
o Local Decision Making. Our management structure is
organized to retain local decision-making authority so that
our officers will be able to provide our customers with
expedited loan decisions.
o Personalized Service. Our staff is committed to providing
the type of personalized service not generally available
at larger financial institutions.
o Competitive Technology. Our decision to have third parties
provide us with competitive technology and ongoing upgrades
is expected to provide us with cost efficiencies. In
addition, our ability to invest in the latest technologies
without having to incur the additional financial and
operational costs associated with converting and upgrading
existing systems may provide us a technological advantage
over our established competitors.
o Customized Products and Services. Our close, personalized
service will afford us the opportunity and flexibility to
provide customized and individualized products and services
to our customers.
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Our Business Strategy
We will implement our strategy by:
o targeting small and medium-sized business customers who
demand high levels of personalized attention and customer
service;
o staffing banking centers with community-minded and
responsive management teams that will have significant
local decision-making authority;
o enhancing private banking relationships by offering a
broad spectrum of products and services; and
o utilizing technology and self-service features.
<TABLE>
<CAPTION>
Terms of the Offering
<S> <C>
Common shares offered......................................... 900,000 to 1,200,000.
Common shares outstanding after the offering.................. 901,000 to 1,201,000. This amount includes the common shares offered
with this prospectus and 100 shares purchased by David R. Zimmerman
prior to this offering and the subsequent 10 for 1 stock split with
respect to those 100 shares.
Price per share............................................... $10.00
Use of net proceeds after the payment of sales
commissions and offering expenses............................. The offering is expected to generate $8.20 million to $10.99 million,
depending on the size of the offering. A minimum of $7.50 million
will be used to provide initial working capital for Lafayette
Community Bank, which will be placed in short-term investments and
available for loans to Lafayette Community Bank customers. The
remaining amount will be used as working capital for Lafayette
Community Bancorp.
Expiration date............................................... _____, 2000, but may be extended an additional 45 days to _____,
2000 at Lafayette Community Bancorp's discretion.
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Purchase limitations.......................................... The minimum purchase is 500 shares and the maximum purchase
is 50,000 shares. However, we reserve the right to reject all or
any part of any subscription. In determining which subscriptions
to accept, we may take into account any factors we believe may be
relevant, including the order in which subscriptions are received,
a subscriber's potential to do business with Lafayette Community
Bank and factors that may cause an aggregation of ownership under
federal banking regulations.
Further information........................................... Please call the Keefe, Bruyette and Woods, Inc. Stock
Information Center at (877) 298-6520.
</TABLE>
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RISK FACTORS
An investment in our common shares involves a significant degree of
risk and you should not invest in the offering unless you can afford to lose
some or even all of your investment. You should consider these risk factors
together with all the other information included in this prospectus before you
decide to purchase our common shares.
We have no operating history upon which to base an estimate of our future
performance.
We incorporated Lafayette Community Bancorp in January, 1999 and have
not yet engaged in any banking operations. Because Lafayette Community Bank has
not yet opened, we do not have historical financial data and similar information
which would be available for a financial institution that has a history of
operations. Our prospects must be evaluated in light of the risks, expenses and
difficulties frequently encountered by companies in their early stages of
development. We may not successfully address the following:
o building our customer base;
o developing and retaining customer loyalty;
o responding to competitive developments;
o attracting, retaining and motivating qualified management
and employees;
o upgrading our technologies, products and services;
o penetrating our identified markets; and
o providing quality and personal service.
We expect losses in our first eighteen to twenty-four months of operations.
As a result of start-up expenditures and the time it will take to
develop a deposit base and loan portfolio, we expect to operate at a loss during
our start-up period. We do not expect to be profitable for at least the first
twenty-four to thirty-six months of operations. We anticipate that cumulative
losses during the period from inception through December 1, 2001 will exceed
$1.3 million and could be higher. We cannot guarantee that we will ever operate
profitability. If we do not reach profitability and recover our accumulated
operating losses, you will likely suffer a significant decline in, or total loss
of, the value of your common shares. Shareholders will not be liable for any
losses, however, beyond their investment.
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We will be competing with many larger financial institutions that have far
greater financial resources than we have, which could prevent us from attracting
customers and may cause us to have to pay higher interest rates to attract and
maintain customers.
We will encounter strong competition from existing banks and other
types of financial institutions operating in the Tippecanoe County area and
elsewhere. We will compete with other bank holding companies, state and national
commercial banks, savings and loan associations, consumer finance companies,
credit unions, securities brokerages, insurance companies, mortgage banking
companies, money market mutual funds, asset-based non-bank lenders and other
financial institutions. Some of these competitors have been in business for a
long time and have already established their customer base and name recognition.
Most are larger than we will be and have greater financial and personnel
resources than we will have. Some are large super-regional and regional banks,
like Bank One, Fifth Third Bank, Huntington National Bank, National City Bank of
Indiana and Union Planters Bank. These institutions offer services, such as
extensive and established branch networks and trust services, that we either do
not expect to provide or will not provide for some time. Due to this
competition, we may have to pay higher rates of interest to attract deposits. In
addition, competitors that are not depository institutions are generally not
subject to the extensive regulations that will apply to our bank.
Our success largely depends upon the skill and experience of our senior
management team.
The success of our business will depend upon the services of David R.
Zimmerman, our President and Chief Executive Officer, Michael T. Mootz, Senior
Vice-President, Controller and J. Michael Pechin, Senior Vice-President, Senior
Loan Officer. Our business would suffer if we lost the services of any of these
individuals. We have entered into a three year employment agreement with Mr.
Zimmerman, with an automatic one year renewal. Neither Mr. Mootz nor Mr. Pechin
has an employment agreement with us. We have key man life insurance in the
amount of $1 million with respect to Mr. Zimmerman but not on any of our other
officers. Our future success also depends on our ability to identify, attract
and retain qualified senior officers and other employees in our identified
market.
We may not be able to compete with our larger competitors for larger customers
because our lending limits will be lower than theirs.
We will be limited in the amount we can loan a single borrower by the
amount of Lafayette Community Bank's capital. The legal lending limit is 15% of
Lafayette Community Bank's capital and surplus. At a minimum, we expect that our
initial lending limit will be approximately $1.10 million immediately following
the offering. Until Lafayette Community Bank is profitable, our capital level
will decline and therefore so will our lending limit. Our lending limit will be
significantly less than the limit
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for most of our competitors and may affect our ability to seek relationships
with larger businesses in our market area. We intend to accommodate larger loans
by selling participations in those loans to other financial institutions. We
cannot guarantee, however, that we will succeed in attracting or maintaining
customers seeking larger loans or that we will be able to engage in
participation of these loans on favorable terms.
Our board and management will have broad discretion in using the net proceeds of
the offering and may not allocate all of these proceeds in the most profitable
manner.
Upon completion of the offering and after payment of the sales
agent's commission, we intend to pay the estimated offering expenses of
approximately $ 311,000 and start-up expenses of approximately $350,000. We
expect to contribute a minimum of $7.50 million to the capital of Lafayette
Community Bank to support the growth of its loan portfolio by increasing its
legal lending limit. The timing and specific application of these proceeds will
remain in the sole discretion of our board and management. Although we intend to
utilize these funds to serve Lafayette Community Bancorp's best interest, we
cannot assure you that our allocation will ultimately reflect the most
profitable application of these proceeds.
If our regulatory approvals are delayed or denied, you could lose your
investment.
Before we can open for business, we must obtain final approval from
the Federal Reserve Board, FDIC and the Indiana Department of Financial
Institutions. We expect to obtain all regulatory approvals by, and open for
business in, the second quarter of 2000. Any delay in commencing operations will
increase pre-opening expenses and accumulated losses and postpone realization of
potential revenue. If we ultimately do not receive the regulatory approvals to
open Lafayette Community Bank, we expect to return all subscription funds, with
interest, to our investors.
Changes in the law, especially changes deregulating the banking industry, may
harm our current business and impact our future opportunities.
We will operate in a highly regulated environment and will be subject
to supervision and regulation by several governmental regulatory agencies,
including the Federal Reserve Board, the FDIC, and the Indiana Department of
Financial Institutions. These regulations are generally intended to provide
protection for depositors and customers rather than for the benefit of
investors. We will also be subject to changes in federal and state law,
regulations, governmental policies, income tax laws and accounting principles.
Deregulation could adversely affect the banking industry as a whole, including
our operations.
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For example, on November 12, 1999, the President signed into law the
Financial Services Modernization Act, which is comprehensive legislation that
modernizes the financial services industry for the first time in decades. The
legislation permits bank holding companies to conduct essentially unlimited
securities and insurance activities, in addition to other activities determined
by the Federal Reserve Board to be related to financial services. As a result,
Lafayette Community Bancorp would be able to underwrite and sell securities and
insurance. It would also be able to acquire, or be acquired by, brokerage firms
and insurance underwriters. We have not had an opportunity to assess the impact
of the legislation on our operations, but at the present time we do not
anticipate significant changes in our anticipated products or services. See
"Supervision and Regulation" beginning on page ___.
Interest rate volatility could significantly harm our business.
Our results of operations will be materially affected by the monetary
and fiscal policies of the federal government and the regulatory policies of
governmental authorities. Our profitability will be dependent to a large extent
on our net interest income, which is the difference between our income on
interest-earning assets, such as loans, and our expense on interest-bearing
liabilities, such as deposits. A change in market interest rates could adversely
affect our earnings. Consequently, we will be particularly sensitive to interest
rate fluctuations. We plan to sell to in secondary market all fixed rate loans
secured by residential real estate in order to reduce interest rate risk.
Future sales of our common shares could decrease the market value of your
shares.
Sales of a substantial number of common shares in the public market
following this offering, or the perception that such sales could occur, could
decrease the market value of your common shares. After the offering, we will
have at least 901,000 common shares outstanding. In addition, we plan to
establish stock option plans under which we will reserve options to purchase, in
aggregate, up to 15% of our common shares from time to time. The shares being
sold in this offering will be eligible for sale in the open market without
restriction, except for shares purchased by "affiliates" as that term is defined
in Rule 144 of the Securities Act. Our officers, directors and advisory board
members, who own, in the aggregate, 1,000 common shares and who are expected to
purchase an aggregate of 210,000 common shares in this offering, have agreed not
to sell any of their shares for 180 days following the closing of the offering
without the prior written consent of the sales agent. Following the expiration
of this 180 day lock-up period, these shares will be eligible for sale in the
public market subject to compliance with volume limitations and other conditions
of Rule 144. The market price of your shares could decline based on the sale or
availability for sale of shares now held by our existing shareholders or of
shares which may be issued under our stock option plans.
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If our borrowers cannot repay their loans, our business will be harmed.
Lending money is an essential part of the banking business. However,
borrowers do not always repay their loans. The risk of non-payment is affected
by:
o credit risks of a particular borrower;
o changes in national, regional, or local economic and
industry conditions;
o the duration of the loan; and
o in the case of a collateralized loan, uncertainties
as to the future value of the collateral.
Generally, commercial/industrial, construction and commercial real
estate loans present a greater risk of non-payment by a borrower than other
types of loans. We anticipate that approximately 75% of our commercial loans
will be commercial real estate loans secured by a first lien. While this does
not represent a greater percentage of these types of loans in our portfolio than
in the portfolios of our competitors, the comparative youth of our portfolio may
increase our risk of non-payment. This is because most defaults occur early in
the term of a loan.
Our commercial loan concentration increases the risk of defaults by our
borrowers.
We will make various types of loans, including commercial, consumer,
residential mortgage and construction loans. We anticipate that approximately
70% of Lafayette Community Bank's loans will be commercial loans, and 30% will
be consumer/personal, although the actual percentage may vary. Commercial
lending is more risky than residential mortgage lending because loan balances
are greater and the borrower's ability to repay is contingent on the success of
the borrower's business. The risk of loan defaults by borrowers is unavoidable
in the banking industry. We will try to limit our exposure to this risk by
limiting our exposure to owner-operated properties and to businesses with an
established operating history, by carefully monitoring the amount of loans we
make within specific industries, and through other prudent lending practices,
but we will not be able to eliminate this risk. Substantial credit losses could
result in our insolvency, which could cause you to lose your entire investment.
Our allowance for loan losses may not be sufficient to absorb actual losses.
There is no precise method of predicting loan losses. We can not
assure you that our allowance for loan losses will be sufficient to absorb our
actual loan losses. Excess loan losses will harm our business. We will attempt
to maintain an appropriate allowance for loan losses to absorb the losses we
expect to experience in our loan portfolio. We will periodically determine the
amount of the allowance for loan losses based upon consideration of several
factors, including:
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o an ongoing review of the quality, mix and size of our overall loan
portfolio; o historical loan loss experience;
o evaluation of non-performing loans;
o assessment of economic conditions and their effects on our existing
portfolio; and
o the amount and quality of collateral, including guarantees, securing
loans.
The following factors, however, make our evaluation of our allowance
for loan losses more subjective than if our bank had an established operating
history:
o our lack of an operating history may prevent management from
accurately predicting loan losses based on historical experience;
o the local economy has not experienced any significant recessionary
periods over the past five (5) years; and
o because of our small business focus, the principals of the small
businesses may have several different types of loans with Lafayette
Community Bank and a default on one of these loans may have an adverse
effect on the other loans.
Because of these factors, we may have a higher risk, in comparison to
banks with established operating histories, that our loan allowance will not be
adequate to absorb future loan losses.
To the extent we cannot attract sufficient deposits to fund our anticipated loan
growth, we may need to raise additional capital, which could dilute your
ownership interest.
We anticipate that we will need to attract significant levels of
deposits to fund our anticipated loan growth. Our ability to attract and
maintain such deposit levels will depend on our ability to attract new deposit
customers. To the extent that funds generated by our deposit customers are
insufficient to fund our loan growth, we may need to raise additional funds
through public or private financings. We cannot assure you that we would be able
to obtain these funds on terms that are favorable to us. If we do sell
additional common shares in the future to raise capital, the sale could
significantly dilute your ownership interest.
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We will not have a large number of shareholders or a large number of shares
outstanding after the offering, which may limit your ability to sell or trade
the shares after the offering.
Initially, there will be no established market for our common shares.
We cannot guarantee:
o that any market for our common shares will develop;
o that any market for our common shares that develops will be liquid;
o that you will be able to sell the common shares you buy in this
offering; or
o that you will be able to sell the common shares you buy in this
offering at any particular price.
After the offering, we will encourage broker-dealers to buy and sell
orders for our common shares on the Over-the-Counter Bulletin Board. However,
the trading markets on the OTC Bulletin Board lack the depth, liquidity, and
orderliness necessary to maintain a liquid market. We do not expect a liquid
market for our common shares to develop for several years, if at all. A public
market having depth and liquidity depends on having enough buyers and sellers at
any given time. Because this is a relatively small offering, we do not expect to
have enough shareholders or outstanding shares to support an active trading
market. Accordingly, investors should consider the potential illiquid and
long-term nature of an investment in our common shares.
The offering price was determined arbitrarily and may not reflect the market
price of our shares.
The offering price of $10.00 per share was arbitrarily determined by
Lafayette Community Bancorp in consultation with Keefe, Bruyette & Woods. The
price is not based upon earnings or any history of operations and does not
necessarily indicate the present or anticipated value of our common shares. The
market price of our common shares after the offering could be lower than the
offering price.
Our organizers and directors will own a significant number of common shares,
which will allow them to control the management of Lafayette Community Bancorp.
We expect that our organizers, directors and advisory board members
will own approximately 210,000 common shares after this offering, which will
equal approximately 18% of the total number of shares, assuming the offering is
fully subscribed. To the extent that our organizers, directors and advisory
board members vote together, they will have the ability to exert significant
influence over the election of our board of directors, as well as our policies
and business affairs, and their interests may not be the same as yours.
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<PAGE>
The exercise of stock options will cause dilution and may decrease the value of
your shares.
We plan to reserve 180,000 shares of common stock of Lafayette
Community Bancorp for issuance under stock option plans which we plan to
establish. The exercise of these options at an assumed exercise price of $10.00
per share will reduce your proportionate interest in Lafayette Community Bancorp
by approximately 20% (assuming a minimum offering) or 15% (assuming a maximum
offering) per share. See "Capitalization - Impact of Stock Options on Dilution"
beginning on page ___.
You will not receive dividends in the foreseeable future.
We do not intend to pay dividends on our common shares for the
foreseeable future. Instead, we intend to reinvest our earnings in our business.
Our success will depend on our ability to effectively provide, implement and
market technology-driven products and services.
The banking industry is undergoing rapid technological changes with
frequent introductions of new technology-driven products and services. In
addition to improving customer service, technology can increase efficiency and
reduce costs. Our success will depend in part on our ability to use technology
to provide products and services that will satisfy customer demands for
convenience, as well as to create operating efficiencies within Lafayette
Community Bank. Many of our competitors have substantially greater resources to
invest in technology, which may permit them to operate at a lower cost than us.
We believe that we may have an advantage over our competitors by being able to
invest in the latest technologies without having to incur the additional
operational and financial costs associated with converting and upgrading
existing systems. We, however, cannot assure you that we will be able to
effectively implement new technology-driven products and services or that we
will be able to effectively market these products and services to our customers.
To the extent our third-party service providers fail to perform, our ability to
process banking transactions will suffer.
We will be dependent on third parties to provide a number of our core
processing functions, including our back office operations, data processing and
other products and services. If these third parties either increase the cost of
their services or fail to maintain the operational integrity of their networks,
our operations will be harmed.
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<PAGE>
Our articles of incorporation and by-laws contain provisions that could deter
takeover attempts, even at a price attractive to shareholders.
Our articles of incorporation and by-laws, along with applicable
Indiana and federal law, may make it difficult to change or gain control of
Lafayette Community Bancorp, even at an attractive price to shareholders. As a
result, shareholders who might desire to participate in such a transaction may
not have an opportunity to do so. These provisions may reduce the market price
of our shares. Some of these provisions may also make the removal of the current
board of directors or management more difficult. These provisions include:
o restrictions on the acquisition of Lafayette Community Bancorp's
equity securities;
o the classification of the terms of the members of the board of
directors;
o shareholders meeting restrictions; o the ability of our board of
directors to issue serial preferred shares and additional common
shares without shareholder approval; and
o supermajority provisions for the approval of specified business
combinations.
See "Description of Securities" beginning on page ___.
If we do not sell the minimum offering, you will have lost the use of your
subscription funds while they are held in escrow.
Keefe, Bruyette & Woods has agreed to sell our shares on a best
efforts basis. We cannot assure you that Keefe, Bruyette & Woods will sell the
minimum of 900,000 shares or the maximum of 1,200,000 shares. If we do not sell
at least 900,000 shares before ______, 2000 (or _____, 2000 in the event we
decide to extend the offering) we will not close the offering and we will return
all subscription funds, with interest. See "Plan of Distribution" beginning on
page ___.
FORWARD-LOOKING STATEMENTS
Some of the information in this prospectus, including the summary,
contains "forward-looking statements" concerning Lafayette Community Bancorp and
Lafayette Community Bank and their operations, performance, financial condition
and likelihood of success.
You can identify these statements by use of terms such as "expect,"
"believe," "goal," "plan," "intend," "estimate," "may," and "will" or similar
words. These forward-looking statements involve known and unknown risks,
uncertainties and other factors, including those described in the "Risk
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Factors" section and other parts of this prospectus, that could cause our actual
results to differ materially from those anticipated in these forward-looking
statements.
USE OF PROCEEDS
We estimate that we will receive net proceeds of between $8.20
million and $10.99 million, depending on the size of the offering, after
deducting commissions and estimated offering expenses. The following two
paragraphs describe our proposed use of proceeds based on our present plans and
business conditions.
Use of proceeds by Lafayette Community Bancorp.
The following table shows the anticipated use of the proceeds by
Lafayette Community Bancorp. We describe Lafayette Community Bank's anticipated
use of proceeds in the following section. As shown, at a minimum, we will use
$7.50 million to capitalize Lafayette Community Bank. We will initially invest
the remaining proceeds in United States government securities. In the long term,
we will use these remaining proceeds for operational expenses and other general
corporate purposes, including the provision of additional capital to Lafayette
Community Bank, if necessary. We may also use the proceeds to expand, for
example, by opening additional facilities or acquiring other financial
institutions. We currently have no expansion plans.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
----------------------- ----------------------
<S> <C> <C>
Gross Proceeds from offering.......................................... $ 9,000,000 $ 12,000,000
Sales agent commission and offering expenses.......................... 801,000 1,011,000
Start-up expenses (1)................................................. 350,000 350,000
Investment in capital stock of Lafayette Community Bank............... 7,500,000 9,989,000
----------------------- ----------------------
Remaining proceeds.................................................... $ 349,000 $ 650,000
</TABLE>
- ----------------------------------------------------------------------
(1) Start-up expenses consist of payroll, occupancy, advertising,
supplies and other expenses incurred while getting Lafayette
Community Bank ready for opening. Loans from another unrelated
financial institution which were used to finance interim start-up
expenses and which will bear interest at the prime rate, will be
repaid promptly following the completion of the offering.
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Use of proceeds by Lafayette Community Bank.
The following table shows the anticipated use of the proceeds by
Lafayette Community Bank. All proceeds received by Lafayette Community Bank will
be in the form of an investment in its capital stock by Lafayette Community
Bancorp, as described above. The table shows the cost of the temporary and
permanent facilities for a period of twelve months from the completion of the
offering. Furniture, fixtures, and equipment will be capitalized and amortized
over the estimated useful lives of the assets. Lafayette Community Bank will use
the remaining proceeds to make loans, purchase securities, and otherwise conduct
its business.
<TABLE>
<CAPTION>
Minimum Maximum
Offering Offering
------------------------- ---------------------
<S> <C> <C>
Investment by Lafayette Community Bancorp in
Lafayette Community Bank's capital stock........................... $ 7,500,000 $ 9,989,000
Furniture, fixtures and equipment.................................. 791,000 791,000
Remaining proceeds................................................. $ 6,709,000 $ 9,198,000
</TABLE>
Determination of offering price.
The offering price for the common shares were arbitrarily determined
by Lafayette Community Bancorp in consultation with our sales agent. This price
is not based upon earnings or any history of operations. In determining the
offering amount, we took into account the following factors:
o capital requirements of the FDIC, the Federal Reserve, and the Indiana
Department of Financial Institutions for Lafayette Community Bank;
o expenses related to the simultaneous opening of two separate banking
offices; and
o general market conditions for the sale of securities.
PLAN OF DISTRIBUTION
General.
We will offer the shares to the public for a period of sixty days
ending on _____, 2000. We may, however, in our discretion, extend this offering
period by forty-five days to _____, 2000. We have engaged Keefe, Bruyette &
Woods, Inc. to consult with and advise us with respect to the offering. Keefe,
Bruyette & Woods has agreed to use its best efforts to solicit subscriptions and
purchase orders for our shares. Keefe, Bruyette & Woods will have no obligation
to take or purchase any of our shares in the offering. See "Capitalization" on
page ___.
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<PAGE>
Shares will be offered primarily to persons who reside in the State
of Indiana. We also plan to register this offering in Ohio, Michigan, Idaho,
Illinois, Kentucky, Maryland, Oklahoma and Florida. If you are not a resident of
one of these states, please call the Keefe, Bruyette & Woods, Inc. Stock
Information Center at (877) 298-6520 before subscribing. We will provide persons
indicating an interest in acquiring our shares with a copy of this prospectus
prior to our acceptance of any subscription funds. We will conduct our first
closing only if the conditions required to close the minimum offering have been
met.
Conditions of the offering.
The offering will expire at 5:00 p.m. Eastern Time on _____, 2000
unless extended by us to _____, 2000. The offering is expressly conditioned upon
fulfillment of the following conditions within the offering period. The offering
conditions, which may not be waived, are as follows:
o subscriptions for not less than $9,000,000 shall have been deposited
with the escrow agent; and
o Lafayette Community Bancorp shall not have canceled this offering
prior to the time funds are withdrawn from the escrow account.
Escrow of subscription funds.
All accepted subscription funds and documents tendered by investors
will be placed in an escrow account with The Farmers & Merchants Bank of
Boswell, Indiana, pursuant to the terms of the Escrow Agreement, a form of which
is attached to this prospectus as Appendix B. Upon receipt of a certification
from Lafayette Community Bancorp during the offering period that subscriptions
totaling not less than $9,000,000, including subscriptions from our organizers
and management, have been received and fully collected, the escrow agent will
release to Lafayette Community Bancorp all subscription funds, and any income
received thereon.
Prior to the disposing of the escrow account, the escrow agent may
invest subscription funds in direct obligations of the United States Government,
in short-term insured certificates of deposit and/or money market management
trusts for short-term obligations of the United States Government, with
maturities not to exceed sixty days. Lafayette Community Bancorp will invest the
subscription funds in a similar manner after breaking escrow and prior to the
time that it infuses capital into Lafayette Community Bank. The escrow agent, by
accepting its appointment, in no way endorses the purchase of our shares by any
person.
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<PAGE>
In the event the offering conditions are not met within the offering
period or if we terminate the offering prior to withdrawing the subscription
funds, the escrow agent will promptly return to the subscribers their
subscription funds, together with their allocated share of interest, if any,
earned on the investment of the escrow account, and without deduction of
offering expenses. The latest date to which the subscription funds might be held
in escrow prior to their return in the event the minimum offering is not reached
or final regulatory approval to commence operations is not granted is _____,
2000 (or _____, 2000 in the event that we decide to extend the offering).
Method of subscription.
We may cancel this offering for any reason at any time prior to the
release of subscription funds from the escrow account in the event that we elect
to cancel the offering in its entirety.
The minimum subscription is 500 shares and the maximum subscription
is 50,000 shares. We may, however, accept subscriptions for more than 50,000
shares in order to reach the minimum offering amount.
In order to purchase shares you must:
o complete and sign the Stock Order Form, an example of which is
attached as Appendix A to this prospectus;
o make full payment for your subscription in United States currency
by check or money order payable to "The Farmers & Merchants Bank,
Trust No. 40-4410-2"; and
o return your Stock Order Form and full payment to Farmers &
Merchants Bank in the enclosed reply envelope before the
expiration date of the offering.
Failure to pay the full subscription price shall entitle Lafayette
Community Bancorp to disregard the subscription. No subscription agreement is
binding until accepted by Lafayette Community Bancorp, which may, in its sole
discretion, refuse to accept any subscription for shares, in whole or in part,
for any reason whatsoever. In determining which subscriptions to accept, we may
take into account any factors we believe may be relevant, including the order in
which subscriptions are received, a subscriber's potential to do business with
Lafayette Community Bank, and factors that may cause an aggregation of ownership
under federal banking regulations. No subscription will be deemed accepted until
we deliver written notification of acceptance to the subscriber. After a
subscription is accepted and proper payment received, we will not cancel such
subscription, unless all accepted subscriptions are canceled.
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<PAGE>
Once we accept a subscription, it cannot be withdrawn. Payment from
any subscriber for shares in excess of the number of shares allocated to such
subscriber, if any, will be refunded by mail, without interest, within ten days
of the date of rejection.
Certificates representing common shares of Lafayette Community
Bancorp, duly authorized and fully paid, will be issued as soon as practicable
after subscription funds are released to Lafayette Community Bancorp from the
escrow account.
Dividend policy.
We do not expect to pay any dividends in the foreseeable future. Any
profits we earn will be retained and used to finance our growth. We have no
current plans to initiate payment of cash dividends, and future dividend policy
will depend on Lafayette Community Bank's earnings, capital requirements,
financial condition and other factors deemed relevant by our board of directors.
Our ability to pay any cash dividends will depend primarily on
Lafayette Community Bank's ability to pay dividends to Lafayette Community
Bancorp, which depends on the profitability of Lafayette Community Bank. In
order to pay dividends, Lafayette Community Bank must comply with the
requirements of all applicable laws and regulations. See "Supervision and
Regulation - Lafayette Community Bank - Dividends" on page ___ and "Supervision
and Regulation - Lafayette Community Bank Capital Regulations" on page ___. In
addition to the availability of funds from Lafayette Community Bank, our
dividend policy is subject to the discretion of our board of directors and will
depend upon a number of factors, including future earnings, financial condition,
cash needs, and general business conditions.
Capitalization.
The following table sets forth the estimated capitalization of
Lafayette Community Bancorp as of December 31, 1999, and as adjusted to give
effect to the sale of the minimum and maximum number of common shares offered
with this prospectus, at an assumed offering price of $10.00 per share, net of
estimated offering expenses. This table does not include potential dilution for
exercise of stock options.
25
<PAGE>
<TABLE>
<CAPTION>
Actual As Adjusted
------------------ --------------------------------
Minimum Maximum
Offering Offering
------------------ --------------- ---------------
<S> <C> <C> <C>
SHAREHOLDER EQUITY
Commonshares - no par value, 1,000 shares issued and outstanding; 901,000
shares issued and outstanding as adjusted (minimum); 1,201,000 shares
issued and
outstanding (maximum)(2) $ 10,000 $ 8,199,000(1) $ 10,999,000(1)
Deficit accumulated during the development stage (81,236) (81,236) (81,236)
------------------ --------------- ---------------
Total shareholders' deficit equity $ (71,236) $ 8,117,764 $ 10,917,764
================== =============== ===============
</TABLE>
- ---------------------------------------------------------------------------
(1) Represents the sale of 900,000 shares at $10.00 per share less estimated
offering expenses and commissions of approximately $ 801,000 (minimum) and
1,200,000 shares at $10.00 per share less estimated offering expenses of $
1,011,000 (maximum).
(2) Represents the total number of common shares outstanding after giving
effect to a 10 to 1 stock split concerning the 100 shares purchased by Mr.
Zimmerman prior to this offering. ---
Our organizers, directors and advisory board members have indicated
that they intend to purchase approximately 210,000 shares in this offering.
Impact of stock options on dilution.
Lafayette Community Bancorp will adopt separate stock option plans
providing for (i) the grant of non-qualified stock options to directors of
Lafayette Community Bancorp and Lafayette Community Bank; and (ii) the grant of
both qualified and nonqualified stock options to key employees of Lafayette
Community Bancorp and Lafayette Community Bank. The following illustrates basic
concepts regarding the potential impact of stock options on dilution.
o For nonqualified stock options, a gain is measured on the
exercise date between the market value and exercise price
of the shares, which is recognized by the individual as
compensation. Additionally, Lafayette Community Bancorp
receives a tax deduction for the amount of gain recognized
by the individual. This tax savings is treated as
additional payment for the shares and is directly credited
to the capital accounts of Lafayette Community Bancorp.
o For qualified options, no gain is recognized by the
individual until the shares acquired upon exercise of the
option is sold. The gain is measured on the date the shares
are sold
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<PAGE>
between the sales price of the shares and the exercise
price of the option. Lafayette Community Bancorp receives
no tax deduction in connection with qualified options.
We have not yet granted any options. Assuming the maximum offering
and a grant of 180,000 options exercised at $10.00 per share, we would receive a
total of approximately $1,800,000 in new capital and would issue 180,000 shares.
This would reduce your proportionate interest in Lafayette Community Bancorp by
approximately 15%.
BUSINESS
Background
At the end of 1990, according to data provided by the FDIC website at
http://www.fdic.gov., there were approximately 12,000 financial institutions in
the United States, which number declined to 8,000 by the end of 1998. This
industry consolidation was due, in large part, to larger institutions purchasing
smaller institutions and then closing redundant back-office services and
branches in the local and regional communities. This consolidation continues in
the financial markets and has resulted in the dominance of large commercial
banks. At the same time, consolidation also provides a tremendous opportunity
for local community banks to fill a void. In 1994 there were 50 de novo
community banks chartered in the United States. By 1998 this figure rose to 190
de novo banks.
We believe that industry consolidation has created significant
opportunities in the Tippecanoe County, Indiana communities for us to satisfy
the needs of the small businesses, professionals and individuals. The idea to
charter a new bank was originally formulated by the organizers as a result of
market consolidation in the Tippecanoe County, Indiana areas. The Lafayette
Community Bank will provide the small businesses in our service area a
community-based banking alternative to the large institutions. The organizers
and senior management have had significant experience in the financial industry
either directly or through experience as directors of financial institutions.
The experience and community connections of all eight organizers and senior
management and their knowledge of the Tippecanoe County, Indiana markets led
them to identify the need for a locally chartered, owned and operated community
bank that would be service-driven and technologically advanced and capable of
serving the small businesses of Tippecanoe County, Indiana.
The directors and management hold strong ties to the community. The
directors are all experienced entrepreneurs and business owners who are active
participants in the community. The combination of these individuals offers a
blend of banking background and non-banking business experience that we believe
will contribute to our overall success. Lafayette Community Bank will also
27
<PAGE>
establish our advisory board composed of additional community and business
leaders to provide further input to management.
Business strategy.
The primary service area to be served by Lafayette Community Bancorp
is Tippecanoe County, Indiana within which the cities of Lafayette and West
Lafayette are located. The combined population of Lafayette and West Lafayette
is approximately 73,000. This primary service area represents the geographic
areas from which we expect to generate the majority of our business. The primary
employers in the service area include Purdue University, Wabash International,
Subaru-Isuzu Automotive, Inc., Caterpillar, Inc., Home Hospital, Fairfield
Manufacturing, Alcoa and Eli Lilly & Co. We will also seek business in Benton
County, White County, Carroll County, Clinton County, Montgomery County, Warren
County and Fountain County, Indiana.
There are no unusual customer groups in the Tippecanoe County market
area. Purdue University is within our service area and its presence is evident
in the demographic characteristics; however, Tippecanoe County has a diversified
economic base that we believe is not overly dependent on any single industry.
Lafayette Community Bank intends to operate as a full-service
financial institution with an emphasis on serving small businesses,
professionals and individuals. Therefore, Lafayette Community Bank's product and
service line will consist of all traditional banking activities, including the
following:
o Lending: Lafayette Community Bank will offer loans to
individuals, partnerships, and limited liability companies or
other corporate borrowers for a variety of purposes. Our
anticipated commercial lending will focus on small and
medium-sized businesses and will include lines of credit, term
loans, equipment loans, letters of credit, commercial real
estate, construction, and Small Business Administration lending.
Loan products will also include consumer loans, secured and
unsecured, auto loans, home equity lines of credit, home
improvement loans, general lines of credit including overdraft
lines, and mortgage lending. Lafayette Community Bank may also
offer loans in excess of its lending limit by selling
participations in those loans to correspondent banks. We
anticipate that Lafayette Community Bank will set up the
capability to sell loans in the secondary market. The volume of
loans to be sold will be determined based on asset/liability and
capital positions.
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o Deposit: Deposit products will include interest-bearing and
non-interest bearing checking accounts, money market savings
accounts, certificates of deposit, regular savings accounts,
individual retirement accounts, and cash management services.
o Operations/Other: Lafayette Community Bank will offer ATM
services and direct deposit services, and will offer Internet
banking services to both retail and commercial customers.
Further, while it is our opinion that the market would support
trust services, Lafayette Community Bank will not initially offer
trust services.
Proposed Lending Practices
Lafayette Community Bank expects to make loans to individuals and
businesses located within its proposed market area. Lafayette Community Bank
anticipates that its loan portfolio will consist of commercial loans (70%),
residential mortgage loans (20%) and consumer/personal loans (10%), although
these percentages are approximations and the actual percentages may vary.
Lafayette Community Bank anticipates that its legal lending limit under
applicable regulations will be approximately $1.10 million immediately following
the offering if the maximum number of shares are sold, based on the legal
lending limit of 15% of capital and surplus.
Commercial Loans. We will make commercial loans primarily to small
and medium-sized businesses. These loans will be either secured or unsecured and
we expect our borrowers to use them for general operating purposes, acquisition
of fixed assets including real estate, purchases of equipment and machinery,
financing of inventory and accounts receivable, as well other general corporate
purposes. Lafayette Community Bank will generally look to a borrower's business
operations as the principal source of repayment, but will also receive, when
appropriate, mortgages on real estate, security interests in inventory, accounts
receivable and other personal property and/or personal guarantees. In addition,
Lafayette Community Bank expects that approximately 75% of its commercial loans
will be secured by first mortgages on commercial real estate and that the
majority of Lafayette Community's commercial loans that are not mortgage loans
will be secured by liens on equipment, inventory and/or other assets of the
commercial borrower.
Commercial lending involves more risk than residential lending
because loan balances are greater and repayment is dependent upon the borrower's
business. Lafayette Community Bank will attempt to minimize the risks associated
with these transactions by generally limiting its exposure to owner-operated
properties of customers with an established profitable history. In many cases,
risk will be further reduced by limiting the amount of credit to any one
borrower to an amount less than Lafayette Community Bank's legal lending limit
and avoiding certain types of commercial real estate financings, such as loans
secured by properties causing environmental concerns.
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<PAGE>
Residential Mortgage Loans. Lafayette Community Bank expects to
originate residential mortgage loans, which are generally long-term, with either
fixed or variable interest rates. Lafayette Community Bank's anticipated general
policy will be to retain all or a portion of its variable interest rate mortgage
loans in its loan portfolio and to sell all fixed rate loans in the secondary
market. This policy is subject to review by management and may be revised as a
result of changing market and economic conditions and other factors. Lafayette
Community Bank also expects to offer home equity loans. Lafayette Community Bank
does not expect to retain servicing rights with respect to the majority of the
residential mortgage loans that it originates. We anticipate, but cannot assure
you, that substantially all of Lafayette Community Bank's residential real
estate loans will be secured by first liens on real estate and that the majority
of Lafayette Community Bank's personal loans will be home equity loans secured
by second liens on real estate.
Personal Loans and Lines of Credit. Lafayette Community Bank will
make personal loans and lines of credit available to consumers for various
purposes, such as the purchase of automobiles, boats and other recreational
vehicles, and the making of home improvements and personal investments.
Lafayette Community Bank expects to retain all of such loans. Depending, in
part, on the level of demand among Lafayette Community Bank's customers and
other considerations, Lafayette Community Bank may consider offering credit card
services.
Consumer loans generally have shorter terms and higher interest rates
than residential mortgage loans and, except for home equity lines of credit,
usually involve more credit risk than mortgage loans because of the type and
nature of the collateral. Consumer lending collections are dependent on a
borrower's continuing financial stability and are thus likely to be adversely
affected by the borrower's job loss, illness or personal bankruptcy. In many
cases, repossessed collateral for a defaulted consumer loan will not provide an
adequate source of repayment of the outstanding loan balance because of
depreciation of the underlying collateral. Lafayette Community Bank intends to
underwrite its loans carefully, with a strong emphasis on the amount of the down
payment, credit quality, employment stability and monthly income. These loans
will have a monthly repayment schedule with the payment amount tied to the
borrower's periodic income. Lafayette Community Bank believes that the generally
higher yields earned on consumer loans will help compensate for the increased
credit risk associated with such loans and that consumer loans will be important
to its efforts to serve the credit needs of its customer base.
Loan Policies. Although Lafayette Community Bank intends to take a
progressive and competitive approach to lending, it will stress high quality in
its loans. Because of Lafayette Community Bank's local nature, management
believes that quality control should be achievable while still providing prompt
and personal service. The Bank will adopt written loan policies that will
contain general lending
30
<PAGE>
guidelines and will be subject to periodic review and revision by the Bank's
Loan Committee and its board of directors. These policies will concern loan
administration, documentation, approval and reporting requirements for various
types of loans.
Lafayette Community Bank will seek to make sound loans while
recognizing that lending money involves a degree of business risk. The Bank's
loan policies will be designed to assist Lafayette Community Bank in managing
the business risk involved in making loans. These policies will provide a
general framework for the Bank's loan operations while recognizing that not all
loan activities and procedures can be anticipated. The Bank's loan policies will
instruct lending personnel to use care and prudent decision making and to seek
the guidance of the Senior Vice President of Lending or President and Chief
Executive Officer of Lafayette Community Bank where appropriate.
The Bank's loan policies will include procedures for oversight and
monitoring of its lending practices and loan portfolio. The Bank will have a
Loan Committee comprised initially of Mr. Zimmerman and other appropriate
lending personnel. Initially, Mr. Zimmerman will have individual signatory
authority for loans up to $250,000 and joint signatory authority, along with J.
Michael Pechin, for loans up to $550,000. These limits will be subject to review
and revision by the Bank's board of directors and its Loan Committee will be
responsible for approving all loans that exceed the established limits for the
senior officers.
The Bank's loan policies will provide guidelines for loan-to-value
ratios that limit the size of certain types of loans to a maximum percentage of
the value of the collateral securing the loans, which percentage varies by the
type of collateral, including the following maximum loan-to-value ratios:
o raw land (65%)
o improved residential real estate lots (75%)
o owner-occupied commercial real estate (80%) o non-owner occupied
commercial real estate (80%)
o first mortgages on residences (80%)
o junior mortgages on residences (90%)
The Bank's loan policies will also include other underwriting
standards for loans secured by liens on real estate. These underwriting
standards are designed to determine the maximum loan amount that a borrower has
the capacity to repay based upon the type of collateral securing the loan and
the borrower's income. For owner-occupied residential real estate mortgages, the
monthly payments on the loan will not exceed 28% of the borrower's monthly
income. For owner-occupied commercial real estate mortgages, the annual
payments, combined with the borrower's other required debt payments, will not
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<PAGE>
exceed 80% of the borrower's net annual projected cash flow. In addition, the
loan policies will require that the Bank obtain a written appraisal by a state
certified appraiser for loans secured by real estate in excess of $250,000,
subject to certain limited exceptions. The appraiser must be selected by
Lafayette Community Bank and must be independent and licensed. For loans secured
by real estate that are less than $250,000, the Bank may elect to conduct an
in-house real estate evaluation. The Bank's loan policies will also include
maximum amortization schedules and loan terms for each category of loans secured
by liens on real estate. Loans secured by commercial real estate will be subject
to a maximum term of 10 years and a maximum amortization schedule of 20 years.
Loans secured by residential real estate with variable interest rates will have
a maximum term and amortization schedule of 25 years. The Bank will, at its
option, sell to the secondary market loans secured by residential real estate
with fixed interest rates, thereby reducing the interest rate risk and credit
risk to Lafayette Community Bank. Loans secured by vacant land will be subject
to a maximum term of 3 years and a maximum amortization schedule of 10 years.
The Bank's loan policies will also establish a limit on the aggregate
amount of loans to any one borrower. These loan policies will provide that no
loan shall be granted where the aggregate liability of the borrower to the Bank
will exceed 15% of the Bank's total equity, or $1.10 million. This internal
lending limit will be subject to review and revision by the board of directors
from time to time.
In addition, Lafayette Community Bank's loan policies will provide
guidelines for:
o personal guarantees;
o environmental policy review;
o loans to employees, executive officers and directors; o problem
loan identification;
o maintenance of a loan loss reserve; and
o other matters relating to Lafayette Community Bank's lending
practices.
Deposits.
The Bank intends to offer a broad range of deposit products,
including checking, business checking, savings and money market accounts,
certificates of deposit and direct-deposit services. Transaction accounts and
certificates of deposit will be tailored to the primary market area at rates
competitive with those offered in Tippecanoe County. All deposit accounts will
be insured by the FDIC up to the maximum amount permitted by law. Lafayette
Community Bank intends to solicit those accounts from individuals, businesses,
associations, financial institutions and government entities.
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Marketing strategy.
The marketing strategy for Lafayette Community Bank involves two
primary components: capitalizing on the competitive advantages of community
banking, and utilizing technology to provide high-quality service to businesses
and residents. We believe that, as a community bank, our growth will be
furthered due to strategic advantages that include:
o higher level of personalized customer service;
o positive customer perception of local ownership and local
management;
o focus on small-business banking; and
o typically lower service charges and more favorable interest
rates.
We face significant competition from larger regional banks in our
market area. Therefore, the marketing focus of Lafayette Community Bank will be
to highlight the competitive advantages of being a locally chartered and managed
community bank and to utilize the advantages discussed above to generate growth.
We intend to offer competitive rates and fees, but not to necessarily be the
lowest cost provider in each market. The features and pricing of our products
and services will be competitive; however, we intend to compete on service
rather than on rates and fees. We believe that the likelihood of success for
this strategy is enhanced by the experience, qualifications, and community
involvement of the proposed management and directors.
The second component of our marketing strategy will be to utilize
technology where appropriate to provide convenience and service to our retail
and commercial customers. We believe that we may have an advantage over our
competitors by being able to invest in the latest technologies without having to
incur the additional financial and operational costs associated with converting
and upgrading existing systems. We intend to provide products and services via
the Internet, including cash management services to our retail and commercial
customers.
We believe that, by using a combination of the competitive advantages
of community banking and the convenience of technology, Lafayette Community Bank
will be able to meet the needs of businesses and residents in Tippecanoe County,
Indiana and surrounding areas.
Competition.
Tippecanoe County, Lafayette/West Lafayette. As of June 30, 1999, the
primary service area of Tippecanoe County was served by 48 financial institution
offices, 44 of which were bank or savings and loan offices. Total deposits in
Lafayette/West Lafayette increased by 0.7% or $10.5 million, between
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June 30, 1998 and June 30, 1999. Deposits from June 1998 to June 1999 increased
by nearly 3% or $50 million.
The most significant competitive change that has occurred in
Lafayette/West Lafayette was the acquisition of NBD, N.A. by Union Planters
Bank, N.A. in 1999, which affected nearly 20% of deposits in Lafayette/West
Lafayette.
Total deposits in Tippecanoe County grew by more than 4% between 1997
and 1999, reaching $1.5 billion in June 1999. Lafayette/West Lafayette
represents approximately 80% percent of total deposits in Tippecanoe County.
Summary. In reviewing the competitive nature of the Tippecanoe County
market, there are two positive characteristics that suggest the potential for
success of Lafayette Community Bank. First, the market has a significant deposit
base, which has provided growth for the majority of financial institutions
serving the areas. The overall size of the deposit base in the market suggests
the opportunity for Lafayette Community Bank to generate deposit growth. Second,
the presence of locally-owned and managed community banks in the market is
limited. Larger regional banks hold nearly 68% percent of market share in
Tippecanoe County. While the larger regional banks in the markets are strong, we
believe that Lafayette Community Bank will attract business by offering a higher
level of customer service and by benefiting from positive customer perception of
local ownership, local management, and community involvement. Though no
assurances can be given, we believe that the large share of deposits held by the
larger regional banks provide Lafayette Community Bank with the opportunity to
effectively position itself as a stable and attractive community banking
alternative.
Community involvement.
We realize that our success will be dependent on the success of the
local communities of Tippecanoe County, Indiana. We plan to attract and maintain
support in the community through the following three methods:
o Public offering - This public offering of our shares will
give residents in the community an opportunity to have an
ownership interest in Lafayette Community Bancorp from its
inception and be part of its future success.
o Community participation - Our directors, officers and
advisory directors are currently and will continue to be
members of civic, social and religious organizations,
through which we will maintain regular contact with various
leaders throughout the community. This type of association
will provide a forum for exchange of thoughts and ideas
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regarding a variety of subjects, including identification
of community needs and ways in which we can assist.
o Community communication - We plan to maintain consistent,
ongoing communication with Tippecanoe County, Indiana
residents. We will use advertising and public relations
tools to consistently inform the communities of our
products, services and involvement in local activities and
community development.
Employees.
We anticipate that, when Lafayette Community Bank opens for business,
it will employ approximately twelve full-time employees and five part-time
employees. Initially, the executive officers of Lafayette Community Bank will
consist of three individuals, the Chief Executive Officer and President, the
Senior Vice-President of Lending, and Senior Vice-President and Controller. The
remaining employees will provide personal banking services to customers and
staff support in the areas of accounting, lending and operations. Other
non-banking services such as data processing, compliance and internal audit will
be outsourced to companies specializing in these areas.
We expect that total compensation for Lafayette Community Bank's
employees for the first year of operations will be approximately $517,000. We
have no plans for any significant increases in compensation for the second and
third years unless significant increases in deposits and loans occur that would
require additional staff. We also intend to provide employees with benefit
programs, including medical insurance, paid vacation time and sick leave, and
employee stock options.
Litigation.
We are not a party to any pending legal proceedings.
DESCRIPTION OF PROPERTY
Our headquarters and the main office banking center will be located
at 2 North 4th Street, Lafayette, Indiana 47901. We have entered into a
five-year lease agreement for the property, with two five-year renewal options.
The two-story brick and frame structure contains approximately four thousand
square feet per level. The annual base rent is approximately $78,000. The
facility will include a vault, safe deposit boxes, personal banker stations, an
automated teller machine, a night depository drop and drive-up teller stations.
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We have also entered into a lease for a branch office facility at
2136 Greenbush Street, Lafayette, Indiana 47905. The facility will be used as a
branch office once we receive our charter.
PLAN OF OPERATION
We formed Lafayette Community Bancorp to own and hold all of the
common stock of Lafayette Community Bank. In November of 1999, our organizers
filed applications with the Indiana Department of Financial Institutions and
with the FDIC to receive an Indiana state bank charter and federal deposit
insurance. Whether the Indiana Department of Financial Institutions and FDIC
grant us a charter and deposit insurance will depend upon, among other things,
our compliance with legal requirements imposed by Indiana law and the FDIC,
including capitalization of Lafayette Community Bank with at least a specified
minimum amount of capital which we believe will be approximately $7.5 million.
Upon receipt of these regulatory approvals from the Indiana Department of
Financial Institutions and the FDIC, we will file an application with the
Federal Reserve Board to become a bank holding company, which must be approved
before we can acquire the capital stock of Lafayette Community Bank. We expect
to receive all required regulatory approvals by the second quarter of 2000.
Our profitability will be dependent upon the successful operations of
Lafayette Community Bank. New banks are typically not profitable in the first
year of operation and sometimes do not become profitable for several years, if
at all. At December 31, 1999, our accumulated deficit was $81,236. We will
continue to incur pre-opening expenses until Lafayette Community Bank commences
operations. We expect to incur total pre-opening expenses of approximately
$350,000. Based upon industry standards, management's experience and current
market demand, we believe that Lafayette Community Bank will begin to be
profitable in the third quarter of the second year of operations. We cannot
assure you, however, that Lafayette Community Bank will be profitable, or if
profitable, that its earnings will be comparable to those of similar banking
institutions. Please refer to the "Risk Factors" section of this prospectus for
a more detailed explanation of the risks associated with the purchase of our
common stock.
We face stiff competition in making loans and attracting deposits in
our service area. In order to overcome this competitive environment, we plan to
become the premier community based financial institution in our service areas by
providing personalized bank products and traditional bank services to
individuals, small businesses, professionals and other local organizations. We
intend to employ professional and consumer friendly individuals who can "think
outside of the box". While Lafayette Community Bank will provide personal
computer banking and telephone banking for customers who want this convenience,
customers will still be able to talk with employees and have their transactions
handled by employees who have the authority and knowledge to take care of them.
We plan to open
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Lafayette Community Bank with approximately twelve full-time employees and five
part-time employees and expect that this number of employees will be sufficient
for our first three years of operations.
Our operating principles are based on superior customer service
through knowledgeable employees and efficient operating systems and technology.
Policies and procedures will be tailored to the local markets rather than larger
regional or state areas.
Our directors and management plan to focus on the small businesses
within our market, residential real estate mortgages and a growing consumer
market. They will rely principally on themselves, advisory directors,
shareholders, management and employees for business development.
Over the next eighteen to twenty-four months, we plan to continue to
offer competitive products in our market and do not expect to have any trouble
satisfying our cash requirements for funding loans. We do not plan to pay the
highest rates on deposits, but feel we can compete by offering exceptional
customer service. At the same time we do not expect to charge the lowest rates
and fees on our loans. We will work with customers to design products and
systems that will meet their individual needs, without just being another low
cost provider.
Assuming this offering is fully subscribed, we do not presently
anticipate any need to raise additional capital for the next five years.
We anticipate that expenditures for furniture, fixtures, and
equipment will be approximately $791,000 in the first year of operation. Our
largest expenditure items will be for bank equipment such as vaults, safe
deposit boxes, ATMs, personal computers, teller equipment and leasehold
improvements. These expenditures are expected to meet our needs for the next few
years.
SUPERVISION AND REGULATION
Both Lafayette Community Bancorp and Lafayette Community Bank are or
will soon be subject to extensive state and federal banking laws and regulations
which impose specific requirements or restrictions on, and provide for general
regulatory oversight of, virtually all aspects of operations. These laws and
regulations are generally intended to protect depositors, not shareholders. The
following summary is qualified by reference to the statutory and regulatory
provisions discussed. Changes in applicable laws or regulations may have a
material effect on our business and prospects. Beginning with the enactment of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and
following with the FDIC Improvement Act of 1991, numerous additional changes
have been proposed. Our operations may be affected by legislative changes and
the policies of various regulatory authorities,
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including changes brought about by the Financial Services Modernization Act of
1999. We cannot predict the effect that fiscal or monetary policies, economic
control, or new federal or state legislation may have in the future on our
business and earnings.
Lafayette Community Bancorp.
Because we will own the outstanding capital stock of Lafayette
Community Bank, we will be deemed a bank holding company under the federal Bank
Holding Company Act of 1956.
The Bank Holding Company Act. Under the Bank Holding Company Act,
Lafayette Community Bancorp will be subject to periodic examination by the
Federal Reserve and required to file periodic reports of its operations and any
additional information that the Federal Reserve may require. Our activities at
the bank holding company level will be limited to:
o banking, managing or controlling banks;
o furnishing services to or performing services for its
subsidiaries; and
o engaging in other activities that the Federal Reserve determines
to be so closely related to banking, managing, or controlling
banks as to be a proper incident thereto.
Investments, Control, and Activities. With some limited exceptions,
the Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before:
o acquiring substantially all the assets of any bank;
o acquiring direct or indirect ownership or control of any voting
shares of any bank if after such acquisition it would own or
control more than 5% of the voting shares of such bank (unless it
already owns or controls the majority of such shares); or
o merging or consolidating with another bank holding company.
In addition, and subject to some exceptions, the Bank Holding Company
Act and the Change in Bank Control Act, together with regulations thereunder,
require Federal Reserve approval prior to any person or company acquiring
"control" of a bank holding company. Control is conclusively presumed to exist
if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person acquires 10% or more, but less than 25%, of any class of voting
securities and either Lafayette Community Bancorp has registered securities
under Section 12 of the Securities Exchange Act of 1934 or no other person owns
a greater percentage of that class of voting securities immediately after the
transaction. Our common shares will be registered
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under Section 15(d) of the Securities Exchange Act of 1934 upon the first
closing of this offering. The regulations provide a procedure for challenge of
the rebuttable control presumption.
Under the Bank Holding Company Act, a bank holding company is
generally prohibited from engaging in, or acquiring direct or indirect control
of more than 5% of the voting shares of any company engaged in nonbanking
activities unless the Federal Reserve Board, by order or regulation, has found
those activities to be so closely related to banking or managing or controlling
banks as to be a proper incident thereto. Some of the activities that the
Federal Reserve Board has determined by regulation to be proper incidents to the
business of a bank holding company include:
o making or servicing loans and certain types of leases;
o engaging in certain insurance and discount brokerage activities;
o performing certain data processing services;
o acting in certain circumstances as a fiduciary or investment or
financial adviser;
o owning savings associates; and
o making investment in certain corporations or projects designed
primarily to promote community welfare.
The Federal Reserve Board imposes capital requirements on Lafayette
Community Bancorp under the Bank Holding Company Act, including a minimum
leverage ratio and a minimum ratio of "qualifying" capital to risk-weighted
assets. These requirements are described below under "Capital Regulations."
Subject to its capital requirements and certain other restrictions, Lafayette
Community Bancorp is able to borrow money to make a capital contribution to
Lafayette Community Bank, and these loans may be repaid from dividends paid from
Lafayette Community Bank to Lafayette Community Bancorp.
Lafayette Community Bancorp is a corporation separate and distinct
from Lafayette Community Bank. Because most of Lafayette Community Bancorp's
revenues will be received by it in the form of dividends or interest paid by
Lafayette Community Bank, our ability to pay dividends will be subject to
regulatory restrictions as described below in "Lafayette Community Bank -
Dividends." The Federal Reserve has issued a policy statement on the payment of
cash dividends by bank holding companies. In the policy statement, the Federal
Reserve expressed its view that a bank holding company experiencing earnings
weaknesses should not pay cash dividends exceeding its net income or which could
only be funded in ways that weakened the bank holding company's financial
health, such as by borrowing. Additionally, the Federal Reserve possesses
enforcement powers over bank holding companies and their non-bank subsidiaries
to prevent or remedy actions that represent unsafe or unsound practices or
violations of applicable statutes and regulations. Among these powers is the
ability to proscribe the
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payment of dividends by banks and bank holding companies. The FDIC possesses
similar enforcement powers over the Bank as an incident of the deposit insurance
it provides to the Bank's depositors. The "prompt corrective action" provisions
of the FDIC Improvement Act impose further restrictions on the payment of
dividends by insured banks which fail to meet specified capital levels and, in
some cases, their parent bank holding companies. As described below in
"Description of Securities," in addition to the restrictions on dividends
imposed by the Federal Reserve, the laws of the State of Indiana impose certain
restrictions on the declaration and payment of dividends by Indiana corporations
such as Lafayette Community Bancorp.
Lafayette Community Bancorp is also able to raise capital for
contribution to Lafayette Community Bank by issuing securities without having to
receive regulatory approval, subject to compliance with federal and state
securities laws.
Source of Strength. In accordance with Federal Reserve Board policy,
Lafayette Community Bancorp will be expected to act as a source of financial
strength to Lafayette Community Bank and to commit resources to support
Lafayette Community Bank in circumstances in which Lafayette Community Bancorp
might not otherwise do so. Under the Bank Holding Company Act, the Federal
Reserve Board may require a bank holding company to terminate any activity or
relinquish control of a nonbank subsidiary, other than a nonbank subsidiary of a
bank, upon the Federal Reserve Board's determination that such activity or
control constitutes a serious risk to the financial soundness or stability of
any subsidiary depository institution of the bank holding company. Further,
federal bank regulatory authorities have additional discretion to require a bank
holding company to divest itself of any bank or nonbank subsidiary if the agency
determines that divestiture may aid the depository institution's financial
condition.
Lafayette Community Bank.
Lafayette Community Bank will operate as an Indiana-chartered banking
corporation and a member of the Federal Reserve System subject to examination by
the Indiana Department of Financial Institutions and the Federal Reserve Board.
Deposits in Lafayette Community Bank will be insured by the FDIC up to a maximum
amount, which is generally $100,000 per depositor subject to aggregation rules.
The Federal Reserve, the Indiana Department of Financial
Institutions, and the FDIC will regulate or monitor virtually all areas of
Lafayette Community Bank's operations, including:
o security devices and procedures;
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o adequacy of capitalization and loss reserves;
o loans;
o investments;
o borrowings;
o deposits;
o mergers;
o issuances of securities;
o payment of dividends;
o interest rates payable on deposits;
o interest rates or fees chargeable on loans;
o establishment of branches;
o corporate reorganizations;
o maintenance of books and records; and
o adequacy of staff training to carry on safe lending and
deposit gathering practices.
The Federal Reserve Board will require Lafayette Community Bank to
maintain specified capital ratios and will impose limitations on Lafayette
Community Bank's aggregate investment in real estate, bank premises, and
furniture and fixtures. The Federal Reserve Board will also require Lafayette
Community Bank to prepare quarterly reports on Lafayette Community Bank's
financial condition and to conduct an annual audit of its financial affairs in
compliance with its minimum standards and procedures.
Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate, as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC
Improvement Act also requires the federal banking regulatory agencies to
prescribe, by regulation, standards for all insured depository institutions and
depository institution holding companies relating, among other things, to the
following:
o internal controls;
o information systems and audit systems;
o loan documentation;
o credit underwriting;
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o interest rate risk exposure; and
o asset quality.
State banks which are members of the Federal Reserve System and their
holding companies which have been chartered or registered or have undergone a
change in control within the past two years or which have been deemed by Federal
Reserve Board to be troubled institutions must give the Federal Reserve Board
thirty days prior notice of the appointment of any senior executive officer or
director. Within the thirty day period, the Federal Reserve Board may approve or
disapprove any such appointment.
Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance premiums
from the industry used to offset losses from insurance payouts when banks and
thrifts fail. In 1993, the FDIC adopted a rule which established a risk-based
deposit insurance premium system for all insured depository institutions. Under
this system, until mid-1995 depository institutions paid to the Bank Insurance
Fund or the Savings Association Insurance Fund from $0.23 to $0.31 per $100 of
insured deposits (depending on capital levels and risk profile, as determined by
the institution's primary federal regulator) on a semiannual basis. Once the
Bank Insurance Fund reached its legally mandated reserve ratio in mid-1995, the
FDIC lowered and eventually eliminated premiums for well-capitalized banks, with
a minimum semiannual assessment of $1,000. However, in 1996 Congress enacted the
Deposit Insurance Funds Act of 1996, which eliminated even this minimum
assessment. It also separated the Financial Corporation (FICO) assessment to
service the interest on its bond obligations. The amount assessed on individual
institutions, including Lafayette Community Bank, by FICO is in addition to the
amount paid for deposit insurance according to the risk-related assessment rate
schedule. Increases in deposit insurance premiums or changes in risk
classification will increase Lafayette Community Bank's cost of funds, and we
may not be able to pass these costs on to our customers.
Transactions with Affiliates and Insiders. Lafayette Community Bank
will be subject to the provisions of Section 23A of the Federal Reserve Act,
which places limits on the amount of loans or extensions of credit to, or
investments in, or certain other transactions with, affiliates and on the amount
of advances to third parties collateralized by the securities or obligations of
affiliates. The aggregate of all covered transactions is limited in amount, as
to any one affiliate, to 10% of Lafayette Community Bank's capital and surplus
and, as to all affiliates combined, to 20% of Lafayette Community Bank's capital
and surplus. Furthermore, within the foregoing limitations as to amount, each
covered transaction
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must meet specified collateral requirements. Compliance is also required with
certain provisions designed to avoid the taking of low quality assets.
Lafayette Community Bank will also be subject to the provisions of
Section 23B of Federal Reserve Act which, among other things, prohibits an
institution from engaging in certain transactions with certain affiliates unless
the transactions are on terms substantially the same, or at least as favorable
to such institution or its subsidiaries, as those prevailing at the time for
comparable transactions with nonaffiliated companies. Lafayette Community Bank
will be subject to certain restrictions on extensions of credit to executive
officers, directors, certain principal shareholders, and their related
interests. Such extensions of credit:
o must be made on substantially the same terms, including interest
rates and collateral, as those prevailing at the time for
comparable transactions with third parties; and
o must not involve more than the normal risk of repayment or
present other unfavorable features.
Dividends. As a state-chartered commercial bank organized under
Indiana law, Lafayette Community Bank may pay dividends from its undivided
profits in an amount declared by its board of directors, subject to prior
approval of the Indiana Department of Financial Institutions if the proposed
dividend, when added to all prior dividends declared during the current calendar
year, would be greater than the current year's "net profits" and retained "net
profits" for the previous two calendar years.
The FDIC Improvement Act generally prohibits a depository institution
from making any capital distribution (including payment of a dividend) or paying
any management fee to its holding company if the depository institution would
thereafter be undercapitalized. The FDIC may prevent an insured bank from paying
dividends if the bank is in default of payment of any assessment due to the
FDIC. In addition, payment of dividends by a bank may be prevented by the
applicable federal regulatory authority if such payment is determined, by reason
of the financial condition of such bank, to be an unsafe and unsound banking
practice.
Branching and Acquisitions. Branching by Lafayette Community Bank is
subject to the jurisdiction, and requires the prior approval, of the FDIC and
the Indiana Department of Financial Institutions. Under current law, banks
chartered by the State of Indiana may establish branches throughout the state
and in other states. Congress authorized interstate branching, with certain
limitations, beginning in 1997. In 1996, the Indiana General Assembly adopted
statutes authorizing Indiana financial institutions to establish one or more
branches in states other than Indiana through
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interstate merger transactions and to establish one or more interstate branches
through de novo branching or the acquisition of a branch.
Bank holding companies, such as Lafayette Community Bancorp, are
prohibited by the Bank Holding Company Act from acquiring direct or indirect
control of more than 5% of the outstanding shares of any class of voting stock
or substantially all of the assets of any bank or savings association or merging
or consolidating with another bank holding company without prior approval of the
Federal Reserve. Additionally, Lafayette Community Bancorp is prohibited by the
Bank Holding Company Act from engaging in or from acquiring ownership or control
of more than 5% of the outstanding shares of any class of voting stock of any
company engaged in a nonbanking business unless such business is determined by
the Federal Reserve to be so closely related to banking as to be a proper
incident thereto. The Bank Holding Company Act does not place territorial
restrictions on the activities of such nonbanking-related activities.
The Bank Holding Company Act specifically authorizes a bank holding
company, upon receipt of appropriate approvals from the Federal Reserve and the
Director of the Office of Thrift Supervision, to acquire control of any savings
association or thrift holding company. Similarly, a thrift holding company may
acquire control of a bank. A savings association acquired by a bank holding
company cannot continue any non-banking activities not authorized for bank
holding companies.
Interstate Banking. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 allows bank holding companies to acquire banks anywhere
in the United States subject to certain state restrictions, and permits an
insured bank to merge with an insured bank in another state without regard to
whether such merger is prohibited by state law. Additionally, an out-of-state
bank may acquire the branches of an insured bank in another state without
acquiring the entire bank; provided, however, that the law of the state where
the branch is located permits such an acquisition. Bank holding companies also
may merge existing bank subsidiaries located in different states into one bank.
An insured bank subsidiary may act as an agent for an affiliated bank
or savings association in offering limited banking services (receive deposits,
renew time deposits, close loans, service loans and receive payments on loans
obligations) both within the same state and across state lines.
Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the
Comptroller of the Currency, shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to
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open a branch or facility. Failure to adequately meet these criteria could
result in the imposition of additional requirements and limitations on Lafayette
Community Bank.
Other Regulations. Interest and other charges collected or contracted
for by Lafayette Community Bank are subject to state usury laws and federal laws
concerning interest rates. Lafayette Community Bank's loan operations are also
subject to federal laws applicable to credit transactions, such as the:
o Truth-In-Lending Act, governing disclosures of credit terms to
consumer borrowers;
o Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution is
fulfilling its obligation to help meet the housing needs of the
community it serves;
o Equal Credit Opportunity Act, prohibiting discrimination on the
basis of race, creed or other prohibited factors in extending
credit;
o Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
o Fair Debt Collection Act, governing the manner in which consumer
debts may be collected by collection agencies; and
o rules and regulations of the various federal agencies charged
with the responsibility of implementing such federal laws.
The deposit operations of Lafayette Community Bank also are subject
to the:
o Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes
procedures for complying with administrative subpoenas of
financial records; and
o Electronic Funds Transfer Act, and Regulation E issued by the
Federal Reserve Board to implement that Act, which governs
automatic deposits to and withdrawals from deposit accounts and
customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking service.
Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow
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expansion to diminish their capital ratios and should maintain ratios in excess
of the minimums. We have not received any notice indicating that either
Lafayette Community Bancorp or Lafayette Community Bank will be subject to
higher capital requirements. The current guidelines require all bank holding
companies and federally-regulated banks to maintain a minimum risk-based total
capital ratio equal to 8%, of which at least 4% must be Tier 1 capital. Tier 1
capital includes common shareholders' equity, qualifying perpetual preferred
stock, and minority interests in equity accounts of consolidated subsidiaries,
but excludes goodwill and most other intangibles and excludes the allowance for
loan and lease losses. Tier 2 capital includes the excess of any preferred stock
not included in Tier 1 capital, mandatory convertible securities, hybrid capital
instruments, subordinated debt and intermediate term-preferred stock, and
general reserves for loan and lease losses up to 1% of risk-weighted assets.
Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.
The federal bank regulatory authorities have also implemented a
leverage ratio, which is equal to Tier 1 capital as a percentage of average
total assets less intangibles, to be used as a supplement to the risk-based
guidelines. The principal objective of the leverage ratio is to place a
constraint on the maximum degree to which a bank holding company may leverage
its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional
cushion of at least 100 to 200 basis points.
The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To qualify as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total risk-based capital ratio of no less than 10%, and
Lafayette Community Bank must not be under any order or directive from the
appropriate regulatory agency to meet and maintain a specific capital level.
Initially, we will qualify as "well capitalized."
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Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines, after notice and an opportunity for hearing, that the institution is
in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:
o submit a capital restoration plan;
o raise additional capital;
o restrict their growth, deposit interest rates, and other
activities;
o improve their management;
o eliminate management fees; or
o divest themselves of all or a part of their operations.
Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.
These capital guidelines can affect us in several ways. If we grow at
a rapid pace, a premature "squeeze" on capital could occur making a capital
infusion necessary. The requirements could impact our ability to pay dividends.
Our capital levels will initially be more than adequate; however, rapid growth,
poor loan portfolio performance, poor earnings performance, or a combination of
these factors could change our capital position in a relatively short period of
time.
The FDIC Improvement Act requires the federal banking regulators to
revise the risk-based capital standards to provide for explicit consideration of
interest-rate risk, concentration of credit risk, and the risks of untraditional
activities. We are uncertain what effect these regulations would have.
Failure to meet these capital requirements would mean that a bank
would be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger application, unless the bank could demonstrate a
reasonable plan to meet the capital requirement within a reasonable period of
time.
Enforcement Powers. The Financial Institution Reform Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties." Institution-affiliated parties
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primarily include management, employees, and agents of a financial institution,
as well as independent contractors and consultants such as attorneys and
accountants and others who participate in the conduct of the financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the submission of inaccurate reports. Civil penalties may be as high as
$1,000,000 a day for such violations. Criminal penalties for some financial
institution crimes have been increased to twenty years. In addition, regulators
are provided with greater flexibility to commence enforcement actions against
institutions and institution-affiliated parties. Possible enforcement actions
include the termination of deposit insurance. Furthermore, banking agencies'
power to issue cease-and-desist orders were expanded. Such orders may, among
other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnifications or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.
Recent Legislative Developments. On November 12, 1999, the President
of the United States signed into law the Financial Services Modernization Act of
1999. The FSMA contains a number of provisions that will fundamentally alter the
banking and financial services industries. The FSMA repeals Section 20 of the
Banking Act of 1933, commonly known as the Glass-Steagall Act, which generally
has separated commercial from investment banking. The FSMA will also for the
first time allow banks, securities firms and insurance companies to affiliate in
a new financial holding company structure.
Under the FSMA, national bank affiliates will be able to conduct a
broad range of financial activities, including providing insurance and
securities services. However, the national bank must be well-capitalized and
well-managed. In addition, insurance and securities activities will be
functionally regulated. For example, the Securities and Exchange Commission will
regulate most national bank affiliates' securities activities and the states
will regulate their insurance activities. The FSMA preserves the thrift charter,
but bars new unitary thrift holding companies from approval that were applied
for after May 4, 1999.
Neither Lafayette Community Bancorp nor Lafayette Community Bank can
predict what impact the FSMA will have on financial institutions. One
consequence may be increased competition from large financial services companies
that, under the FSMA, will be permitted to provide many types of financial
services to customers.
Effect of Governmental Monetary Policies. Our earnings are affected
by domestic economic conditions and the monetary and fiscal policies of the
United States government and its agencies. The Federal Reserve Bank's monetary
policies have had, and are likely to continue to have, an important
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impact on the operating results of commercial banks through its power to
implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve
Board have major effects upon the levels of bank loans, investments and deposits
through its open market operations in United States government securities and
through its regulation of the discount rate on borrowings of member banks and
the reserve requirements against member bank deposits. It is not possible to
predict the nature or impact of future changes in monetary and fiscal policies.
MANAGEMENT
Directors and officers.
Set forth below is information regarding Lafayette Community
Bancorp's and Lafayette Community Bank's executive officers and directors. Our
articles of incorporation provide for a classified board of directors, so that,
as nearly as possible, one-third of the directors will be elected each year to
serve three year terms. The terms of office of the classes of directors expire
as follows: Class I at the 2003 annual meeting of shareholders, Class II at the
2002 annual meeting of shareholders and Class III at the 2001 annual meeting of
shareholders. Executive officers serve at the discretion of the board of
directors, a summary of the background and experience of each of these
individuals is set forth below.
David R. Zimmerman, age 41, Director, President and Chief Executive
Officer of Lafayette Community Bancorp, will be the President and Chief
Executive Officer of Lafayette Community Bank. Mr. Zimmerman has over 17 years
of experience in the banking industry which began in 1984 with Lafayette Bank &
Trust, Lafayette, Indiana. Mr. Zimmerman was the Vice-President, Commercial
Lending when he left Lafayette Bank & Trust in 1999 to form Lafayette Community
Bancorp. Prior to his experience with Lafayette Bank & Trust, he attended Purdue
University, obtaining an undergraduate degree in Finance. Mr. Zimmerman has
attended numerous banking and financial institution management courses with the
American Institute of Banking and the Bank Administration Institute,
respectively. Mr. Zimmerman has lived in Lafayette for 20 years where he is
active in the community. His past and present civic activities include
involvement with Junior Achievement, the Lafayette Rotary Club, the Relators
Association, the Greater Lafayette Builders Association, the Lafayette Chamber
of Commerce, the United Way, Legal Aid and the Downtown Business Center.
Edward Chosnek, age 52, senior attorney and majority owner of the
Lafayette, Indiana law firm of Pearlman, Chosnek, Morrissey & Hopson, P.C.
currently serves as Chairman of the Board of Directors of Lafayette Community
Bancorp. Mr. Chosnek attended Purdue University, obtaining an undergraduate
degree in Pre-Law, and Indiana University, where he obtained his law degree. He
has lived in Lafayette
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for 51 years where he is active in the community. He is active in the Indiana
State and American Bar Associations, the Association of Trial Lawyers of
America, the Indiana Bar Foundation, the Tippecanoe County Bar Association, the
Private Panel Bankruptcy Trustees, Tippecanoe Legal Aid Association, the
Tippecanoe County Historical Association and the Lafayette Chamber of Commerce.
John R. Basham, II, age 53, Director, owner and operator of Basham
Rentals, Lafayette, Indiana, is a lifelong resident of Lafayette. Mr. Basham
worked at Eli Lilly & Co. from 1969-97 during which time he served as Senior
Environmental Control Operator. He is active in the community. His community
activities include involvement in the Acting Theatre, the Colt World Series, the
Purdue University All-American Club and Vision 21.
Donald J. Ehrlich, age 62, is Director, President, Chief Executive
Officer and Chairman of the Board of Wabash National Corporation, Lafayette,
Indiana. Mr. Ehrlich has been associated with Wabash National Corporation since
1985. Mr. Ehrlich presently serves on the board of directors of Danaher
Corporation, Washington, D.C., a real estate company, in addition to serving as
a board member of Indiana Secondary Market, a student loan service company. He
attended Purdue University. He is active in the community. Currently, Mr.
Ehrlich serves as a director for the Danaher Corporation, the Indiana Secondary
Market and the Truck Trailer Manufacturer's Association and serves on the
Advisory Council for Purdue University. In 1992, Mr. Ehrlich was voted National
Entreprenuer of the Year by Inc., Magazine, Merrill Lynch and Ernst & Young,
LLP.
Steven Hogwood, age 43, Director, owns and operates as a franchisee
numerous fast-food restaurants in the Lafayette area. Mr. Hogwood served as
Executive Director of Operations of the McDonald Corporation, Oakbrook, Illinois
from 1976-1995. He attended Rhema Bible College, Tulsa, Oklahoma, obtaining a
Bachelor degree. He is active in the community. Currently, Mr. Hogwood serves as
a director for the Indiana Business College and Junior Achievement of White
County, Indiana and is the Chairman for Public Relations for the Indianapolis,
Indiana area. He is the former President of Black McDonald's Operators
Association, as well as the former Vice-President of Indiana McDonald's
Operators Association.
Connie L. Koleszar, age 41, Director, currently serves as Assistant
Secretary and Director of Investor Relations of Wabash National Corporation,
Lafayette, Indiana. Ms. Koleszar has been associated with Wabash National
Corporation since 1985. She attended Ivy Technical College, completing the legal
secretary program in 1980. She is active in the community. Ms. Koleszar serves
on the Community Relations Committee at Wabash National Corporation.
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Thomas A. McDonald, age 34, Director, is self-employed in the
residential and commercial real estate business in and around the Lafayette
area. Mr. McDonald is a lifelong resident of Lafayette. He attended Purdue
University. He is active in the community. His past and present community
activities includes involvement in the United Way and the Lafayette YMCA. Mr.
McDonald formerly served as a board member for the Industrial Credit Union.
Steven W. Norfleet, age 50, Director, is President and owner of
Norfleet Builders, a residential and commercial building and development company
located in Lafayette, Indiana. Mr. Norfleet has been a lifelong resident of
Lafayette. He is active in the community. Mr. Norfleet is a director of the
Lafayette Greater Progress. He is a former director of Homebuilders Association
and is a Life Member of the Indiana Street Route Association.
Michael T. Mootz, age 41, will be the Senior Vice-President,
Controller of Lafayette Community Bank. Mr. Mootz has approximately 12 years of
experience in the banking industry which began in 1988 with Peoples Bank &
Trust, Indianapolis, Indiana. Mr. Mootz was the Assistant Vice-President,
Accounting Manager when Peoples Bank & Trust was acquired by Fifth-Third Bank in
November, 1999. Prior to his experience with Peoples Bank & Trust and
Fifth-Third Bank, he attended Indiana University Purdue University -
Indianapolis, obtaining an undergraduate degree in Business Finance. Mr. Mootz
was born and raised in Indiana.
J. Michael Pechin, age 33, will be the Senior Vice-President, Senior
Loan Officer of Lafayette Community Bank. Mr. Pechin has over 11 years of
experience in the banking industry which began in 1989 with Lafayette Bank &
Trust Company, Lafayette, Indiana. Mr. Pechin was the Vice-President, Commercial
Loan Officer when he left Lafayette Bank & Trust in March, 2000. Prior to his
experience with Lafayette Bank & Trust Company, he attended Illinois Benedictine
College, Lisle, Illinois, obtaining undergraduate degrees in business and
economics. Mr. Pechin has lived in the Lafayette area for 29 years where he is
active in the community. His past and present civic activities include President
and past board member of the Tippecanoe County Mental Health Association, past
treasurer of the Lafayette Chapter NARI and involvement in St. Lawrence grade
school athletics.
General.
Initially, our board will consist of eight directors, seven of whom
will be independent directors. The directors will be divided into three classes,
designated Class I, Class II and Class III. Each class will consist, as nearly
as possible, of one third of the total number of directors constituting the
entire board of directors. In accordance with our Articles of Incorporation, the
initial term of office of directors of Class I will expire at the annual meeting
of the shareholders to be held in 2003 and when their respective
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successors are duly elected and qualified; the initial term of the office of
directors of Class II will expire at the annual meeting of shareholders to be
held in 2002 and when their respective successors are duly elected and
qualified; and the initial term of the office of directors of Class III will
expire at the annual meeting of shareholders to be held in 2001 and when their
respective successors are duly elected and qualified. Currently, Messrs.
Chosnek, Ehrlich, Norfleet and Zimmerman and Ms. Koleszar comprise Class II.
Messrs. Basham, Hogwood and McDonald comprise Class III. Class I currently has
no directors. At each annual meeting of shareholders, successors to the
directors whose term expires at the annual meeting will be elected for
three-year terms. If the number of directors is changed, an increase or decrease
will be apportioned among the classes so as to maintain the number of directors
to fill a vacancy resulting from an increase in such class will hold office for
a term that will coincide with the remaining term of that class, but in no event
will a decrease in the number of directors shorten the term of any incumbent
director. Any director elected to fill a vacancy not resulting in an increase in
the number of directors will have the same remaining term as that of his
predecessor. Except in the case of removal from office, any vacancy on the board
of directors will be filled by a majority vote of the remaining directors then
in office. The executive officers of Lafayette Community Bancorp and Lafayette
Community Bank are elected annually by the board of directors following the
annual meeting of shareholders and serve at the pleasure of the board.
Committees of the board of directors.
The Bank's board of directors has established five committees. These
committees will meet with management on a regularly scheduled basis to review
the Bank's policies, procedures and operating performance on particular
functional areas. The activities of all committees are reviewed by the board of
directors. These committees are established in accordance with the bylaws of
Lafayette Community Bank, which may be changed from time to time by a majority
vote of Lafayette Community Bank board of directors.
The Senior Loan and Investment Committee consists of those
individuals who comprise the Lafayette Community Bancorp board of directors, in
addition to Michael T. Mootz and J. Michael Pechin, who are executive officers
of the Bank. The primary responsibilities of the Senior Loan and Investment
Committee are to review and approve loans over particular limits and enforce,
review and approve changes to Lafayette Community Bank's lending policies and
procedures.
The Executive Committee is comprised of four directors. The directors
currently serving on this Committee are Messrs. Zimmerman, Chosnek, Ehrlich and
Norfleet. The Executive Committee meets as needed, and its primary
responsibilities include exercising the authority of the board of directors in
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between board meetings, to the extent permitted by law. The Executive Committee
is also responsible for establishing investment, liquidity, and asset and
liability policies, and review the investment portfolio and liquidity and
asset/liability position.
The Compensation Committee is comprised of four directors, with its
primary responsibilities being the review of personnel policies and practices
and evaluation of senior management. The directors currently serving on the
Compensation Committee are Messrs. Zimmerman, Chosnek, Ehrlich and Norfleet.
The Audit/Compliance Committee is comprised of four directors, with
its primary responsibilities being the review of internal and external auditors'
reports, the review of internal loan review reports, evaluation of the internal
auditor and independent accountants, and the review of regulatory examination
results. The directors currently serving on this Audit/Compliance Committee are
Messrs. Zimmerman, Chosnek, Ehrlich and Hogwood.
Advisory board.
The Bank's board of directors has established an advisory board. The
advisory board will meet with the Bank's management on a regularly scheduled
basis. The activities of the advisory board are reviewed by the Bank's board of
directors. The advisory board is established in accordance with the bylaws of
the Bank, which may be changed from time to time by a majority vote of the
Bank's board of directors. Our company's board of directors has selected Jack
Corns, Jim Keene, Ronald Melichar, Dick Murray, Sandy Pearlman, Robert
Roswarski, Harvey James (Ike) Tarvin, and Don Teder to comprise the advisory
board. A brief summary of the background of each of these individuals is set
forth below.
Jack Corns is a graduate of East Tipp High School and the Purdue
University Krannert School of Business, majoring in economics. He is retired
from Alcoa, where he served as Chief Mill Accountant, and currently owns and
operates C&N Enterprises, a property management company. Mr. Corns is a former
officer of the National Association of Accountants and former President of Aqua
Pure. He is a current member of the Conservation Club and a developer of the
Deer Haven subdivision.
Jim Keene is a member of the Lafayette Chamber of Commerce and the
Builders Association of Greater Lafayette. He attended Indiana University,
majoring in marketing. He also earned a graduate degree in finance from the
Indiana University School of Business.
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Ronald Melichar is currently, and has been since 1985, a Judge in the
Tippecanoe Circuit Court. He obtained his undergraduate degree from the
University of Notre Dame and earned his law degree from Indiana University. He
currently sits on the board of directors of the Friendship House.
Dick Murray is a current board member of the Jefferson High Booster
Club and a sustaining member and annual contributor to the Boy Scouts, Girl
Scouts, YMCA and the Boys & Girls Club of Lafayette. Mr. Murray is a former
assistant Scoutmaster for Boy Scout Troop 313 and has been actively involved in
youth athletics, having coached in the Greater Lafayette Soccer Club, the
Murdock Youth Baseball League and the Mustang, Bronco and Pony League baseball
organizations.
Sandy Pearlman is a member of the Indiana Lawyers Auxiliary and
currently serves as a member on the board of directors of the Lafayette Symphony
Foundation. She formerly served as a member of the United Way Board and has
previous affiliations with Friends of Downtown Lafayette, the Allocation
Committee for United Way, the Downtown Business Board, the St. Elizabeth
Hospital Auxiliary, the Purdue Woman's Club and the Legal Aid board of
directors.
Robert Roswarski is currently Vice President of Hedgewood
Neighborhood Association and a member of Carpenters Union #215.
Harvey James (Ike) Tarvin is President of Lighthouse, Inc. He is a
member of Who's Who of Executives and Professionals and is a former member of
the Illinois Manufacturing Housing Board. He formerly served as Executive
President of Goldman & Associates, as well as President of the McLeon County
Chapter Manufacturing Housing & Community board of directors.
Don Teder, a certified insurance counselor, is a member of the
Professional Insurance Association, the Lafayette Chamber of Commerce and the
Day Bread Rotary. Mr. Teder graduated from Purdue University.
Compensation of directors.
Employee directors of Lafayette Community Bancorp, other than Mr.
Zimmerman, will receive no compensation for their services as directors. Mr.
Zimmerman will receive $200 for each Lafayette Community Bancorp Board of
Directors meeting attended and $25 for each committee meeting attended.
Non-employee directors of Lafayette Community Bancorp will receive reimbursement
of reasonable expenses incurred in serving as a director. In addition, subject
to compliance with the restrictions and requirements of the FDIC stock benefit
plan policy, each non-employee director of Lafayette Community Bancorp will
receive $250 for each meeting of the Board of Directors attended and $50 for
each
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committee meeting attended. Additionally, the Chairman of the board of directors
of Lafayette Community Bancorp will receive $10,000 per year.
Executive compensation.
Lafayette Community Bancorp and David R. Zimmerman have entered into
a three-year employment agreement to retain Mr. Zimmerman as its Chief Executive
Officer and President. The employment agreement renews automatically for an
additional year unless either party furnishes the other of its intent to
terminate the agreement. Mr. Zimmerman's employment agreement commenced on
January 1, 2000. If we do not commence the operations of Lafayette Community
Bank, we must continue paying Mr. Zimmerman under his employment agreement for a
period of three years from the commencement date of his agreement.
Mr. Zimmerman will receive an annual base salary of $105,000 and
will be eligible for bonuses at the discretion of the board of directors. Mr.
Zimmerman will also be eligible to participate in all employee benefit plans,
stock option plans, health insurance and other fringe benefits commensurate with
their positions.
The employment agreement entitles Mr. Zimmerman to a payment equal to
2.99 times his then base compensation if termination occurs within two years of
a "change in control", as defined in the agreement. In addition, all previously
granted stock options will vest in the event of a termination of employment upon
a change in control.
Directors' and key employees' stock option plans.
Lafayette Community Bancorp will adopt separate stock option plans
for Directors of Lafayette Community Bancorp and Lafayette Community Bank and
for officers and key employees of Lafayette Community Bancorp and Lafayette
Community Bank. Under the option plans, options for an aggregate not to exceed
180,000 shares of common stock of Lafayette Community Bancorp may be granted.
The Board of Directors of Lafayette Community Bancorp believes these plans
provide an important incentive to those who will be instrumental to the success
of Lafayette Community Bancorp and of Lafayette Community Bank and will
encourage such persons to continue their service with Lafayette Community
Bancorp and Lafayette Community Bank. A description of each of the plans is set
forth below but such descriptions are qualified in their entirety by reference
to the complete plans.
During the term of the options, the individuals who hold such options
will be given the opportunity to benefit if the value of the common shares
increases. In the event that the options are
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exercised, there may be some resulting dilution in the per share book value of
Lafayette Community Bancorp at the time of exercise or issuance, and there will
be a reduction in the percentage ownership in Lafayette Community Bancorp by the
other shareholders.
2000 Key Employees' Stock Option Plan. The Board of Directors of
Lafayette Community Bancorp adopted a stock option plan which provides for the
grant of incentive stock options within the meaning of Section 422 of the Code
and of nonqualified stock options. The plan provides for the award of stock
options to executive officers and key employees of Lafayette Community Bancorp
and Lafayette Community Bank. The exercise price per share for all options
granted under the plan will not be less than the greater of $10.00 per share or
the fair market value of a share on the date of grant. The plan was approved by
the board of directors of Lafayette Community Bancorp prior to the offering.
Options may be granted under the plan only to officers and other key
employees who are in positions to make significant contributions to the success
of Lafayette Community Bancorp. A committee consisting of individuals appointed
by the board of directors of Lafayette Community Bancorp will administer the
plan.
The stock option agreement between the Company and the optionee shall
vest in accordance with the following schedule:
Percentage of
Vesting Date Options Vested
- ---------------------------------------------- ---------------------
First Anniversary of Date of Option Grant 20.0%
Second Anniversary of Date of Option Grant 20.0%
Third Anniversary of Date of Option Grant 20.0%
Fourth Anniversary of Date of Option Grant 20.0%
Fifth Anniversary of Date of Option Grant 20.0%
Notwithstanding the above schedule, the committee may, in its
discretion, accelerate the time(s) at which all or any part of an option may be
exercised. In no event will any incentive stock options be exercisable later
than ten years after date of grant. No option will be granted under the plan
after __________, 2010.
A total of 96,000 shares of common stock of Lafayette Community
Bancorp have been reserved for issuance under the plan. No options are currently
outstanding under the plan.
2000 Directors' Stock Option Plan. The Board of Directors of
Lafayette Community Bancorp adopted a nonqualified stock option plan which
provides for the grant of nonqualified stock options to
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those individuals who serve as Directors of Lafayette Community Bancorp or
Lafayette Community Bank. The Directors' plan was also approved by the board of
directors of Lafayette Community Bancorp prior to the offering. A committee
consisting of individuals appointed by the board of directors of Lafayette
Community Bancorp will administer the plan.
The Directors' plan provides for the grant of nonqualified stock
options with an exercise price per share of the greater of the public offering
price of $10.00 per share or the fair market value of a share on the date of
grant.
The stock option agreement between the Company and the optionee shall
vest in accordance with the following schedule:
Percentage of
Vesting Date Options Vested
- ------------------------------------------------- -----------------------
First Anniversary of Date of Option Grant 20.0%
Second Anniversary of Date of Option Grant 20.0%
Third Anniversary of Date of Option Grant 20.0%
Fourth Anniversary of Date of Option Grant 20.0%
Fifth Anniversary of Date of Option Grant 20.0%
Notwithstanding the above schedule, the committee may, in its
discretion, accelerate the time(s) at which all or any part of an option may be
exercised. In no event will any incentive stock options be exercisable later
than ten years after date of grant. No option will be granted under the plan
after __________, 2010.
A total of 84,000 shares of common stock of Lafayette Community
Bancorp have been reserved for issuance under the plan. No options are currently
outstanding under the plan.
An individual will become eligible to receive grants of options
under the plan upon his election to a qualifying board of directors but will not
receive additional options because he is a member of more than one such board.
Certain Relationships and Related Transactions.
We expect to have banking and other transactions in the ordinary
course of business with the organizers, directors, and officers and their
affiliates, including members of their families or corporation, partnerships, or
other organizations in which such organizers, officers, or directors have a
controlling interest, on substantially the same terms, including price, or
interest rates and collateral, as those
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prevailing at the time for comparable transactions with unrelated parties. These
transactions are also restricted by our regulatory agencies, including the
Federal Reserve Board. For a discussion of the Federal Reserve Board
regulations, please see "Transactions with Affiliates and Insiders" on page ___.
These transactions are not expected to involve more than the normal risk of
collectibility nor present other unfavorable features.
Loans to individual directors and officers must also comply with
Lafayette Community Bank's lending policies, regulatory restrictions, and
statutory lending limits, and directors with a personal interest in any loan
application will be excluded from the consideration of such loan application. We
intend for all of our transactions with organizers or other affiliates to be on
terms no less favorable than could be obtained from an unaffiliated third party
and to be approved by a majority of our disinterested directors who will have
access, at Lafayette Community Bank's expense, to Lafayette Community Bank's or
independent counsel.
The members of the Board of Directors of Lafayette Community Bancorp
have formed a separate limited liability company (unrelated to Lafayette
Community Bancorp) to acquire the proposed Bank property and will, in turn,
lease the property to Lafayette Community Bank at or below market rate. At the
inception of the lease, Lafayette Community Bancorp received a report from an
independent property consultant that the terms and conditions of the lease fall
within a reasonable range of market terms.
PRINCIPAL SHAREHOLDERS
The following table gives information about the anticipated
beneficial ownership of Lafayette Community Bancorp capital stock after the
offering by:
o each person expected to own more than 5% of Lafayette Community
Bancorp's common shares;
o each of Lafayette Community Bancorp's executive officers and
directors; and
o all of Lafayette Community Bancorp's executive officers and
directors as a group.
<TABLE>
<CAPTION>
Common Percent of Class Percent of Class
Name Shares (1) (Minimum) (Maximum)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Directors and executive officers:
David R. Zimmerman 25,000 2.8% 2.1%
Edward Chosnek 25,000 2.8% 2.1%
John R. Basham II 10,000 1.1% 0.8%
Donald J. Ehrlich 25,000 2.8% 2.1%
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Common Percent of Class Percent of Class
Name Shares (1) (Minimum) (Maximum)
- --------------------------------------------------------------------------------------
Steven Hogwood 25,000 2.8% 2.1%
Connie L. Koleszar 5,000 0.6% 0.4%
Thomas A. McDonald 25,000 2.8% 2.1%
Steven W. Norfleet 25,000 2.8% 2.1%
-----------------------------------------------------
Directors and executive officers
as a group: 165,000 18.31% 13.74%
</TABLE>
- --------------------------------------------
(1) Reflects common shares purchased prior to this offering (as adjusted for
the stock split), and common shares to be purchased in this offering.
DESCRIPTION OF SECURITIES
General.
We are authorized to issue up to 10,000,000 common shares, without
par value, and 1,000,000 preferred shares, also without par value. We have no
preferred shares outstanding as of the date of this offering. Upon completion of
this offering, we will have up to 1,201,000 common shares outstanding.
Common shareholders are entitled to one vote per share on all matters
submitted to a vote of shareholders, and do not have the right to vote
cumulatively in the election of directors. Except for (a) supermajority votes
required for approval of certain business combinations, removal of directors and
certain other matters, and (b) certain corporate actions that must be approved
by a majority of the outstanding votes of the relevant voting group under the
Indiana Business Corporation Law discussed below, the affirmative vote of the
holders of a majority of the votes cast at a meeting of shareholders at which a
quorum is present is sufficient to approve matters submitted for shareholder
approval, except that directors are elected by a plurality of the votes cast.
There is no provision for cumulative voting with respect to the election of
directors. Accordingly, the holders of more than 50% of the outstanding shares
of common stock, if they choose to do so, can elect all of the directors.
Our board of directors has full discretion to determine the payment
of dividends on common shares. Common shareholders will have equal rights to
receive dividends ratably, as and when declared by the board of directors out of
funds legally available for dividends, subject to the dividend rights of serial
preferred shares that may be issued in the future. In the event of any
liquidation, dissolution or winding-up of Lafayette Community Bancorp, common
shareholders will receive the assets of Lafayette Community Bancorp available
for distribution after the satisfaction of all liabilities.
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Lafayette Community Bancorp common shareholders do not have
preemptive or preferential rights to purchase or subscribe to any shares or
other securities of Lafayette Community Bancorp. Lafayette Community Bancorp may
be required to provide additional capital to Lafayette Community Bank in the
future in the event that the regulating body for Lafayette Community Bank
determines such capital infusion is necessary. In such event, in order to obtain
such capital, Lafayette Community Bancorp may seek additional funds from
existing shareholders, borrow additional funds from a bank or other lender or
have an equity offering of additional shares of common stock or other securities
of Lafayette Community Bancorp.
All of the common shares issued pursuant to this offering will be
validly issued, fully paid and nonassessable. Lafayette Community Bancorp acts
as its own transfer agent and registrar.
Preferred shares.
The authorized preferred share is available for issuance from time to
time at the discretion of the board of directors without shareholder approval.
The board of directors has the authority to prescribe for each series of
preferred shares it establishes the number of shares in that series, the number
of votes, if any, to which the shares in that series are entitled, the
consideration for the shares in that series, and the designations, powers,
preferences and other rights, qualifications, limitations or restrictions of the
shares in that series. Depending upon the rights prescribed for a series of
preferred shares, the issuance of preferred shares could have an adverse effect
on the voting power of the holders of common shares and could adversely affect
holders of common shares by delaying or preventing a change in control of us,
making removal of our present management more difficult or imposing restrictions
upon the payment of dividends and other distributions to the holders of common
shares.
Indiana law restrictions.
Under the Indiana Business Corporation Law, several provisions could
affect the acquisition of the common shares or of control of Lafayette Community
Bancorp after completion of the offering. The Business Combinations Chapter of
the Indiana Business Corporation Law prohibits certain business combinations,
including mergers, sales of assets, recapitalizations and reverse stock splits,
between certain Indiana corporations and a 10% or greater shareholder for five
years following the date on which the shareholder obtained a 10% or greater
ownership interest, unless the acquisition was approved in advance of that date
by the board of directors. In addition, if prior approval is not obtained, the
company and such shareholder may not consummate a business combination unless a
majority of disinterested shareholders approve the transaction or all
shareholders receive a price per share determined in accordance with the
Business Combinations Chapter. The Business Combinations Chapter does not
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apply to a company if its stock is not registered under Section 12 of the
Securities Exchange Act, unless the articles of incorporation affirmatively
elect to be governed by the Business Combinations Chapter. Because the stock of
Lafayette Community Bancorp is not registered under Section 12 of the Securities
Exchange Act and our Articles of Incorporation do not provide that the Business
Combinations Chapter will apply to us, we currently do not have the protection
afforded by this law. However, if Lafayette Community Bancorp has more than 100
shareholders and registers the common shares under Section 12 of the Securities
Exchange Act, we will enjoy the protection provided by the Business Combinations
Chapter.
In addition to the Business Combinations Chapter, the Indiana
Business Corporation Law also contains a Control Share Acquisition Chapter
which, although different in structure from the Business Combinations Chapter,
may have a similar effect of discouraging or making more difficult a hostile
takeover of an Indiana corporation. This provision, however, may also have the
effect of discouraging premium bids for outstanding shares. The Control Share
Acquisition Chapter provides that, unless otherwise provided in a corporation's
articles of incorporation or by-laws, shares acquired in certain acquisitions of
the corporation's stock will be accorded voting rights only if a majority of the
disinterested shareholders approves a resolution granting the potential acquiror
the ability to vote such shares. An Indiana corporation is subject to the
Control Share Acquisition Chapter if it has 100 or more shareholders and its
principal place of business is in Indiana. An Indiana corporation otherwise
subject to the Control Share Acquisition Chapter may elect not to be governed by
the statute by so providing in its articles of incorporation or by-laws.
Lafayette Community Bancorp has not made an election and therefore will be
subject to the statute (assuming that it has 100 or more shareholders).
The Indiana Business Corporation Law specifically authorizes
directors, in considering the best interests of a corporation, to consider the
effects of any action on shareholders, employees, suppliers and customers of the
corporation on the communities in which offices or other facilities of the
corporation are located and any other factors the directors consider pertinent.
As described below, Lafayette Community Bancorp's Articles of Incorporation
contain a provision having a similar effect. Under the Indiana Business
Corporation Law, directors are not required to approve a proposed business
combination or other corporate action if the directors determine in good faith,
after considering and weighing as they deem appropriate the effects of such
action on the corporation's constituents, that such approval is not in the best
interest of the corporation. The Indiana Business Corporation Law specifies
that, in making these determinations, directors are not required to consider the
effects of a proposed corporation action on any particular corporate constituent
group or interest (including the amounts that might be paid to shareholders) as
a dominant or controlling factor. The Indiana Business Corporation Law
explicitly provides that the different or higher degree of scrutiny imposed in
Delaware and certain other jurisdictions upon director actions taken in response
to potential changes in control will not apply.
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In taking or declining to take any action or in making any
recommendation to a corporation's shareholders with respect to any matter,
directors are authorized under the Indiana Business Corporation Law to consider
both the short-term and long-term interests of the corporation as well as
interests of other constituencies and other relevant factors. Any determination
made with respect to the foregoing by a majority of disinterested directors
shall conclusively be presumed to be valid unless it can be demonstrated that
such determination was not made in good faith.
Because of the foregoing provisions of the Indiana Business
Corporation Law, the board of directors will have flexibility in responding to
unsolicited proposals to acquire Lafayette Community Bancorp. This could make it
more difficult for an acquiror to gain control of Lafayette Community Bancorp in
a transaction not approved by the Board.
The Indiana Business Corporation Law also imposes restrictions in
connection with shareholder derivative proceedings. The Indiana Business
Corporation Law provides that if a shareholder of a corporation files a
derivative complaint, the corporation's board of directors may establish a
committee of disinterested directors or other disinterested persons to
investigate the complaint. The Indiana Business Corporation Law authorizes a
stay of any court proceedings on the complaint until the investigation of such
committee is completed. If the committee determines that pursuit of the claim
through the derivative proceeding would not be in the best interests of the
corporation, then the committee can terminate the derivative proceeding. The
conclusion of the committee is determinative unless the shareholder who filed
the complaint can demonstrate that the committee was not disinterested or did
not act in good faith.
Change in bank control.
It is unlawful for a person to offer to buy shares, without the prior
approval of the Federal Reserve, if the purchase of such shares would give the
purchaser control of Lafayette Community Bancorp. Control is defined to mean the
direct or indirect power (i) to vote 25% or more of the outstanding shares, or
(ii) to direct or cause the direction of the management and policies of
Lafayette Community Bancorp, whether through ownership of voting securities, by
contract or otherwise; provided that no individual will be deemed to control
Lafayette Community Bancorp solely on account of being a director, officer or
employee of Lafayette Community Bancorp. Persons who directly or indirectly own
or control 10% or more of a company's outstanding shares are presumed to control
the company.
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Articles of Incorporation.
Staggered board of directors. The board of directors is divided into
three classes, designated as Class I, Class II and Class III, with each class
being comprised of as nearly an equal number of directors as possible. The
directors in Class I hold office initially for a term of one year; the directors
in Class II hold office initially for a term of two years; and the directors in
Class III hold office initially for a term of three years. Upon expiration of
the respective initial terms and thereafter, the directors in each of the
classes shall be elected to serve for terms of three years and until their
successors have been elected and qualified.
Staggered terms of directors tend to promote continuity of management
because only one-third of the directors will be elected at annual meetings. In
addition, the staggered terms will ensure that two-thirds of the directors have
at least one year of experience on the board of directors, which helps assure
that the board of directors consists of persons with experience.
Staggered terms may tend to perpetuate present management by making
it more difficult for a shareholder to make immediate changes in the composition
of a majority of the board of directors. Because the terms of only one-third of
the directors expire each year, it would require at least two annual meetings of
shareholders in order to effect a change in a majority of the directors.
Shareholders may find the provision for staggered terms
disadvantageous to the extent that it may tend to discourage or render it more
difficult for a person to acquire control because a person who acquires control
of a company may desire to remove and replace directors immediately.
This provision may not be altered, amended or repealed without the
prior approval of the holders of outstanding shares of stock representing at
least 67% of the votes entitled to be cast.
Residency Requirements for Directors. The Articles of Incorporation
provide that a director must reside within fifty (50) miles of the main office
of Lafayette Community Bancorp. This provision is consistent with our philosophy
that we should be responsive to and aware of the needs of the communities which
we serve. This provision may discourage a person from seeking to acquire control
of Lafayette Community Bancorp if such person did not reside within the State of
Indiana.
This provision may not be altered, amended or repealed without the
prior approval of the holders of outstanding shares representing at least 67% of
the votes entitled to be cast.
Removal of Directors. The Articles of Incorporation provide that a
director may only be removed from office with cause prior to the expiration of
his term only upon the affirmative vote of the holders of at least 67% of the
outstanding shares of stock entitled to vote for the election of directors.
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This provision may not be altered, amended or repealed without the
approval of the holders of outstanding shares of stock representing at least 67%
of the votes entitled to be cast.
Certain Business Combinations. The Articles of Incorporation provide
for certain voting requirements for the approval by the board of directors or
the shareholders of certain business combinations. A "Business Combination" as
defined in the Articles includes any merger, consolidation or share exchange of
Lafayette Community Bancorp with or into any other corporation; any sale, lease,
exchange, pledge, transfer or other disposition, in one transaction or a series
of transactions, of a material portion of the assets of Lafayette Community
Bancorp; and any liquidation or dissolution of Lafayette Community Bancorp or
any material subsidiary of Lafayette Community Bancorp.
The Articles provide that the affirmative vote of the holders of at
least 67% of the outstanding shares of stock entitled to vote is required to
approve a Business Combination if the Business Combination is not first approved
by the affirmative vote of at least two-thirds of the members of the board of
directors who have held office for at least one year. If, however, at least
two-thirds of such members of the board of directors approves, and recommends
approval to shareholders of, the proposed Business Combination, then only the
affirmative vote of a majority of the outstanding shares of stock entitled to
vote is required to approve the Business Combination.
The board of directors believes that it is in the best interests of
shareholders to encourage persons seeking to complete a Business Combination to
enter into negotiations with the board relating to such a transaction. The board
further believes that attempts to gain control of Lafayette Community Bancorp,
in certain instances, may not be beneficial to the interests of Lafayette
Community Bancorp and our shareholders because such attempts may be structured
in such a manner so as not to provide the board with adequate time and
information necessary to evaluate a proposal, to study alternative proposals and
to seek to obtain the best possible terms of any such Business Combination. We
believe this provision will permit us to have adequate time to consider
appropriate financial and non-financial factors permitted by law in determining
whether to approve a Business Combination.
This provision may tend to discourage or render it more difficult for
a person to acquire control of Lafayette Community Bancorp, even if such a
transaction might generally be favorable to the interests of shareholders. This
provision may also tend to perpetuate present management in that if a certain
number of directors do not approve a proposed Business Combination it may be
more difficult to obtain the 67% shareholder approval requirement. In addition,
this provision may give directors and minority shareholders veto power over a
Business Combination which a majority of the shareholders may believe is
desirable.
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This provision may not be altered, amended or repealed without the
approval of the holders of outstanding shares of stock of Lafayette Community
Bancorp representing at least 67% of the votes entitled to be cast.
Non-Financial Considerations. In deciding whether to approve a
Business Combination or a tender or exchange offer, the Articles of
Incorporation require the board to consider a number of factors in addition to
the adequacy of the consideration to be paid. These factors may include the
social and economic effects of the transaction on Lafayette Community Bancorp,
on its subsidiaries, employees, depositors and customers and on the communities
in which Lafayette Community Bancorp or its subsidiaries may conduct business or
be located. The directors will be charged with the responsibility of inquiring
into the business and financial condition, results of operation and earnings
potential of the interested party and to include an examination of the debt
service or other financial obligations entered into by the interested or
acquiring party, and the effect such conditions will have on Lafayette Community
Bancorp, its subsidiaries and the community. Furthermore the competence,
experience and integrity of the management of the acquiring party will be
thoroughly analyzed. These factors may also include the adequacy of the
consideration offered in relation to the current market price of the outstanding
securities of Lafayette Community Bancorp, the current value of Lafayette
Community Bancorp in a freely negotiated transaction and the board's estimate of
the future value of Lafayette Community Bancorp as an independent going concern,
including the unrealized value of its properties and assets.
This provision may discourage or make more difficult an attempt by a
potential acquiring party to effect a Business Combination without giving the
board an opportunity to consider and approve the full consequences of the
proposed transaction. The board also believes that its obligation to evaluate a
Business Combination with an interested party extends beyond merely comparing
the consideration offered to the market price of Lafayette Community Bancorp's
stock at the time of the offer. While such a comparison is important, it is the
board's view that this one factor alone should not be determinative when
evaluating either the financial benefits or overall desirability of a particular
Business Combination. This provision recognizes the board's obligations to
evaluate a Business Combination in light of all relevant financial, as well as
non-financial, criteria, including the legal and economic effect on the
depositors and customers of Lafayette Community Bancorp and Lafayette Community
Bank, on the communities which Lafayette Community Bancorp and Lafayette
Community Bank serve and on Lafayette Community Bancorp's business and
properties.
The board believes that corporations in general, and banks in
particular, occupy positions of special trust in the communities in which they
are located and operate. It is a concern of the board that Lafayette Community
Bancorp be managed in the interests of the community which is served by the
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Lafayette Community Bank and that Lafayette Community Bank maintain its
integrity as a locally-owned institution in the community. The board also
believes that this is in the best interests of Lafayette Community Bancorp and
its shareholders.
This provision may not be altered, amended or repealed without the
approval of the holders of outstanding shares of stock of Lafayette Community
Bancorp representing at least 67% of the votes entitled to be cast.
SALES AGENT
We have engaged Keefe, Bruyette & Woods, Inc. to serve as our sales
agent in connection with this offering, pursuant to a Sales Agency Agreement
dated _______________, 2000. Keefe, Bruyette & Woods was chosen because of its
general experience in the financial services industry and because of its
experience in transactions involving community offerings.
Keefe, Bruyette & Woods has provided advice to us regarding the
structure of the offering and the marketing of our shares. Keefe, Bruyette &
Woods will use its best efforts to solicit subscriptions and purchase orders for
our shares.
Keefe, Bruyette & Woods has not prepared any report or opinion
constituting a recommendation or advice to us, nor has it prepared an opinion as
to the fairness of the offering price or the terms of the offering. Keefe,
Bruyette & Woods expresses no opinion as to the prices at which shares to be
distributed in connection with the offering may trade if and when they are
issued at any future time.
As compensation for their services, we have agreed to pay Keefe,
Bruyette & Woods as follows:
o an initial advisory fee of $10,000;
o a sales commission equal to 4.0% of the aggregate sales
price of the shares sold to investors who are included on
the lists provided to Keefe, Bruyette & Woods by our
directors; and
o a sales commission equal to 7.0% of the aggregate sales
price of the shares sold to investors who are not included
on the lists provided to Keefe, Bruyette & Woods by our
directors.
No commission will be charged by Keefe, Bruyette & Woods for orders
submitted by directors of Lafayette Community Bancorp. In addition, in the event
that selected dealers are used to facilitate sales
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of stock, such dealers will be paid a fee in an amount competitive with
underwriting discounts charged for comparable amounts of stock sold at a
comparable price per share in a similar market environment. It is anticipated
such fees may range from five percent to seven percent of the amount of the
order and will be paid by Keefe, Bruyette & Woods from its fee, and not in
addition to its fee.
We have agreed to indemnify, defend and hold harmless Keefe, Bruyette
& Woods, its officers, employees, agents and controlling persons, against all
claims, losses, actions, judgments, damages and expenses arising from its
engagement with Keefe, Bruyette & Woods, including liabilities under the federal
securities laws, provided that indemnification shall not be provided for such
matters if due to the gross negligence of Keefe, Bruyette & Woods, and to
contribute payments to Keefe, Bruyette & Woods should Keefe, Bruyette & Woods be
required to make payments in connection with any such claims or liabilities.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Indiana law provides for the indemnification of officers and
directors against liability and expenses that may be incurred by them in the
event of an action against them as a result of their service for or on behalf of
Lafayette Community Bancorp. Our regulations contain specific provisions with
regard to indemnification of our directors and officers, in compliance with the
general provisions of Indiana law. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to our directors,
officers and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
SHARE ELIGIBLE FOR FUTURE SALE
As of the date of this Prospectus, Lafayette Community Bancorp had
1,000 common shares outstanding held by David R. Zimmerman. Upon completion of
this offering, we will have a minimum of 901,000 and a maximum of 1,201,000
common shares outstanding. All of these shares will be freely transferable
without restriction of future registration, except for the approximately 210,000
common shares purchased by Lafayette Community Bancorp directors, executive
officers and affiliates, as defined in Rule 144 of the Securities Act.
In general, under Rule 144, an affiliate may sell shares within any
three month period in an amount limited to the greater of 1% of the outstanding
shares or the average weekly trading volume of
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the shares over the four week period immediately preceding the sale. Rule 144
sales are also subject to the holding periods, notice requirements, manner of
sale restrictions and information requirements.
In addition to any other restrictions, Lafayette Community Bancorp
officers, directors and advisory board members have agreed with the sales agent
not to sell their shares for 180 days after the closing of the offering.
LEGAL MATTERS
The validity of the common shares offered with this prospectus has
been passed upon for Lafayette Community Bancorp by the law firm Krieg DeVault
Alexander & Capehart, LLP. Certain legal matters relating to this offering will
be passed upon for the sales agent by Squire, Sanders & Dempsey L.L.P.,
Cleveland, Ohio. Squire, Sanders & Dempsey L.L.P. will rely, as to all matters
of Indiana law, on the opinion of Krieg DeVault Alexander & Capehart, L.L.P.
EXPERTS
The balance sheet of Lafayette Community Bancorp as of December 31,
1999 and the related statement of operations, changes in shareholders' deficit
and cash flows for the period from January 29, 1999, the date of inception, to
December 31, 1999, included in this prospectus and in the Registration Statement
have been audited by Crowe, Chizek and Company, LLP, independent public
accountants, as set forth in their report dated March 10, 2000 which appears
elsewhere herein and in the Registration Statement. All such financial
statements have been included herein in reliance upon such reports given upon
the authority of such firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Upon the completion of this offering, Lafayette Community Bancorp
will be required to file annual, quarterly and current reports, and other
information with the SEC. You may read and copy the registration statement and
any other documents filed by Lafayette Community Bancorp at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Information
regarding the operation of the Public Reference Room may be obtained by calling
the SEC at 1-800-SEC-0330. Our filings are also available to the public at the
SEC's Internet site located at http://www.sec.gov.
This prospectus is part of the registration statement and does not
contain all of the information included in the registration statement. Whenever
a reference is made in this prospectus to any contract or
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other document of Lafayette Community Bancorp, the reference may not be complete
and you should refer to the exhibits that are a part of the registration
statement for a copy of the contract or document.
After the offering, we expect to provide annual reports to our
shareholders that include financial information examined and reported on by our
independent public accountants.
Requests for these documents should be directed to David R. Zimmerman
at (765) 420-8111.
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LAFAYETTE COMMUNITY BANCORP
(A Development Stage Company)
Lafayette, Indiana
FINANCIAL STATEMENTS
December 31, 1999
CONTENTS
REPORT OF INDEPENDENT AUDITORS...........................................F-2
FINANCIAL STATEMENTS
BALANCE SHEET AS OF DECEMBER 31, 1999.................................F-3
STATEMENT OF OPERATIONS FOR THE PERIOD FROM JANUARY 29, 1999
(DATE OF INCEPTION) TO DECEMBER 31, 1999....................F-4
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT FOR THE PERIOD
FROM JANUARY 29, 1999 (DATE OF INCEPTION) TO DECEMBER 31,
1999........................................................F-5
STATEMENT OF CASH FLOWS FOR THE PERIOD FROM JANUARY 29, 1999
(DATE OF INCEPTION) TO DECEMBER 31, 1999....................F-6
NOTES TO FINANCIAL STATEMENTS.........................................F-7
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Lafayette Community Bancorp
Lafayette, Indiana
We have audited the accompanying balance sheet of Lafayette Community Bancorp (a
corporation in the development stage) as of December 31, 1999 and the related
statements of operations, changes in shareholders' deficit and cash flows for
the period from January 29, 1999 (date of inception) to December 31, 1999. These
financial statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lafayette Community Bancorp (a
corporation in the development stage) as of December 31, 1999, and the results
of its operations and its cash flows for the period from January 29, 1999 (date
of inception) to December 31, 1999 in conformity with generally accepted
accounting principles.
Crowe, Chizek and Company LLP
Indianapolis, Indiana
March 10, 2000
F-2
<PAGE>
LAFAYETTE COMMUNITY BANCORP
(A Corporation in the Development Stage)
BALANCE SHEET
December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash $ 4,090
Other assets 10,158
Deferred offering costs 20,639
------------
$ 34,887
============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Liabilities
Note payable $ 80,000
Accrued expenses 26,123
------------
Total liabilities 106,123
Shareholder's deficit
Common stock, no par value: 10,000,000 shares authorized; 1,000
shares issued and outstanding 10,000
Preferred stock - no par value; 1,000,000 shares authorized; zero
shares issued and outstanding --
Deficit accumulate during the development stage (81,236)
------------
Total shareholders' deficit (71,236)
------------
$ 34,887
============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
LAFAYETTE COMMUNITY BANCORP
(A Corporation in the Development Stage)
STATEMENT OF OPERATIONS
For the period from January 29, 1999 (date of inception) to December 31, 1999
Operating expenses
Interest expense $ 827
Salaries and benefits 25,961
Occupancy and equipment 2,636
Legal and professional fees 47,410
Telephone 1,268
Other 3,134
------------
Total operating expenses $ 81,236
============
Loss before income taxes (81,236)
Provision for income taxes --
------------
Net loss $ (81,236)
============
See accompanying notes to financial statements.
F-4
<PAGE>
LAFAYETTE COMMUNITY BANCORP
(A Corporation in the Development Stage)
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
For the period from January 29, 1999 (date of inception) to December 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
During the
Development
Common Stock Stage Total
--------------------- -------------------- --------------------
<S> <C> <C> <C>
Balance at inception (January 29, 1999) $ -- $ -- $ --
Issuance of common stock 10,000 -- 10,000
Net loss -- (81,236) (81,236)
--------------------- -------------------- --------------------
Balance December 31, 1999 $ 10,000 $ (81,236) $ (71,236)
===================== ==================== ====================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
LAFAYETTE COMMUNITY BANCORP
(A Corporation in the Development Stage)
STATEMENT OF CASH FLOWS
For the period from January 29, 1999 (date of inception) to December 31, 1999
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities
Net loss $ (81,236)
Adjustments to reconcile net loss to net cash from operating
activities
Change in other assets (10,158)
Change in accrued expenses 26,123
---------------
Net cash from operating activities (65,271)
Cash flows from financing activities
Draws on not payable 80,000
Deferred offering costs (20,639)
Sale of common stock 10,000
---------------
Net cash from financing activities 69,361
---------------
Net increase in cash 4,090
Cash at beginning of period --
---------------
Cash at end of period $ 4,090
===============
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
LAFAYETTE COMMUNITY BANCORP
(A Corporation in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Lafayette Community Bancorp (Bancorp) was incorporated
on January 29, 1999 to become a regulated bank holding company by chartering and
capitalizing a wholly owned Indiana bank subsidiary, Lafayette Community Bank
(Bank), to be located in Lafayette, Indiana. The Bancorp intends to raise
between $9,000,000 and $12,000,000 through the public offering of between
900,000 and 1,200,000 shares of the Company's common stock, at $10 per share.
Proceeds will be reduced by sales discounts and offering costs. Proceeds from
the offering will be used to capitalize the Bank and provide working capital.
Initiating business is contingent upon a number of factors including the
successful completion of the public offering and the receipt of required
regulatory approvals to establish the Bank
Nature of Business: The Bank intends to generate commercial, mortgage
and installment loans and receive deposits from customers located in Tippecanoe
and contiguous counties in Indiana.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and the disclosures provided and future results could differ.
Deferred Offering Costs: Deferred offering costs include legal,
consulting and accounting costs incurred in connection with the registration of
the Corporation's common stock. Those costs will be charged against the stock
proceeds or, if the offering is not successful, charged to expense.
Legal and Professional Fees: These expenses are costs incurred to
organize the Bancorp and to pursue gaining regulatory approval to charter the
Bank. They are being expensed as they are incurred.
NOTE 2 - NOTE PAYABLE
Bancorp has a $250,000 bank line of credit with a balance of $80,000
at December 31, 1999. The line was originated on August 24, 1999 and matures
August 24, 2000. Principal and interest are
F-7
<PAGE>
payable at maturity. The line is secured by the guarantee of four directors and
is to be used to fund pre-opening expenditures of the Bancorp.
NOTE 3 - COMMITMENTS
Bancorp leases office space from a director on a month to month
basis. Rent is $250 per month and expense recorded during 1999 was $1,000.
Bancorp entered into a noncancellable lease agreement for branch office space
for the Bank. The lease term runs through March 31, 2005 and rent commences
April 1, 2000. Annual rental payments are $21,250.
Bancorp intends to enter into a lease agreement for a main office
facility with a partnership comprised of directors. The terms of the agreement
have not yet been finalized.
Effective January 1, 2000, Bancorp entered into an employment
agreement with the Chief Executive Officer. The agreement has a three year term
and automatically extends for one year on the anniversary date of the agreement,
absent action by either party. The agreement entitles the Chief Executive
Officer to a payment equal to 2.99 times his then base compensation if
termination occurs within two years of a "change in control", as defined.
NOTE 4 - STOCK OPTION PLANS
Bancorp intends to establish director and employee stock option plans
and allocate 180,000 of the outstanding shares of Bancorp to be eligible for
grant under these plans. No options have been granted. Options will be granted
by a Board committee and will be at the greater of the offering price or the
current fair market value of Bancorp stock. The plans provide for a five year,
pro rata vesting schedule with respect to all options granted.
NOTE 5 - INCOME TAXES
For the period ended December 31, 1999, Bancorp recorded a net loss
of $81,236. As the Bancorp is in the development stage, these expenses are not
currently deductible for income tax purposes. Upon initiation of business, these
expenses would be deductible and Bancorp expects to have operating loss
carryforwards for income tax purposes which could be utilized to offset
otherwise taxable income during a 15 year period. No tax benefit or deferred tax
asset is being recorded, as the value of these benefits depends upon the Bancorp
successfully initiating its business and becoming profitable.
F-8
<PAGE>
APPENDIX A
STOCK ORDER FORM & _______________
CERTIFICATION FORM (on the reverse side) (_______________)
Stock Information Center __________
- -------------------------------------------------------------------------------
Deadline: The Subscription Offering ends at 5:00 p.m.
Eastern Time, , 2000. Your Stock Order Form and Certification
Form, properly executed and with the correct payment, must be received at the
address on the bottom of this form by this deadline, or it will be
considered void.
- -------------------------------------------------------------------------------
Number of Shares
(1) Number of Shares Price Per Share (2) Total Amount Due
X $ = $
-------------------- ------ ----------------------
The minimum number of shares that may be subscribed for is ___. The maximum
amount any person may purchase is ______ shares. _______________ has reserved
the right to reject all or any part of any subscription.
(3) Method of Payment
[ ] Enclosed is a check, bank draft or money order payable to "Escrow
Agent as Escrow Agent for _______________" in the amount of
$__________.
(For wire information, call _______________)
Purchaser Information
4) [ ] Check here if you are a director, officer or employee of
_______________ or a member of such person's immediately
family.
5) If purchasing through a broker/dealer, please list the name, a
phone number below:
Name:
Street Address:
City:
State:
Zip Code:
Phone Number:
(6) Stock Registration - Form of Stock Ownership
[ ] Individual [ ] Uniform Gift to Minors
[ ] Joint Tenants [ ] Uniform Transfer to Minors
[ ] Tenants in Common [ ] Corporation
[ ] Partnership [ ] Individual Retirement Account
[ ] Fiduciary/Trust (under Agreement Dated __________)
Name
- ---------------------------------------------------------------------------
Street Address
- ---------------------------------------------------------------------------
City State Zip Code
- ---------------------------------------------------------------------------
Social Security or Tax I.D.
- ---------------------------------------------------------------------------
Daytime Telephone
- ---------------------------------------------------------------------------
Evening Telephone
- ---------------------------------------------------------------------------
County of Residence
- ---------------------------------------------------------------------------
NASD Affiliation (this section only applies to those individuals who meet
the delineated criteria)
[ ] Check here if you are a member of the National Association of Securities
Dealers, Inc. ("NASD"), a person associated with an NASD member, a member of the
immediate family of any such person to whose support such person contributes,
directly or indirectly, or the holder of an account in which an NASD member or
person associated with an NASD member has a beneficial interest. To comply with
conditions under which an exemption from the NASD's Interpretation With Respect
to Free-Riding and Withholding is available, you agree, if you have checked the
NASD affiliation box: (1) not to sell, transfer or hypothecate the shares
subscribed for herein for a period of three months following the issuance and
(2) to report this subscription in writing to the applicable NASD member within
one day of the payment therefor.
Acknowledgment By signing below, I acknowledge receipt of the Prospectus dated
_______________ and that I have reviewed all provisions therein. I understand
that I may not change or revoke my order once it is received by the Escrow
Agent. Under penalties of perjury, I further certify that: (1) the social
security number or taxpayer identification number given above is correct; and
(2) I am not subject to backup withholding. You must cross out this item, (2)
above, if you have been notified by the Internal Revenue Service that you are
subject to back up withholding because of under- reporting interest or dividends
on your tax return. By signing below, I also acknowledge that I have not waived
any rights under the Securities Act of 1933 and the Securities Exchange Act of
1934.
Signature THIS ORDER FORM TOGETHER WITH THE CERTIFICATION FORM MUST BE SIGNED
AND DATED. THIS ORDER IS NOT VALID IF THE STOCK ORDER FORM AND CERTIFICATE FORM
ARE NOT BOTH SIGNED. YOUR ORDER WILL BE FILLED IN ACCORDANCE WITH THE
PROVISIONS OF THE PROSPECTUS. When purchasing a custodian, corporate officer,
etc., include your full title. If you need help completing this Form, you may
call __________.
- ---------------------------------------------------------------------------
Signature Title (if applicable) Date
- ---------------------------------------------------------------------------
Signature Title (if applicable) Date
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
Date Rec'd ___/___/___ Order # __________ Batch # ______
OFFICE USE Check # __________ Category __________
Amount $ __________ Initials __________
A-1
<PAGE>
CERTIFICATION FORM
(This Form Must Accompany A Signed Stock Order Form)
I ACKNOWLEDGE THAT THE COMMON STOCK, NO PAR VALUE ("COMMON STOCK"), OF
_______________ ("THE COMPANY") IS NOT A DEPOSIT OR ACCOUNT AND IS NOT FEDERALLY
INSURED, AND IS NOT GUARANTEED BY _______________ OR BY THE FEDERAL GOVERNMENT.
I further certify that, before purchasing the Common Stock of the Company,
I received a copy of the Prospectus dated, _______________. By executing this
Certification Form, I have not waived any of my rights under The Securities Act
of 1933 and The Securities Exchange Act of 1934.
Signature Signature
- --------------------------------- -------------------------------------
(Note: If shares are to be held joint, both parties must sign)
Date:_________________________
Return This Form to:
A-2
<PAGE>
Stock Ownership Guide
Instructions: See your legal advisor if you are unsure about the correct
registration of your stock.
Individual- The shares are to be registered in an individual's name only. You
must not list beneficiaries for this ownership.
Joint Tenants- Joint tenants with right of survivorship identifies two or more
owners. When shares are held by joint tenants with rights of survivorship,
ownership of the shares will be held by the surviving co-tenant(s) and by the
heirs of the deceased co-tenant. You may not list beneficiaries for this
ownership.
Tenants in Common-- Tenants in common may also identify two or more owners. When
shares are held by tenants in common, upon the death of one co-tenant, ownership
of the shares will be held by the surviving co-tenant(s) and by the heirs of the
deceased co-tenant. All parties must agree to the transfer or sale of shares
held by tenants in common. You may not list beneficiaries for this ownership.
Individual Retirement Account- Individual Retirement Account ("IRA") holders may
make share purchases from their self-directed IRA's. The administrator or
trustee will need to fill out the appropriate forms and return them on a timely
basis.
Uniform Gift to Minors- For residents of many states, shares may be held in the
name of a custodian for the benefit of a minor under the Uniform Transfer to
Minors Act. For residents in other states, shares maybe held in a similar type
of ownership under the Uniform Gift to Minors Act of the individual states. For
either type of ownership, the minor is the actual owner of the shares with the
adult custodian being responsible for the investment until the child reaches
legal age.
On the first line, print the first name, middle initial and last name of the
custodian, with the abbreviation "CUSF" and "Unif Tran Min Act" or "Unif Gift
Min Act" after the name. Print the first name, middle initial and last name of
the minor on the second "NAME" line. Standard U.S. Postal Service state
abbreviations should be used to describe the appropriate state. For example,
shares held by John Doe as custodian for Susan Doe under the Ohio Transfer to
Minors Act will be abbreviated John Doe, CUST Susan Doe Unif Trans Min Act, OH.
Use the minor's Social Security Number. Only one custodian and one minor may be
designated.
Corporation/Partnership- Corporation/Partnerships may purchase shares. Please
provide the Corporation/Partnership's legal name and Tax I.D.
Fiduciary/Trust- Generally, fiduciary relationships (such as trusts, estate,
guardianships, etc.) are established under a form of trust agreement or pursuant
to a court order. Without legal document establishing a fiduciary relationship,
your shares may not be registered in a fiduciary capacity.
Instructions: One the first "NAME" line, print the first name, middle initial
and last name of the fiduciary if the fiduciary is an individual. If the
fiduciary is a corporation, list the corporate title on the first "NAME" line.
Following the name, print the fiduciary "title" such as trustee, executor,
personal representative, etc.
On the second "NAME" line, print either the name of the maker, donor or testator
OR the name of the beneficiary. Following the name, indicate the type of legal
document establishing the fiduciary relationship (agreement, court order, etc).
In the blank after "Under Agreement Dated", fill in the date of the document
governing the relationship. The date of the document need not be provided for a
trust created by a will.
An example of fiduciary ownership of stock in the case of a trust is: John D.
Smith, Trustee for Thomas A. Smith Trust Under Agreement Dated 06/09/87.
Item Instruction
Items 1 and 2- Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares by the subscription price of $____ per share. The minimum purchase is
___ shares. The maximum amount any person may purchase is ______ shares.
_______________ has reserved the right to reject all or any part of any
subscription.
Item 3- Payment for shares may be made by check, bank draft or money order made
payable to " " DO NOT MAIL CASH. Your funds will be returned promptly with
interest if the offering is terminated. Payment may also be made by wire
transfer to the Escrow Agent. The phone number of the Escrow Agent is
_______________. The contact person is _______________.
Item 5- Please check this box if you are director, officer or employee of
_______________ or a member of such person's immediately family.
Item 6- The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of _______________
common stock. Print the name(s) in which you want the shares registered and the
mailing address of the registration. Include the first name, middle initial and
last name of the shareholder. Avoid the use of two initials. Please omit words
that do not affect ownership rights, such as "Mrs.", "Mr.", "Dr.", "special
account", etc.
Enter the Social Security or Tax I.D. number of one registered owner. This
registered owner must be listed on the first "NAME" line. Be sure to include
your telephone number because we will need to contact you if we cannot execute
your order as given. Review the Stock Ownership Guide and refer to the
instructions for Uniform Gift to Minors/Uniform Transfer to Minors and
Fiduciaries.
A-3
<PAGE>
APPENDIX B
ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Agreement") entered into this _______ day of
____________, 2000, by and between __________________________ ("Escrow Agent"),
____________________________________, and ________________________ ("Company"),
______________________________________.
W I T N E S S E T H:
WHEREAS, the Company is in the process of forming a financial institution
("Bank"); and
WHEREAS, in connection with the formation or acquisition of the Bank, the
Company is offering up to ________ shares of its common stock ("Shares") at $__
per Share in accordance with the terms and conditions set forth in the
Prospectus ("Prospectus") dated ____________, ______ (the "Offering"); and
WHEREAS, the Prospectus sets forth as a term and condition of the Offering
that those potential investors desiring to purchase Shares must, among other
things, deliver a check for the full amount of the purchase price of the Shares
for which such investor has subscribed to the Company; and
WHEREAS, the check for payment of the subscription price for the Shares
which the investor has subscribed must be payable to the Escrow Agent, and will
be deposited into the escrow account contemplated by this Agreement all as
described in the Prospectus; and
WHEREAS, in connection with the Offering, the Company desires the Escrow
Agent to serve as escrow agent and the Escrow Agent desires to serve as escrow
agent, as set forth in the Prospectus.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Escrow Agent hereby agree as follows:
1. The Escrow Agent, upon receipt of any monies from the Company in
connection with the Offering, shall hold such monies as escrow agent for the
Company as follows:
a. Such funds shall be held by the Escrow Agent until funds in the
principal sum of not less than $_____________ as payment for the sale
of _______ Shares have been deposited therein in accordance with the
terms of the Prospectus. Escrow Agent shall promptly invest the funds
in _________________________ certificates of deposit; any short-term
or money market fund available to such account through Escrow Agent's
Trust Department; U.S. Treasury notes or bills; or such other
obligation, which obligation shall be limited to an obligation
guaranteed by the United States of America or an agency thereof and
rated in one of the top two rating categories by a rating agency of
national recognition, is considered prudent to safeguard principal,
earn a reasonable rate of interest and have funds available within a
reasonable time for distribution when required.
B-1
<PAGE>
b. At any time and from time to time after at least $______________ have
been deposited in the escrow account as set forth above, upon the
written instruction of the Company, such funds, or a portion thereof,
shall be immediately transferred by the Escrow Agent to a new account
in the name of the Company ("Company's Account"), and immediately
thereafter, the Company shall have the sole authority to exercise
complete dominion of the Company's Account and shall have the right to
disburse any funds deposited therein in accordance with its absolute
discretion. Any interest accrued on funds transferred from the escrow
account to the Company's Account will be transferred to the Company's
Account after deducting therefrom the amount of the fees owed to
Escrow Agent for its services as set forth herein. If such fees are
more than the accrued interest or the escrow account, the difference
shall be paid by the Company.
c. If funds in the aggregate amount of $__________ have been deposited in
the escrow account as set forth above, then such funds or the
remaining funds in the escrow account shall be immediately transferred
by the Escrow Agent to the Company's Account, and immediately
thereafter, the Company shall have sole authority to exercise complete
dominion of the Company's Account and shall have the right to disburse
any funds deposited therein in accordance with its absolute
discretion. Any interest accrued on funds transferred from the escrow
account to the Company's Account shall be transferred to the Company's
Account after deducting therefrom the amount of the fees owed to
Escrow Agent for its services as set forth herein. If such fees are
more than the accrued interest on the escrow account, the difference
shall be paid by the Company.
d. If the sum of $________________ is not deposited in the escrow account
by ____________________, which date may be extended to
__________________ by the Company, then the Escrow Agent by
_________________________ or ________________ if extended by the
Company shall deliver and pay the entire balance of the escrow account
plus accrued interest, after first deducting from the accrued interest
the amount of fees owed to the Escrow Agent for its services as set
forth herein, to each of the investors in accordance with a letter of
instruction from the Company (in the form of Exhibit A attached
hereto) designating the name and address of each investor who is
entitled to receive such funds at that time the Escrow Agent is
required to make disbursement thereof by the Company. If the Escrow
Agent's fees pursuant to this Agreement are more than accrued interest
on the escrow account, the difference will be paid by the Company.
2. The duties and responsibilities of the Escrow Agent will be limited to
those expressly set forth herein, to hold escrow items and to deliver to
recipients under such conditions as herein set forth. The Escrow Agent shall be
fully protected from liability to the Company when relying in good faith on any
written notices, demand certificate or document received from the Company which
it reasonably believes to be genuine. The Escrow Agent shall not be liable to
the Company for any loss or damage not caused by the gross negligence or willful
misconduct of the Escrow Agent.
3. The Escrow Agent shall be compensated for its services as set forth in
Exhibit B attached hereto. Payment of such fee shall be made by deducting the
amount of the fee from any interest accrued on funds in the escrow account. If
accrued interest on the escrow account is not sufficient to fully pay the Escrow
Agent's or fees due pursuant to this paragraph 3, the fee will be paid by the
Company. All fees, charges and expenses are due and payable on or before the
termination date hereof.
4. The Escrow Agent may resign by giving 30 days prior notice in writing
to the Company. Upon written notice from the Company to the Escrow Agent of the
appointment of the succeeding escrow agent, the escrow funds, less any fees due
as provided herein, shall be forwarded to such successor escrow agent. In the
event 60 days elapse from the date of the Escrow
B-2
<PAGE>
Agent's notice of resignation, and no successor escrow agent is appointed, the
Escrow Agent shall forward the balance of the escrow funds to the Company.
5. This Agreement shall be construed, enforced and administered in
accordance with the laws of the State of Indiana.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officers this ________ day of __________________, _____.
---------------------------------
By:
, President
---------------------------------
---------------------------------
By:
-------------------------------
Printed:
-----------------------------
Its:
-------------------------------
B-3
<PAGE>
Exhibit A
To: _____________________________, Escrow Agent Transmittal No._____________
Cumulative Shareholders Record Date________________________
Account No.
Name
Subscription Number of Amount of
Number Shares Check Shareholder
------ ------ ----- -----------
- ----------------------------------------------------------
Number of Total
Shares Deposit
- ----------------------------------------------------------
Total This
Transmittal:
- ----------------------------------------------------------
Previous
Total:
- ----------------------------------------------------------
Cumulative
Total:
- ----------------------------------------------------------
By:_________________________________
_________________________, President
<PAGE>
Exhibit B
SCHEDULE OF CHARGES
Base Fee
The base fee for ________________________ services is $__________ per year
charged at the rate of $___________ per calendar quarter. A minimum of four (4)
quarters ($___________) will be charged regardless of the Escrow term.
Extra Statements
The customer will be charged $_________ for all statements other than those
regularly issued on a quarterly and annual basis.
Activity Fee
Investment in short term or money market funds is available to the account
through ______________________________. There is a charge of $_________ for each
purchase or sale.
Cash disbursements are charged at a rate of $_________ each.
Administrative Hours
Administrative hours will be charged at a rate of $_________ per hour after the
first hour each calendar quarter.
Termination
There is no termination fee.
<PAGE>
PART II -- INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Indiana Business Corporation Law and our Articles of
Incorporation and Bylaws, our officers and directors are entitled to
indemnification against all liability and expense with respect to any civil or
criminal claim, action, suit or proceeding in which they are wholly successful.
If they are not wholly successful and even if they are adjudged liable or
guilty, they are entitled to indemnification if it is determined, with respect
to a civil action, by disinterested directors, a special legal counsel, or a
majority vote of the shares of our voting stock held by disinterested
shareholders, that they acted in good faith in what they reasonably believed to
be in our best interests. With respect to any criminal action, it must also be
determined that they had no reasonable cause to believe their conduct unlawful.
Under the Indiana Business Corporation Law, a director of our company
cannot be held liable for actions that do not constitute wilful misconduct or
recklessness. In addition, our Articles of Incorporation provide that our
directors shall be immune from personal liability for any action taken as a
director, or any failure to take any action, to the fullest extent permitted by
the applicable provisions of the Indiana Business Corporation Law from time to
time in effect and by general principles of corporate law. In addition, a
director of our company against whom a shareholders' derivative suit has been
filed cannot be held liable if a committee of disinterested directors of our
company, after a good faith investigation, determines either that the
shareholder has no right or remedy or that pursuit of that right or remedy will
not serve the best interests of our company.
At present, there are no claims, actions, suits or proceedings
pending where indemnification would be required under the above, and we are not
aware of any pending or threatened claims, actions, suits or proceedings which
may result in a request for such indemnification.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection
with the sale and distribution of the common stock being registered, other than
underwriting discounts and commissions. All amounts shown are estimates, except
the Commission registration fee and the NASD filing fee, and assume sale of
1,200,000 shares in the offering.
Commission registration fee............................. $ 3,168
NASD filing fee......................................... 1,700
NASDAQ OTC listing fee.................................. 1,000
Printing and mailing expenses........................... 45,000
Fees and expenses of counsel............................ 130,000
Accounting and related expenses......................... 50,000
Blue Sky fees and expenses (including counsel fees)..... 30,000
Miscellaneous........................................... 50,132
---------------
Total........................................ $ 311,000
===============
II-1
<PAGE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
We have obtained an operating expense loan from The Farmers and
Merchants Bank of Boswell, Indiana, in the amount of $250,000, to cover certain
expenses, as disclosed in the prospectus. To the extent that such transactions
would be deemed to involve the offer or sale of a security, the registrant would
claim exemption including, without limitation, the exemption provided by Section
4(2) of the Securities Act of 1933, for such transactions. In addition, on
August 9, 1999, we sold 1000 shares of our common stock to Mr. Zimmerman for
$10.00 per share. Such transaction was exempt from the registration requirements
of the Securities Act of 1933, as amended, as it did not involve any public
offering.
ITEM 27. EXHIBITS.
Exhibit No. Description
- -------------- ----------------------------------------------------------------
1 Form of Sales Agency Agreement
3.1 Amended and Restated Articles of Incorporation of Lafayette
Community Bancorp
3.2 Bylaws of Lafayette Community Bancorp
5 Opinion of Krieg DeVault Alexander & Capehart, LLP
10.1 Form of 2000 Directors' Stock Option Plan
10.2 Form of 2000 Key Employees' Stock Option Plan
10.3 Form of Lease Agreement by and between LCB Investments, LLC and
Lafayette Community Bancorp
10.4 Lease Agreement, dated October 4, 1999, by and between Kimzay
Greenwoods, Inc. and Lafayette Community Bancorp
10.5 Employment Agreement, dated December 20, 1999 by and between
Lafayette Community Bancorp and David R. Zimmerman
10.6 Promissory Note and Guaranty, dated August 24, 1999, by and
between The Farmers and Merchants Bank of Boswell, Indiana and
Lafayette Community Bancorp
23.1 Consent of Krieg DeVault Alexander & Capehart, LLP (included in
Opinion filed as Exhibit 5)
23.2 Consent of Crowe, Chizek and Company, LLP
24 Powers of Attorney
27 Financial Data Schedule (EDGAR filing only)
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes as follows:
II-2
<PAGE>
(1) The registrant will provide to the underwriter at the closing
specified in the underwriting agreement certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(2) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(3) The registrant will:
(i) For determining any liability under the Securities Act, treat
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant under Rule 424(b)(1), or (4) or 497(h) under
the Securities Act as part of this registration statement as of the time the
Commission declared it effective; and
(ii) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Lafayette, State of Indiana, on April 7, 2000.
LAFAYETTE COMMUNITY BANCORP
By: /s/ DAVID R. ZIMMERMAN
-------------------------------
David R. Zimmerman, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
indicated on April 7, 2000.
II-4
<PAGE>
Signatures Titles
- ---------- ------
/s/ DAVID R. ZIMMERMAN
- --------------------------
David R. Zimmerman President (Chief Executive Officer) and Director
/s/ MICHAEL T. MOOTZ
- --------------------------
Michael T. Mootz Vice President and Controller (principal financial
and accounting officer)
/s/ JOHN R. BASHAM, II*
- --------------------------
John R. Basham, II Director
/s/ EDWARD CHOSNEK*
- --------------------------
Edward Chosnek Director
/s/ DONALD J. EHRLICH*
- --------------------------
Donald J. Ehrilich Director
/s/ STEVEN HOGWOOD*
- --------------------------
Steven Hogwood Director
/s/ CONNIE L. KOLESZAR*
- --------------------------
Connie L. Koleszar Director
/s/ THOMAS A. McDONALD*
- --------------------------
Thomas A. McDonald Director
/s/ STEVEN W. NORFLEET*
- --------------------------
Steven W. Norfleet Director
*By: /s/ MICHAEL T. MOOTZ
---------------------
Michael T. Mootz, Attorney-in-fact
II-5
<PAGE>
EXHIBIT 1
LAFAYETTE COMMUNITY BANCORP
up to 1,200,000 Shares
COMMON SHARES
(Without par value)
Subscription Price $10.00 Per Share
AGENCY AGREEMENT
_______________ __,2000
<PAGE>
Keefe, Bruyette & Woods, Inc.
211 Bradenton Drive
Dublin, Ohio 43017-5034
Ladies and Gentlemen:
Lafayette Community Bankcorp, an Indiana banking corporation (the "Holding
Company"), and Lafayette Community Bank, Lafayette, Indiana, an Indiana banking
corporation in organization (the "Bank") (references to the Bank include both
the Bank in organization and after its articles of incorporation have been
granted, as indicated by the context), with its deposit accounts insured by the
Bank Insurance Fund ("BIF") administered by the Federal Deposit Insurance
Corporation ("FDIC"), hereby confirm their agreement with Keefe, Bruyette &
Woods, Inc. ( "KBW or "the Agent"), as follows:
Section 1. The Offering. The Holding Company is offering a minimum of 800,000
shares and up to a maximum of 1,200,000 shares of common shares, without par
value (the "Shares"), in a community offering (the "Offering") in connection
with the Holding Company's initial public offering and capitalization of the
Bank, a de novo, FDIC-insured Indiana state-chartered bank. The Holding Company
is offering all of the Shares through approved broker-dealer firms which are
members of the National Association of Securities Dealers, Inc.
("NASD")("Assisting Brokers").
The Holding Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form SB-2 (File No. 333- ) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933, as amended (the
"1933 Act"), and has filed such amendments thereof and such amended prospectuses
as may have been required to the date hereof. The term "Registration Statement@
shall include any documents incorporated by reference therein and all financial
schedules and exhibits thereto, as amended, including post-effective amendments.
The prospectus, as amended, on file with the Commission at the time the
Registration Statement initially became effective is hereinafter called the
"Prospectus", except that if any Prospectus is filed by the Company pursuant to
Rule 424(b) or (c) of the rules and regulations of the Commission under the 1933
Act (the "1933 Act Regulations") differing from the prospectus on file at the
time the Registration Statement initially becomes effective, the term
"Prospectus" shall refer to the prospectus filed pursuant to Rule 424(b) or (c)
from and after the time said prospectus is filed with the Commission.
The Bank has filed with the Indiana Department of Financial Institutions
("DFI") for approval to form a de novo Indiana banking corporation, and with the
FDIC for insurance of accounts, and has filed amendments thereto as required by
the DFI and the FDIC (as so amended, the Applications). The Holding Company has
filed with the Board of Governors of the Federal Reserve System (the "FRB") its
application (the Holding Company Application) to acquire the Bank under the Bank
Holding Company Act, as amended, and the regulations promulgated thereunder
("BHCA") (the DFI, FDIC and Federal Reserve being hereafter referred to
collectively as the Regulatory Agencies).
Section 2. Retention of Agent; Compensation; Sale and Delivery of the Shares
. Subject to the terms and conditions herein set forth, the Holding Company and
the Bank hereby appoint the Agent as their exclusive financial advisor and
marketing agent (i) to utilize its best efforts to solicit subscriptions for the
Shares and to advise and assist the Company and the Bank with respect to the
Holding Company" s sale of the Shares in the Offering and (ii) to manage the
sale of Shares through a group of Assisting Brokers if necessary.
<PAGE>
On the basis of the representations and warranties and subject to the terms
and conditions of this Agreement, the Agent accepts such appointment and agrees
to consult with and advise the Holding Company and the Bank as to matters set
forth in the letter agreement ("Letter Agreement"), dated December 16, 1999,
between the Bank, the Holding Company and Webb (a copy of which is attached
hereto as Exhibit A). It is acknowledged by the Holding Company and the Bank
that the Agent shall not be obligated to purchase any Shares and shall not be
obligated to take any action which is inconsistent with any applicable law,
regulation, decision or order. Subscriptions will be offered by means of Order
Forms as described in the Prospectus. Except as provided in the paragraph below,
the appointment of the Agent hereunder shall terminate upon completion of the
Offering.
The Agent agrees to provide financial advisory assistance to the Bank and the
Holding Company at no charge for a period of one year following the completion
of the Offering including general advice on the market for bank stocks and the
shares of the Holding Company, shareholder enhancement methods and other related
matters. Thereafter, if the parties wish to continue the relationship, a fee
will be negotiated and an agreement with respect to specific advisory services
will be entered into at that time.
In the event the Holding Company is unable to sell a minimum of 800,000
Shares within the period herein provided, this Agreement shall terminate and the
Holding Company shall refund to any persons who have subscribed for any of the
Shares the full amount which it may have received from them as set forth in the
Prospectus; and none of the parties to this Agreement shall have any obligation
to the other parties hereunder, except as set forth in this Section 2 and in
Sections 6, 8 and 9 hereof.
In the event the Offering is terminated for any reason not attributable to
the action or inaction of the Agent, the Agent shall be paid the fees due to the
date of such termination pursuant to subparagraphs (a) and (b) below.
If all conditions precedent to the consummation of the Offering are
satisfied, the Holding Company agrees to issue, or have issued, the Shares sold
in the Offering and to release for delivery certificates for such Shares on the
Closing Date (as hereinafter defined) against payment to the Holding Company by
any means authorized pursuant hereto; provided, however, that no funds shall be
released to the Company until the conditions specified in Section 7A hereof
shall have been complied with to the reasonable satisfaction of the Agent and
its counsel. The release of Shares against payment therefor shall be made on a
date and at a place acceptable to the Holding Company, the Bank and the Agent.
Certificates for shares shall be delivered directly to the purchasers in
accordance with their directions. The date upon which the Holding Company shall
release or deliver the Shares sold in the Offering, in accordance with the terms
herein, is called the "Closing Date."
The Agent shall receive the following compensation for its services hereunder:
(a) An advisory fee of $10,000. Such fees shall be deemed to have been earned
and shall be applied against the fees pursuant to subsection (b), below.
(b) (i) 0% of the aggregate actual purchase price of the stock sold to
officers, directors and employees of the Bank;
(ii) 4.0% of the aggregate actual purchase price of the stock sold to
investors who are included on the lists provided by the directors in
conjunction with the Offering and who placed their orders with KBW;
and
(iii) 7.0% of the aggregate actual purchase price of the stock sold to
investors in conjunction with the Offering; and
(iv) In the event that a syndicate of Assisting Brokers are used to
assist in the Offering, the fee for such Shares be 7.0% of the
aggregate actual purchase price of the securities sold through such
syndicate. KBW will pass on to such Assisting Brokers who assist in
the Offering an amount competitive with gross underwriting discounts
charged at such
<PAGE>
time for comparable amounts of stock sold at a comparable price per
share in a similar market environment. Fees with respect to purchases
effected through Assisting Brokers other than KBW shall be transmitted
by KBW to such Assisting Broker. The decision to utilize Assisting
Brokers will be made by KBW upon consultation with the Company with
due diligence regard to the Holding Company' s stock distribution
strategy.
(v) In the event that a syndicate of selected broker-dealers are used
to sell Shares to institutional investors in the institutional
offering, which may include KBW, the fee for such shares shall be 7.0%
of the aggregate actual purchase price of the securities sold through
such syndicate. KBW will pass on to such selected broker-dealers who
assist in the institutional offering an amount competitive with gross
underwriting discounts charged at such time for comparable amounts of
stock sold at a comparable price per share in a similar market
environment. Fees with respect to purchases effected through selected
institutional broker-dealers other than KBW shall be transmitted by
KBW to such selected broker-dealer. The decision to utilize selected
broker-dealers to offer and sell shares to institutional investors
will be made by the Holding Company upon consultation with KBW with
due regard to the Holding Company's stock distribution strategy.
Full payment of the Agent's actual and accountable expenses, advisory
fees and compensation shall be made in next day funds on the earlier
of the Closing Date or a determination by the Holding Company to
terminate or abandon the offering.
Section 3. Prospectus; Offering. The Shares are to be offered in the
Offering at $10.00 per share.
Section 4. Representations and Warranties. The Holding Company and the Bank
jointly and severally represent and warrant to and agree with the Agent as
follows:
(a) The Holding Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to issue and
sell the capital stock of the Bank to the Holding Company and the Shares to be
sold by the Holding Company as provided herein and as described in the
Prospectus. The consummation of the Offering, the execution, delivery and
performance of this Agreement and the consummation of the transactions herein
contemplated have been duly and validly authorized by all necessary corporate
action on the part of the Holding Company and the Bank and this Agreement has
been validly executed and delivered by the Holding Company and the Bank and is
the valid, legal and binding agreement of the Holding Company and the Bank
enforceable in accordance with its terms, except to the extent, if any, that the
provisions of Sections 8 and 9 hereof may be unenforceable as against public
policy, and except to the extent that such enforceability may be limited by
bankruptcy laws, insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of financial
institutions insured by the FDIC (including the laws relating to the rights of
the contracting parties to equitable remedies).
(b) As of the Closing Date, the Bank shall have completed all conditions
precedent to the Offering in accordance with the Prospectus and shall have
complied in all material respects with applicable laws, regulations (except as
modified or waived in writing by Regulatory Agencies), decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Offering imposed upon it by the Regulatory Agencies as set forth in the
correspondence received from the Regulatory Agencies.
(c) The Registration Statement was declared effective by the Commission on
_______, 2000; and no stop order has been issued with respect thereto and no
proceedings therefore have been initiated or to the best knowledge of the
Holding Company threatened by the Commission. At the time the Registration
Statement, including the Prospectus contained therein (including
<PAGE>
any amendment or supplement thereto), became effective, the Registration
Statement complied as to form in all material respects with the requirements of
the 1933 Act and the regulations promulgated thereunder and the Registration
Statement including the Prospectus contained therein (including any amendment or
supplement thereto), any Blue Sky Application or any Sales Information (as such
terms are defined in Section 8 hereof) authorized by the Holding Company or the
Bank for use in connection with the Offering did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and at the time any
Rule 424(b) or (c) Prospectus was filed with or mailed to the Commission for
filing and at the Closing Date, the Registration Statement including the
Prospectus contained therein (including any amendment or supplement thereto) and
any Blue Sky Application or any Sales Information authorized by the Holding
Company or the Bank for use in connection with the Offering will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
representations and warranties in this Section 4(c) shall not apply to
statements or omissions made in reliance upon and in conformity with written
information furnished to the Holding Company or the Bank by the Agent expressly
regarding the Agent for use under the caption "Sales Agent" or written
statements or omissions from any sales information or information filed pursuant
to state securities or blue sky laws or regulations regarding the Agent
(d) The DFI application, including the Prospectus, at the time of the approval
of the Application, including the Prospectus, by the DFI (including any
amendment or supplement thereto) and at all times subsequent thereto until the
Closing Date, will comply as to form in all material respects with all
applicable rules and regulations of the DFI (except as modified or waived in
writing by the DFI). The Application, including the Prospectus (including any
amendment or supplement thereto), does not include any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that representations or
warranties in this subsection (d) shall not apply to statements or omissions
made in reliance upon and in conformity with written information furnished to
the Company by the Agent expressly regarding the Agent for use in the Prospectus
contained in the Application under the caption "Sales Agent" or written
statements or omissions from any sales information filed pursuant to state
securities or blue sky laws or regulations regarding the Agent.
(e) No order has been issued by the Commission, the DFI, the FRB or the FDIC
(and hereinafter reference to the FDIC shall include the BIF), or any state
regulatory authority, preventing or suspending the use of the Prospectus and no
action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related to the Offering or the
Application is, to the best knowledge of the Bank or the Holding Company,
pending or threatened.
(f) At the Closing Date, the Offering will have been approved by the Boards of
Directors of both the Holding Company and the Bank, and the Holding Company and
the Bank will have completed all conditions precedent to the Offering specified
in the Applications and approvals from the Regulatory Agencies, and the offer
and sale of the Shares will have been conducted in all material respects in
compliance with all applicable laws, regulations, decisions and orders,
including all terms, conditions, requirements and provisions precedent to the
Offering imposed upon the Holding Company or the Bank by the Regulatory
Agencies, the Commission or any regulatory authority, and in the manner
described in the Prospectus. At the Closing Date, to the best knowledge of the
Holding Company and the Bank, no person will have sought to obtain review of the
final action of the Regulatory Agencies in approving the Applications pursuant
to any applicable state or federal statute or regulation.
(g) The Holding Company has filed with the FRB the Holding Company Application
and has received, as of the Closing Date, approval of its acquisition of the
Bank from the FRB.
<PAGE>
(h) Crowe Chizek & Company, LLP, which certified the financial statements filed
as part of the Registration Statement and the Applications, have advised the
Holding Company and the Bank in writing that they are, with respect to the
Holding Company and the Bank, independent certified public accountants within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants and under the 1933 Act and the regulations
promulgated thereunder.
(i) The financial statements and the schedules and notes thereto which are
included in the Registration Statement and which are a part of the Prospectus
present fairly the financial position and retained earnings of the Holding
Company as of the dates indicated and the results of operations and cash flows
for the periods specified. The financial statements comply in all material
respects with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods presented except as otherwise noted therein
and present fairly in all material respects the information required to be
stated therein and are consistent with the most recent financial statements and
other reports filed by the Bank with the Regulatory Agencies except that
accounting principles employed in such filings conform to requirements of such
authorities and not necessarily to GAAP. The other financial statistical and pro
forma information and related notes included in the Prospectus fairly present
the information shown therein on a basis consistent with the audited and
unaudited financial statements included in the Prospectus, and as to the pro
forma adjustments, the adjustments made therein have been properly applied on
the basis described therein.
(j) Since the respective dates as of which information is given in the
Registration Statement, including the Prospectus: (i) there has not been any
material adverse change in the financial condition or in the management,
earnings, capital, properties or business affairs of the Holding Company or the
Bank considered as one enterprise, whether or not arising in the ordinary course
of business, (ii) there has not been any material change in total assets,
liabilities or equity from the amount set forth in the Prospectus; nor has the
Holding Company issued any securities or incurred any liability or obligation
for borrowings other than set forth in the Prospectus; (iii) there has not been
any material transactions entered into by the Holding Company or the Bank, other
than those set forth in the Prospectus; and (iv) the capitalization,
liabilities, assets, properties and business of the Holding Company and the Bank
conform in all material respects to the descriptions thereof contained in the
Prospectus and, neither the Bank nor the Holding Company has any material
liabilities of any kind, contingent or otherwise, except as set forth in or
contemplated by the Registration Statement and the Prospectus.
(k) The Holding Company is a corporation duly organized and in good standing
under the laws of the State of Indiana, with corporate power and authority to
own its properties and to conduct its business as described in the Prospectus,
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business requires such qualification
unless the failure to qualify in one or more of such jurisdictions would not
have a material adverse effect on the financial condition, earnings, capital,
properties or business affairs of the Holding Company and the Bank considered as
a whole.
(l) The Bank is a bank in organization and has all conditional approvals to
transact its business. At the closing, the Bank will be a duly organized and
validly existing Indiana banking corporation, with FDIC insurance of accounts
and duly authorized to conduct its business as described in the Prospectus; the
activities of the Bank are permitted by the rules, regulations and practices of
the DFI and the FDIC; the Bank has or will obtain all licenses, permits and
other governmental authorizations required for the conduct of its business
except those that individually or in the aggregate would not materially
adversely affect the financial condition of the Holding Company and the Bank
taken as a whole; all such licenses, permits and other governmental
authorizations are in full force and effect and the Bank is in good standing
under the laws of the State of Indiana and is or will be duly qualified as a
foreign corporation to transact business in each jurisdiction in which failure
to so qualify would have a material adverse effect upon the financial condition,
earnings, capital, properties or business affairs of the Bank; all of the issued
and outstanding capital stock of the Bank after the Offering will be duly and
validly issued and fully paid and nonassessable; and the Holding Company will
directly own all of such capital stock free and clear of any mortgage, pledge,
lien, encumbrance, claim or restriction. The Bank does not own equity securities
or any equity interest in any other business enterprise.
<PAGE>
(m) The Bank is a member of the Federal Reserve Bank; the deposit accounts of
the Bank are insured by the FDIC up to applicable limits.
(n) Upon the completion of the Offering, the authorized, issued and outstanding
equity capital of the Holding Company will be as described in the Prospectus
under the caption "Capitalization," and no Shares have been or will be issued
and outstanding prior to the Closing Date; the Shares to be subscribed for in
the Offering have been duly and validly authorized for issuance, and when issued
and delivered by the Holding Company against payment of the consideration
calculated as set forth in the Prospectus, will be duly and validly issued and
fully paid and nonassessable; the issuance of the Shares is not subject to
preemptive rights; and the terms and provisions of the Shares will conform in
all material respects to the description thereof contained in the Prospectus.
Upon issuance of the Shares, good title to the Shares will be transferred from
the Holding Company to the purchaser thereof against payment therefore, subject
to such claims as may be asserted against the purchasers thereof by third party
claimants.
(o) As of the date hereof and as of the Closing Date, neither the Holding
Company nor the Bank is in violation of its articles of incorporation or its
bylaws or in material default in the performance or observance of any
obligation, agreement, covenant, or condition contained in any contract, lease,
loan agreement, indenture or other instrument to which it is a party or by which
it, or any of its property, may be bound which would result in a material
adverse change in the condition (financial or otherwise), earnings, capital,
properties or business affairs of the Holding Company or Bank considered as one
enterprise or which would materially affect their properties or assets. The
consummation of the transactions herein contemplated will not (i) conflict with
or constitute a breach of, or default under, the certificate of incorporation
and bylaws of the Holding Company or the Bank, or materially conflict with or
constitute a material breach of, or default under any material contract, lease
or other instrument to which the Holding Company or the Bank has a beneficial
interest, or any applicable law, rule, regulation or order that is material to
the financial condition of the Holding Company and the Bank on a consolidated
basis; (ii) violate any authorization, approval, judgment, decree, order,
statute, rule or regulation applicable to the Holding Company or the Bank except
for such violations which would not have a material adverse effect on the
financial condition and results of operations of the Holding Company and the
Bank on a consolidated basis; or (iii) result in the creation of any material
lien, charge or encumbrance upon any property of the Holding Company or the
Bank.
(p) No default exists, and no event has occurred which with notice or lapse of
time, or both, would constitute a default on the part of the Holding Company or
the Bank, in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, note, bank loan or credit
agreement or any other instrument or agreement to which the Holding Company or
the Bank is a party or by which any of them or any of their property is bound or
affected in any respect which, in any such case, is material to the Holding
Company or the Bank considered as one enterprise, and all such agreements are in
full force and effect; and no other party to any such agreements has instituted
or, to the best knowledge of the Holding Company or the Bank, threatened any
action or proceeding wherein the Holding Company or the Bank is alleged to be in
default thereunder under circumstances where such action or proceeding, if
determined adversely to the Holding Company or the Bank, as the case may be,
would have a material adverse effect upon the Holding Company and the Bank
considered as one enterprise.
(q) The Holding Company and the Bank have good and marketable title to all
assets which are material to the business of the Holding Company and the Bank
and to those assets described in the Prospectus as owned by them free and clear
of all liens, charges, encumbrances, restrictions or other claims, except such
as are described in the Prospectus or which do not have a material adverse
effect on the business of the Holding Company and the Bank taken as a whole; and
all of the leases and subleases which are material to the business of the
Holding Company and the Bank, as described in the Registration Statement or
Prospectus, are in full force and effect.
<PAGE>
(r) The Holding Company and the Bank are not in material violation of any
directive from the DFI, the FRB, the FDIC, the Commission or any other agency to
make any material change in the method of conducting their respective
businesses; the Holding Company and the Bank have conducted and are conducting
their respective businesses so as to comply in all material respects with all
applicable statutes and regulations (including, without limitation, regulations,
decisions, directives and orders of the DFI, the FRB, the Commission and the
FDIC) and there is no charge, investigation, action, suit or proceeding before
or by any court, regulatory authority or governmental agency or body pending or,
to the best knowledge of either the Holding Company or the Bank, threatened,
which would reasonably be expected to materially and adversely affect the
Offering, the performance of this Agreement, or the consummation of the
transactions contemplated as described in the Registration Statement, or which
would reasonably be expected to result in any material adverse change in the
financial condition or in the earnings, capital, properties or business affairs
of the Holding Company and the Bank considered as one enterprise.
(s) Neither the Bank nor the Holding Company has relied on the Agent or the
Agent=s counsel with respect to any legal, tax, or accounting advice in
connection with the Offering, including without limitation as to any matter of
federal or state securities law.
(t) The Holding Company and the Bank have timely filed all required federal and
state tax returns, have paid all taxes that have become due and payable in
respect of such returns except where permitted to be extended, have made
adequate reserves for similar future tax liabilities and no deficiency has been
asserted with respect thereto by any taxing authority.
(u) No approval, authorization, consent or order of any regulatory or
supervisory or other public authority is required for the execution and delivery
by the Holding Company and the Bank of this Agreement, or the issuance of the
Shares, except for the approval of the Regulatory Agencies and the Commission
(which have been received) and any necessary qualification, notification, or
registration or exemption under the securities or blue sky laws of the various
states in which the shares are to be offered and except as may be required under
the rules and regulations of The Nasdaq Stock Market, Inc. ("NASDAD") or the
NASD.
(v) The Holding Company and the Bank have made appropriate arrangements for
placing the funds received from subscriptions for Shares in the designated
subscription account at The Farmers & Merchants Bank, Boswell, Indiana (the
"Escrow Agent") until the minimum number of Shares are sold and paid for, with
provision for refund to the purchasers in the event that the Offering is not
completed for whatever reason or for delivery to the Holding Company if at least
the minimum number of offered Shares are sold.
(w) Prior to the Offering, neither the Holding Company nor the Bank has: (i)
issued any securities (except as disclosed in the Prospectus); (ii) had any
material dealings with respect to sales of securities with any member of the
NASD, or any person related to or associated with such member, other than
discussions and meetings relating to the proposed Offering; (iii) entered into a
financial or management consulting agreement except as contemplated hereunder
(except as disclosed in the Prospectus); or (iv) engaged any intermediary
between the Agent and the Holding Company and the Bank in connection with the
offering of Shares and no person is being compensated in any manner for such
service.
(x) Neither the Holding Company, the Bank nor, to the best knowledge of the
Holding Company or the Bank, the employees of the Holding Company or the Bank
have made any payment of funds of the Holding Company or the Bank as a loan to
any person for the purchase of the Shares.
<PAGE>
Any certificates signed by an officer of the Holding Company or the Bank and
delivered to the Agent or its counsel that refer to this Agreement shall be
deemed to be a representation and warranty by the Holding Company or the Bank to
the Agent as to the matters covered thereby with the same effect as if such
representation and warranty were set forth herein.
Section 5. Representations and Warranties of the Agent.
The Agent represents and warrants to the Holding Company and the Bank that:
(a) it is a corporation and is validly existing in good standing under the laws
of the State of Ohio with full corporate power and authority to provide the
services to be furnished to the Bank and the Holding Company hereunder.
(b) The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on the part of the Agent, and this Agreement has been duly and
validly executed and delivered by the Agent and is a legal, valid and binding
agreement of the Agent, enforceable in accordance with its terms, except to the
extent that such enforcement may be limited by bankruptcy laws, insolvency laws,
or other laws affecting the enforcement of creditors' rights generally.
(c) Each of the Agent and its employees, agents and representatives who shall
perform any of the services hereunder shall be duly authorized and empowered,
and shall have all licenses, approvals and permits necessary to perform such
services; and the Agent is a registered selling agent in each of the
jurisdictions in which the Shares are to be offered by the Holding Company in
reliance upon the Agent as a registered selling agent as set forth in the blue
sky memorandum prepared with respect to the Offering.
(d) The execution and delivery of this Agreement by the Agent, the consummation
of the transactions contemplated hereby and compliance with the terms and
provisions hereof will not conflict with, or result in a breach of, any of the
terms, provisions or conditions of, or constitute a default (or an event which
with notice or lapse of time or both would constitute a default) under, the
articles of incorporation or bylaws of the Agent or any material agreement,
indenture or other instrument to which the Agent is a party or by which it or
its property is bound which would result in a material adverse change in the
condition (financial or otherwise) or business affairs of the Agent.
(e) No approval of any regulatory or supervisory or other public authority is
required in connection with the Agent's execution and delivery of this
Agreement, except as may have been received.
(f) There is no suit or proceeding or charge or action before or by any court,
regulatory authority or government agency or body or, to the knowledge of the
Agent, pending or threatened, which might materially adversely affect the
Agent=s performance of this Agreement.
Section 5.A Covenants of the Holding Company and the Bank. The Holding
Company and the Bank hereby jointly and severally covenant with the Agent as
follows:
(a) The Holding Company has filed the Registration Statement with the
Commission. The Holding Company will not, at any time after the date the
Registration Statement is declared effective, file any amendment or supplement
to the Registration Statement without providing the Agent and its counsel an
opportunity to review such amendment or file any amendment or supplement to
which amendment the Agent or its counsel shall reasonably object.
<PAGE>
(b) The Bank has filed the Applications with the Regulatory Agencies. The Bank
will not, at any time after the date an Application is approved, file any
amendment or supplement to an Application without providing the Agent and its
counsel an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement the Agent or its
counsel shall reasonably object.
(c) The Holding Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared effective
by the Commission and any post-effective amendment to an Application to be
approved by the Regulatory Agencies, and will immediately upon receipt of any
information concerning the events listed below notify the Agent (i) when the
Registration Statement, as amended, has become effective; (ii) when an
Application, as amended, has been approved by the Regulatory Agencies; (iii) of
the receipt of any comments from the Commission, a Regulatory Agency or any
other governmental entity with respect to the Offering or the transactions
contemplated by this Agreement; (iv) of any request by the Commission, a
Regulatory Agency or any other governmental entity for any amendment or
supplement to the Registration Statement or an Application or for additional
information; (v) of the issuance by the Commission, a Regulatory Agency or any
other governmental agency of any order or other action suspending the Offering
or the use of the Registration Statement or the Prospectus or any other filing
of the Holding Company and the Bank under applicable regulations or other
applicable law, or the threat of any such action; (vi) of the issuance by the
Commission, any Regulatory Agency or any state authority of any stop order
suspending the effectiveness of the Registration Statement or of the initiation
or threat of initiation or threat of any proceedings for that purpose; or (vii)
of the occurrence of any event mentioned in paragraph (g) below. The Holding
Company and the Bank will make every reasonable effort to prevent the issuance
by the Commission, any Regulatory Agency or any state authority of any such
order and, if any such order shall at any time be issued, to obtain the lifting
thereof at the earliest possible time.
(d) The Holding Company and the Bank will provide the Agent and its counsel with
notice of its intention to file, and reasonable time to review prior to filing,
any amendment or supplement to the any Application and will not file any such
amendment or supplement to which the Agent shall reasonably object or which
shall be reasonably disapproved by its counsel.
(e) The Holding Company and the Bank will deliver to the Agent and to its
counsel conformed copies of each of the following documents, with all exhibits:
the Applications, as originally filed and of each amendment or supplement
thereto, and the Registration Statement, as originally filed and each amendment
thereto. Further, the Holding Company and the Bank will deliver such additional
copies of the foregoing documents to counsel to the Agent as may be required for
any NASD filings. In addition, the Holding Company and the Bank will also
deliver to the Agent such number of copies of the Prospectus, as amended or
supplemented, as the Agent may reasonably request.
(f) The Holding Company and the Bank will comply in all material respects with
any and all terms, conditions, requirements and provisions with respect to the
Offering and the transactions contemplated thereby imposed by the Commission, by
applicable state law and regulations, and by the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the rules and regulations
of the Commission promulgated under such statutes, to be complied with prior to
or subsequent to the Closing Date; and when the Prospectus is required to be
delivered, the Holding Company and the Bank will comply in all material
respects, at their own expense, with all material requirements imposed upon them
by the Regulatory Agencies, the Commission, by applicable state law and
regulations and by the 1933 Act, the 1934 Act and the rules and regulations of
the Commission promulgated under such statutes, in each case as from time to
time in force, so far as necessary to permit the continuance of sales or dealing
in Shares during such period in accordance with the provisions hereof and the
Prospectus.
(g) If any event relating to or affecting the Holding Company or the Bank shall
occur, as a result of which it is necessary, in the reasonable opinion of
counsel for the Holding Company or the Bank or for the Agent, to amend or
supplement the
<PAGE>
Registration Statement or the Prospectus in order to make them not misleading in
light of the circumstances existing at the time of its use, the Holding Company
and the Bank will, at their expense, forthwith prepare, file with the Commission
and the Regulatory Agencies, and furnish to the Agent, a reasonable number of
copies of an amendment or amendments of, or a supplement or supplements to, the
Registration Statement and the Prospectus (in form and substance satisfactory to
counsel for the Agent after a reasonable time for review) which will amend or
supplement the Registration Statement and/or the Prospectus so that as amended
or supplemented it will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances existing at the time, not misleading. For the
purpose of this subsection, the Holding Company and the Bank each will furnish
such information with respect to itself as the Agent may from time to time
reasonably request.
(h) The Holding Company will endeavor in good faith, in consultation with the
Agent, to register or to qualify the Shares for offering and sale under the
applicable securities laws of the jurisdictions in which the Offering will be
conducted; provided, however, that the Holding Company shall not be obligated to
file any general consent to service of process or to qualify to do business in
any jurisdiction in which it is not so qualified. In each jurisdiction where any
of the Shares shall have been registered or qualified as above provided, the
Holding Company will make and file such statements and reports in each year as
are or may be required by the laws of such jurisdictions.
The Holding Company and the Bank and each of the directors officers and Advisory
Board members of the Holding Company and the Bank will not sell or issue,
contract to sell or otherwise dispose of, for a period of 180 days after the
date hereof, without the Agent=s prior written consent, which consent shall not
be unreasonably withheld, any Shares other than in connection with any plan or
arrangement described in the Prospectus.
(i) For the period of three years from the date of this Agreement, the Holding
Company will furnish to the Agent upon request (i) a copy of each report of the
Holding Company furnished to or filed with the Commission under the 1934 Act or
any national securities exchange or system on which any class of securities of
the Holding Company is listed or quoted, (ii) a copy of each report of the
Holding Company mailed to holders of Shares or nonconfidential report filed with
the Commission or a Regulatory Agency or any other supervisory or regulatory
authority or any national securities exchange or system on which any class of
the securities of the Holding Company is listed or quoted, and (iii) from time
to time, such other publicly available information concerning the Holding
Company and the Bank as the Agent may reasonably request.
(j) The Holding Company and the Bank will use the net proceeds from the sale of
the Common Shares in the manner set forth in the Prospectus under the caption
"Use of Proceeds."
(k) Prior to the Closing Date, the Holding Company and the Bank will inform the
Agent of any event or circumstances of which it is aware as a result of which
the Registration Statement and/or Prospectus, or the Applications as then
supplemented or amended, would include an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein
not misleading.
(l) The Holding Company and the Bank will distribute the Prospectus or other
offering materials in connection with the offering and sale of the Common Shares
only as set forth in the Prospectus, and only in accordance with the 1933 Act
and the 1934 Act and the rules and regulations promulgated under such statutes,
and the laws of any state in which the shares are qualified for sale.
<PAGE>
(m) The Holding Company shall register its Shares under Section 12(d) of the
1934 Act, concurrent with the effective date of the Registration Statement. The
Holding Company shall maintain the effectiveness of such registration for not
less than three years.
(n) For so long as the Holding Company=s Shares are registered under the 1934
Act, the Holding Company will furnish to its shareholders, as soon as
practicable after the end of each fiscal year, such reports and other
information as are required to be furnished to its stockholders under the 1934
Act (including consolidated financial statements of the Holding Company and its
subsidiaries, certified by independent public accountants).
(o) The Holding Company will comply with the provisions of Rule 158 of the
1933 Act.
(p) The Holding Company will use its best efforts to obtain approval for and
maintain quotation of the Shares on the Nasdaq Bulletin Board effective on or
prior to the Closing Date.
(q) The Bank will maintain appropriate arrangements with the Escrow Agent for
depositing all funds received from persons mailing subscriptions for or orders
to purchase Shares in the Offering as described in the Prospectus until the
Closing Date and satisfaction of all conditions precedent to the release of the
Bank=s obligation to refund payments received from persons subscribing for or
ordering Shares in the Offering as described in the Prospectus.
(r) The Holding Company will as a bank holding company under the BHCA.
(s) The Holding Company and the Bank will take such actions and furnish such
information as are reasonably requested by the Agent in order for the Agent to
ensure compliance with the "Interpretation of the Board of Governors of the NASD
on Free Riding and Withholding."
(t) The Holding Company and the Bank will conduct their businesses in compliance
in all material respects with all applicable federal and state laws, rules,
regulations, decisions, directives and orders including, all decisions,
directives and orders of the Commission, the DFI, the FRB and the FDIC.
(u) The Bank will not amend the Offering without notifying the Agent
prior thereto.
(v) The Holding Company will not deliver the Shares until the Holding Company
and the Bank have satisfied or caused to be satisfied each condition set forth
in Section 7A hereof, unless such condition is waived in writing by the Agent.
Section 6. Payment of Expenses. Whether or not the Offering is
completed or the sale of the Shares by the Holding Company is consummated, the
Holding Company and the Bank will pay for all expenses incident to the
performance of this Agreement, including without limitation: (a) the preparation
and filing of the Applications; (b) the preparation, printing, filing, delivery
and shipment of the Registration Statement, including the Prospectus, and all
amendments and supplements thereto; (c) all filing fees and expenses in
connection with the qualification or registration of the Shares for offer and
sale by the Holding Company under the securities or "blue sky" laws, including
without limitation filing fees, reasonable legal fees and disbursements of
counsel in connection therewith, and in connection with the preparation of a
blue sky law survey; (d) the filing fees of the NASD; (e) all expenses related
to "road shows" and (f) the actual out-of-pocket expenses of the Agent up to a
maximum of $7,000. Subject to such maximum limitation, any such expense incurred
by the Agent shall be reimbursed by the Holding Company and the Bank, except for
the fees and expenses of its counsel.
<PAGE>
Section 7A. Conditions to the Agents Obligations. The obligations of
the Agent hereunder and the occurrence of the Closing and the Offering are
subject to the condition that all representations and warranties and other
statements of the Holding Company and the Bank herein contained are at and as of
the commencement of the Offering and at and as of the Closing Date, true and
correct in all respects, the condition that the Holding Company and the Bank
shall have performed all of their obligations hereunder to be performed on or
before such dates and to the following further conditions:
(a) The Registration Statement shall have been declared effective by the
Commission and the Applications approved by the Regulatory Agencies not later
than 5:30 p.m. on the date of this Agreement, and no stop order or other action
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefore initiated or, to the Holding
Company's or the Bank's best knowledge, threatened by the Commission or any
state authority and no order or other action suspending the authorization for
use of the Prospectus or the consummation of the Offering shall have been issued
or proceedings therefore initiated or, to the Holding Company=s or the Bank=s
best knowledge, threatened by the Regulatory Agencies, the Commission, or any
other governmental body.
(b) At the Closing Date, the Agent shall have received:
(1) The favorable opinion, dated as of the Closing Date, of Kreig
DeVault Alexander & Capehart LLP, counsel for the Holding Company and the Bank,
in form and substance satisfactory to counsel for the Agent to the effect that:
(i) The Holding Company is a corporation duly organized and
validly existing and in good standing under the laws of the
State of Indiana, with corporate power and authority to own
its properties and to conduct its business as described in
the Prospectus, and is duly qualified to transact business
and is in good standing in each jurisdiction in which the
conduct of its business requires such qualification and in
which the failure to qualify would have a material adverse
effect on the financial condition, earnings, capital,
properties or business affairs of the Holding Company.
(ii) The Bank is a duly organized and validly existing
Indiana banking corporation with full power and authority
to own its properties and to conduct its business as
described in the Prospectus and to enter into this
Agreement and perform its obligations hereunder; the
activities of the Bank as described in the Prospectus are
permitted by the rules, regulations and practices of the
Regulatory Agencies; the issuance and sale of the capital
stock of the Bank to the Holding Company has been duly and
validly authorized by all necessary corporate action on the
part of the Holding Company and the Bank and, upon payment
therefore as described in the Prospectus, will be validly
issued, fully paid and nonassessable and will be owned of
record and beneficially by the Holding Company, free and
clear of any mortgage, pledge, lien, encumbrance, claim or
restriction.
(iii) The Bank is a member of the Federal Reserve and the
deposit accounts of the Bank are insured by the FDIC up to
the maximum amount allowed by law and to such no
proceedings for the termination or revocation of such
insurance are pending or threatened.
(iv) Upon the completion of the Offering, the authorized,
issued and outstanding capital stock of the Holding Company
and the Bank will be as set forth in the Prospectus under
the caption "Capitalization," and no Shares have been or
will be issued and outstanding prior to the Closing Date;
the Shares of the Holding Company to be subscribed for in
the Offering have been duly and validly authorized for
issuance, and when issued and delivered by the Holding
Company against payment of the consideration therefor, will
be fully paid and nonassessable; and the issuance of the
Shares is not subject to preemptive rights.
<PAGE>
(v) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of
the Holding Company and the Bank; and this Agreement
constitutes a valid, legal and binding obligation of each
of the Holding Company and the Bank, enforceable in
accordance with its terms, except to the extent that the
provisions of Sections 8 and 9 hereof may be unenforceable
as against public policy, and except to the extent that
such enforceability may be limited by bankruptcy laws,
insolvency laws, or other laws affecting the enforcement of
creditors' rights generally, or the rights of creditors of
financial institutions insured by the FDIC (including the
laws relating to the rights of the contracting parties to
equitable remedies).
(vi) Subject to the satisfaction of the conditions to the
Regulatory Agencies' approval of the Applications, no
further approval, registration, authorization, consent or
other order of any federal regulatory agency, public board
or body is required in connection with the execution and
delivery of this Agreement, the offer, sale and issuance of
the Shares and the consummation of the Offering.
(vii) The Applications, including the Prospectus as filed
with the Regulatory Agencies, been approved by the
Regulatory Agencies. The FRB has issued its order of
approval under the BHCA, and the purchase by the Holding
Company of all of the issued and outstanding capital stock
of the Bank has been authorized by the FRB and no action
has been taken, or to such counsel's knowledge is pending
or threatened, to revoke any such authorization or
approval.
(viii) The Registration Statement has become effective
under the 1933 Act, no stop order suspending the
effectiveness of the Registration Statement has been
issued, and to the best of such counsel's knowledge no
proceedings for that purpose have been instituted or
threatened.
(ix) The consummation of the Offering and the transactions
contemplated thereunder will have no material tax
consequences to the Holding Company, the Bank or any person
subscribing for shares in the Offering.
(x) The terms and provisions of the Shares conform to the
description thereof contained in the Registration Statement
and the Prospectus and such description describes in all
material respects the rights of the holders thereof, the
information in the Prospectus under the caption "Articles
of Incorporation" to the extent that it constitutes matters
of law or legal conclusions has been prepared by such
counsel and is accurate in all material respects; and the
forms of certificates proposed to be used to evidence the
Shares are in due and proper form.
(xi) At the time the Applications, including the Prospectus
contained therein, were approved, the Applications (as
amended or supplemented) complied as to form in all
material respects with the requirements of the Regulatory
Agencies and all applicable laws, rules and regulations and
decisions and orders of the Regulatory Agencies, except as
modified or waived in writing by the Regulatory Agencies,
(other than the financial statements, notes to financial
statements, financial tables and other financial and
statistical data included therein as to which counsel need
express no opinion and other than compliance with state
securities or Blue Sky laws as to which such counsel need
express no opinion). To such counsel's knowledge, no person
has sought to obtain regulatory or judicial review of the
final action of the Regulatory Agencies approving the
Applications.
(xii) At the time that the Registration Statement became
effective (i) the Registration Statement (as amended or
supplemented) (other than the financial statements, notes
to financial statements, financial tables or other
<PAGE>
financial and statistical data included therein as to which
counsel need express no opinion), complied as to form in
all material respects with the requirements of the 1933 Act
and the rules and regulations promulgated thereunder; and
(ii) the Prospectus (other than the financial statements,
notes to financial statements, financial tables and other
financial and statistical data included therein, as to
which counsel need express no opinion) complied as to form
in all material respects with the requirements of the 1933
Act and the rules and regulations promulgated thereunder,
and the rules, regulations and decisions and orders of the
Regulatory Agencies, except as modified or waived in
writing by the Regulatory Agencies.
(xiii) There are no legal or governmental proceedings
pending, or threatened (i) asserting the invalidity of this
Agreement or, (ii) seeking to prevent the Offering.
(xiv) The information in the Prospectus under the caption
"Supervision and Regulation", to the extent that it
constitutes matters of law, summaries and supervision of
legal matters, documents or proceedings, or legal
conclusions, has been prepared by such counsel and is
accurate in all material respects (except as to the
financial statements and other financial data included
therein as to which such counsel need express no opinion).
(xv) The Holding Company and the Bank have obtained all
material licenses, permits and other governmental
authorizations required for the conduct of their respective
businesses as described in the Registration Statement and
the Prospectus, except where the failure to obtain such
licenses, permits and other governmental authorizations
would not have a material adverse effect on the financial
condition of the Holding Company or the Bank considered as
one enterprise, or on the earnings, capital, properties or
business affairs of the Holding Company or the Bank
considered as one enterprise, and all such licenses,
permits and other governmental authorizations are in full
force and effect and the Holding Company and the Bank are
in all material respects complying therewith.
(xvi) Neither the Holding Company nor the Bank is in
violation of its articles of incorporation or its bylaws or
to the best of such counsel's knowledge, in violation of
any obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which it is a
party or by which it or its property may be bound, which
violation would have a material adverse effect on the
financial condition of the Holding Company or the Bank
considered as one enterprise, or on the earnings, capital,
properties or business affairs of the Holding Company and
the Bank considered as one enterprise; the execution and
delivery of this Agreement by the Holding Company and the
Bank, the incurrence of the obligations herein set forth
and the consummation of the transactions contemplated
herein, will not conflict with, constitute a breach of, or
default under, or result in the creation or imposition of
any material lien, charge or encumbrance upon any property
or assets of the Holding Company or the Bank which are
material to their business considered as one enterprise,
pursuant to any contract, indenture, mortgage, loan
agreement, note, lease or other instrument to which the
Holding Company or the Bank is a party or by which any of
them may be bound, or to which any of the property or
assets of the Holding Company or the Bank is subject. In
addition, such action will not result in any material
violation of the provisions of the articles of
incorporation or bylaws of the Holding Company or the Bank
or any material violation of any applicable law, act,
regulation or to such counsel's knowledge, order or court
order, writ, injunction or decree.
(xvii) To the best of counsel=s knowledge, the Holding
Company and the Bank are not in violation in any material
respect of any directive from any Regulatory Agency to make
any material change in the method of conducting their
business.
<PAGE>
(2) The letter of Krieg DeVault Alexander & Capehart, LLP, special
counsel for the Holding Company and the Bank, in form and substance to the
effect that:
In addition, during the preparation of the Registration Statement and
the Prospectus, Krieg DeVault Alexander & Capehart, LLP, participated in
conferences with certain officers of and other representatives of the Bank and
the Holding Company, counsel to the Agent, representatives of the independent
public accountants for the Bank and the Holding Company and representatives of
the Agent at which the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although Krieg DeVault Alexander &
Capehart, LLP, is not passing upon and does not assume the accuracy of the
statements contained in the Registration Statement and Prospectus, on the basis
of the foregoing without independent verification (relying as to materiality as
to factual matters on certificates of officers and other factual representations
by the Bank and the Holding Company), nothing has come to the attention of Krieg
DeVault Alexander & Capehart, LLP, that caused Krieg DeVault Alexander &
Capehart, LLP, to believe that the Registration Statement, at the time it was
declared effective by the SEC or the Prospectus or as of its date, contained or
contains any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that counsel need express no comment or opinion
with respect to the financial statements, schedules and other financial and
statistical data included, or statistical or appraisal methodology employed, in
the Registration Statement or Prospectus).
The opinion shall be limited to matters governed by the laws of the
United States or the State of Indiana. In rendering such opinion, such counsel
may rely (A) as to matters involving the application of laws of any jurisdiction
other than the United States or Indiana, to the extent such counsel deems proper
and specified in such opinion, upon the opinion of other counsel reasonably
acceptable to the Agent and the Agent's counsel, as long as such other opinion
indicates that the Agent may rely on the opinion, and (B) as to matters of fact,
to the extent such counsel deems proper, on certificates of responsible officers
of the Holding Company and the Bank and public officials; provided copies of any
such opinion(s) or certificates of public officials are delivered to you
together with the opinion to be rendered hereunder by counsel to the Holding
Company and the Bank. The opinion of such counsel for the Holding Company shall
state that it has no reason to believe that the Agent is not justified in
relying thereon.
(3) The favorable opinion, dated as of the Closing Date, of counsel
for the Agent, with respect to such matters as the Agent may reasonably require,
such opinion may rely as to matters of fact, upon certificates of officers and
directors of the Holding Company and the Bank delivered pursuant hereto or as
such counsel may reasonably request.
(c) Concurrently with the execution of this Agreement, the Agent shall receive a
letter from Crowe Chizek and Company LLP dated the date hereof and addressed to
the Agent, (i) such letter confirming that Crowe Chizek and Company LLP is a
firm of independent public accountants within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants,
the 1933 Act and the regulations promulgated thereunder, and no information
concerning its relationship with or interests in the Holding Company or the Bank
is required by the Application or Item 10 of the Registration Statement, and
stating in effect that in Crowe Chizek and Company LLP=s opinion the financial
statements of the Holding Company included in the Prospectus comply as to form
in all material respects with the applicable accounting requirements of the 1933
Act, the 1934 Act and the related published rules and regulations of the
Commission thereunder and generally accepted accounting principles; (ii) stating
in effect that, on the basis of certain agreed upon procedures (but not an audit
examination in accordance with generally accepted auditing standards) consisting
of a reading of the latest available unaudited interim financial statements of
the Holding Company and the Bank prepared by the Holding Company and the Bank, a
reading of the minutes of the meetings of the Board of Directors of the Holding
Company and the Bank, a review of interim financial information in accordance
with Statement on Auditing Standards No. 71, and consultations with officers of
the Holding Company and the Bank
<PAGE>
responsible for financial and accounting matters, nothing came to their
attention which caused them to believe that: (A) such unaudited financial
statements, including Recent Developments, if any, are not in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Prospectus; or (B) during the period from the date of the latest unaudited
consolidated financial statements included in the Prospectus to a specified date
not more than five business days prior to the date hereof, there was any
material increase in borrowings (defined as securities sold under agreements to
repurchase and any other form of debt other than deposits) of the Holding
Company or the Bank (other than as disclosed in the Prospectus); or (C) there
was any decrease in retained earnings of the Bank at the date of such letter as
compared with amounts shown in the latest unaudited statement of condition
included in the Prospectus or there was any decrease in net income or net
interest income of the Bank for the number of full months commencing immediately
after the period covered by the latest unaudited income statement included in
the Prospectus and ended on the latest month ending prior to the date of the
Prospectus or in such letter as compared to the corresponding period in the
preceding year; and (iii) stating that, in addition to the audit examination
referred to in its opinion included in the Prospectus and the performance of the
procedures referred to in clause (ii) of this subsection (D), they have compared
with the general accounting records of the Holding Company and/or the Bank, as
applicable, which are subject to the internal controls of the Holding Company
and/or the Bank, as applicable, accounting system and other data prepared by the
Holding Company and/or the Bank, as applicable, directly from such accounting
records, to the extent specified in such letter, such amounts and/or percentages
set forth in the Prospectus as the Agent may reasonably request, and they have
found such amounts and percentages to be in agreement therewith (subject to
rounding).
(d) At the Closing Date, the Agent shall receive letters from Crowe Chizek and
Company LLP dated the Closing Date, addressed to the Agent, confirming the
statements made by its letter delivered by it pursuant to subsection (f) of this
Section 7A, the "specified date" referred to in clause (ii)(B) thereof to be a
date specified in such letter, which shall not be more than five business days
prior to the Closing Date.
At the Closing Date counsel to the Agent shall have been furnished with such
documents and opinions as counsel for the Agent may require for the purpose of
enabling them to advise the Agent with respect to the issuance and sale of the
Shares as herein contemplated and related proceedings, or in order to evidence
the accuracy of any of the representations and warranties, or the fulfillment of
any of the conditions herein contained.
(f) At the Closing Date, the Agent shall receive a certificate of the Chief
Executive Officer and Chief Financial Officer of each of the Holding Company and
the Bank, dated the Closing Date, to the effect that (i) they have carefully
examined the Prospectus and at the time the Prospectus became authorized for
final use, the Prospectus did not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (ii) there has not been, since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
financial condition or in the management, earnings, capital, properties,
business prospects or business affairs of the Holding Company or the Bank,
considered as one enterprise, whether or not arising in the ordinary course of
business; (iii) the representations and warranties contained in Section 4 of
this Agreement are true and correct with the same force and effect as though
made at and as of the Closing Date; (iv) the Holding Company and the Bank have
complied in all material respects with all material agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the Closing
Date including the conditions contained in this Section 7A; (v) no stop order
has been issued or, to the best of their knowledge, is threatened, by the
Commission, a Regulatory Agency or any other governmental body; (vi) no order
suspending the Offering, the acquisition of all of the shares of the Bank by the
Holding Company or the effectiveness of the Prospectus has been issued and to
the best of their knowledge, no proceedings for any such purpose have been
initiated or threatened by any Regulatory Agency or any other federal or state
authority; (vii) to the best of
<PAGE>
their knowledge, no person has sought to obtain regulatory or judicial review of
the action of the DFI, FRB or FDIC in approving the Applications.
(g) The Holding Company or the Bank shall not have sustained since the date of
the latest audited financial statements included in the Registration Statement
and Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Registration Statement and the Prospectus, and since
the respective dates as of which information are given in the Registration
Statement and the Prospectus, there shall not have been any material change in
the long-term debt of the Holding Company or the Bank or any material change, or
any development, involving a prospective material change in or affecting the
general affairs of the management, financial position, shareholders' equity or
results of operations of the Holding Company or the Bank, otherwise than as set
forth or contemplated in the Registration Statement and the Prospectus, the
effect of which, in any such case described above, is in the Agent=s reasonable
judgment sufficiently material and adverse as to make it impracticable or
inadvisable to proceed with the Offering or the delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.
(h) Prior to and at the Closing Date: (i) in the reasonable opinion of the
Agent, there shall have been no material adverse change in the management,
financial condition or in the earnings, capital, properties or business affairs
of the Holding Company or the Bank independently, or of the Holding Company and
the Bank, considered as one enterprise, from that as of the latest dates as of
which such condition is set forth in the Prospectus, except as referred to
therein; (ii) there shall have been no material transaction entered into by the
Holding Company and the Bank, considered as one enterprise, from the latest date
as of which the financial condition of the Holding Company or the Bank is set
forth in the Prospectus other than transactions referred to or contemplated
therein; (iii) the Holding Company or the Bank shall not have received from the
DFI, FRB or the FDIC any direction (oral or written) to make any material change
in the method of conducting their business with which it has not complied in all
material respects (which direction, if any, shall have been disclosed to the
Agent) and which would reasonably be expected to have a material and adverse
effect on the management, condition (financial or otherwise) or on the earnings,
capital, properties or business affairs of the Holding Company or the Bank
considered as one enterprise; (iv) neither the Holding Company nor the Bank
shall have been in default (nor shall an event have occurred which, with notice
or lapse of time or both, would constitute a default) under any provision of any
agreement or instrument relating to any material outstanding indebtedness; (v)
no action, suit or proceedings, at law or in equity or before or by any federal
or state commission, board or other administrative agency, shall be pending or,
to the knowledge of the Holding Company or the Bank, threatened against the
Holding Company or the Bank or affecting any of their properties wherein an
unfavorable decision, ruling or finding would reasonably be expected to have a
material and adverse effect on the management, financial condition or on the
earnings, capital, properties or business affairs of the Holding Company or the
Bank, considered as one enterprise; and (vi) the Shares have been qualified or
registered for offering and sale under the securities or blue sky laws of the
jurisdictions as to which the Holding Company and the Agent shall have agreed.
(i) At or prior to the Closing Date, the Agent shall receive (i) a copy of the
letters from the DFI and FDIC approving the Applications, (ii) a copy of the
order from the Commission declaring the Registration Statement effective, (iii)
a copy of certificate of corporate existence for the Bank from the DFI, (iv) a
certificate of good standing from the State of Indiana evidencing the good
standing of the Holding Company and (v) a copy of the letter from the FRB
approving the Holding Company Application.
(j) Subsequent to the date hereof, there shall not have occurred any of the
following: (i) a suspension or limitation in trading in securities generally on
the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market, or quotations halted generally on the Nasdaq Stock
Market, or minimum or maximum prices for trading have been fixed, or
<PAGE>
maximum ranges for prices for securities have been required by either of such
exchanges or the NASD or by order of the Commission or any other governmental
authority; (ii) a general moratorium on the operations of commercial banks or
other federally-insured financial institutions or general moratorium on the
withdrawal of deposits from commercial banks or other federally-insured
financial institutions declared by either federal or state authorities; (iii)
the engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a national emergency or war; or
(iv) a material decline in the price of equity or debt securities if the effect
of any of (i) through (iv) herein, in the Agent=s reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the delivery of the
Shares on the terms and in the manner contemplated in the Registration Statement
and the Prospectus.
Section 7B. Conditions to the Holding Company and the Bank's
Obligations.
The obligations of the Holding Company and the Bank hereunder are
subject to the accuracy of the representations and warranties of the Agent, to
the performance by the Agent of its obligations hereunder.
Section 8. Indemnification.
(a) The Holding Company and the Bank jointly and severally agree to indemnify
and hold harmless the Agent, its respective officers and directors, employees
and agents, and each person, if any, who controls the Agent within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any and
all loss, liability, claim, damage or expense whatsoever, joint or several, that
the Agent or any of them may suffer or to which the Agent and any such persons
may become subject under all applicable federal or state laws or otherwise, and
to promptly reimburse the Agent and any such persons upon written demand for any
expense (including reasonable fees and disbursements of counsel) incurred by the
Agent or any of them in connection with investigating, preparing or defending
any actions, proceedings or claims (whether commenced or threatened) to the
extent such losses, claims, damages, liabilities or actions: (i) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment or supplement
thereto), preliminary or final Prospectus (or any amendment or supplement
thereto), the Application (or any amendment or supplement thereto), the Holding
Company Application or any instrument or document executed by the Holding
Company or the Bank or based upon written information supplied by the Holding
Company or the Bank filed in any state or jurisdiction to register or qualify
any or all of the Shares or to claim an exemption therefrom or provided to any
state or jurisdiction to exempt the Holding Company as a broker-dealer or its
officers, directors and employees as broker-dealers or agent, under the
securities laws thereof (collectively, the "Blue Sky Application"), or any
document, advertisement, oral statement or communication ("Sales Information")
prepared, made or executed by or on behalf of the Holding Company or the Bank
with their consent or based upon written or oral information furnished by or on
behalf of the Holding Company or the Bank, whether or not filed in any
jurisdiction, in order to qualify or register the Shares or to claim an
exemption therefrom under the securities laws thereof; (ii) arise out of or are
based upon the omission or alleged omission to state in any of the foregoing
documents or information a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (iii) arise from any theory of
liability whatsoever relating to or arising from or based upon the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Applications (or any
amendment or supplement thereto), any Blue Sky Application or Sales Information
or other documentation distributed in connection with the Offering; provided,
however, that no indemnification is required under this paragraph (a) to the
extent such losses, claims, damages, liabilities or actions arise out of or are
based upon any untrue material statement or alleged untrue material statement
in, or material omission or alleged material omission from, the Registration
Statement (or any amendment or supplement thereto), preliminary or final
Prospectus (or any amendment or supplement thereto), the Application, any Blue
Sky Application or Sales Information made in reliance upon and in conformity
with information furnished in writing to the Holding Company or the Bank by the
Agent or its counsel regarding the Agent,
<PAGE>
provided, that it is agreed and understood that the only information furnished
in writing to the Holding Company or the Bank by the Agent regarding the Agent
is set forth in the Prospectus under the caption "Sales Agent"; and, provided
further, that neither the Holding Company nor the Bank should be liable under
this Section 8 in respect of any losses, claims, damages, liabilities, actions
or expenses to the extent same is determined, in a final judgment by a court of
competent jurisdiction, to have resulted from the gross negligence or bad faith
of the Agent.
(b) The Agent agrees to indemnify and hold harmless the Holding Company and the
Bank, their directors and officers and each person, if any, who controls the
Holding Company or the Bank within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act against any and all loss, liability, claim, damage
or expense whatsoever (including but not limited to settlement expenses), joint
or several, which they, or any of them, may suffer or to which they, or any of
them may become subject under all applicable federal and state laws or
otherwise, and to promptly reimburse the Holding Company, the Bank, and any such
persons upon written demand for any expenses (including reasonable fees and
disbursements of counsel) incurred by them, or any of them, in connection with
investigating, preparing or defending any actions, proceedings or claims
(whether commenced or threatened) to the extent such losses, claims, damages,
liabilities or actions: (i) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement (or any amendment or supplement thereto), the Application (or any
amendment or supplement thereto), the preliminary or final Prospectus (or any
amendment or supplement thereto), any Blue Sky Application or Sales Information,
(ii) are based upon the omission or alleged omission to state in any of the
foregoing documents a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or (iii) arise from any theory of liability
whatsoever relating to or arising from or based upon the Registration Statement
(or any amendment or supplement thereto), preliminary or final Prospectus (or
any amendment or supplement thereto), the Application (or any amendment or
supplement thereto), or any Blue Sky Application or Sales Information or other
documentation distributed in connection with the Offering; provided, however,
that the Agent=s obligations under this Section 8(b) shall exist only if and
only to the extent that such untrue statement or alleged untrue statement was
made in, or such material fact or alleged material fact was omitted from, the
Registration Statement (or any amendment or supplement thereto), the preliminary
or final Prospectus (or any amendment or supplement thereto), the Application
(or any amendment or supplement thereto), any Blue Sky Application or Sales
Information in reliance upon and in conformity with information furnished in
writing to the Holding Company or the Bank by the Agent or its counsel regarding
the Agent, provided, that it is agreed and understood that the only information
furnished in writing to the Holding Company or the Bank by the Agent regarding
the Agent is set forth in the Prospectus under the caption "Sales Agent,"
provided further that the Holding Company and the Bank also agree that neither
The Agent, nor any of its affiliates, nor officer, director, employee or agent
of The Agent or any of its affiliates, nor any person controlling The Agent or
any of its affiliates, shall have any liability to the Holding Company or the
Bank for or in connection with such engagement except for any such liability for
losses, claims, damages, liabilities or expenses incurred by the Holding Company
that is finally judicially determined to have resulted from gross negligence or
bad faith of The Agent. Notwithstanding the foregoing, The Agent shall not be
required to indemnify or reimburse the Holding Company for expenses hereunder in
an amount, in the aggregate, in excess of any fees actually paid pursuant to
Section 2 above. The foregoing shall be in addition to any rights that The Agent
or any agent thereof may have at common law or otherwise.
(c) Each indemnified party shall give prompt written notice to each indemnifying
party of any action, proceeding, claim (whether commenced or threatened), or
suit instituted against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve it
from any liability which it may have on account of this Section 8 or otherwise.
An indemnifying party may participate at its own expense in the defense of such
action. In addition, if it so elects within a reasonable time after receipt of
such notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume defense of such action with counsel chosen by
it and approved by the indemnified parties that are defendants in such action,
unless such indemnified parties object to such assumption on the ground that
there may be legal
<PAGE>
defenses reasonably available to them that are different from or in addition to
those available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying parties shall not be liable for any
fees and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action, proceeding or claim, other than reasonable costs of
investigation. In no event shall the indemnifying parties be liable for the fees
and expenses of more than one separate firm of attorneys for all indemnified
parties in connection with any one action, proceeding or claim or separate but
similar or related actions, proceedings or claims in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) The agreements contained in this Section 8 and in Section 9 hereof and the
representations and warranties of the Holding Company and the Bank set forth in
this Agreement shall remain operative and in full force and effect regardless
of: (i) any investigation made by or on behalf of the Agent or its officers,
directors or controlling persons, agent or employees or by or on behalf of the
Holding Company or the Bank or any officers, directors or controlling persons,
agent or employees of the Holding Company or the Bank; (ii) delivery of and
payment hereunder for the Shares; or (iii) any termination of this Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Holding Company, the Bank or the Agent, the
Holding Company, the Bank and the Agent shall contribute to the aggregate
losses, claims, damages and liabilities (including any investigation, legal and
other expenses incurred in connection with, and any amount paid in settlement
of, any action, suit or proceeding, but after deducting any contribution
received by the Holding Company, the Bank or the Agent from persons other than
the other parties thereto, who may also be liable for contribution) in such
proportion so that the Agent is responsible for that portion represented by the
percentage that the fees paid to the Agent pursuant to Section 2 of this
Agreement (not including expenses) bears to the gross proceeds received by the
Holding Company from the sale of the Shares in the Offering, and the Holding
Company and the Bank shall be responsible for the balance. If, however, the
allocation provided above is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative fault of the Holding Company and the Bank on the one hand and the Agent
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions, proceedings or claims
in respect thereto), but also the relative benefits received by the Holding
Company and the Bank on the one hand and the Agent on the other from the
Offering (before deducting expenses). The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Holding Company and/or the Bank on the
one hand or the Agent on the other and the parties= relative intent, good faith,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Holding Company, the Bank and the Agent agree that it
would not be just and equitable if contribution pursuant to this Section 9 were
determined by pro-rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above in
this Section 9. The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions, proceedings or claims
in respect thereof) referred to above in this Section 9 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. It is expressly agreed that the Agent shall not be liable for any
loss, liability, claim, damage or expense or be required to contribute any
amount pursuant to Section 8(b) or this Section 9 which in the aggregate exceeds
the amount paid (excluding reimbursable expenses) to the Agent under this
Agreement. It is understood that the above stated limitation on the Agent=s
liability is essential to the Agent and that the Agent would not have entered
into this Agreement if such limitation had not been agreed to by the parties to
this Agreement. No person found guilty of any fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not found guilty of such fraudulent
misrepresentation. The obligations of the Holding Company, the Bank and
<PAGE>
the Agent under this Section 9 and under Section 8 shall be in addition to any
liability which the Company, the Bank and the Agent may otherwise have. For
purposes of this Section 9, each of the Agent=s, the Holding Company=s or the
Bank=s officers and directors and agents and each person, if any, who controls
the Agent or the Holding Company or the Bank within the meaning of the 1933 Act
and the 1934 Act shall have the same rights to contribution as the Agent, the
Holding Company or the Bank. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action, suit, claim or proceeding
against such party in respect of which a claim for contribution may be made
against another party under this Section 9, will notify such party from whom
contribution may be sought, but the omission to so notify such party shall not
relieve the party from whom contribution may be sought from any other obligation
it may have hereunder or otherwise than under this Section 9.
Section 10. Survival of Agreements, Representations and Indemnities.
The respective indemnities of the Holding Company, the Bank and the Agent and
the representations and warranties and other statements of the Holding Company,
the Bank and the Agent set forth in or made pursuant to this Agreement shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of the Agent, the
Holding Company, the Bank or any controlling person referred to in Section 8
hereof, and shall survive the issuance of the Shares, and any successor or
assign of the Agent, the Holding Company, the Bank, and any such controlling
person shall be entitled to the benefit of the respective agreements,
indemnities, warranties and representations.
Section 11. Termination. The Agent may terminate this Agreement by
giving the notice indicated below in this Section 11 at any time after this
Agreement becomes effective as follows:
(a) In the event the Holding Company fails to sell the required minimum number
of the Shares within the period specified by the Prospectus or as required by
applicable law, this Agreement shall terminate upon refund by the Holding
Company to each person who has subscribed for or ordered any of the Shares the
full amount which it may have received from such person as provided in the
Prospectus, and no party to this Agreement shall have any obligation to the
other hereunder, except as set forth in Sections 2, 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7A shall not have been
fulfilled when and as required by this Agreement, unless waived in writing, or
by the Closing Date, this Agreement and all of the Agent's obligations hereunder
may be canceled by the Agent by notifying the Holding Company and the Bank of
such cancellation in writing or by telegram at any time at or prior to the
Closing Date, and any such cancellation shall be without liability of any party
to any other party except as otherwise provided in Sections 2, 6, 8 and 9
hereof.
(c) If the Agent elects to terminate this Agreement as provided in this Section,
the Holding Company and the Bank shall be notified promptly by telephone or
telegram, confirmed by letter.
(d) The Holding Company and the Bank may terminate this Agreement in the event
the Agent is in material breach of the representations and warranties or
covenants contained in Section 5 and such breach has not been cured in a timely
fashion after the Holding Company and the Bank have provided the Agent with
notice of such breach. The Agent may terminate this Agreement in the event the
Holding Company or the Bank, or either of them, is in material breach of the
representations and warranties and covenants in Sections 4 and 5A and such
breach has not been cured in a timely fashion after the Agent has provided the
Holding Company or the Bank with notice of such breach.
(e) This Agreement may also be terminated by mutual written consent of the
parties hereto.
<PAGE>
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to the
Agent shall be mailed, delivered or telegraphed and confirmed to Keefe, Bruyette
& Woods Inc., 211 Bradenton Drive, Dublin, Ohio 43017-5034, Attention: Harold T.
Hanley, III (with a copy to Squire, Sanders & Dempsey L.L.P., Attention: M.
Patricia Oliver, Esq.) and, if sent to the Holding Company and the Bank, shall
be mailed, delivered or telegraphed and confirmed to the Company and the Bank at
2 North 4th Street, Lafayette, Indiana, Attention: David R. Zimmerman, President
and Chief Executive Officer (with a copy to Kreig DeVault Alexander & Capehart,
LLP, Attention: John W. Tanselle, Esq.).
Section 13. Parties. The Holding Company and the Bank shall be
entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of the Agent when the same shall have been given by
the undersigned. The Agent shall be entitled to act and rely on any request,
notice, consent, waiver or agreement purportedly given on behalf of the Holding
Company or the Bank, when the same shall have been given by the undersigned or
any other officer of the Holding Company or the Bank. This Agreement shall inure
solely to the benefit of, and shall be binding upon, the Agent, the Holding
Company, the Bank, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provision
herein contained. It is understood and agreed that this Agreement is the
exclusive agreement among the parties hereto, and supersedes any prior agreement
among the parties and may not be varied except in writing signed by all the
parties.
Section 14. Closing. The closing for the sale of the Shares shall
take place on the Closing Date at such location as mutually agreed upon by the
Agent and the Company and the Bank. At the closing, the Holding Company and the
Bank shall deliver to the Agent in next day funds the commissions, fees and
expenses due and owing to the Agent as set forth in Sections 2 and 6 hereof and
the opinions and certificates required hereby and other documents deemed
reasonably necessary by the Agent shall be executed and delivered to effect the
sale of the Shares as contemplated hereby and pursuant to the terms of the
Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision
or covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in
accordance with the laws of the State of Ohio without giving effect to
principals of conflicts of laws.
Section 17. Counterparts. This Agreement may be executed in
separate counterparts, each of which so executed and delivered shall be an
original, but all of which together shall constitute but one and the same
instrument.
If the foregoing correctly sets forth the arrangement among the Holding Company,
the Bank and the Agent, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and the Agent=s acceptance shall
constitute a binding agreement.
Section 18. Entire Agreement. This Agreement, including schedules and
exhibits hereto, which are integral parts hereof and incorporated as though set
forth in full, constitutes the entire agreement between the parties pertaining
to the subject matter hereof superseding any and all prior or contemporaneous
oral or prior written agreements, proposals, letters of intent and
understandings, and cannot be modified, changed, waived or terminated except by
a writing which expressly states that it is an
<PAGE>
amendment, modification or waiver, refers to this Agreement and is signed by the
party to be charged. No course of conduct or dealing shall be construed to
modify, amend or otherwise affect any of the provisions hereof.
Very truly yours,
LAFAYETTE COMMUNITY BANCORP LAFAYETTE COMMUNITY BANK
By Its Authorized By Its Authorized
Representative: Representative:
- ------------------------------- ------------------------------
David R. Zimmerman David R. Zimmerman
President and Chief Executive Officer President and Chief Executive Officer
Accepted as of the date first above written
Keefe, Bruyette & Woods, Inc.
By Its Authorized
Representative:
- -----------------------------------------------------
Harold T. Hanley III
Senior Vice President
<PAGE>
EXHIBIT A
Letter Agreement
[CHARLES WEBB & COMPANY LETTERHEAD]
December 16, 1999
Mr. David R. Zimmerman
President
Lafayette Community Bancorp
3728 E. 200 North
Lafayette, Indiana 47905
Dear Mr. Zimmerman:
We understand that it is the intention of Lafayette Community Bancorp (the
"Company"), to conduct an offering to sell Common Stock in an amount anticipated
to be a minimum of $8,000,000 and a maximum of $12,000,000 in connection with
the formation of a de novo bank. Of this amount, we understand that insiders
intend to purchase approximately $2,000,000 and the remaining amount will be
sold in a direct community offering (the "Direct Community Offering"). Shares
may also be sold in the Community Offering by a syndicate of broker-dealers (the
"Syndicated Offering") and if necessary to institutional investors in an
Institutional Offering (the "Institutional Offering" and together with the
Direct Community Offering, and the Syndicated Offering, the "Offering"). This
proposal relates solely to the Direct Community Offering.
This letter hereby confirms the interest of Charles Webb & Company ("Webb"), A
Division of Keefe, Bruyette and Woods, Inc., and its parent company Keefe,
Bruyette and Woods, Inc. ("KBW") (for purposes of this letter, Webb and KBW are
collectively referred to herein as the "Underwriter") in acting as the Company's
exclusive underwriter/stock marketing agent in connection with the Direct
Community Offering. For purposes of this letter, it is understood that employees
of Webb/KBW will be actively involved in the Offering and that references to the
Underwriter shall include employees of Webb and KBW. This letter sets forth
selected terms of our engagement.
1. Offering Services. The Underwriter will act as lead manager in the Direct
Community Offering to be conducted on a best efforts basis. The Direct Community
Offering will be conducted through a direct solicitation of persons located in
North Central Indiana. If necessitated by market and other conditions, the
Underwriter may form a syndicate of selected broker-dealers to assist in the
offering of the Common Stock. The decision to utilize selected broker-dealers
will be made by the Company upon consultation with the Underwriter.
As the Company's underwriter/stock marketing agent, the Underwriter will provide
the Company with a comprehensive program of services designed to promote an
orderly, efficient and cost-effective distribution. The Underwriter will provide
financial and logistical advice to the Company concerning the Offering and
related issues.
<PAGE>
The Underwriter further agrees to provide at no charge to the Company financial
advisory assistance for a period of one year following completion of the
Offering, including general advice on the market for bank stocks and the stock
of the Company, shareholder enhancement methods and other related matters.
Following this initial one-year term, if both parties wish to continue the
relationship, a fee will be negotiated and an agreement entered into at that
time.
2. Preparation of Offering Documents. The Company and its counsel will draft the
Registration Statement and other materials to be used in connection with the
Offering. The Underwriter will attend meetings to review these documents and
assist your counsel with their preparation. The Registration Statement will be
in a form reasonably satisfactory to each of us and our counsel.
3. Due Diligence Review. Prior to the filing of the Registration Statement or
any other documents naming the Underwriter as the Company's underwriter/stock
marketing agent, the Underwriter and its representatives will undertake
substantial investigations to learn about the Company's proposed business and
operations ("due diligence review") in order to confirm information provided to
us and to evaluate information to be contained in the Company's Registration
Statement. The Company agrees that it will make available to the Underwriter all
relevant information, whether or not publicly available, which the Underwriter
reasonably requests, and will permit the Underwriter to discuss personnel and
the operations and prospects of the Company with management. The Underwriter
will treat all material non-public information as confidential. The Company
acknowledges that the Underwriter will rely upon the accuracy and completeness
of all information received from the Company, its officers, directors,
employees, agents and representatives, accountants and counsel.
The Underwriter shall furnish, as soon as practicable, to the Company such
information regarding the Underwriter as the Company may reasonably request in
writing and as shall be reasonably required in connection with any registration,
qualification or compliance with state and federal securities laws.
4. Regulatory Filings. Upon satisfactory completion of the Underwriter's due
diligence review, the Company will cause a Registration Statement with respect
to the Offering to be filed with the Securities and Exchange Commission ("SEC")
and such state securities commissioners as may be determined by the Company. No
filings naming the Underwriter will be made without the prior consent of the
Underwriter, which consent shall not be unreasonably withheld.
5. Agency or Underwriting Agreement. The specific terms of the Offering and any
broker-assisted sales services contemplated in this letter shall be set forth in
any Agency or Underwriting Agreement between the Underwriter and the Company to
be executed prior to commencement of the Offering. Sales of Common Stock in the
Offering will be contingent upon, among other things, the absence of material
adverse developments and the completion of the Offering. The Agency or
Underwriting Agreement and any Selected Dealer Agreement shall be prepared by
counsel for the Underwriter. The Company, its officers and directors will agree
not to offer, sell, contract to sell or grant any option to purchase or
otherwise dispose of any Common Stock for at least 180 days after the public
offering without first obtaining the Underwriter's written consent, other than
pursuant to the Omnibus Stock Option, Ownership and Long Term Incentive Plan.
6. Representations, Warranties and Covenants. The Underwriting Agreement will
provide for customary representations, warranties and covenants by the Company,
including, without limitation, with respect to indemnification and contribution
by the Company. This will be consistent with the indemnification set forth in
paragraph 9 herein.
7. Fees. For the services hereunder, the Company shall pay the following fees to
the Underwriter at closing unless stated otherwise:
<PAGE>
(a) For advising the Company in connection with the Offering an
initial advisory fee of $10,000 payable upon execution of this letter
agreement. Such fee shall be applied against the fees paid pursuant
to paragraph 7(b).
(b) (i) 0% of the aggregate Actual Purchase Price of the
stock sold to officers, directors and employees of the
Bank;
(ii) 4.0% of the aggregate Actual Purchase Price of the
stock sold to investors who are included on the lists
provided by the directors in conjunction with the Direct
Community Offering, if their purchases are made directly
through Webb; and
(iii) 7.0% of the aggregate Actual Purchase Price of the
stock sold to investors, who were not included on the lists
provided by the directors, in conjunction with the Direct
Community Offering; and
(iv) In the event that a syndicate of selected
broker-dealers are used to assist in the Community
Offering, the fee for such shares shall be 7.0% of the
aggregate Actual Purchase Price of the securities sold
through such syndicate. The Underwriter will pass onto such
selected broker-dealers who assist in the Community
Offering an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of
stock sold at a comparable price per share in a similar
market environment. Fees with respect to purchases effected
through selected broker-dealers other than the Underwriter
shall be transmitted by the Underwriter to such selected
broker-dealer. The decision to utilize selected
broker-dealers will be made by the Company upon
consultation with the Underwriter with due regards to the
Company's stock distribution strategy.
(v) In the event that the Company utilizes a syndicate of
selected broker-dealers to sell Shares to institutional
investors in the Institutional Offering, which may include
KBW, the fee for such shares shall be 7.0% of the aggregate
Actual Purchase Price of the securities sold through such
syndicate. The Underwriter will pass onto such selected
broker-dealers who assist in the Institutional Offering an
amount competitive with gross underwriting discounts
charged at such time for comparable amounts of stock sold
at a comparable price per share in a similar market
environment. Fees with respect to purchases effected
through selected institutional broker-dealers other than
the Underwriter shall be transmitted by the Underwriter to
such selected broker-dealer. The decision to utilize
selected broker-dealers to offer and sell shares to
institutional investors will be made by the Company upon
consultation with the Underwriter with the Underwriter with
due regards to the Company's stock distribution strategy.
8. Expenses. The Company will bear those expenses of the proposed offering
customarily borne by issuers, including, without limitation, SEC, "Blue Sky" and
NASD filing and registration fees; the fees of the Company's accountants,
attorneys, transfer agent and registrar, printing, mailing and marketing
expenses associated with the Offering; the expenses of any "road shows" and
community meetings conducted in connection with the Offering; the fees and
expenses relating to the offering and sale of shares to the officers, directors
and employees of the Bank and to the private investors; the fees set forth in
Section 7; and fees for "Blue Sky" legal work. The Company shall reimburse the
Underwriter for its actual out-of-pocket expenses up to a maximum of $7,000. The
Underwriter shall pay the fees and expenses of its legal counsel.
9. Indemnification.
(a) In connection with the Underwriter's engagement (which engagement
may have commenced prior to the date hereof), the Company agrees to
indemnify and hold harmless the Underwriter and its affiliates and
the respective
<PAGE>
directors, officers, employees, agents and partners of the
Underwriter and its affiliates, and each other person controlling the
Underwriter or any of its affiliates within the meaning of either
Section 15 of the Securities Act of 1933 or Section 20 of the
Securities Exchange Act of 1934 (collectively, "Underwriter
Indemnified Parties") to the full extent lawful, from and against all
losses, claims, damages or liabilities resulting from any legal
action, investigation or other proceeding to which any Underwriter
Indemnified Party may become subject as a result of or arising out of
this engagement and will reimburse any Underwriter Indemnified Party
for all reasonable expenses (including reasonable counsel fees)
incurred by such Underwriter Indemnified Party in connection with
investigating, defending or settling any such matter or enforcing any
rights hereunder. Notwithstanding the foregoing, the Company shall
not be liable to an Underwriter Indemnified Party in respect of any
loss, claim, damage, liability or expense to the extent of the same
is determined, in a final judgment by a court of competent
jurisdiction, to have resulted from the gross negligence or bad faith
of such Underwriter Indemnified Party. The Company also agrees that
neither the Underwriter, nor any of its affiliates, nor officer,
director, employee or agent of the Underwriter or any of its
affiliates, nor any person controlling the Underwriter or any of its
affiliates, shall have any liability to the Company for or in
connection with such engagement except for any such liability for
losses, claims, damages, liabilities or expenses incurred by the
Company that is finally judicially determined to have resulted from
the Underwriter's gross negligence or bad faith. Notwithstanding the
foregoing, the Underwriter shall not be required to indemnify or
reimburse the Company for expenses hereunder in an amount, in the
aggregate, in excess of any fees paid pursuant to Section 7 above.
The foregoing shall be in addition to any rights that the Underwriter
or any Underwriter Indemnified Party may have at common law or
otherwise.
(b) Upon receipt of notice of any claim or the commencement of any
such action with respect to which indemnity is to be sought, an
Indemnified Party shall notify the indemnifying party of such claim
or the commencement of such action. Such Indemnified Party shall have
the right to employ counsel reasonably acceptable to the Company to
defend such claim or action.
(c) If for any reason the foregoing indemnification is unavailable to
any Indemnified Party or insufficient to hold it harmless as
contemplated herein then the Company shall contribute to the amount
payable by the Indemnified Party as a result of such loss, claim,
damage, liability or expense in such proportion as is appropriate to
reflect not only the relative benefits received by the Company and
its affiliates, on the one hand, and the Underwriter and the
Indemnified Party, on the other hand, but also the relative fault of
the Company and its affiliates and the Underwriter or any Indemnified
Party, as the case may be, as well as any other relevant equitable
considerations, provided, however, that in no event shall the
Underwriter be required to contribute any amount in excess of any
fees paid to it pursuant to Section 7 above.
(d) The reimbursement, indemnity and contribution by the Company or
Underwriter hereunder shall be in addition to any liability which any
party may otherwise have, and shall be binding upon and accrue to the
benefit of any successors, assigns, heirs and personal
representatives of the Company, and any Indemnified Party. The
foregoing provisions relating to reimbursement, indemnification and
contribution shall survive any termination of the Underwriter's
engagement under this letter.
10. Conditions. The Underwriter's willingness and obligation to proceed
hereunder shall be subject to, among other things, satisfaction of the following
conditions in the Underwriter's opinion, which opinion shall have been formed in
good faith by the Underwriter after reasonable determination and consideration
of all relevant factors: (a) full and satisfactory disclosure of all relevant
material, financial and other information in the disclosure documents; (b) no
material adverse change in the condition or operations of the Company subsequent
to the Underwriter due diligence review; and (c) no market conditions at the
time of
<PAGE>
the Offering which in the Underwriter's opinion make the sale of the Common
Stock by the Company inadvisable and (d) the agreement between the Company and
the Underwriter as to the offering terms.
11. Benefit. No party to this letter agreement may assign its duties and
obligations hereunder without the prior written consent of the other parties.
This Agreement shall inure to the benefit of the parties hereto and their
respective successors and assigns and to the parties indemnified hereunder and
their successors and assigns, and the obligations and liabilities assumed
hereunder by the parties hereto shall be binding upon their respective
successors and assigns.
12. Termination. This Agreement may be terminated in writing by either party
hereto without any obligation other than for the payment of any fees
specifically set forth herein. If terminated, all fees paid previously will be
deemed to have been earned when paid.
This letter reflects the Underwriter's present intention of proceeding to work
with the Company on its proposed Offering. It does not constitute an agreement
to underwrite securities or to serve as sales or marketing agent to the Company
or the Company, or to perform any other service, nor is it an agreement to enter
into any such agreement or a representation that market conditions will support
an offering of the Company's securities. It also does not constitute a
commitment on the part of the Company or the Underwriter except as to the
payment of certain fees as set forth in Section 7, the assumption of expenses as
set forth in Section 8 and indemnification as set forth in Section 9, all of
which shall constitute the binding obligations of the parties hereto and which
shall survive the termination of this Agreement or the completion of the
services furnished hereunder and shall remain operative and in full force and
effect. You further acknowledge that any report or analysis rendered by the
Underwriter pursuant to this engagement is rendered for use solely by the
management of the Company and its agents in connection with the Offering.
Accordingly, you agree that you will not provide any such information to any
other person without our prior written consent. The Underwriter acknowledges
that in offering the Company's securities, no person will be authorized to give
any information or to make any representation not contained in the Prospectus
and related offering materials filed as part of the Registration Statement to be
declared effective in connection with the Offering. Accordingly, the Underwriter
agrees that in connection with the Offerings it will not give any unauthorized
information or make any unauthorized representation. We will be pleased to
elaborate on any of the matters discussed in this letter at your convenience.
13. In case of a dispute under this agreement, it shall be governed by the law
of the State of Ohio. any claims or disputes, arising out of this agreement,
shall be heard by a court of competent jurisdiction within the State of Ohio.
If the foregoing correctly sets forth our mutual understanding, please so
indicate by signing and returning the original copy of this letter to the
undersigned with a check in the amount of $10,000 payable to Charles Webb &
Company.
Sincerely,
CHARLES WEBB & COMPANY
A Division of Keefe, Bruyette and Woods, Inc.
By: /S/ HAROLD T. HANLEY, III Date: December 20, 1999
-------------------------- ------------------
Harold T. Hanley III
Senior Vice President
<PAGE>
Agreed to:
LAFAYETTE COMMUNITY BANCORP
By: /S/ DAVID R. ZIMMERMAN Date: December 20, 1999
------------------------- ------------------
David R. Zimmerman
President
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
LAFAYETTE COMMUNITY BANCORP
Lafayette Community Bancorp (hereinafter referred to as the
"Corporation"), desiring to amend and restate its Articles of Incorporation, as
amended, effective as of the date Articles of Restatement are submitted to the
Indiana Secretary of State for approval, pursuant to the provisions of the
Indiana Business Corporation Law (hereinafter referred to as the "Corporation
Law"), submits the following Restated Articles of Incorporation:
ARTICLE I
Name
The name of the Corporation is Lafayette Community Bancorp.
ARTICLE II
Purposes and Powers
Section 2.1. Purposes of the Corporation. The purposes for which the
Corporation is formed are (a) to operate as a bank holding company, carry on
such activities of every kind or nature as may be allied or incidental to such
purpose, and (b) to engage in the transaction of any or all lawful business for
which corporations may now or hereafter be incorporated under the Corporation
Law.
Section 2.2. Powers of the Corporation. The Corporation shall have (a) all
powers now or hereafter authorized by or vested in corporations pursuant to the
provisions of the Corporation Law, (b) all powers now or hereafter vested in
corporations by common law or any other statute or act, and (c) all powers
authorized by or vested in the Corporation by the provisions of these Restated
Articles of Incorporation or by the provisions of its By-Laws as from time to
time in effect.
ARTICLE III
Term of Existence
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
Registered Office and Agent
The street address of the Corporation's registered office at the time of
adoption of these Restated Articles of Incorporation is 316 Ferry Street,
Lafayette, Indiana 47902, and the name of its Resident Agent at such office at
the time of adoption of these Restated Articles of Incorporation is Edward
Chosnek.
<PAGE>
ARTICLE V
Authorized Shares
Section 5.1. Authorized Classes and Number of Shares. The total
number of shares which the Corporation has authority to issue shall be
11,000,000 shares, consisting of 10,000,000 shares of common stock, without par
value per share (the "Common Stock"), and 1,000,000 shares of preferred stock,
without par value (the "Preferred Stock").
Section 5.2. General Terms of All Shares. The Corporation shall have
the power to acquire (by purchase, redemption, or otherwise), hold, own, pledge,
sell, transfer, assign, reissue, cancel, or otherwise dispose of the shares of
the Corporation in the manner and to the extent now or hereafter permitted by
the laws of the State of Indiana (but such power shall not imply an obligation
on the part of the owner or holder of any share to sell or otherwise transfer
such share to the Corporation), including the power to purchase, redeem, or
otherwise acquire the Corporation's own shares, directly or indirectly, and
without pro rata treatment of the owners or holders of any class or series of
shares, unless, after giving effect thereto, the Corporation would not be able
to pay its debts as they become due in the usual course of business or the
Corporation's total assets would be less than its total liabilities (and without
regard to any amounts that would be needed, if the Corporation were to be
dissolved at the time of the purchase, redemption, or other acquisition, to
satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those of the holders of the shares of the
Corporation being purchased, redeemed, or otherwise acquired, unless otherwise
expressly provided with respect to a series of Preferred Stock in the provisions
of these Restated Articles of Incorporation adopted by the Board of Directors
pursuant to Section 5.5 hereof describing the terms of such series). Shares of
the Corporation purchased, redeemed, or otherwise acquired by it shall
constitute authorized but unissued shares, unless prior to any such purchase,
redemption, or other acquisition, or within thirty (30) days thereafter, the
Board of Directors adopts a resolution providing that such shares constitute
authorized and issued but not outstanding shares.
The Board of Directors of the Corporation may dispose of, issue, and
sell shares in accordance with, and in such amounts as may be permitted by, the
laws of the State of Indiana and the provisions of these Restated Articles of
Incorporation and for such consideration, at such price or prices, at such time
or times and upon such terms and conditions (including the privilege of
selectively repurchasing the same) as the Board of Directors of the Corporation
shall determine, without the authorization or approval by any shareholders of
the Corporation. Shares may be disposed of, issued, and sold to such persons,
firms, or corporations as the Board of Directors may determine.
The Corporation shall have the power to declare and pay dividends or
other distributions upon the issued and outstanding shares of the Corporation,
subject to the limitation that a dividend or other distribution may not be made
if, after giving it effect, the Corporation would not be able to pay its debts
as they become due in the usual course of business or the Corporation's total
assets would be less than its total liabilities (and without regard to any
amounts that would be needed, if the Corporation were to be dissolved at the
time of the dividend or other distribution, to satisfy the preferential rights
upon dissolution of shareholders whose preferential rights are superior to those
of the holders of shares receiving the dividend or other distribution, unless
otherwise expressly provided with respect to a series of Preferred Stock in the
provisions of these Restated Articles of Incorporation adopted by the Board of
Directors pursuant to Section 5.5 hereof describing the terms of such series).
Except as otherwise provided in Section 5.4, the Corporation shall have the
power to issue shares of one class or series as a share dividend or other
distribution in respect of that class or series or one or more other classes or
series.
<PAGE>
Section 5.3. Voting Rights of Shares.
(a) Common Stock. Except as otherwise provided by the Corporation
Law and subject to such shareholder disclosure and recognition procedures (which
may include voting prohibition sanctions) as the Corporation may by action of
its Board of Directors establish, shares of Common Stock have unlimited voting
rights. Shares of Common Stock shall, when validly issued by the Corporation,
entitle the holder thereof to one (1) vote per share on all matters submitted to
a vote of the shareholders of the Corporation. Shares of Common Stock shall not
have cumulative voting rights.
(b) Preferred Stock. Except as required by the Corporation Law or
by the provisions of these Restated Articles of Incorporation adopted by the
Board of Directors pursuant to Section 5.5 hereof describing the terms of the
Preferred Stock or a series thereof, the holders of Preferred Stock shall have
no voting rights or powers. Shares of Preferred Stock shall, when validly issued
by the Corporation, entitle the record holder thereof to vote as and on such
matters, but only as and on such matters, as the holders thereof are entitled to
vote under the Corporation Law or under the provisions of these Restated
Articles of Incorporation adopted by the Board of Directors pursuant to Section
5.5 hereof describing the terms of the Preferred Stock or a series thereof
(which provisions may provide for special, conditional, limited, or unlimited
voting rights, including multiple or fractional votes per share, or for no right
to vote, except to the extent required by the Corporation Law) and subject to
such shareholder disclosure and recognition procedures (which may include voting
prohibition sanctions) as the Corporation may by action of the Board of
Directors establish.
Section 5.4. Other Terms of Common Stock.
(a) Distributions.
(1) Shares of Common Stock shall be equal in every respect
insofar as their relationship to the Corporation is concerned, but
such equality of rights shall not imply equality of treatment as to
redemption or other acquisition of shares by the Corporation.
(2) Subject to the rights of the holders of any outstanding
Preferred Stock issued under Section 5.5 hereof, the holders of
Common Stock shall be entitled to share ratably in such dividends or
other distributions (other than purchases, redemptions, or other
acquisitions of shares by the Corporation), if any, as are declared
and paid from time to time at the discretion of the Board of
Directors.
(3) In the event of any liquidation, dissolution or winding
up of the Corporation, whether voluntarily or involuntarily, after
payment shall have been made to the holders of the Preferred Stock of
the full amount to which they shall be entitled under this Article V,
the holders of Common Stock shall be entitled, to the exclusion of
the holders of the Preferred Stock of any and all series, to share,
ratably according to the number of shares held by them, in all
remaining assets of the Corporation available for distribution to its
shareholders.
Section 5.5. Other Terms of Preferred Stock.
(a) Preferred Stock may be issued from time to time
in one or more series, each such series to have such distinctive designation and
such preferences, limitations, and relative voting and other rights as shall be
set forth in these Restated Articles of Incorporation. Subject to the
requirements of the Corporation Law and subject to all other provisions of these
Restated Articles of Incorporation, the Board of Directors of the Corporation
may create one or more series of Preferred
<PAGE>
Stock and may determine the preferences, limitations, and relative voting and
other rights of one or more series of Preferred Stock before the issuance of any
shares of that series by the adoption of an amendment to these Restated Articles
of Incorporation that specifies the terms of the series of Preferred Stock. All
shares of a series of Preferred Stock must have preferences, limitations, and
relative voting and other rights identical with those of other shares of the
same series and, if the description of the series set forth in these Restated
Articles of Incorporation so provides, no series of Preferred Stock need have
preferences, limitations, or relative voting or other rights identical with
those of any other series of Preferred Stock.
Before issuing any shares of a series of Preferred Stock, the Board
of Directors shall adopt an amendment to these Restated Articles of
Incorporation, which shall be effective without any shareholder approval or
other action, that sets forth the preferences, limitations, and relative voting
and other rights of the series, and authority is hereby expressly vested in the
Board of Directors, by such amendment:
(1) To fix the distinctive designation of such series and
the number of shares which shall constitute such series, which number
may be increased or decreased (but not below the number of shares
thereof then outstanding) from time to time by action of the Board of
Directors;
(2) To fix the voting rights of such series, which may
consist of special, conditional, limited, or unlimited voting rights,
including multiple or fractional votes per share, or no right to vote
(except to the extent required by the Corporation Law);
(3) To fix the dividend or distribution rights of such
series and the manner of calculating the amount and time for payment
of dividends or distributions, including, but not limited to:
(A) the dividend rate, if any, of such series;
(B) any limitations, restrictions, or conditions
on the payment of dividends or other distributions,
including whether dividends or other distributions shall be
noncumulative or cumulative or partially cumulative and, if
so, from which date or dates;
(C) the relative rights of priority, if any, of
payment of dividends or other distributions on shares of
that series in relation to Common Stock and shares of any
other series of Preferred Stock; and
(D) the form of dividends or other distributions,
which may be payable at the option of the Corporation, the
shareholder, or another person (and in such case to
prescribe the terms and conditions of exercising such
option), or upon the occurrence of a designated event in
cash, indebtedness, stock or other securities or other
property, or in any combination thereof,
and to make provisions, in the case of dividends or other
distributions payable in stock or other securities, for adjustment of
the dividend or distribution rate in such events as the Board of
Directors shall determine;
(4) To fix the price or prices at which, and the terms
and conditions on which, the shares of such series may be redeemed
or converted, which may be
<PAGE>
(A) at the option of the Corporation, the shareholder,
or another person or upon the occurrence of a designated
event;
(B) for cash, indebtedness, securities, or other
property or any combination thereof; and
(C) in a designated amount or in an amount determined
in accordance with a designated formula or by reference to
extrinsic data or events;
(5) To fix the amount or amounts payable upon the shares of
such series in the event of any liquidation, dissolution, or winding
up of the Corporation and the relative rights of priority, if any, of
payment upon shares of such series in relation to Common Stock and
shares of any other series of special shares; and to determine
whether or not any such preferential rights upon dissolution need be
considered in determining whether or not the Corporation may make
dividends, repurchases, or other distributions;
(6) To determine whether or not the shares of such series
shall be entitled to the benefit of a sinking fund to be applied to
the purchase or redemption of such series and, if so entitled, the
amount of such fund and the manner of its application;
(7) To determine whether or not the issue of any additional
shares of such series or of any other series in addition to such
series shall be subject to restrictions in addition to restrictions,
if any, on the issue of additional shares imposed in the provisions
of these Restated Articles of Incorporation fixing the terms of any
outstanding series of Preferred Stock theretofore issued pursuant to
this Section 5.5 and, if subject to additional restrictions, the
extent of such additional restrictions; and
(8) Generally to fix the other preferences or rights, and
any qualifications, limitations, or restrictions of such preferences
or rights, of such series to the full extent permitted by the
Corporation Law; provided, however, that no such preferences, rights,
qualifications, limitations, or restrictions shall be in conflict
with these Restated Articles of Incorporation or any amendment
hereof.
(b) Shares of Preferred Stock of any series that have been redeemed
(whether through the operation of a sinking fund or otherwise) or purchased by
the Corporation, or which, if convertible, have been converted into shares of
the Corporation of any other class or series, may be reissued as a part of such
series or of any other series of Preferred Stock, subject to such limitations
(if any) as may be fixed by the Board of Directors with respect to such series
of Preferred Stock in accordance with subsection (a) of this Section 5.5.
ARTICLE VI
Directors
Section 6.1. Number. The Board of Directors at the time of adoption of
these Restated Articles of Incorporation is comprised of eight (8) members,
which number may be changed from time to time in the manner set forth in the
By-Laws. Whenever the By-Laws provide that the number of Directors shall be
three (3) or more, the By-Laws may also provide for staggering the terms of the
members of the Board of Directors by dividing the total number of Directors into
three (3) groups (with each group containing one-third (1/3) of the total, as
near as may be) whose terms of office expire at different times. Notwithstanding
the first sentence of this Section 6.1, any amendment to the By-Laws or any
resolution of the Board of Directors
<PAGE>
that would effect: (a) any increase in the number of Directors over such number
as then in effect, (b) any reduction in the number of Directors below such
number as then in effect, or (c) any elimination or modification of the groups
or terms of office of the Directors as the By-Laws then in effect may provide,
shall also be approved by the affirmative vote of a majority of the entire
number of Directors of the Corporation who then qualify as Continuing Directors
with respect to all Related Persons (as such terms are defined for purposes of
Article VIII hereof).
Section 6.2. Qualifications. Directors need not be shareholders of the
Corporation. Absent the approval of seventy-five percent (75%) of the
disinterested members of the Board of Directors, each director shall be a
resident of the State of Indiana and at least one-half (1/2) of the directors
shall maintain their respective principal residences within a fifty (50) mile
radius of the primary business service area of the Corporation.
Section 6.3. Vacancies. Vacancies occurring in the Board of Directors
shall be filled in the manner provided in the By-Laws or, if the By-Laws do not
provide for the filling of vacancies, in the manner provided by the Corporation
Law. The By-Laws may also provide that in certain circumstances specified
therein, vacancies occurring in the Board of Directors may be filled by vote of
the shareholders at a special meeting called for that purpose or at the next
annual meeting of shareholders.
Section 6.4. Liability of Directors. A Director's responsibility to
the Corporation shall be limited to discharging his or her duties as a Director,
including his or her duties as a member of any committee of the Board of
Directors upon which he or she may serve, in good faith, with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances, and in a manner the Director reasonably believes to be in the
best interests of the Corporation, all based on the facts then known to the
Director.
In discharging his or her duties, a Director is entitled to rely on
information, opinions, reports, or statements, including financial statements
and other financial data, if prepared or presented by:
(a) One (1) or more officers or employees of the
Corporation whom the Director reasonably believes to be reliable and
competent in the matters presented;
(b) Legal counsel, public accountants, or other
persons as to matters the Director reasonably believes are within such person's
professional or expert competence; or
(c) A committee of the Board of which the Director
is not a member if the Director reasonably believes the Committee merits
confidence;
but a Director is not acting in good faith if the Director has knowledge
concerning the matter in question that makes reliance otherwise permitted by
this Section 6.4 unwarranted.
A Director shall not be liable for any action taken as a Director, or
any failure to take any action, unless (a) the Director has breached or failed
to perform the duties of the Director's office in compliance with this Section
6.4, and (b) the breach or failure to perform constitutes willful misconduct or
recklessness.
Section 6.5. Factors to be Considered by Board. In determining
whether to take or refrain from taking any action with respect to any matter,
including making or declining to make any recommendation to shareholders of the
Corporation, the Board of Directors may, in its discretion, consider both the
short term and long term best interests of the Corporation (including the
possibility that these interests may be best served by the continued
independence of the Corporation), taking into account, and
<PAGE>
weighing as the Directors deem appropriate, the social and economic effects
thereof on the Corporation's present and future employees, suppliers and
customers of the Corporation and its subsidiaries, the communities in which
offices or other facilities of the Corporation are located, and any other
factors the Directors consider pertinent.
Section 6.6. Removal of Directors. Any or all of the members of the
Board of Directors may be removed, for good cause, only at a meeting of the
shareholders called expressly for that purpose, by the affirmative vote of the
holders of outstanding shares representing at least sixty-seven percent (67%) of
all the votes then entitled to be cast at an election of Directors. Directors
may not be removed in the absence of good cause.
Section 6.7. Election of Directors by Holders of Preferred Stock. The
holders of one (1) or more series of Preferred Stock may be entitled to elect
all or a specified number of Directors, but only to the extent and subject to
limitations as may be set forth in the provisions of these Restated Articles of
Incorporation adopted by the Board of Directors pursuant to Section 5.5 hereof
describing the terms of the series of Preferred Stock.
ARTICLE VII
Provisions for Regulation of Business
and Conduct of Affairs of Corporation
Section 7.1. Meetings of Shareholders. Meetings of the shareholders
of the Corporation shall be held at such time and at such place, either within
or without the State of Indiana, as may be stated in or fixed in accordance with
the By-Laws of the Corporation and specified in the respective notices or
waivers of notice of any such meetings.
Section 7.2. Special Meetings of Shareholders. Special meetings of
the shareholders, for any purpose or purposes, unless otherwise prescribed by
the Corporation Law, may be called at any time only by the Board of Directors
or the officers authorized to do so by the By-Laws. Shareholders of the
Corporation shall not be authorized to call a special meeting of shareholders.
Section 7.3. Meetings of Directors. Meetings of the Board of
Directors of the Corporation shall be held at such place, either within or
without the State of Indiana, as may be authorized by the By-Laws and specified
in the respective notices or waivers of notice of any such meetings or otherwise
specified by the Board of Directors. Unless the By-Laws provide otherwise, (a)
regular meetings of the Board of Directors may be held without notice of the
date, time, place, or purpose of the meeting and (b) the notice for a special
meeting need not describe the purpose or purposes of the special meeting.
Section 7.4. Action Without Meeting. Any action required or permitted
to be taken at any meeting of the Board of Directors or shareholders, or of any
committee of such Board, may be taken without a meeting, if the action is taken
by all members of the Board or all shareholders entitled to vote on the action,
or by all members of such committee, as the case may be. The action must be
evidenced by one (1) or more written consents, in one or more counterparts,
describing the action taken, signed by each Director, or all the shareholders
entitled to vote on the action, or by each member of such committee, as the case
may be, and, in the case of action by the Board of Directors or a committee
thereof, included in the minutes or filed with the corporate records reflecting
the action taken or, in the case of action by the shareholders, delivered to the
Corporation for inclusion in the minutes or filing with the corporate records.
Action taken under this Section 7.4 is effective when the last Director,
shareholder, or committee member, as the case may be, signs the consent, unless
the consent specifies a different prior or subsequent effective date, in which
case the action is effective on or as of the specified date. Executed consents
returned to the Corporation by facsimile transmission may be relied upon as, and
shall have the same effect as, originals of such consents.
<PAGE>
A consent signed under this Section 7.4 shall have the same effect as a
unanimous vote of all members of the Board, or all shareholders, or all members
of the committee, as the case may be, and may be described as such in any
document.
Section 7.5. By-Laws. The Board of Directors shall have the exclusive
power to make, alter, amend, or repeal, or to waive provisions of, the By-Laws
of the Corporation by the affirmative vote of a majority of the entire number of
Directors at the time, except as expressly provided in Section 6.1 hereof and as
provided by the Corporation Law. All provisions for the regulation of the
business and management of the affairs of the Corporation not stated in these
Restated Articles of Incorporation shall be stated in the By-Laws. The Board of
Directors shall not be authorized to adopt Emergency By-Laws of the Corporation.
Section 7.6. Interest of Directors.
(a) A conflict of interest transaction is a
transaction with the Corporation in which a Director of the Corporation has a
direct or indirect interest. A conflict of interest transaction is not voidable
by the Corporation solely because of the Director's interest in the transaction
if any one (1) of the following is true:
(1) The material facts of the transaction and the
Director's interest were disclosed or known to the Board of Directors
or a committee of the Board of Directors and the Board of Directors
or committee authorized, approved, or ratified the transaction.
(2) The material facts of the transaction and the
Director's interest were disclosed or known to the shareholders
entitled to vote and they authorized, approved, or ratified the
transaction.
(3) The transaction was fair to the Corporation.
(b) For purposes of this Section 7.6, a Director of
the Corporation has an indirect interest in a transaction
if:
(1) Another entity in which the Director has a
material financial interest or in which the Director is a general
partner is a party to the transaction; or
(2) Another entity of which the Director is a director,
officer, or trustee is a party to the transaction and the transaction
is, or is required to be, considered by the Board of Directors of the
Corporation.
(c) For purposes of Section 7.6(a)(1), a conflict of
interest transaction is authorized, approved, or ratified if it receives the
affirmative vote of a majority of the Directors on the Board of Directors (or on
the committee) who have no direct or indirect interest in the transaction, but a
transaction may not be authorized, approved, or ratified under this section by a
single Director. If a majority of the Directors who have no direct or indirect
interest in the transaction vote to authorize, approve, or ratify the
transaction, a quorum shall be deemed present for the purpose of taking action
under this Section 7.6. The presence of, or a vote cast by, a Director with a
direct or indirect interest in the transaction does not affect the validity of
any action taken under Section 7.6(a)(1), if the transaction is otherwise
authorized, approved, or ratified as provided in such subsection.
(d) For purposes of Section 7.6(a)(2), a conflict of
interest transaction is authorized, approved, or ratified if it receives the
affirmative vote of the holders of shares representing a majority of the votes
entitled to be cast. Shares owned
<PAGE>
by or voted under the control of a Director who has a direct or indirect
interest in the transaction, and shares owned by or voted under the control of
an entity described in Section 7.6(b), may be counted in such a vote of
shareholders.
Section 7.7. Nonliability of Shareholders. Shareholders of the Corporation
are not personally liable for the acts or debts of the Corporation, nor is
private property of shareholders subject to the payment of corporate debts.
Section 7.8. Indemnification of Officers, Directors, and Other Eligible
Persons.
(a) To the extent not inconsistent with applicable law, every Eligible
Person shall be indemnified by the Corporation against all Liability and
reasonable Expense that may be incurred by him in connection with or resulting
from any Claim, (1) if such Eligible Person is Wholly Successful with respect to
the Claim, or (2) if not Wholly Successful, then if such Eligible Person is
determined, as provided in either Section 7.8(f) or 7.8(g), to have acted in
good faith, in what he reasonably believed to be the best interests of the
Corporation or at least not opposed to its best interests and, in addition, with
respect to any criminal claim is determined to have had reasonable cause to
believe that his conduct was lawful or had no reasonable cause to believe that
his conduct was unlawful. The termination of any Claim, by judgment, order,
settlement (whether with or without court approval), or conviction or upon a
plea of guilty or of nolo contendere, or its equivalent, shall not create a
presumption that an Eligible Person did not meet the standards of conduct set
forth in clause (2) of this subsection (a). The actions of an Eligible Person
with respect to an employee benefit plan subject to the Employee Retirement
Income Security Act of 1974 shall be deemed to have been taken in what the
Eligible Person reasonably believed to be the best interests of the Corporation
or at least not opposed to its best interests if the Eligible Person reasonably
believed he was acting in conformity with the requirements of such Act or he
reasonably believed his actions to be in the interests of the participants in or
beneficiaries of the plan.
(b) The term "Claim" as used in this Section 7.8 shall include every
pending, threatened, or completed claim, action, suit, or proceeding and all
appeals thereof (whether brought by or in the right of this Corporation or any
other corporation or otherwise), civil, criminal, administrative, or
investigative, formal or informal, in which an Eligible Person may become
involved, as a party or otherwise:
(1) by reason of his being or having been an Eligible
Person, or
(2) by reason of any action taken or not taken by him in
his capacity as an Eligible Person, whether or not he continued in
such capacity at the time such Liability or Expense shall have been
incurred.
(c) The term "Eligible Person" as used in this Section 7.8 shall mean every
person (and the estate, heirs, and personal representatives of such person) who
is or was a Director, officer, employee, or agent of the Corporation or is or
was serving at the request of the Corporation as a Director, officer, employee,
agent, or fiduciary of another foreign or domestic corporation, partnership,
joint venture, trust, employee benefit plan, or other organization or entity,
whether for profit or not. An Eligible Person shall also be considered to have
been serving an employee benefit plan at the request of the Corporation if his
duties to the Corporation also imposed duties on, or otherwise involved services
by, him to the plan or to participants in or beneficiaries of the plan.
(d) The terms "Liability" and "Expense" as used in this Section 7.8 shall
include, but shall not be limited to, counsel fees and disbursements and amounts
of judgments, fines, or penalties against (including excise taxes assessed with
respect to an employee benefit plan), and amounts paid in settlement by or on
behalf of an Eligible Person.
<PAGE>
(e) The term "Wholly Successful" as used in this Section 7.8 shall mean (1)
termination of any claim against the Eligible Person in question without any
finding of liability or guilt against him, (2) approval by a court, with
knowledge of the indemnity herein provided, of a settlement of any Claim, or (3)
the expiration of a reasonable period of time after the making or threatened
making of any Claim without the institution of the same, without any payment or
promise made to induce a settlement.
(f) Every Eligible Person claiming indemnification hereunder (other than
one who has been Wholly Successful with respect to any Claim) shall be entitled
to indemnification (1) if special independent legal counsel, which may be
regular counsel of the Corporation, or other disinterested person or persons, in
either case selected by the Board of Directors, whether or not a disinterested
quorum exists (such counsel or person or persons being hereinafter called the
"Referee"), shall deliver to the Corporation a written finding that such
Eligible Person has met the standards of conduct set forth in Section 7.8(a)(2),
and (2) if the Board of Directors, acting upon such written finding, so
determines. The Board of Directors shall, if an Eligible Person is found to be
entitled to indemnification pursuant to the preceding sentence, also determine
the reasonableness of the Eligible Person's Expenses. The Eligible Person
claiming indemnification shall, if requested, appear before the Referee, answer
questions that the Referee deems relevant and shall be given ample opportunity
to present to the Referee evidence upon which the Eligible Person relies for
indemnification. The Corporation shall, at the request of the Referee, make
available facts, opinions, or other evidence in any way relevant to the
Referee's findings that are within the possession or control of the Corporation.
(g) If an Eligible Person claiming indemnification pursuant to Section
7.8(f) is found not to be entitled thereto, or if the Board of Directors fails
to select a Referee under Section 7.8(f) within a reasonable amount of time
following a written request of an Eligible Person for the selection of a
Referee, or if the Referee or the Board of Directors fails to make a
determination under Section 7.8(f) within a reasonable amount of time following
the selection of a Referee, the Eligible Person may apply for indemnification
with respect to a Claim to a court of competent jurisdiction, including a court
in which the Claim is pending against the Eligible Person. On receipt of an
application, the court, after giving notice to the Corporation and giving the
Corporation ample opportunity to present to the court any information or
evidence relating to the claim for indemnification that the Corporation deems
appropriate, may order indemnification if it determines that the Eligible Person
is entitled to indemnification with respect to the Claim because such Eligible
Person met the standards of conduct set forth in Section 7.8(a)(2). If the court
determines that the Eligible Person is entitled to indemnification, the court
shall also determine the reasonableness of the Eligible Person's Expenses.
(h) The rights of indemnification provided in this Section 7.8 shall be in
addition to any rights to which any Eligible Person may otherwise be entitled.
Irrespective of the provisions of this Section 7.8, the Board of Directors may,
at any time and from time to time, (1) approve indemnification of any Eligible
Person to the full extent permitted by the provisions of applicable law at the
time in effect, whether on account of past or future transactions, and (2)
authorize the Corporation to purchase and maintain insurance on behalf of any
Eligible Person against any Liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability.
(i) Expenses incurred by an Eligible Person with respect to any Claim may
be advanced by the Corporation (by action of the Board of Directors, whether or
not a disinterested quorum exists) prior to the final disposition thereof upon
receipt of an undertaking by or on behalf of the Eligible Person to repay such
amount unless he is determined to be entitled to indemnification.
<PAGE>
(j) The provisions of this Section 7.8 shall be deemed to be a contract
between the Corporation and each Eligible Person, and an Eligible Person's
rights hereunder shall not be diminished or otherwise adversely affected by any
repeal, amendment, or modification of this Section 7.8 that occurs subsequent to
such person becoming an Eligible Person.
(k) The provisions of this Section 7.8 shall be applicable to Claims made
or commenced after the adoption hereof, whether arising from acts or omissions
to act occurring before or after the adoption hereof.
ARTICLE VIII
Approval of Business Combinations
Section 8.1. Supermajority Vote. Except as provided in Sections 8.2 and 8.3
hereof, neither the Corporation nor its Subsidiaries, if any, shall become a
party to any Business Combination with a Related Person without the prior
affirmative vote at a meeting of the Corporation's shareholders:
(a) Of not less than sixty-seven percent (67%) of all the votes entitled to
be cast by the holders of the outstanding shares of all classes of Voting Stock
of the Corporation considered for purposes of this Article VIII as a single
class, and
(b) Of an Independent Majority of Shareholders. Such favorable votes shall
be in addition to any shareholder vote which would be required without reference
to this Section 8.1 and shall be required notwithstanding the fact that no vote
may be required, or that some lesser percentage may be specified by law or
elsewhere in these Restated Articles of Incorporation or the By-Laws of the
Corporation or otherwise.
Section 8.2. Fair Price Exception. The provisions of Section 8.1 of this
Article VIII shall not apply to a Business Combination if all of the conditions
set forth in subsections (a) through (d) are satisfied.
(a) The fair market value of the property, securities, or other
consideration to be received per share by holders of each class or series of
capital stock of the Corporation in the Business Combination is not less, as of
the date of the consummation of the Business Combination (the "Consummation
Date"), than the higher of the following: (1) the highest per share price (with
appropriate adjustments for recapitalizations and for stock splits, stock
dividends, and like distributions), including brokerage commissions and
solicitation fees paid by the Related Person in acquiring any of its holdings,
of such class or series of capital stock within the two-year period immediately
prior to the first public announcement of the proposed Business Combination
("Announcement Date") plus interest compounded annually from the date that the
Related Person became a Related Person (the "Determination Date"), or if later
from a date two years before the Consummation Date, through the Consummation
Date, at the rate publicly announced as the "prime rate" of interest of any
subsidiary of the Corporation which is a financial institution (or of any major
bank headquartered in Indianapolis, Chicago or New York as may be selected by a
majority of the Continuing Directors) from time to time in effect, less the
aggregate amount of any cash dividends paid and the fair market value of any
dividends paid in other than cash on each share of such stock from the date from
which interest accrues under the preceding clause through the Consummation Date
up to but not exceeding the amount of interest so payable per share; OR (2) the
fair market value per share of such class or series on the Announcement Date as
determined by the highest closing sale price during the 30-day period
immediately preceding the Announcement Date if such stock is listed on a
securities exchange registered under the Securities Exchange Act of 1934 or, if
such stock is not listed on any such exchange, the highest closing bid quotation
with respect to such stock during the 30-day period preceding the Announcement
Date on the National Association of Securities Dealers, Inc. Automated Quotation
System or any similar system then in use, or if no such quotations are
available, the fair market value of such stock immediately prior to the first
public announcement of the proposed Business Combination as determined by the
Continuing Directors in good faith. In the event of a Business Combination upon
the consummation of which the Corporation would be the surviving corporation or
company or would continue to exist (unless it is provided, contemplated, or
intended that as part of such Business Combination
<PAGE>
or within one year after consummation thereof a plan of liquidation or
dissolution of the Corporation will be effected), the term "other consideration
to be received" shall include (without limitation) Common Stock and/or the
shares of any other class of stock retained by shareholders of the Corporation
other than Related Persons who are parties to such Business Combination;
(b) The consideration to be received in such Business Combination by
holders of each class or series of capital stock of the Corporation other than
the Related Person involved shall, except to the extent that a shareholder
agrees otherwise as to all or part of the shares which he or she owns, be in the
same form and of the same kind as the consideration paid by the Related Person
in acquiring the majority of the shares of capital stock of such class or series
already Beneficially Owned by it;
(c) After such Related Person became a Related Person and prior to the
consummation of such Business Combination: (1) such Related Person shall have
taken steps to ensure that the Board of Directors of the Corporation included at
all times representation by Continuing Directors proportionate to the ratio that
the number of shares of Voting Stock of the Corporation from time to time owned
by shareholders who are not Related Persons bears to all shares of Voting Stock
of the Corporation outstanding at the time in question (with a Continuing
Director to occupy any resulting fractional position among the Directors); (2)
such Related Person shall not have acquired from the Corporation, directly or
indirectly, any shares of the Corporation (except upon conversion of convertible
securities acquired by it prior to becoming a Related Person or as a result of a
pro rata stock dividend, stock split, or division of shares or in a transaction
which satisfied all applicable requirements of this Article VIII); (3) such
Related Person shall not have acquired any additional shares of Voting Stock of
the Corporation or securities convertible into or exchangeable for shares of
Voting Stock except as a part of the transaction which resulted in such Related
Person's becoming a Related Person; and (4) such Related Person shall not have
received the benefit, directly or indirectly (except proportionately as a
shareholder), of any loans, advances, guarantees, pledges, or other financial
assistance or tax credits provided by the Corporation or any Subsidiary, or made
any major change in the Corporation's business or equity capital structure or
entered into any contract, arrangement, or understanding with the Corporation
except any such change, contract, arrangement, or understanding as may have been
approved by the favorable vote of not less than a majority of the Continuing
Directors of the Corporation; and
(d) A proxy or information statement complying with the requirements of the
Securities Exchange Act of 1934 and the rules and regulations of the Securities
and Exchange Commission thereunder, as then in force for corporations subject to
the requirements of Section 14 of such Act (even if the Corporation is not
otherwise subject to Section 14 of such Act), shall have been mailed to all
holders of shares of the Corporation's capital stock entitled to vote with
respect to such Business Combination. Such proxy or information statement shall
contain on the face page thereof, in a prominent place, any recommendations as
to the advisability (or inadvisability) of the Business Combination which the
Continuing Directors, or any of them, may have furnished in writing and, if
deemed advisable by a majority of the Continuing Directors, a fair summary of an
opinion of a reputable investment banking firm addressed to the Corporation as
to the fairness (or lack of fairness) of the terms of such Business Combination
from the point of view of the holders of shares of Voting Stock other than any
Related Person (such investment banking firm to be selected by a majority of the
Continuing Directors, to be furnished with all information it reasonably
requests, and to be paid a reasonable fee for its services upon receipt by the
Corporation of such opinion).
Section 8.3. Director Approval Exception. The provisions of Section 8.1
hereof shall not apply to a Business Combination if:
<PAGE>
(a) The Directors, by a favorable vote of not less than sixty-seven percent
(67%) of the Directors who then qualify as Continuing Directors, (1) have
expressly approved a memorandum of understanding with the Related Person with
respect to the Business Combination prior to the time that the Related Person
became a Related Person and the Business Combination is effected on
substantially the same terms and conditions as are provided by the memorandum of
understanding, or (2) have otherwise approved the Business Combination; or
(b) The Business Combination is solely between the Corporation and another
corporation, one hundred percent (100%) of the Voting Stock of which is owned
directly or indirectly by the Corporation.
Section 8.4. Definitions. For purposes of this Article VIII:
(a) A "Business Combination" means:
(1) The sale, exchange, lease, transfer, or other
disposition to or with a Related Person or any Affiliate or
Associate of such Related Person by the Corporation or any
Subsidiaries (in a single transaction or a Series of
Related Transactions) of all or substantially all, or any
Substantial Part, of its or their assets or businesses
(including, without limitation, securities issued by a
Subsidiary, if any);
(2) The purchase, exchange, lease, or other
acquisition by the Corporation or any Subsidiaries (in a
single transaction or a Series of Related Transactions) of
all or substantially all, or any Substantial Part, of the
assets or business of a Related Person or any Affiliate or
Associate of such Related Person;
(3) Any merger or consolidation of the
Corporation or any Subsidiary thereof into or with a
Related Person or any Affiliate or Associate of such
Related Person or into or with another Person which, after
such merger or consolidation, would be an Affiliate or an
Associate of a Related Person, in each case irrespective of
which Person is the surviving entity in such merger or
consolidation;
(4) Any reclassification of securities,
recapitalization, or other transaction (other than a
redemption in accordance with the terms of the security
redeemed) which has the effect, directly or indirectly, of
increasing the proportionate amount of shares of Voting
Stock of the Corporation or any Subsidiary thereof which
are Beneficially Owned by a Related Person, or any partial
or complete liquidation, spinoff, splitoff, or splitup of
the Corporation or any Subsidiary thereof; provided,
however, that this Section 8.4(a)(4) shall not relate to
any transaction that has been approved by a majority of the
Continuing Directors; or
(5) The acquisition upon the issuance thereof of
Beneficial Ownership by a Related Person of shares of
Voting Stock or securities convertible into shares of
Voting Stock or any voting securities or securities
convertible into voting securities of any Subsidiary of the
Corporation, or the acquisition upon the issuance thereof
of Beneficial Ownership by a Related Person of any rights,
warrants, or options to acquire any of the foregoing or any
combination of the foregoing shares of Voting Stock or
voting securities of a Subsidiary, if any.
(b) A "Series of Related Transactions" shall be deemed to include not only
a series of transactions with the same Related Person, but also a series of
separate transactions with a Related Person or any Affiliate or Associate of
such Related Person.
<PAGE>
(c) A "Person" shall mean any individual, firm, corporation, or other
entity and any partnership, syndicate, or other group.
(d) "Related Person" shall mean any Person (other than the Corporation or
any Subsidiary of the Corporation or the Continuing Directors, singly or as a
group) who or that at any time described in the last sentence of the penultimate
paragraph of this subsection (d):
(1) is the Beneficial Owner, directly or
indirectly, of more than ten percent (10%) of the voting
power of the outstanding shares of Voting Stock and who has
not been the Beneficial Owner, directly or indirectly, of
more than ten percent (10%) of the voting power of the
outstanding shares of Voting Stock for a continuous period
of two years prior to the date in question; or
(2) is an Affiliate of the Corporation and at any
time within the two-year period immediately prior to the
date in question (but not continuously during such two-year
period) was the Beneficial Owner, directly or indirectly,
of ten percent (10%) or more of the voting power of the
then outstanding shares of Voting Stock; or
(3) is an assignee of or has otherwise succeeded
to any shares of the Voting Stock which were at any time
within the two-year period immediately prior to the date in
question beneficially owned by any Related Person, if such
assignment or succession shall have occurred in the course
of a transaction or series of transactions not involving a
public offering within the meaning of the Securities Act of
1933, as amended.
A Related Person shall be deemed to have acquired
a share of the Corporation at the time when such Related
Person became the Beneficial Owner thereof. For the
purposes of determining whether a Person is the Beneficial
Owner of ten percent (10%) or more of the voting power of
the then outstanding Voting Stock, the outstanding Voting
Stock shall be deemed to include any Voting Stock that may
be issuable to such Person pursuant to a right to acquire
such Voting Stock and that is therefore deemed to be
Beneficially Owned by such Person pursuant to Section
8.4(e)(2)(A). A Person who is a Related Person at (1) the
time any definitive agreement relating to a Business
Combination is entered into, (2) the record date for the
determination of shareholders entitled to notice of and to
vote on a Business Combination, or (3) the time immediately
prior to the consummation of a Business Combination shall
be deemed a Related Person.
A Related Person shall not include the Board of
Directors of the Corporation acting as a group. In
addition, a Related Person shall not include any Person who
possesses ten percent (10%) or more of the voting power of
the outstanding shares of Voting Stock of the Corporation
at the time of filing these Restated Articles of
Incorporation.
(e) A Person shall be a "Beneficial Owner" of any shares of
Voting Stock:
(1) which such Person or any of its Affiliates or Associates
beneficially owns, directly or indirectly; or
(2) which such Person or any of its Affiliates or
Associates has (A) the right to acquire (whether such right
is exercisable immediately or only after the passage of
time), pursuant to any agreement, arrangement,
<PAGE>
or understanding or upon the exercise of conversion rights,
exchange rights, warrants, or options, or otherwise, or (B)
the right to vote pursuant to any agreement, arrangement,
or understanding; or
(3) which are beneficially owned, directly or
indirectly, by any other Person with which such Person or
any of its Affiliates or Associates has any agreement,
arrangement, or understanding for the purpose of acquiring,
holding, voting, or disposing of any shares of Voting
Stock.
(f) An "Affiliate" of, or a person Affiliated with, a specific Person means
a Person that directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the Person
specified.
(g) The term "Associate" used to indicate a relationship with any Person,
means (1) any corporation or organization (other than this Corporation or a
majority-owned Subsidiary of this Corporation) of which such Person is an
officer or partner or is, directly or indirectly, the Beneficial Owner of five
percent (5%) or more of any class of equity securities, (2) any trust or other
estate in which such Person has a substantial beneficial interest or as to which
such Person serves as trustee or in a similar fiduciary capacity, (3) any
relative or spouse of such Person, or any relative of such spouse, who has the
same home as such Person, or (4) any investment company registered under the
Investment Company Act of 1940, as amended, for which such Person or any
Affiliate of such Person serves as investment adviser.
(h) "Subsidiary" means any corporation of which a majority of any class of
equity security is owned, directly or indirectly, by the Corporation; provided,
however, that for the purposes of the definition of Related Person set forth in
Section 8.4(d) hereof, the term "Subsidiary" shall mean only a corporation of
which a majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(i) "Continuing Director" means any member of the Board of Directors of the
Corporation (the "Board") who is not associated with the Related Person and was
a member of the Board prior to the time that the Related Person became a Related
Person, and any successor of a Continuing Director who is not associated with
the Related Person and is recommended to succeed a Continuing Director by not
less than two-thirds of the Continuing Directors then on the Board.
(j) "Independent Majority of Shareholders" shall mean the holders of the
outstanding shares of Voting Stock representing a majority of all the votes
entitled to be cast by all shares of Voting Stock other than shares Beneficially
Owned or controlled, directly or indirectly, by a Related Person.
(k) "Voting Stock" shall mean all outstanding shares of capital stock of
the Corporation or another corporation entitled to vote generally on the
election of Directors, and each reference to a proportion of shares of Voting
Stock shall refer to such proportion of the total number of votes (taking into
account any multiple votes per share) entitled to be cast by such shares.
(l) "Substantial Part" means properties and assets involved in any single
transaction or a Series of Related Transactions having an aggregate fair market
value of more than ten percent (10%) of the total consolidated assets of the
Person in question as determined immediately prior to such transaction or Series
of Related Transactions.
Section 8.5. Director Determinations. A majority of the Continuing
Directors shall have the power to determine for the purposes of this Article
VIII, on the basis of information known to them: (a) the number of shares of
Voting Stock of which any Person is the Beneficial Owner, (b) whether a Person
is an Affiliate or Associate of another, (c) whether a Person has an agreement,
arrangement, or understanding with another as to the matters referred to in the
definition of "Beneficial Owner," (d)
<PAGE>
whether the assets subject to any Business Combination constitute a Substantial
Part, (e) whether two or more transactions constitute a Series of Related
Transactions, and (f) such other matters with respect to which a determination
is required under this Article VIII.
Section 8.6. Amendment of Article VIII or Certain Other Provisions. Any
amendment, change, or repeal of this Article VIII, or of Sections 6.1, 6.2. 6.6,
7.2 or 9.2, or any other amendment of these Restated Articles of Incorporation
which would have the effect of modifying or permitting circumvention of this
Article VIII or such other provisions of these Restated Articles of
Incorporation, shall require the affirmative vote, at a meeting of shareholders
of the Corporation:
(a) Of at least sixty-seven percent (67%) of the votes entitled to be cast
by the holders of the outstanding shares of all classes of Voting Stock of the
Corporation considered for purposes of this Article VIII as a single class; and
(b) Of an Independent Majority of Shareholders;
Provided, however, that this Section 8.6 shall not apply to, and such vote
shall not be required for, any such amendment, change, or repeal recommended to
shareholders by the favorable vote of not less than two-thirds (2/3) of the
Directors who then qualify as Continuing Directors with respect to all Related
Persons and any such amendment, change, or repeal so recommended shall require
only the vote, if any, required under the applicable provisions of the
Corporation Law.
Section 8.7. Fiduciary Obligations Unaffected. Nothing in this Article VIII
shall be construed to relieve any Related Person from any fiduciary duty imposed
by law.
Section 8.8. Article VIII Nonexclusive. The provisions of this Article VIII
are nonexclusive and are in addition to any other provisions of law or these
Restated Articles of Incorporation or the By-Laws of the Corporation relating to
Business Combinations, Related Persons, or similar matters.
ARTICLE IX
Miscellaneous Provisions
Section 9.1. Amendment or Repeal. Except as otherwise expressly provided
for in these Restated Articles of Incorporation, the Corporation shall be
deemed, for all purposes, to have reserved the right to amend, alter, change, or
repeal any provision contained in these Restated Articles of Incorporation to
the extent and in the manner now or hereafter permitted or prescribed by
statute, and all rights herein conferred upon shareholders are granted subject
to such reservation.
Section 9.2. Redemption of Shares Acquired in Control Share Acquisitions.
If and whenever the provisions of IC 23-1-42 apply to the Corporation, it is
authorized to redeem its securities pursuant to IC 23-1-42-10.
Section 9.3. Captions. The captions of the Articles and Sections of these
Restated Articles of Incorporation have been inserted for convenience of
reference only and do not in any way define, limit, construe, or describe the
scope or intent of any Article or Section hereof.
EXHIBIT 3.2
BY-LAWS
OF
LAFAYETTE COMMUNITY BANCORP
ARTICLE I
Section 1. Name. The name of the corporation is Lafayette
Community Bancorp ("Corporation").
Section 2. Registered Office and Registered Agent. The street address
of the Registered Office of the Corporation is 316 Ferry Street, P.O. Box 676,
Lafayette, Indiana 47902, and the name of its Registered Agent at that office is
Edward Chosnek.
Section 3. Seal. Unless otherwise required by law, the Corporation
shall not be required to use a seal. If the Board of Directors of the
Corporation determines that the Corporation shall use a seal, the seal shall be
circular in form and mounted upon a metal die, suitable for impressing the same
upon paper. About the upper periphery of the seal shall appear the words "
Lafayette Community Bancorp" and about the lower periphery thereof the word
"Indiana". In the center of the seal shall appear the word "Seal".
ARTICLE II
Fiscal Year
The fiscal year of the Corporation shall begin each year on the first
day of December and end on the last day of January of the same year.
ARTICLE III
Capital Stock
Section 1. Number of Shares and Classes of Capital Stock. The total
number of shares and classes of capital stock which the Corporation shall have
authority to issue shall be as set forth in the Corporation's Articles of
Incorporation from time to time.
Section 2. Consideration for Shares. The shares of stock of the
Corporation shall be issued or sold in such manner and for such amount of
consideration, received or to be received, as may be fixed from time to time by
the Board of Directors. Upon payment of the consideration fixed by the Board of
Directors, such shares of stock shall be fully paid and nonassessable.
Section 3. Payment for Shares. The consideration determined by the
Board of Directors to be required for the issuance of shares of capital stock of
the Corporation may consist of any tangible or intangible property or benefit to
the Corporation, including cash, promissory notes, services performed, contracts
for services to be performed, or other securities of the Corporation.
<PAGE>
If the Board of Directors authorizes the issuance of shares for
promissory notes or for promises to render services in the future, the
Corporation shall report in writing to the shareholders the number of shares
authorized to be so issued with or before the notice of the next shareholders
meeting.
The Corporation may place in escrow shares issued for a contract for
future services or benefits or a promissory note, or make other arrangements to
restrict the transfer of the shares, and may credit distributions in respect of
the shares against their purchase price, until the services are performed, the
note is paid, or the benefits received. If the services are not performed, the
note is not paid, or the benefits are not received, the shares escrowed or
restricted and the distributions credited may be canceled in whole or in part.
When payment of the consideration for which a share was authorized to
be issued shall have been received by the Corporation, such share shall be
declared and taken to be fully paid and not liable to any further call or
assessment, and the holder thereof shall not be liable for any further payments
thereon. In the absence of actual fraud in the transaction, the judgment of the
Board of Directors as to the value of such property, labor or services received
as consideration, or the value placed by the Board of Directors upon the
corporate assets in the event of a share dividend, shall be conclusive.
Section 4. Certificate for Shares. Each holder of capital stock of
the Corporation shall be entitled to a stock certificate, signed by the
President or a Vice President and the Secretary or any Assistant Secretary of
the Corporation, stating the name of the registered holder, the number of shares
represented by such certificate, and that such shares are fully paid and
nonassessable, provided, that if such shares are not fully paid, the
certificates shall be legibly stamped to indicate the percent which has been
paid, and as further payments are made, the certificate shall be stamped
accordingly.
If the Corporation is authorized to issue shares of more than one
class, every certificate shall state the kind and class of shares represented
thereby, and the relative rights, interests, preferences and restrictions of
such class, or a summary thereof; provided, that such statement may be omitted
from the certificate if it shall be conspicuously set forth upon the face or
back of the certificate that such statement, in full, will be furnished by the
Corporation to any shareholder upon written request and without charge.
Section 5. Facsimile Signatures. If a certificate is countersigned by
the written signature of a transfer agent other than the Corporation or its
employee, the signatures of the officers of the Corporation may be facsimiles.
If a certificate is countersigned by the written signature of a registrar other
than the Corporation or its employee, the signatures of the transfer agent and
the officers of the Corporation may be facsimiles. In case any officer, transfer
agent, or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent, or
registrar before such certificate is issued, it may be issued by the Corporation
with the same effect as if he were such officer, transfer agent, or registrar at
the date of its issue.
Section 6. Transfer of Shares. The shares of capital stock of the
Corporation shall be transferable only on the books of the Corporation upon
surrender of the certificate or certificates representing the same, properly
endorsed by the registered holder or by his duly authorized attorney or
accompanied by proper evidence of succession, assignment or authority to
transfer.
The Corporation may impose restrictions on the transfer or
registration of transfer of capital stock of the Corporation by means of these
By-Laws, the Articles of Incorporation, or by an agreement with shareholders.
Shareholders may agree between themselves to impose a restriction on the
transfer or registration of transfer of shares. A restriction which is
authorized by the Indiana Business Corporation Law and which has its existence
noted conspicuously on the front or back of the
<PAGE>
Corporation's stock certificate is valid and enforceable against the holder or a
transferee of the holder of the Corporation's stock certificate. If noted on the
certificate the restriction is enforceable against a person without knowledge of
the restriction.
Section 7. Cancellation. Every certificate surrendered to the
Corporation for exchange or transfer shall be canceled, and no new certificate
or certificates shall be issued in exchange for any existing certificate until
such existing certificate shall have been so canceled, except in cases provided
for in Section 9 of this Article III.
Section 8. Transfer Agent and Registrar. The Board of Directors may
appoint a transfer agent and a registrar for each class of capital stock of the
Corporation and may require all certificates representing such shares to bear
the signature of such transfer agent and registrar. Shareholders shall be
responsible for notifying the transfer agent and registrar for the class of
stock held by such shareholder in writing of any changes in their addresses from
time to time, and failure so to do shall relieve the Corporation, its
shareholders, directors, officers, transfer agent and registrar of liability for
failure to direct notices, dividends, or other documents or property to an
address other than the one appearing upon the records of the transfer agent and
registrar of the Corporation.
Section 9. Lost, Stolen or Destroyed Certificates. The Corporation
may cause a new certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the Corporation alleged to
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or certificates, the
Corporation may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the Corporation a bond in
such sum and in such form as it may direct to indemnify against any claim that
may be made against the Corporation with respect to the certificate alleged to
have been lost, stolen or destroyed or the issuance of such new certificate. The
Corporation, in its discretion, may authorize the issuance of such new
certificates without any bond when, in its judgment, it is proper to do so.
Section 10. Registered Shareholders. The Corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of such shares to receive dividends, to vote as such owner, to hold
liable for calls and assessments, and to treat as owner in all other respects,
and shall not be bound to recognize any equitable or other claims to or interest
in such share or shares on the part of any other person, whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Indiana.
ARTICLE IV
Meetings of Shareholders
Section 1. Place of Meeting; Conference Telephone Meetings. Meetings
of shareholders of the Corporation shall be held at such place, within or
outside the State of Indiana, as may from time to time be designated by the
Board of Directors, or as may be specified in the notices or waivers of notice
of such meetings. A shareholder may participate in a shareholders' meeting by
means of a conference telephone or similar communications equipment by which all
persons participating in the meeting can communicate with each other, and
participating by these means constitutes presence in person at the meeting.
Section 2. Annual Meeting. The annual meeting of shareholders for the
election of directors, and for the transaction of such other business as may
properly come before the meeting, shall be held on such day and at such time
within six (6) months following the close of the Corporation's fiscal year as
the Board of Directors may set by resolution. Failure to hold the annual
<PAGE>
meeting within such time period shall not work any forfeiture or a dissolution
of the Corporation, and shall not affect otherwise valid corporate acts.
Section 3. Special Meetings. Special meetings of the shareholders,
for any purpose or purposes, unless otherwise prescribed by statute or by the
Articles of Incorporation, may be called by the Board of Directors or the
President and shall be called by the President or Secretary at the request in
writing of a majority of the Board of Directors, or at the request of
shareholders holding of record not less than one-fourth of all the shares
outstanding and entitled by the Articles of Incorporation to vote on the
business for which the meeting is being called. Such request by the shareholders
shall be in writing, signed by all of such shareholders (or their duly
authorized proxies), dated and delivered to the Corporation's secretary.
Section 4. Notice of Meetings. A written or printed notice, stating
the place, day and hour of the meeting, and in case of a special meeting, or
when required by any other provision of the Indiana Business Corporation Law, or
of the Articles of Incorporation, as now or hereafter amended, or these By-Laws,
the purpose or purposes for which the meeting is called, shall be delivered or
mailed by the Secretary, or by the officers or persons calling the meeting, to
each shareholder of record entitled by the Articles of Incorporation, as now or
hereafter amended, and by the Indiana Business Corporation Law to vote at such
meeting, at such address as appears upon the records of the Corporation, at
least ten (10) days and no more than sixty (60) days before the date of the
meeting. Notice of any such meeting may be waived in writing by any shareholder,
if the waiver sets forth in reasonable detail the purpose or purposes for which
the meeting is called, and the time and place thereof. Attendance at any such
meeting in person, or by proxy, shall constitute a waiver of notice of such
meeting. Each shareholder, who has in the manner above provided waived notice of
a shareholders meeting, who personally attends a shareholders meeting or who is
represented at a shareholders meeting by a proxy authorized to appear by an
instrument of proxy, shall be conclusively presumed to have been given due
notice of such meeting. Notice of any adjourned meeting of shareholders shall
not be required to be given if the time and place thereof are announced at the
meeting at which the adjournment is taken, except as may be expressly required
by law.
Section 5. Addresses of Shareholders. The address of any shareholder
appearing on the records of the Corporation or appearing on the records
maintained by the Transfer Agent if the Corporation has appointed a Transfer
Agent shall be deemed to be the latest address of such shareholder for the class
of stock held by such shareholder.
Section 6. Voting at Meetings.
(a) Quorum. The holders of record of a majority of the
issued and outstanding stock of the Corporation entitled to vote at
such meeting, present in person or by proxy, shall constitute a
quorum at all meetings of shareholders for the transaction of
business, except where otherwise provided by law, the Articles of
Incorporation or these By-Laws. In the absence of a quorum, any
officer entitled to preside at, or act as secretary of, such meeting
shall have the power to adjourn the meeting from time to time until a
quorum shall be constituted. At any such adjourned meeting at which a
quorum shall be present, any business may be transacted which might
have been transacted at the original meeting, but only those
shareholders entitled to vote at the original meeting shall be
entitled to vote at any adjournment or adjournments thereof unless a
new record date is fixed by the Board of Directors for the adjourned
meeting.
(b) Voting Rights. Except as otherwise provided by law or
by the provisions of the Articles of Incorporation, every shareholder
shall have the right at every shareholders' meeting to one vote for
each share of stock having voting power, registered in his name on
the books of the Corporation on the date for the determination of
shareholders entitled to vote, on all matters coming before the
meeting including the election of directors. At any meeting of the
shareholders, every shareholder having the right to vote shall be
entitled to vote in person, or by proxy
<PAGE>
executed in writing by the shareholder or a duly authorized
attorney-in-fact and bearing a date not more than eleven months prior
to its execution, unless a longer time is expressly provided therein.
(c) Required Vote. When a quorum is present at any meeting,
action on a matter (other than the election of directors) is approved
if the votes cast favoring the action exceed the votes cast opposing
the action unless the Indiana Business Corporation Law or the
Articles of Incorporation require a greater number of affirmative
votes. Unless otherwise provided in the Articles of Incorporation,
directors are elected by a plurality of the votes cast by the shares
entitled to vote in the election at a meeting at which a quorum is
present.
(d) Validity of a Vote, Consent, Waiver or Proxy
Appointment. If the name on a vote, consent, waiver, or proxy
appointment corresponds to the name of a shareholder, the Corporation
if acting in good faith may accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder.
The Corporation may reject a vote, consent, waiver, or proxy
appointment if the authorized tabulation officer, acting in good
faith, has a reasonable basis for doubt about the validity of the
signature, or the signatory's authority. If so accepted or rejected,
the Corporation and its officer are not liable in damages to the
shareholder for any consequences of the rejection. Any of the
Corporation's actions based on an acceptance or rejection of a vote,
consent, waiver or proxy appointment under this Section is valid
unless a court of competent jurisdiction determines otherwise.
Section 7. Voting List. The transfer agent (or, if the Corporation
has no transfer agent, the Secretary) of the Corporation shall make before each
meeting of shareholders, a complete list of the shareholders entitled by the
Articles of Incorporation, as now or hereafter amended, to vote at such meeting,
arranged in alphabetical order, with the address and number of shares so
entitled to vote held by each shareholder. Such list shall be produced and kept
open at the time and place of the meeting of shareholders and subject to the
inspection of any shareholder during the holding of such meeting.
Section 8. Fixing of Record Date to Determine Shareholders Entitled
to Vote. The Board of Directors may prescribe a period not exceeding seventy
(70) days prior to meetings of the shareholders, during which no transfer of
stock on the books of the Corporation may be made; or, in lieu of prohibiting
the transfer of stock may fix a day and hour not more than seventy (70) days
prior to the holding of any meeting of shareholders as the time as of which
shareholders entitled to notice of, and to vote at, such meeting shall be
determined, and all persons who are holders of record of voting stock at such
time, and no others, shall be entitled to notice of, and to vote at, such
meeting. In the absence of such a determination, such date and time shall be the
close of business on the tenth (10th) day prior to the date of such meeting. Any
determination of shareholders entitled to notice of or to vote at a shareholders
meeting is effective for any adjournment of the meeting unless the Board of
Directors fixes a new record date, which is only required if the meeting is
adjourned to a date more than one hundred twenty (120) days after the date fixed
for the original meeting.
Section 9. Consent Action by Shareholders. Any action required or
permitted to be taken at a shareholders' meeting may be taken without a meeting,
if one (1) or more written consents describing the action taken are signed by
all the shareholders entitled to vote on the action, and delivered to the
Corporation for inclusion in the minutes or filing with the corporate records.
Action taken under this section is effective when the last shareholder entitled
to vote on the action signs the consent, unless the consent specifies a
different, prior or subsequent effective date.
<PAGE>
ARTICLE V
Board of Directors
Section 1. Election, Number and Term of Office. Directors shall be
elected at the annual meeting of shareholders, or, if not so elected, at a
special meeting of shareholders called for that purpose, by the holders of the
shares of stock entitled by the Articles of Incorporation to elect directors.
The number of directors of the Corporation to be elected by the
holders of the shares of stock entitled by the Articles of Incorporation to
elect directors shall be two (2) unless changed by amendment of this Section.
All directors elected by the holders of such shares, except in the
case of earlier resignation, removal or death, shall hold office until their
respective successors are duly elected and qualified. Directors need not be
shareholders of the Corporation.
Section 2. Vacancies. Any vacancy occurring in the Board of Directors
caused by resignation, death or other incapacity shall be filled by a majority
vote of the remaining members of the Board of Directors, until the next annual
meeting of the shareholders. If the vote of the remaining members of the Board
shall result in a tie, such vacancy, at the discretion of the Board of
Directors, may be filled by vote of the shareholders at a special meeting called
for that purpose.
Any vacancy on the Board of Directors caused by an increase in the
number of directors shall be filled by a majority vote of the members of the
Board of Directors, until the next annual or special meeting of the shareholders
at which directors are elected or, at the discretion of the Board of Directors,
such vacancy may be filled by vote of the shareholders at a special meeting
called for that purpose. No decrease in the number of directors shall have the
effect of shortening the term of any incumbent director.
Section 3. Annual Meeting of Directors. The Board of Directors shall
meet each year immediately after the annual meeting of the shareholders, at the
place where such meeting of the shareholders has been held either within or
outside the State of Indiana, for the purpose of organization, election of
officers, and consideration of any other business that may properly come before
the meeting. No notice of any kind to either old or new members of the Board of
Directors for such annual meeting shall be necessary.
Section 4. Regular Meetings. Regular meetings of the Board of
Directors, if any, shall be held at such times and places, either within or
outside the State of Indiana, as may be fixed by the directors. Such regular
meetings of the Board of Directors may be held without notice or upon such
notice as may be fixed by the directors.
Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by the President or by not less than a majority of the
members of the Board of Directors. Notice of the date, time and place, either
within or outside the State of Indiana, of a special meeting shall be personally
delivered or telephoned to each director at least twenty-four hours prior to the
time of the meeting, or sent by telegraph, telecopy or over-night courier to
each director at his usual place of business or residence at least forty-eight
hours prior to the time of the meeting. Directors, in lieu of such notice, may
sign a written waiver of notice either before the time of the meeting, at the
meeting or after the meeting. Attendance by a director in person at any such
special meeting shall constitute a waiver of notice unless the director at the
beginning of the meeting (or promptly upon the director's arrival) objects to
holding the meeting or transacting business at the meeting and does not
thereafter vote for or assent to action taken at the meeting.
<PAGE>
Section 6. Conference Telephone Meetings. A member of the Board of
Directors may participate in a meeting of the Board by means of a conference
telephone or similar communications equipment by which all persons participating
in the meeting can communicate with each other, and participation by these means
constitutes presence in person at the meeting.
Section 7. Quorum. A majority of the actual number of directors
elected and qualified, from time to time, shall be necessary to constitute a
quorum for the transaction of any business except the filling of vacancies, and
the act of a majority of the directors present at the meeting, at which a quorum
is present, shall be the act of the Board of Directors, unless the act of a
greater number is required by the Indiana Business Corporation Law, by the
Articles of Incorporation, or by these By-Laws, as now or hereafter amended. A
director, who is present at a meeting of the Board of Directors or a committee
of the Board of Directors, at which action on any corporate matter is taken,
shall be conclusively presumed to have assented to the action taken, unless (a)
he objects at the beginning of the meeting (or promptly upon his arrival) to
holding the meeting or transacting business at the meeting, (b) his dissent or
abstention from the action taken is entered in the minutes of the meeting, or
(c) he delivers written notice of his dissent or abstention to the presiding
officer of the meeting before its adjournment or to the Secretary of the
Corporation immediately after adjournment of the meeting. The right of dissent
or abstention is not available to a director who votes in favor of the action
taken.
Section 8. Consent Action by Directors. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if one (1) or more written
consents describing the action taken are signed by all members of the Board of
Directors or such committee, as the case may be, and such written consent is
filed with the minutes of proceedings of the Board of Directors or committee, or
filed with the corporate records reflecting the action taken. Action taken under
this section is effective when the last director signs the consent, unless the
consent specifies a different, prior or subsequent effective date.
Section 9. Removal of Directors. Unless otherwise provided in
Articles of Incorporation, any or all members of the Board of Directors may be
removed, with or without cause, only by the affirmative vote of a majority of
the total number of shares entitled to vote for the election of directors at a
meeting called for that purpose.
Section 10. Resignations. Any director may resign at any time by
giving written notice to the Board of Directors, to the President or to the
Secretary. Any such resignation shall take effect upon receipt of such notice or
at any later time specified therein, and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 11. Distributions. The Board of Directors shall have power,
subject to any restrictions and limitations contained in the Indiana Business
Corporation Law or in the Articles of Incorporation, as now or hereafter
amended, to declare and pay distributions upon the outstanding capital stock of
the Corporation to its shareholders as and when they deem expedient.
Section 12. Fixing of Record Date to Determine Shareholders Entitled
to Receive Corporate Benefits. The Board of Directors may fix a record date,
declaration date and payment date with respect to any share dividend or
distribution to the Corporation's shareholders. If no record date is fixed for
the determination of shareholders entitled to receive payment of a distribution,
the end of the day on which the resolution of the Board of Directors declaring
such dividend is adopted shall be the record date for such determination.
Section 13. Interest of Directors in Contracts. Any contract or other
transaction between the Corporation and any corporation in which this
Corporation owns a majority of the capital stock or between the Corporation and
any corporation which owns a majority of the capital stock of the Corporation
shall be valid and binding, notwithstanding that the directors or officers
<PAGE>
of this Corporation are identical or that some or all of the directors or
officers, or both, are also directors or officers of such other corporation.
Any contract or other transaction with the Corporation in which a
director of the Corporation has a direct or indirect interest is not voidable by
the Corporation solely because of the director's interest in the transaction, if
any one (1) of the following is true:
(a) The material facts of the transaction and the
director's interest were disclosed or known to the Board of Directors
or a committee of the Board of Directors and the Board of Directors
or committee authorized, approved, or ratified the transaction; or
(b) The material facts of the transaction and the
director's interest were disclosed or known to the shareholders
entitled to vote and they authorized, approved, or ratified the
transaction; or
(c) The transaction was fair to the Corporation.
A transaction is authorized, approved, or ratified if it receives the
affirmative vote of a majority of the directors on the Board of Directors or on
the committee who have no direct or indirect interest in the transaction, but it
cannot be authorized, approved or ratified by a single director. If a majority
of the directors who have no direct or indirect interest in the transaction vote
to authorize, approve or ratify the transaction, a quorum is present for the
purposes of this Section. The presence of, or a vote cast by, a director with a
direct or indirect interest in the transaction does not affect the validity of
any transaction if it is otherwise authorized, approved, or ratified as provided
in this Section.
Shares owned by or voted under the control of a director who has a
direct or indirect interest in the transaction, and shares owned by or voted
under the control of an entity in which the director has a direct or indirect
interest, may be counted in a vote of shareholders to determine whether to
authorize, approve, or ratify a conflict of interest transaction under
Subsection (b).
For purposes of this Section, a director of the Corporation has an
indirect interest in a transaction if:
(i) Another entity in which the director has a material
financial interest or in which the director is a general
partner is a party to the transaction; or
(ii) Another entity of which the director is a
director, officer or trustee is a party to the transaction
and the transaction is, or is required to be, considered by
the Board of Directors of the Corporation.
This Section shall not be construed to invalidate any contract or
other transaction which would otherwise be valid under the common and statutory
law applicable thereto.
Section 14. Committees. The Board of Directors may, by resolution
adopted by a majority of the actual number of directors elected and qualified,
from time to time, designate from among its members an executive committee and
one or more other committees, each of which, to the extent provided in the
resolution, the Articles of Incorporation, or these By-Laws, may exercise all of
the authority of the Board of Directors of the Corporation. However, no such
committee has the authority to (a) authorize distributions (except a committee
may authorize or approve a reacquisition of shares if done according to a
formula or method, or within a range, prescribed by the Board of Directors), (b)
approve or propose to shareholders action that
<PAGE>
the Indiana Business Corporation Law requires to be approved by shareholders,
(c) fill vacancies on the Board of Directors or any of its committees, (d) amend
the Articles of Incorporation, (e) adopt, amend or repeal the By-Laws, (f)
approve a plan of merger not requiring shareholder approval, or (g) authorize or
approve the issuance or sale or a contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, except the Board of Directors may authorize a committee to
take the action described in this subsection within limits prescribed by the
Board of Directors. No member of any such committee shall continue to be a
member thereof after he ceases to be a director of the Corporation.
ARTICLE VI
Officers
Section 1. Principal Officers. The principal officers of the
Corporation shall be a Chairman of the Board, a President, a Treasurer, a
Secretary, and such Vice Presidents as may be determined from time to time by
the Board of Directors. The Corporation may also have, at the discretion of the
Board of Directors, such other subordinate officers as may be appointed in
accordance with the provisions of these By-Laws. The same individual may hold
more than one office at any time, and a single individual may hold all of the
offices at any time.
Section 2. Election and Term of Office. The principal officers of the
Corporation shall be chosen annually by the Board of Directors at the annual
meeting thereof. Each such officer shall hold office until his successor shall
have been duly elected and qualified, or until his death, or until he shall
resign, or shall have been removed in the manner hereinafter provided.
Section 3. Removal. Any principal officer may be removed, either with
or without cause, at any time, by resolution adopted at any meeting of the Board
of Directors by a majority of the actual number of directors elected and
qualified from time to time.
Section 4. Subordinate Officers. In addition to the principal
officers enumerated in Section 1 of this Article VI, the Corporation may have
one or more Assistant Treasurers, one or more Assistant Secretaries and such
other officers, agents and employees as the Board of Directors may deem
necessary, each of whom shall hold office for such period, may be removed with
or without cause, have such authority, and perform such duties as the President,
or the Board of Directors may from time to time determine. The Board of
Directors may delegate to any principal officer the power to appoint and to
remove any such subordinate officers, agents or employees.
Section 5. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors, to the President or to the Secretary.
Any such resignation shall take effect upon receipt of such notice or at any
later time specified therein, and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 6. Vacancies. Any vacancy in any office for any cause may
be filled for the unexpired portion of the term in the manner prescribed in
these By-Laws for election or appointment to such office for such term.
Section 7. Chairman of the Board. The Chairman of the Board, who
shall be chosen from among the directors, shall preside at all meetings of
shareholders and at all meetings of the Board of Directors. He shall perform
such other duties and have such other powers as, from time to time, may be
assigned to him by the Board of Directors.
<PAGE>
Section 8. President. The President shall be the chief executive
officer of the Corporation and as such shall have general supervision of the
affairs of the Corporation, subject to the control of the Board of Directors. He
shall be an ex officio member of all standing committees. Subject to the control
and direction of the Board of Directors, the President may enter into any
contract or execute and deliver any instrument in the name and on behalf of the
Corporation. In general, he shall perform all duties and have all the powers
incident to the office of President, as herein defined, and all such other
duties and powers as, from time to time, may be assigned to him by the Board of
Directors.
Section 9. Vice Presidents. The Executive Vice President, if one has
been appointed, and then the Vice Presidents in the order of their seniority,
unless otherwise determined by the Board of Directors, shall, in the absence or
disability of the President and Executive Vice President, perform the duties and
exercise the powers of the President. They shall perform such other duties and
have such other powers as the President or the Board of Directors may from time
to time assign.
Section 10. Treasurer. The Treasurer shall have charge and custody
of, and be responsible for, all funds and securities of the Corporation and
shall deposit all such funds in the name of the Corporation in such banks or
other depositories as shall be selected by the Board of Directors. He shall upon
request exhibit at all reasonable times his books of account and records to any
of the directors of the Corporation during business hours at the office of the
Corporation where such books and records shall be kept; shall render upon
request by the Board of Directors a statement of the condition of the finances
of the Corporation at any meeting of the Board of Directors or at the annual
meeting of the shareholders; shall receive, and give receipt for, moneys due and
payable to the Corporation from any source whatsoever; and in general, shall
perform all duties incident to the office of Treasurer and such other duties as
from time to time may be assigned to him by the President or the Board of
Directors. The Treasurer shall give such bond, if any, for the faithful
discharge of his duties as the Board of Directors may require.
Section 11. Secretary. The Secretary shall prepare and shall keep or
cause to be kept in the books provided for that purpose the minutes of the
meetings of the shareholders and of the Board of Directors; shall duly give and
serve all notices required to be given in accordance with the provisions of
these By-Laws and by the Indiana Business Corporation Law; shall be custodian of
the records and of the seal (if one is required) of the Corporation and see that
the seal is affixed to all documents, the execution of which on behalf of the
Corporation under its seal is duly authorized in accordance with the provisions
of these By-Laws; and, in general, shall perform all duties incident to the
office of Secretary and such other duties as may, from time to time, be assigned
to him by the President or the Board of Directors.
Section 12. Salaries. The salaries of the principal officers of the
Corporation shall be fixed from time to time by the Board of Directors, and the
salaries of any subordinate officers may be fixed by the President.
Section 13. Voting Corporation's Securities. Unless otherwise ordered
by the Board of Directors, the President and Secretary, and each of them
individually, are appointed attorneys and agents of the Corporation, and shall
have full power and authority in the name and on behalf of the Corporation, to
attend, to act, and to vote all stock or other securities entitled to be voted
at any meetings of security holders of corporations, or associations in which
the Corporation may hold securities, in person or by proxy, as a shareholder or
otherwise, and at such meetings shall possess and may exercise any and all
rights and powers incident to the ownership of such securities, and which as the
owner thereof the Corporation might have possessed and exercised, if present, or
to consent in writing to any action by any such other corporation or
association. The Board of Directors by resolution from time to time may confer
like powers upon any other person or persons.
ARTICLE VII
Indemnification of Directors and Officers.
<PAGE>
Section 1. Definitions. For purposes of this Article, the following
terms shall have the following meanings:
(a) "Liabilities" and "Expenses" shall mean monetary
obligations incurred by or on behalf of a director or officer in
connection with the investigation, defense or appeal of a Proceeding
or in satisfying a claim thereunder and shall include, but shall not
be limited to, attorneys' fees and disbursements, amounts of
judgments, fines or penalties, excise taxes assessed with respect to
an employee benefit plan, and amounts paid in settlement by or on
behalf of a director or officer.
(b) "Other Enterprise" shall mean any corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, whether for profit or not, for which a director or
officer is or was serving, at the request of the Corporation, as a
director, officer, partner, trustee, employee or agent.
(c) "Proceeding" shall mean any claim, action, suit or
proceeding (whether brought by or in the right of the Corporation or
Other Enterprise or otherwise), civil, criminal, administrative or
investigative, whether formal or informal, and whether actual or
threatened or in connection with an appeal relating thereto, in which
a director or officer may become involved, as a party or otherwise,
(i) by reason of his being or having been a director or officer of
the Corporation (and, if applicable, an officer, employee or agent of
the Corporation) or a director, officer, partner, trustee, employee
or agent of an Other Enterprise or arising out of his status as such,
or (ii) by reason of any past or future action taken or not taken by
a director or officer in any such capacity, whether or not he
continues to be such at the time he incurs Liabilities and Expenses
under the Proceeding.
(d) "Standard of Conduct" shall mean that a director or
officer, based on facts then known to the director or officer,
discharged the duties as a director or officer, including duties as a
member of a committee, in good faith in what he reasonably believed
to be in or not opposed to the best interests of the Corporation or
Other Enterprise, as the case may be, and, in addition, in any
criminal Proceeding had no reasonable cause to believe that his
conduct was unlawful. The termination of any Proceeding, by judgment,
order, settlement (whether with or without court approval) or
conviction or upon a plea of guilty, shall not create a presumption
that the director or officer did not meet the Standard of Conduct.
The termination of any Proceeding by a consent decree or upon a plea
of nolo contendere, or its equivalent, shall create the presumption
that the director or officer met the Standard of Conduct.
Section 2. Indemnification. If a director or officer is made a party
to or threatened to be made a party to any Proceeding, the Corporation shall
indemnify the director or officer against Liabilities and Expenses incurred by
him in connection with such Proceeding in the following circumstances:
(a) If a director or officer has been wholly successful on
the merits or otherwise with respect to any such Proceeding, he shall
be entitled to indemnification for Liabilities and Expenses as a
matter of right. If a Proceeding is terminated against the director
or officer by consent decree or upon a plea of nolo contendere, or
its equivalent, the director or officer shall not be deemed to have
been "wholly successful" with respect to such Proceeding.
(b) In all other situations, a director or officer shall be
entitled to indemnification for Liabilities and Expenses as a matter
of right unless (i) the director or officer has breached or failed to
perform his duties as a director or officer in compliance with the
Standard of Conduct and (ii) with respect to any action or failure to
act by the director or officer which is at issue in such Proceeding,
such action or failure to act constituted willful misconduct or
recklessness. To be entitled to indemnification pursuant to this
Section 2(b), the director or officer must notify the Corporation of
the commencement of the Proceeding in accordance with Section 5 and
request indemnification. A
<PAGE>
review of the request for indemnification and the facts and
circumstances underlying the Proceeding shall be made in accordance
with one of the procedures described below; and the director or
officer shall be entitled to indemnification as a matter of right
unless, in accordance with such procedure, it is determined beyond a
reasonable doubt that (i) the director or officer breached or failed
to perform the duties of the office in compliance with the Standard
of Conduct, and (ii) the breach or failure to perform constituted
willful misconduct or recklessness. Any one of the following
procedures may be used to make the review and determination of a
director's or officer's request for indemnification under this
Section 2(b):
(A) by the Board of Directors by a majority vote
of a quorum consisting of directors who are not parties to,
or who have been wholly successful with respect to, such
Proceeding;
(B) if a quorum cannot be obtained under (A)
above, by a majority vote of a committee duly designated by
the Board of Directors (in the designation of which,
directors who are parties to such Proceeding may
participate), consisting solely of two or more directors
who are not parties to, or who have been wholly successful
with respect to, such Proceeding;
(C) by independent legal counsel selected by a
majority vote of the full Board of Directors (in which
selection, directors who are parties to such Proceeding may
participate); or
(D) by a committee consisting of three (3) or
more disinterested persons selected by a majority vote of
the full Board of Directors (in which selection, directors
who are parties to such Proceeding may participate).
Any determination made in accordance with the above procedures shall
be binding on the Corporation and the director or officer.
(c) If several claims, issues or matters of action are
involved, a director or officer may be entitled to indemnification as
to some matters even though he is not entitled to indemnification as
to other matters.
(d) The indemnification herein provided shall be applicable
to Proceedings made or commenced after the adoption of this Article,
whether arising from acts or omissions to act which occurred before
or after the adoption of this Article.
Section 3. Prepaid Liabilities and Expenses. The Liabilities and
Expenses which are incurred or are payable by a director or officer in
connection with any Proceeding shall be paid by the Corporation in advance, with
the understanding and agreement between such director or officer and the
Corporation, that, in the event it shall ultimately be determined as provided
herein that the director or officer was not entitled to be indemnified, or was
not entitled to be fully indemnified, the director or officer shall repay to the
Corporation such amount, or the appropriate portion thereof, so paid or
advanced.
Section 4. Exceptions to Indemnification. Notwithstanding any other
provisions of this Article to the contrary, the Corporation shall not indemnify
a director or officer:
(a) for any Liabilities or Expenses incurred in a suit
against a director or officer for an accounting of profits allegedly
made from the purchase or sale of securities of the Corporation
brought pursuant to the provisions of Section 16(b) of the Securities
Exchange Act of 1934 and any amendments thereto or the provisions of
any similar federal, state or local statutory law;
<PAGE>
(b) for any Liabilities and Expenses for which payment is
actually made to or on behalf of a director or officer under a valid
and collectible insurance policy, except in respect of any excess
beyond the amount of payment under such insurance; or
(c) for any Liabilities or Expenses incurred in a suit or
claim against the director or officer arising out of or based upon
actions attributable to the director or officer in which the director
or officer gained any personal profit or advantage to which he was
not legally entitled.
Section 5. Notification and Defense of Proceeding. Promptly after
receipt by a director or officer of notice of the commencement of any
Proceeding, the director or officer will, if a request for indemnification in
respect thereof is to be made against the Corporation under this Article, notify
the Corporation of the commencement thereof; but the failure to so notify the
Corporation will not relieve it from any obligation which it may have to the
director or officer under this Article or otherwise. With respect to any such
Proceeding as to which the director or officer notifies the Corporation of the
commencement thereof:
(a) the Corporation will be entitled to participate therein
at its own expense;
(b) except as otherwise provided below, to the extent that
it may so desire, the Corporation, jointly with any other
indemnifying party similarly notified, will be entitled to assume the
defense thereof, with counsel reasonably satisfactory to the director
or officer. After notice from the Corporation to the director or
officer of its election to assume the defense of the director or
officer in the Proceeding, the Corporation will not be liable to the
director or officer under this Article for any legal or other
Expenses subsequently incurred by the director or officer in
connection with the defense thereof other than reasonable costs of
investigation or as otherwise provided below. The director or officer
shall have the right to employ counsel in such Proceeding, but the
Expenses of such counsel incurred after notice from the Corporation
of its assumption of the defense thereof shall be at the expense of
the director or officer unless:
(i) the employment of counsel by the director or
officer has been authorized by the Corporation;
(ii) the director or officer shall have reasonably
concluded that there may be a conflict of interest between
the Corporation and the director or officer in the conduct
of the defense of such Proceeding; or
(iii) the Corporation shall not in fact have employed
counsel to assume the defense of such Proceeding;
in each of which cases the Expenses of counsel employed by
the director or officer shall be paid by the Corporation.
The Corporation shall not be entitled to assume the defense
of any Proceeding brought by or in the right of the
Corporation or as to which the director or officer shall
have made the conclusion provided for in (ii) above; and
(c) The Corporation shall not be liable to indemnify a
director or officer under this Article for any amounts paid in
settlement of any Proceeding without the Corporation's prior written
consent. The Corporation shall not settle any action or claim in any
manner which would impose any penalty or limitation on a director or
officer without the director or officer's prior written consent.
Neither the Corporation nor a director or officer will unreasonably
withhold its or his consent to any proposed settlement.
<PAGE>
Section 6. Other Rights and Remedies. The rights of indemnification
provided under this Article are not exhaustive and shall be in addition to any
rights to which a director or officer may otherwise be entitled by contract or
as a matter of law. Irrespective of the provisions of this Article, the
Corporation may, at any time and from time to time, indemnify directors,
officers, employees and other persons to the full extent permitted by the
provisions of the Indiana Business Corporation Law, or any successor law, as
then in effect, whether with regard to past or future matters.
Section 7. Continuation of Indemnity. All obligations of the
Corporation under this Article shall survive the termination of a director's or
officer's service in any capacity covered by this Article.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any director, officer or other person or any person who
is or was serving at the request of the Corporation as a director, officer,
partner, trustee or agent of an Other Enterprise against any liability asserted
against such person and incurred by such person in any capacity or arising out
of his status as such, whether or not the Corporation would have the power to
indemnify such person against such liability under the provisions of applicable
statutes, this Article or otherwise.
Section 9. Benefit. The provisions of this Article shall inure to the
benefit of each director or officer and his respective heirs, personal
representatives and assigns and the Corporation, its successors and assigns.
Section 10. Severability. In case any one or more of the provisions
contained in this Article shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Article, but this Article shall be
construed as if such invalid, illegal or unenforceable provision or provisions
had never been contained herein.
ARTICLE VIII
Amendments
The power to make, alter, amend, or repeal these By-Laws is vested in
the Board of Directors, but the affirmative vote of a majority of the actual
number of directors elected and qualified, from time to time, shall be necessary
to effect any alteration, amendment or repeal of these By-Laws.
EXHIBIT 5
_______, 2000
Lafayette Community Bancorp
316 Ferry Street
Lafayette, Indiana 47902
Ladies and Gentlemen:
We have represented Lafayette Company Bancorp (the"Company"), in
connection with its proposed issuance of up to 1,200,000 shares of Common Stock,
no par value (the "Common Stock"), registered under the Securities Act of 1933,
as amended, pursuant to a Registration Statement on Form SB-2 (the "Registration
Statement").
We are familiar with the corporate proceedings of the Company and
have examined and relied upon the forms of the agreements filed with the
Commission as exhibits to the Registration Statement. In addition, we have
examined such corporate records of the Company and such other documents as we
have deemed relevant and necessary as a basis for the opinions hereinafter
expressed. Based on the foregoing, we are of the opinion that: the Common Stock
is duly authorized and, when issued pursuant to the Registration Statement and
when the full consideration specified in the Registration Statement has been
received, will be validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus which constitutes a part of the Registration
Statement. In giving the foregoing consent, we do not thereby admit that we come
within the category of Persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person or for any other purpose.
Very truly yours,
/s/ KRIEG DEVAULT ALEXANDER & CAPEHART, LLP
EXHIBIT 10.1
2000 DIRECTORS' STOCK OPTION PLAN
OF
LAFAYETTE COMMUNITY BANCORP
1. Purpose. The 2000 Directors' Stock Option Plan of Lafayette
Community Bancorp ("Plan") is designed to promote the interests of Lafayette
Community Bancorp ("Company") and Lafayette Community Bank ("Bank") through the
granting of nonqualified stock options to the members of the Board of Directors
of the Company and the Bank who are serving as Directors as of the date hereof
("Directors").
2. Administration.
(a) The Plan shall be administered by a committee appointed by the Board of
Directors of the Company ("Committee") who shall be designated from time to time
by the Board of Directors. No non-employee director of the Company eligible to
receive grants of options under the Plan or who, during the one year period
prior to any proposed service as a member of the Committee, was granted or
awarded equity securities pursuant to the Plan or any other plan of the Company
or any of its affiliates shall be eligible to serve as a member of the
Committee, except as may be otherwise provided for "disinterested
administration" in Rule 16b-3(c)(2) of the Rules and Regulations promulgated by
the Securities and Exchange Commission under the Securities Exchange Act of
1934.
(b) Notwithstanding any other provisions of the Plan, the Committee shall
have authority (i) to grant options; (ii) to determine the number of shares to
be made the subject of options; (iii) to determine the option period; (iv) to
determine the time or times at which options will be granted; (v) to determine
other conditions and limitations, if any, applicable to the exercise of options;
and (vi) to determine the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired by any Director
upon exercise of an option and the nature of the events, if any, and the
duration of the period, in which any Director's rights in respect of shares
acquired upon exercise of an option may be forfeited. Each option granted under
the Plan to a Director shall be evidenced by a written stock option agreement
containing terms and conditions established by the Committee consistent with the
provisions of the Plan. Notwithstanding the foregoing, the Committee shall have
no authority to alter the option price specified in paragraph 5 or the option
period specified in paragraph 6 with respect to any options granted under the
Plan.
(c) The Committee is authorized, subject to the provisions of the Plan, to
adopt, amend and rescind such rules and regulations as it may deem appropriate
for the administration of the Plan and to make determinations and
interpretations which it deems consistent with the Plan's provisions. The
Committee's determination and interpretations shall be final and conclusive.
(d) Neither the Plan nor any stock option agreement executed hereunder
shall constitute a contract of employment. Participation in the Plan does not
give any Director the right to be retained, nominated or reelected as a Director
of the Company or the Bank.
(e) The Plan shall comply with applicable state and federal laws and
regulations governing the Company's sufficiency of capital. In the event that
the Company's capital falls below the minimum capital requirements, as
determined by
<PAGE>
the Company's primary state or federal regulator, the Company's primary federal
regulator shall have the authority to direct the Company to require Plan
participants to exercise or forfeit the rights to shares of the Company under
the Plan.
3. Shares Covered by the Plan. The stock to be subject to options
under the Plan shall be shares of authorized common stock of the Company and may
be unissued shares or reacquired shares (including shares purchased in the open
market), or a combination thereof, as the Committee may from time to time
determine. Subject to the provisions of paragraph 10, the maximum number of
shares to be delivered upon exercise of all options granted under the Plan shall
not exceed 96,000. Shares covered by an option that remain unpurchased upon
expiration or termination of the option may be made subject to further options.
No individual shall be eligible to participate in the Plan or receive options on
the basis of his or her status as a Director of more than one entity.
4. Eligibility. All individuals elected to serve as Company or Bank
Directors shall be eligible, from time to time, to receive options to acquire
shares of Company stock as determined by the Committee in its discretion.
However, an individual shall not receive additional options because he is a
member of more than one board of directors.
5. Option Price. The option price per share of stock under each
option granted to a Director hereunder shall be the greater of Ten Dollars
($10.00) per share or the fair market value of the share on the date the option
is granted. For all purposes of the Plan, the term "fair market value" shall be
determined by the Committee in good faith based upon quotations of the entities
which make a market in Company stock and such other factors as the Committee
shall deem appropriate. If the common stock of the Company is not quoted by
entities which make a market in the Company's stock, the fair market value shall
be determined by the Committee in good faith based upon such factors as the
Committee deems appropriate.
6. Option Period. No option period shall exceed ten (10) years
from the date of grant of such option.
7. Vesting and Exercise of Options. (a) All options granted under the
Plan shall be exercisable during the lifetime of the optionee only by such
optionee and, except as serviced in section 6 hereof, no option may be exercised
unless, at the time the optionee exercises the option, he or she is actually
serving as a Director of the Company or the Bank. All options granted under the
Plan shall vest in accordance with the following schedule:
Percentage of
Vesting Date Options Vested
- -------------------------------------------------- --------------------------
First Anniversary of Date of Option Grant 20.0%
Second Anniversary of Date of Option Grant 20.0%
Third Anniversary of Date of Option Grant 20.0%
Fourth Anniversary of Date of Option Grant 20.0%
Fifth Anniversary of Date of Option Grant 20.0%
Notwithstanding the above schedule, the Committee may, in its
discretion, accelerate the time(s) at which all or any part of an option may be
exercised.
(b) Effective one (1) month from the date a Director ceases to be a
Director for any reason other than death, permanent and total disability or
cause, all options therefore granted to that director shall terminate and shall
not be exercisable. If a Director dies or becomes permanently and totally
disabled, all unexercised options may be exercised within one (1) year from the
date his status as a Director ceases for such reason (but not later than the
date the option expires pursuant to its terms). During such period, subject to
the limitations of the option grant, the optionee, his guardian,
attorney-in-fact, or personal
<PAGE>
representative, as the case may be, may exercise the option. As used herein,
"permanent and total disability" shall have the same meaning ascribed to such
term by Section 22(e)(3) of the Internal Revenue Code of 1986, as amended.
(c) If a Director is removed from the Board or the board of directors of
the Bank for cause, no previously unexercised option granted hereunder may be
exercised. Rather, all unexercised options shall terminate effective on the date
the optionee receives notice of his termination for cause. As used in their
Plan, "for cause" shall be defined as (i) the Director's willful and continued
failure to perform his required duties as a Director of the Company or the Bank,
(ii) any action by the Director which involves willful misfeasance of gross
negligence, (iii) the requirement of or direction by a federal or state
regulation agency which has jurisdiction over the Company or the Bank to remove
the Director from the Board or the board of directors of the Bank or (iv) the
conviction of the Director of the commission of any criminal offense which
involves dishonesty or breach of trust.
(d) In the event of a Change in Control of the Company or upon the death or
total and permanent disability of the optionee, his options may be exercise in
full without regard to any restrictions on the vesting of such options.
8. Payment for Stock. Full payment for shares purchased hereunder shall be
made at the time the option is exercised. Payment for shares purchased may be
made only in the form of cash, and such payment shall be made directly to the
Company. No shares shall be issued until full payment for them has been made,
and an optionee shall have none of the rights of a shareholder with respect to
any shares until they are issued to him. Upon payment in cash of the full
purchase price of Company shares, and any required withholding taxes, the
Company shall issue a certificate or certificates to the optionee evidencing
ownership of the shares purchased pursuant to the exercise of the option which
contain(s) such terms, conditions and provisions as may be required and as are
consistent with the terms, conditions and provisions of the Plan and the stock
option agreement between the Company and the optionee. For purposes of this
section 8, payment for shares purchased hereunder may be delivered to the
Company through such attestation or certification procedures as may be
established by the Committee from time to time in its sole discretion.
9. Income and Employment Tax Withholding. The optionee shall be solely
responsible for paying to the Company all required federal, state, city and
local taxes applicable to his (i) exercise of an NSO under the plan and (ii)
disposition of shares acquired pursuant to the exercise of an ISO in a
disqualifying disposition of the shares under Code Section 422(a)(1).
10. Nontransferability. No option shall be transferable, except by the
Director's will or the laws of descent and distribution. During the Director's
lifetime, his option shall be exercisable (to the extent exercisable) only by
him. The option and any rights and privileges pertaining thereto shall not be
transferred, assigned, pledged or hypothecated by him in any way, whether by
operation of law or otherwise and shall not be subject to execution, attachment,
or similar process.
11. Changes in Stock.
(a) In the event of any change in the common stock of the Company through
stock dividends, split-ups, recapitalizations, reclassifications, conversions,
or otherwise, or in the event that other stock shall be converted into or
substituted for the present common stock of the Company as the result of any
stock conversion, merger, consolidation, reorganization or similar transaction,
then the Committee may make appropriate adjustment or substitution in the
aggregate number, price, and kind of shares available under the Plan and in the
number, price and kind of shares covered under any options granted or to be
granted under the Plan. The Committee's determination in this respect shall be
final and conclusive. Provided, however, that the Company shall not, and shall
not permit the Bank to, recommend, facilitate or agree or consent to a
transaction or series of transactions which would result in a Change of Control
of the Company unless and until the person or persons or
<PAGE>
entity or entities acquiring or succeeding to the assets or capital stock of the
Company or any of its Subsidiaries as a result of such transaction or
transactions agrees to be bound by the terms of the Plan so far as it pertains
to options theretofore granted and agrees to assume and perform the obligations
of the Company and its Successor (as defined in subparagraph (b)) hereunder.
(b) In the event of a Change in Control of the Company pursuant to which
another person or entity acquires control of the Company (such other person or
entity being the "Successor"), the kind of shares of common stock which shall be
subject to the Plan and to each outstanding option shall, automatically by
virtue of such Change in Control of the Company, be converted into and replaced
by shares of common stock, or such other class of securities having rights and
preferences no less favorable than the class of stock of the Successor, and the
number of shares subject to the option and the purchase price per share upon
exercise of the option shall be correspondingly adjusted, so that, by virtue of
such Change in Control of the Company, each Director shall have the right to
purchase (i) that number of shares of common stock of the Successor which have a
fair market value equal, as of the date of such Change in Control of the
Company, to the fair market value, as of the date of such Change in Control, of
the shares of common stock of the Company theretofore subject to his option and
(ii) for a purchase price per share which, when multiplied by the number of
shares of common stock of the Successor subject to the option, shall equal the
aggregate exercise price at which the optionee could have acquired all of the
shares of common stock of the Company theretofore optioned to the optionee.
12. Use of Proceeds. The proceeds received by the Company from the sale of
stock pursuant to the Plan will be used for general corporate purposes.
13. Investment Representations. Unless the shares subject to an option are
registered under the Securities Act of 1933, as amended, each Director, in the
stock option agreement between the Company and the Director, shall agree for
himself and his legal representatives that any and all shares of common stock
purchased upon the exercise of the option shall be acquired for investment and
not with a view to, or for sale in connection with, any distribution thereof.
Any share issued pursuant to an exercise of an option subject to this investment
representation shall bear a legend evidencing such restriction.
14. Amendment and Discontinuance. The Board of Directors may, at any time,
without the approval of the stockholders of the Company, (except as otherwise
required by applicable law, rule or regulations, including without limitation
any shareholder approval of the safe harbor provisions of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934) alter, amend, modify, suspend, or
discontinue the Plan, but may not, without the consent of the holder of an
option, make any alteration which would adversely affect an option previously
granted under the Plan.
15. Liability. No member of the Board of Directors, the Committee or
officers or employees of the Company or the Bank shall be personally liable for
any action, omission or determination made in good faith in connection with the
Plan.
16. Effective Date and Duration. This Plan shall become effective upon its
approval by a majority of the shares of the Company's common stock. No option
may be exercised until the Plan has been approved by the shareholders of the
Company. On December 1, 2009, the Plan shall expire except as to outstanding
options which options shall remain in effect until they have been exercised,
terminated, or have expired.
17. Miscellaneous.
(a) The term "Board" or "Board of Directors" used herein shall mean the
Board of Directors of the Company, unless the context clearly requires
otherwise, and to the extent that any powers and discretion vested in the Board
of Directors are delegated to any committee of the Board, the term "Board of
Directors" shall also mean such committee.
<PAGE>
(b) The term "Change in Control of the Company" used herein shall mean (i)
any merger, consolidation or similar transaction which involves the Company or
any Subsidiary and in which persons who are the shareholders of the Company
immediately prior to such transaction own, immediately after such transaction,
shares of the surviving or combined entity which possess voting rights equal to
or less than fifty percent (50%) of the voting rights of all shareholders of
such entity, determined on a fully diluted basis; (ii) any sale, lease,
exchange, transfer or other disposition of all or any substantial part of the
assets of the Company or any Subsidiary; (iii) any tender, exchange, sale or
other disposition (other than dispositions of the stock of the Company or any
Subsidiary in connection with bankruptcy, insolvency, foreclosure, receivership
or other similar transactions) or purchases (other than purchases by the Company
or any Company-sponsored employee benefit plan, or purchases by members of the
Board of Directors of the Company or any Subsidiary) of more than twenty-five
percent (25%) of the outstanding common stock of the Company or any Subsidiary;
(iv) during any period of two (2) consecutive years during the term of the Plan
specified in paragraph 16, individuals who at the date of the adoption of the
Plan constitute the Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election of each director at
the beginning of such period has been approved by directors representing at
least a majority of the directors then in office who were directors on the date
of the adoption of the Plan; or (v) a majority of the Board of Directors or a
majority of the shareholders of the Company approve, adopt, agree to recommend,
or accept any agreement, contract, offer or other arrangement providing for, or
any series of transactions resulting in, any of the transactions described
above. Notwithstanding the foregoing, a Change in Control of the Company shall
not occur as a result of the issuance of stock by the Company in connection with
any private placement offering of its stock or any public offering of its stock.
LAFAYETTE COMMUNITY BANCORP
By:__________________________________
David R. Zimmerman, President
ATTEST:
- -----------------------------------
Edward Chosnek, Chairman of the Board
EXHIBIT 10.2
2000 KEY EMPLOYEES' STOCK OPTION PLAN
OF
LAFAYETTE COMMUNITY BANCORP
1. Purpose. The 2000 Key Employees' Stock Option Plan is designed to
promote the interests of Lafayette Community Bancorp ("Company") and Lafayette
Community Bank ("Bank ") by encouraging officers and key employees, upon whose
judgment, initiative and industry serve the Company and the Bank are largely
dependent for the successful conduct and growth of their business, to continue
the association with the Company of such officers and key employees by providing
additional incentive and opportunity for unusual industry and efficiency through
stock ownership, and by increasing their proprietary interest in the Company and
their personal interest in its continued success and progress. The Plan provides
for the granting of (i) nonqualified stock options ("NSO's") and (ii) incentive
stock options ("ISO's").
2. Administration.
(a) The Plan shall be administered by a committee of not less than three
directors of the Company ("Committee") who shall be designated from time to time
by the Board of Directors. No director who is also an officer or key employee of
the Company shall be eligible to serve as a member of the Committee. No member
of the Committee shall be eligible, at any time when he is such a member, to
receive the grant of an option under the Plan. The decision of a majority of the
members of the Committee shall constitute the decision of the Committee. Subject
to the provisions of the Plan, the Committee is authorized (i) to grant NSO's
and ISO's; (ii) to determine the employees to be granted NSO's and ISO's; (iii)
to determine the option period, the option price and the number of shares
subject to each option; (iv) to determine the time or times at which options
will be granted; (v) to determine the time or times when each option becomes
exercisable and the duration of the exercise period; (vi) to determine other
conditions and limitations, if any, applicable to the exercise of each option;
and (vii) to determine the nature and duration of the restrictions, if any, to
be imposed upon the sale or other disposition of shares acquired by any optionee
upon exercise of an option, and the nature of the events, if any, and the
duration of the period, in which any optionee's rights in respect of shares
acquired upon exercise of an option may be forfeited. Each option granted under
the Plan shall be evidenced by a written stock option agreement containing terms
and conditions established by the Committee consistent with the provisions of
the Plan, including such terms as the Committee shall deem advisable in order
that each ISO shall constitute an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
(b) The Committee is authorized, subject to the provisions of the Plan, to
adopt, amend and rescind such rules and regulations as it may deem appropriate
for the administration of the Plan and to make determinations and
interpretations which it deems consistent with the Plan's provisions. The
Committee's determinations and interpretations shall be final and conclusive.
(c) The Committee shall also determine, in its sole discretion, with
respect to each employee, whether such options shall be ISO's or NSO's, or any
combination thereof; and whether any employee shall be given discretion to
determine whether any options granted to him shall be ISO's or NSO's or any
combination thereof.
(d) Neither the Plan nor any stock option agreement executed hereunder
shall constitute a contract of employment. Participation in the Plan does not
give any employee the right to be retained in the employ of the Company or the
<PAGE>
Bank and does not limit in any way the right of the Company or the Bank to
change the duties or responsibilities of any employee or to terminate the
employment of any employee.
(e) The Plan shall comply with applicable state and federal laws and
regulations governing the Company's sufficiency of capital. In the event that
the Company's capital falls below the minimum capital requirements, as
determined by the Company's primary state or federal regulator, the Company's
primary federal regulator shall have the authority to direct the Company to
require Plan participants to exercise or forfeit the rights to shares of the
Company under the Plan.
3. Shares Covered by the Plan. The stock to be subject to options under the
Plan shall be shares of authorized common stock of the Company and may be
unissued shares or reacquired shares (including shares purchased in the open
market), or a combination thereof, as the Committee may from time to time
determine. Subject to the provisions of Paragraph 14, the maximum number of
shares to be delivered upon exercise of all options granted under the Plan shall
not exceed 84,000. Shares covered by an option that remain unpurchased upon
expiration or termination of the option may be made subject to further options.
4. Eligibility. Officers and key employees of the Company and the Bank, as
selected by the Committee, shall be eligible to receive grants of NSO's and
ISO's under the Plan. Members of the Committee shall not be eligible to receive
grants of options under the Plan while serving as members of the Committee.
5. Option Price.
(a) The option price per share of stock under each ISO shall be not less
than the greater of ten dollars ($10.00) per share or one hundred percent (100%)
of the fair market value of the share on the date on which the option is
granted; provided, however, as to officers and key employees who, at the time an
ISO is granted, own, within the meaning of Section 425(d) of the Code, more than
ten percent (10%) of the total combined voting power of all classes of stock of
the company or any subsidiary ("shareholder-employees"), the purchase price per
share of stock under each ISO shall be not less than one hundred ten percent
(110%) of the fair market value of the stock on the date on which the option is
granted.
(b) The option price per share of stock under each NSO shall be determined
by the Committee in its discretion; provided, however, the option price per
share shall not be less than twelve dollars ($10.00) per share or one hundred
percent (100%) of the fair market value of the share on the date on which the
option is granted.
(c) For all purposes of the plan, the term "fair market value" shall mean
the value determined by the Committee based upon quotations of the entities
which make a market in company stock and such other factors as the Committee
shall deem appropriate. If the common stock of the company is not quoted by
entities which make a market in the company's stock, the fair market value shall
be determined by the Committee based upon such factors as the Committee deems
appropriate.
6. Option Period. No option period shall exceed ten (10) years, and the
option period with respect to ISO's granted to shareholder-employees shall not
exceed five (5) years.
7. Vesting and Exercise of Options. (a) All options granted under the Plan
shall be exercisable during the lifetime of the optionee only by such optionee
and, except as serviced in Subsection (6), no option may be exercised unless, at
the time the optionee exercises the option, he or she is actually serving as an
employee of the Company or the Bank. All options granted under the Plan shall
vest in accordance with the following schedule:
<PAGE>
Percentage of
Vesting Date Options Vested
- ----------------------------------------------- ----------------------
First Anniversary of Date of Option Grant 20.0%
Second Anniversary of Date of Option Grant 20.0%
Third Anniversary of Date of Option Grant 20.0%
Fourth Anniversary of Date of Option Grant 20.0%
Fifth Anniversary of Date of Option Grant 20.0%
Notwithstanding the above schedule, the Committee may, in its discretion,
accelerate the time(s) at which all or any part of an option may be exercised.
(b) Effective one (1) month from the date an employee ceases to be an
employee for any reason other than death, permanent and total disability or
cause, all options therefore granted to that director shall terminate and shall
not be exercisable. If an employee dies or becomes permanently and totally
disabled, all unexercised options may be exercised within one (1) year from the
date his status as an employee ceases for such reason (but not later than the
date the option expires pursuant to its terms). During such period, subject to
the limitations of the option grant, the optionee, his guardian,
attorney-in-fact, or personal representative, as the case may be, may exercise
the option. As used herein, "permanent and total disability" shall have the same
meaning ascribed to such term by Section 22(e)(3) of the Internal Revenue Code
of 1986, as amended.
(c) If an employee is terminated from the Company or the Bank for cause, no
previously unexercised option granted hereunder may be exercised. Rather, all
unexercised options shall terminate effective on the date the optionee receives
notice of his termination for cause. As used in their Plan, "for cause" shall be
defined as (i) the employee's willful and continued failure to perform his
required duties as an employee of the Company or the Bank, (ii) any action by
the employee which involves willful misfeasance of gross negligence, (iii) the
requirement of or direction by a federal or state regulation agency which has
jurisdiction over the Company or the Bank to remove the employee from the
Company or the Bank or (iv) the conviction of the employee of the commission of
any criminal offense which involves dishonesty or breach of trust.
(d) In the event of a Change in Control of the Company or upon the death or
total and permanent disability of the optionee, his options may be exercise in
full without regard to any restrictions on the vesting of such options.
8. Special Calendar Year Limitation on Shares Subject to ISO's. The
aggregate fair market value (determined at the time of the grant of the ISO's)
of the stock with respect to which ISO's are exercisable for the first time by
an eligible employee during any calendar year (under all plans providing for the
grant of incentive stock options of the company or any of its subsidiaries)
shall not exceed one hundred thousand dollars ($100,000.00).
9. Sequence of Exercising Incentive Stock Options. Any ISO granted to an
employee pursuant to the plan shall be exercisable even if there are outstanding
previously granted but unexercised ISO's with respect to such employee.
10. Early Termination of Option.
(a) Termination of Employment. All rights to exercise an option shall
terminate effective as of the day the optionee's employment terminates unless
such termination is "for cause" as defined in subparagraph (b) or is on account
of the permanent and total disability or death of the optionee (but not later
than the date the option expires pursuant to its terms). Transfer of employment
from the Company to the Bank, or vice versa, shall not be deemed termination of
employment. The
<PAGE>
Committee shall have the authority to determine in each case whether a leave of
absence on military or government service shall be deemed a termination of
employment for purposes of this subparagraph.
(b) For Cause Termination. If an optionee's employment is terminated for
cause, no previously unexercised option granted hereunder may be exercised.
Rather, all unexercised options shall terminate effective on the date the
optionee receives notice of his termination for cause. As used in this Plan,
"for cause" shall be defined as (i) the willful and continued failure of an
optionee to perform his required duties as an officer or employee of the Company
or the Bank, (ii) action by an optionee involving willful misfeasance or gross
negligence, (iii) the requirement or direction of a federal or state regulatory
agency having jurisdiction over the Company or the Bank to terminate the
employment of an optionee, (iv) conviction of an optionee of the commission of
any criminal offense involving dishonesty or breach of trust, or (v) any
intentional breach by an optionee of a material term, condition or covenant of
any agreement of employment, termination or severance or any other agreement
between the optionee and the Company or the Bank.
(c) Permanent and Total Disability or Death of Optionee. If an optionee's
employment terminates due to permanent and total disability or death, his option
shall terminate one (1) year after termination of his employment due to his
permanent and total disability or death (but not later than the date the option
expires pursuant to its terms). During such period, subject to the limitations
of the option grant, the optionee, his guardian, attorney-in-fact or personal
representative, as the case may be, may exercise the option in full. As used
herein, "permanent and total disability" shall have the meaning ascribed to such
term by Section 22(e)(3) of the Code.
(d) Change in Control or Death or Disability of Optionee. In the event of a
Change in Control of the Company or upon the death or permanent and total
disability of the optionee, the options covered by such agreement may be
exercised in full without regard to any restrictions on the vesting of such
options contained in the option agreement between the Company and the optionee.
11. Payment for Stock. Full payment for shares purchased hereunder shall be
made at the time the option is exercised. Payment for shares purchased may be
made only in the form of cash, and such payment shall be made directly to the
Company. No shares shall be issued until full payment for them has been made,
and an optionee shall have none of the rights of a shareholder with respect to
any shares until they are issued to him. Upon payment of the full purchase
price, and any required withholding taxes, the Company shall issue a certificate
or certificates to the optionee evidencing ownership of the shares purchased
pursuant to the exercise of the option which contain(s) such terms, conditions
and provisions as may be required and as are consistent with the terms,
conditions and provisions of the Plan and the stock option agreement between the
Company and the optionee. For purposes of this section 11, payment for shares
purchased hereunder may be delivered to the Company through such attestation or
certification procedures as may be established by the Committee from time to
time in its sole discretion.
12. Income and Employment Tax Withholding. The optionee shall be solely
responsible for paying to the Company all required federal, state, city and
local taxes applicable to his (i) exercise of an NSO under the plan and (ii)
disposition of shares acquired pursuant to the exercise of an ISO in a
disqualifying disposition of the shares under Code Section 422(a)(1).
13. Nontransferability. No option shall be transferable, except by the
optionee's will or the laws of descent and distribution. During the optionee's
lifetime, his option shall be exercisable (to the extent exercisable) only by
him. The option and any rights and privileges pertaining thereto shall not be
transferred, assigned, pledged or hypothecated by him in any way, whether by
operation of law or otherwise and shall not be subject to execution, attachment,
or similar process.
<PAGE>
14. Changes in Stock.
(a) In the event of any change in the common stock of the Company through
stock dividends, split-ups, recapitalizations, reclassifications, conversions,
or otherwise, or in the event that other stock shall be converted into or
substituted for the present common stock of the Company as the result of any
merger, consolidation, reorganization or similar transaction, the Committee may
make appropriate adjustment or substitution in the aggregate number, price, and
kind of shares available under the Plan and in the number, price and kind of
shares covered under any options granted or to be granted under the Plan. The
Committee's determination in this respect shall be final and conclusive.
Provided, however, that the Company shall not recommend and shall not permit the
Bank to, facilitate or agree or consent to a transaction or series of
transactions which would result in a Change of Control of the Company unless and
until the person or persons or entity or entities acquiring or succeeding to the
assets or capital stock of the Company or the Bank as a result of such
transaction or transactions agrees to be bound by the terms of the Plan so far
as it pertains to options theretofore granted but unexercised and agrees to
assume and perform the obligations of the Company hereunder.
(b) In the event of a Change in Control of the Company pursuant to which
another person or entity acquires control of the Company (such other person or
entity being the "Successor"), the kind of shares of common stock which shall be
subject to the Plan and to each outstanding option, shall, automatically by
virtue of such Change in Control of the Company, be converted into and replaced
by shares of common stock, or such other class of securities having rights and
preferences no less favorable than common stock of the Successor, and the number
of shares subject to the option and the purchase price per share upon exercise
of the option shall be correspondingly adjusted, so that, by virtue of such
Change in Control of the Company, each optionee shall have the right to purchase
(i) that number of shares of common stock of the Successor which have a fair
market value equal, as of the date of such Change in Control of the Company, to
the fair market value, as of the date of such Change in Control, of the shares
of common stock of the Company theretofore subject to his option, and (ii) for a
purchase price per share which, when multiplied by the number of shares of
common stock of the Successor subject to the option, shall equal the aggregate
exercise price at which the optionee could have acquired all of the shares of
common stock of the Company theretofore optioned to the optionee.
15. Use of Proceeds. The proceeds received by the Company from the sale of
stock pursuant to the Plan will be used for general corporate purposes.
16. Investment Representations. Unless the shares subject to an option are
registered under the Securities Act of 1933, each optionee in the stock option
agreement between the Company and the optionee shall agree for himself and his
legal representatives that any and all shares of common stock purchased upon the
exercise of the option shall be acquired for investment and not with a view to,
or for sale in connection with, any distribution thereof. Any share issued
pursuant to an exercise of an option subject to this investment representation
shall bear a legend evidencing such restriction.
17. Amendment and Discontinuance. The Board of Directors may, at any time,
without the approval of the stockholders of the Company, (except as otherwise
required by applicable law, rule or regulations, including without limitation
any shareholder approval of the safe harbor rule promulgated under the
Securities Exchange Act of 1934) alter, amend, modify, suspend, or discontinue
the Plan, but may not, without the consent of the holder of an option, make any
alteration which would adversely affect an option previously granted under the
Plan or, without the approval of the stockholders of the Company, make any
alteration which would: (a) increase the aggregate number of shares subject to
options under the Plan, except as provided in paragraphs 10(c) and 14; (b)
decrease the minimum option price, except as provided in paragraph 14; (c)
permit any member of the Committee to become eligible for options under the
Plan; (d) withdraw administration of the Plan from the Committee or the Board of
Directors; (e) extend the term of the Plan or the maximum period during which
any option may be exercised;
<PAGE>
(f) change the manner of determining the option price; (g) change the class of
individuals eligible for options under the Plan; or (h) without the consent of
the holder of the option, alter or impair any option previously granted under
the Plan.
18. Liability. No member of the Board of Directors, the Committee or
officers or employees of the Company or its Subsidiaries shall be personally
liable for any action, omission or determination made in good faith in
connection with the Plan.
19. Effective Date and Duration. This Plan shall become effective upon its
approval by a majority of the shares of common stock of the Company. Options may
be granted under the Plan for a period of ten (10) years commencing _____, 2000,
the date on which the Board of Directors approved the Plan; provided, however,
that no option may be exercised until the Plan has been approved by the
shareholders of the Company, as provided in the first sentence of this paragraph
19. No options shall be granted after _______, 2010. Upon such date, the Plan
shall expire except as to outstanding options and which options and rights shall
remain in effect until they have been exercised or terminated or have expired.
20. Miscellaneous.
(a) The term "Board" or "Board of Directors" used herein shall mean the
Board of Directors of the Company, unless the context clearly requires
otherwise, and to the extent that any powers and discretion vested in the Board
of Directors are delegated to any committee of the Board, the term "Board of
Directors" shall also mean such committee.
(b) The term "Bank" used herein shall mean Lafayette Community Bank, the
wholly-owned and sole subsidiary of the Company.
(c) The term "Change in Control of the Company" used herein shall mean (i)
any merger, consolidation or similar transaction which involves the Company or
any Subsidiary and in which persons who are the shareholders of the Company
immediately prior to such transaction own, immediately after such transaction,
shares of the surviving or combined entity which possess voting rights equal to
or less than fifty percent (50%) of the voting rights of all shareholders of
such entity, determined on a fully diluted basis; (ii) any sale, lease,
exchange, transfer or other disposition of all or any substantial part of the
assets of the Company or the Bank; (iii) any tender, exchange, sale or other
disposition (other than dispositions of the stock of the Company of the Bank in
connection with bankruptcy, insolvency, foreclosure, receivership or other
similar transactions) or purchases (other than purchases by the Company or any
Company-sponsored employee benefit plan, or purchases by members of the Board of
Directors of the Company or the Bank) of more than twenty-five percent (25%) of
the common stock of the Company or the Bank; (iv) during any period of two (2)
consecutive years during the term of the Plan specified in paragraph 19,
individuals who at the date of the adoption of the Plan constitute the Board of
Directors of the Company cease for any reason to constitute at least a majority
thereof, unless the election of each director at the beginning of such period
has been approved by directors representing at least a majority of the directors
then in office who were directors on the date of the adoption of the Plan; or
(v) a majority of the Board of Directors or a majority of the shareholders of
the Company approve, adopt, agree to recommend, or accept any agreement,
contract, offer or other arrangement providing for, or any series of
transactions resulting in, any of the transactions described above.
Notwithstanding the foregoing, a Change in Control of the Company shall not
occur as a result of the issuance of stock by the Company in connection with any
private placement offering of its stock or any public offering of its stock.
<PAGE>
LAFAYETTE COMMUNITY BANCORP
By:______________________________
David R. Zimmerman, President
ATTEST:
- -----------------------------------
Edward Chosnek, Chairman of the Board
EXHIBIT 10.3
LEASE AGREEMENT
THIS LEASE AGREEMENT, entered into this _____ day of ____________, _____,
by and between L.C.B. INVESTMENTS, L.L.C., an Indiana Limited Liability Company
(hereinafter referred to as "Owner") and LAFAYETTE COMMUNITY BANK, INC., an
Indiana Corporation (hereinafter referred to as "Lessee"),
WITNESSETH THAT Owner and Lessee, in consideration of their mutual
undertakings, agree as follows:
1. Premises. Owner hereby leases to Lessee and Lessee hereby leases from
Owner real estate commonly known as 2 North Fourth Street, located at Lafayette,
Tippecanoe County, Indiana, which consists of approximately 8,000 square feet
located on two floors together with the right and privilege to use the walks,
driveways and parking areas surrounding the building, all hereinafter referred
to as the "Leased Premises".
2. Term of Lease. The original term shall commence on the _____ day of
____________, 2000, and shall end five 5) years thereafter ("original
termination date") unless sooner terminated.
3. Renewal Option. Lessee shall have the option to renew this Lease for two
(2) additional five (5) year terms by giving written notice of its intention to
renew One Hundred Twenty (120) days prior to expiration of any prior term. In
the event a continuing lease is not negotiated between Owner and Lessee prior to
One Hundred Twenty (120) days prior to its original termination date, the Owner
shall have the right, during the 120 day period and thereafter, to display "for
lease" signs upon the premises and to freely exhibit the leased premises to any
prospective lessees.
4. Rental. The base monthly rent during the five (5) years of the original
term of this Lease shall be Six Thousand Five Hundred Dollars ($6,500.00) per
month. If the Lessee exercises any renewal options, the rent shall be increased
for such renewal term in direct proportion to the increase in the Consumer Price
Index from January 1, 2000 to date of renewal for Urban Wage Earners and
Clerical Workers (1967=100) For All Items, relating to the City of Chicago area,
published by the Bureau of Labor Statistics of the U.S. Department of Labor.
Any fractional part of a month included under the terms of this Lease shall
be pro-rated, and all rent shall be payable in advance on the first day of each
month during the term hereof. There shall be a late payment penalty of five
percent (5%) of the amount of the late installment of rent commencing on the 6th
day after rent is due. In addition to the late payment penalty, delinquent rent
shall bear interest at the rate of eighteen percent (18%) per annum, together
with attorney fees if the default and breach of this Lease is pursued by Court
proceedings. Lessee's Liability to pay rent or perform any other promise under
this Lease Agreement shall be without relief from valuation or appraisement
laws.
5. Additional Rental Obligations. Lessee shall reimburse Owner a sum equal
to the property taxes assessed for the buildings and land used by Lessee. Owner
shall make the computation annually at the time the taxes are assessed and shall
furnish a computation of taxes and a copy of the tax statement to Lessee. Lessee
shall pay to Owner one-half of its annual tax obligation on or before May 1st
and one-half on November 1st of each year.
6. Use of Premises. The Leased Premises shall be used by Lessee for lawful
purposes only, and in a careful, proper and lease-like manner, and shall be kept
clean and sanitary.
<PAGE>
No auction, fire, bankruptcy, liquidation or "going out of business" sales
may be conducted on the Leased Premises without the written consent of the
Owner.
All refuse shall be stored in dumpster outside the building and it shall be
removed at regular intervals at Lessee's expense. Lessee shall not burn any
refuse of any kind in or about the building.
Lessee shall not install any exterior lighting or plumbing fixtures, shades
or awnings, or any exterior decoration or painting, or build any fences or make
any changes to the front of the building without the written consent of Owner,
which consent shall not be unreasonably withheld.
7. Maintenance of Leased Premises. Lessee shall provide all interior and
exterior maintenance to the Leased Premises, including trash removal. Lessee
shall provide snow removal for all parking and drive areas of the Leased
Premises.
Owner shall keep and maintain the roof and structural portions of the
exterior walls of the Leased Premises, unless such maintenance is a result of
negligence on the part of Lessee. Owner shall not be responsible for damage to
windows, doors, window and door frames, and plate glass, unless such damage is a
result of structural failure or negligence on the part of the Owner. Lessee
shall be responsible for any repairs and/or replacement costs associated with
the plumbing, electrical and heating, ventilation and air-conditioning system
(HVAC) within the Leased Premises.
8. Furniture and Fixtures. Lessee shall have the privilege of installing
any furniture and fixtures necessary in the conduct of its business and the same
shall remain the property of Lessee provided it is removed by Lessee before the
end of the original term of this Lease, or any renewal or extensions thereof. In
the event any damage is done to the Leased Premises in the removing of the
furniture and fixtures, Lessee shall make such repairs as are necessary to
restore the Leased to their original condition and, if Lessee fails to do so,
Owner may make such repairs and be entitled to immediate reimbursement by the
Lessee for the cost of such repairs.
9. Alterations. Lessee shall make no alterations (including the attachment
of any fixtures) in, on or about the Leased Premises without the consent of
Owner in writing, which consent shall not be unreasonably withheld. Any such
alterations or improvements shall become the property of Owner, except for Trade
Fixtures which Lessee shall be entitled to remove.
10. Signs and Advertising. No sign, advertising or notice shall be
inscribed, affixed or displayed on any part of the outside or the inside of the
building, except as approved in writing in advance by Owner, which approval
shall be not unreasonably withheld, and then only in such place, number, size,
color and style as approved by Owner. All signage must be in compliance with the
Tippecanoe County Zoning Ordinance.
11. Damage or Destruction. If the Leased Premises are partially damaged by
fire or other casualty, excepting that caused by negligence of the Lessee, they
shall be repaired by Owner in a prompt and reasonable manner, and abatement
shall be made from the rent corresponding with the time during which and the
extent to which the Leased Premises cannot be used by Lessee.
12. Liability for Injury to Person or Property. Lessee agrees to indemnify
and save harmless Owner from any arid all claims, demands or suits for property
damage, or personal injury, or death, arising out of Lessee's use and occupancy
of the Leased Premises and Lessee's use of the driveways, sidewalks and parking
areas surrounding the Leased Premises, including but not limited to any
environmental problems chat are caused by or related to Lessee's occupancy of
the Leased Premises as
<PAGE>
a gasoline related provider; provided, however, that this shall not be construed
as obligating Lessee to maintain or repair anything except his sign and the
interior of the building, nor make Lessee liable under this Lease for any
damage, personal injury, or death caused by improper maintenance or repair of
any part of the Leased Premises, except the interior of his building.
Lessee hereby agrees to obtain public liability insurance protecting Owner
and Lessee against all claims, demands, suits or liabilities in a sum not less
than Two Million Dollars ($2,000,000) for bodily injury, including death, to one
or more persons, and not less than One Million Dollars ($1,000,000) for damage
to property. Such insurance shall be carried in some good reliable insurance
company to be approved by Owner, and a certificate of insurance shall be
furnished to Owner showing Owner as an "additional insured" and specifying that
such policy shall not be canceled unless Owner is given fifteen (15) days notice
in writing by the insurance company.
In addition, Lessee shall carry casualty insurance on all improvements in
the sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) or in lesser or
greater amounts as may be agreed from time to time between Lessee and Owner.
Said insurance shall name Owner and any mortgagee as additional insureds as
their respective interests appear and Lessee shall furnish verification of such
insurance to Owner.
13. Assignment of Lease or Sub-letting of Leased Premises. Lessee shall not
assign this Lease, or any part thereof, and shall not rent or sublet the whole
or any part of the Leased Premises without the written consent of Owner, which
consent shall not be unreasonably withheld. Any assignment, renting or
sub-letting shall not release Lessee from any part of its obligation.
14. Utilities, Operating Expenses and Taxes. Lessee shall promptly pay all
charges for utilities, including meter deposits, and all running and operating
expenses, including personal property taxes.
15. Payment and Discharge of Liens Created by Lessee. Lessee covenants and
agrees to pay and discharge all liens and obligations created or incurred by
Lessee, of any and every kind and nature whatsoever, which shall attach to, or
be imposed on, the Leased Premises. Upon failure of Lessee to pay and discharge
any such lien or obligation within thirty (30) days, Owner may pay and discharge
same and add the amount of the costs thereof to the rent due hereunder on the
first rental payment date following the date of such payment.
16. Entry on Leased Premises by Owner. Lessee agrees to permit Owner, or
its agents or representatives, to enter upon the Leased Premises or any part
thereof at all reasonable hours for the purpose of examining and inspecting the
same, or making repairs or alterations, as may be necessary for the safety or
preservation thereof.
17. Cost of Enforcing Lease. The Lessee shall pay all reasonable costs,
charges, attorney's fees and expenses incurred by Owner in enforcing any of the
terms of this Lease. In the event of litigation, the prevailing party shall be
entitled to recover all reasonable costs, charges, attorney's fees and expenses
incurred in enforcing any covenant, agreement and/or condition contained in this
Lease, unless such charges and expenses are incurred in any dispute wherein the
Owner and Lessee are in agreement and have a dispute with a third party.
18. Vacating Leased Premises at End of Term and Return in Good Condition.
At the expiration of the term of this Lease, Lessee shall give peaceable
possession of the Leased Premises to the Owner in as good condition as at the
date of commencement of the term, usual wear excepted. Upon termination of this
Lease, unless otherwise agreed to by Owner, Lessee shall remove all underground
tanks and replace any pavement disturbed by such removal. Also, Lessee shall
furnish written proof to Owner that the soil in the are of any petroleum tank is
clean and contains no contaminants.
<PAGE>
19. Effect of Holding Over. The holding over by Lessee shall not operate to
renew this Lease without the written consent of Owner.
20. Personal Property Abandoned by Lessee. In the event of the termination
of this Lease for any cause or in the event of the abandonment, vacation or
surrender of the Leased Premises, any personal property of Lessee remaining upon
the Leased Premises shall be deemed to have been permanently abandoned and may
be used or disposed of by Owner as Owner shall deem fit.
21. Compliance with Governmental Rules and Regulations. The Lessee shall
comply with, at Lessee's cost and expense, all laws, ordinances, rules,
regulations, orders and requirements of governmental authorities having the
jurisdiction over the Leased Premises.
22. Mortgage Subordination. Owner reserves the right to request and obtain
from Lessee a subordination of Lessee's lien in favor of any first mortgage lien
thereafter arising which may become necessary or desirable from time to time to
Owner in the future and Lessee, upon request for same, agrees to execute at any
and all times such instruments that may be reasonably required by any lender or
prospective first mortgagees in order to effectuate such a subordination of
Lessee s lien. It is a condition, however, of the subordination and lien
provisions herein provided that Owner shall procure from any such mortgagees an
agreement in writing which shall be delivered to Lessee, providing that so long
as Lessee shall faithfully discharge the obligations on its part to be kept and
performed under the terms of this Lease, its tenancy will not be disturbed nor
this Lease affected by any default under such mortgage, and mortgagee agrees
that this Lease shall remain in full force and effect even though default in the
mortgage may occur.
23. Eminent Domain. If the whole of the Leased Premises shall be acquired
or condemned by eminent domain for any public or quasi-public use or purpose,
then the terms of this Lease shall cease and terminate at the date of title
vesting in such proceeding and all rentals shall be paid up to that date and
neither party shall have a claim against the other party for the value of any
unexpired term of this Lease. If any part of the Leased Premises shall be
acquired or condemned by eminent domain for any public or quasi-public use or
purpose, and in the event that such partial taking or condemnation shall render
the Leased Premises unsuitable for the business of Lessee, then the terms of
this Lease shall cease and terminate as of the date of title vesting in such
proceeding and Lessee shall have no claim against Owner for the value of any
unexpired term of this Lease. In the event of a partial taking or condemnation
which is not extensive enough to render the Leased Premises unsuitable for the
business of Lessee, then Owner shall promptly restore the Leased Premises to a
condition comparable to its condition at the time of such condemnation less the
portion lost in the taking, and this Lease shall continue in full force and
effect except that the monthly rent shall be reduced in proportion to the
reduction in gross area of the Leased Premises. All damages awarded or
compensation paid for any such taking or conveyance shall belong to and be the
property of Owner, whether such damages shall be awarded as compensation for
diminution in value to the leasehold or to the fee of the demised Leased
Premises; provided, however, that Owner shall not be entitled to any portion of
the award or payment made to Lessee for loss of business and depreciation of and
cost of removal of merchandise and trade fixtures.
24. Default or Breach. Each of the following events shall constitute a
default or breach of this Lease by Lessee:
a. If Lessee, or any successor or assignee of Lessee, while in
possession of the Leased Premises, shall file a Petition in
Bankruptcy or insolvency or for reorganization under any
Bankruptcy Act, or shall voluntarily take advantage of any
such act by answer or otherwise, or shall make assignment
for the benefit of creditors.
<PAGE>
b. If involuntary proceedings under any bankruptcy law or
insolvency act shall be instituted against Lessee, or if a
receiver or trustee shall be appointed of all or
substantially all of the property of Lessee, and such
proceedings shall not be dismissed or the receivership or
trusteeship vacated within ten days after the institution
or appointment.
c. If Lessee shall fail to pay Owner any rent when due or
shall fail to pay Owner any additional rent within thirty
(30) days after notice by Owner to Lessee of such
additional rent.
d. If Lessee shall fail to perform or comply with any of the
conditions of this Lease and if the nonperformance shall
continue for a period of thirty (30) days, hereinafter
referred to as the "notice period", after notice thereof by
Owner to Lessee or, if the performance cannot be reasonably
had within the notice period, or if the Lessee shall not in
good faith have commenced performance within-the-notice
period and shall not diligently proceed to completion of
performance.
e. If Lessee shall vacate or abandon the Leased Premises.
f. If Lessee fails to take possession of the Leased Premises
on the term commencement date, or within thirty (30) days
after notice that the Leased Premises are available for
occupancy if the term commencement date is not fixed herein
or shall be deferred as herein provided.
25. Effect of Default. In the event of any default hereunder, as set forth
in the preceding section, the rights of Owner shall be as follows:
a. Owner shall have the right to cancel and terminate this
Lease, as well as all of the right, title and interest of
Lessee hereunder, by giving to Lessee not less than thirty
(30) days notice of the cancellation and termination. On
expiration of the time fixed in the notice, this Lease and
the right, title and interest of Lessee hereunder shall
terminate in the same manner and with the same force and
effect, except as to Lessee's liability, as if the date
fixed in the notice of cancellation and termination were
the end of the term herein originally determined.
b. Owner may elect, but shall not be obligated, to make any
payment required of Lessee herein or comply with any
agreement, term or condition required hereby to be
performed by Lessee, and Owner shall have the right to
enter the Leased Premises for the purpose of correcting or
remedying any such default and to remain until the default
has been corrected or remedied, but any expenditure for the
correction by Owner shall not be deemed to waive or release
the default of Lessee or the right of Owner to take any
action as may be otherwise permissible hereunder in the
case of any default.
c. Owner may re-enter the Leased Premises immediately and
remove the property and personnel of Lessee, and store the
property in a public warehouse or at a place selected by
Owner at the expense of Lessee. After re-entry, Owner may
terminate the Lease on giving ten (10) days written notice
of termination to Lessee. Without the notice, re-entry will
not terminate the Lease. On termination, Owner may recover
from Lessee all damages proximately resulting from the
breach, including the costs of recovering the Leased
Premises and the worth of the balance of this Lease over
the reasonable rental value of the Leased Premises for the
remainder of the lease term, which sum shall be immediately
due Owner from Lessee.
<PAGE>
d. After re-entry, Owner may relet the Leased Premises or any
part thereof for any term without terminating the Lease, at
the rent and on the terms as Owner may chose. Owner may
make alterations and repairs to the Leased Premises. The
duties and liabilities of the parties if the Leased
Premises are relet as provided herein shall be as follows:
i. In addition to Lessee's liability to Owner for breach
of the Lease, Lessee shall be liable for all expenses
of the reletting, for the alterations and repairs made,
and for the difference between the rent received by
Owner under the new lease agreement and the rent
installments that are due for the same period under
this Lease.
ii. Owner shall apply the rent received from reletting the
Leased Premises (1) to reduce the indebtedness of
Lessee to Owner under the Lease, not including
indebtedness for rent; (2) to expenses of the reletting
and alterations and repairs made; (3) to rent due under
this Lease; or (4) to payment of future rent under this
Lease as it becomes due. If the new Lessee does not pay
a rent installment promptly to Owner, and the rent
installment has been credited in advance of payment of
the indebtedness of Lessee other than rent, or if
rentals from the new Lessee have been otherwise applied
by Owner as provided for herein and during any rent
installment period are less than the rent payable for
the corresponding installment period under this Lease,
Lessee shall pay Owner the deficiency, separately for
each rent installment deficiency period, and before the
end of that period. Owner may at any time after a
reletting terminate the Lease for the breach on which
Owner had based the re-entry and subsequently relet the
Leased Premises.
e. After re-entry, Owner may procure the appointment of a
receiver to take possession and collect rents and profits
of the business of Lessee. The receiver may carry on the
business of Lessee and take possession of the personal
property used in the business of Lessee, including
inventory, trade fixtures and furnishings, and use them in
the business without compensating Lessee. Proceedings for
appointment of a receiver by Owner, or the appointment of a
receiver and the conduct of the business of Lessee by the
receiver shall not terminate and forfeit this Lease unless
Owner has given written notice of termination to Lessee as
provided herein.
26. Waiver. The failure of Owner to insist upon the strict performance of
the terms of this Lease, or to exercise any options herein conferred, shall not
constitute a waiver of Owner's right to thereafter enforce any such tern-is or
options, but the same shall continue in full force and effect.
27. Notices. Notices and demands by either party must be given by Certified
Mail, postage prepaid, addressed to the Owner at P.0. Box 708, Lafayette,
Indiana, 47902, or to the Lessee at 2 North 4th Street, Lafayette, Indiana,
47901 subject to the right of either to designate a new address by a proper
notice in writing.
28. Law of Indiana Governs. The laws of the State of Indiana shall govern
the validity, performance and enforcement of this Lease. The invalidity or
unenforceability of any provision of this Lease shall not effect or impair any
other provision.
29. Binding Heirs, Executors, Successors and Assigns. This Lease shall be
binding upon the parties hereto, and their legal heirs, executors,
administrators, successors and assigns.
<PAGE>
30. Entire Agreement and Definition. This Lease embodies the entire
agreement between the parties hereto relative to the subject matter hereof, and
shall not be modified, changed or altered in any respect except in writing.
Where more than one party shall be Lessees under this Lease, the word "Lessee"
whenever used in the Lease shall be deemed to include all parties-Lessee jointly
and severally. Where more than one building is included and described as part of
the "Leased Premises" under this Lease, the word "building" whenever used in
this Lease shall be deemed to include all buildings.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals the day and year first above written.
LAFAYETTE COMMUNITY BANK, INC. L.C.B. INVESTMENTS, L.L.C.
By: By:
------------------------------- ------------------------------
EXHIBIT 10.4
REVISED OCTOBER 18, 1999
SHOPPING CENTER LEASE
The lease ("Lease"), dated as of October 4, 1999, by and between KIMZAY
GREENWOOD, INC. ("Landlord") and LAFAYETTE COMMUNITY BANK, INC. ("Tenant");
W I T N E S S E T H:
-------------------
WHEREAS, Landlord and Tenant wish to enter into this Lease on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing, and the mutual
covenants and agreements contained in this Lease, Landlord and Tenant hereby
agree as follows:
Tenant hereby leases the Leased Premises (as hereinafter defined)
from Landlord and Landlord hereby leases the Leased Premises to Tenant upon, and
subject to, the terms and conditions hereinafter set forth in this Lease.
1. Basic Lease Provisions and Definitions.
In addition to other terms defined in this Lease, the following terms
whenever used in this Lease with the first letter of each word capitalized shall
have only the meanings set forth in this Article, unless such meetings are
expressly modified, limited or expanded elsewhere herein.
(A) Shopping Center Location: Depicted on Exhibit "A", located in
LAFAYETTE, INDIANA Site No.: 145
(B) Leased Premises: The premises identified as Plot G
shown hatched on Exhibit "A" (see
Article2).
(C) Floor Area: 2,500 square feet (see Article 2).
(D) Lease Commencement Date: January 1, 2000 (see Article 2).
(E) Rent Commencement Date: April 1, 2000 (see Article 2).
(F) Lease Term: January 1, 2000 - March 31, 2005
(see Article 2).
(G) Expiration Date: March 31, 2005 (see Article 2).
(H) Base Rent Schedule (see Article 3):
<PAGE>
MONTHLY
LEASE YEAR ANNUAL BASE RENT INSTALLMENT
- -------------------------- ---------------- -----------
4/1/2000 - 3/31/2001 $21,250.00 $1,770.83
4/1/2001 - 3/31/2002 $21,250.00 $1,770.83
4/1/2002 - 3/31/2003 $21,250.00 $1,770.83
4/1/2003 - 3/31/2004 $21,250.00 $1,770.83
4/1/2004 - 3/31/2005 $21,250.00 $1,770.83
(I) Tax Rent: As provided in Article 5(B).
(J) Common Area Rent: As provided in Article 8(D).
(K) Percentage Rent Rate: N/A
(L) Security Deposit: $2,039.58 (see Article 6).
(M) Permitted Use: The operation of a full service bank
(see Article 9).
(N) Landlord's Notice Address: 3333 NEW HYDE PARK ROAD
(see Article 29) SUITE 100
P.O. BOX 5020
NEW HYDE PARK, NEW YORK 11042-0020
(O) Tenant's Notice Address: LAFAYETTE COMMUNITY BANK, INC.
(see Article 29) 316 PERRY STREET
LAFAYETTE, IN 47902
See Article 29 for
additional notice provisions.
(P) Broker(s): STEVE SHOOK
(see Article 26) COLDWELL BANKER COMMERCIAL
427 MAIN STREET, SUITE 300
LAFAYETTE, IN 47901
FOR INFORMATION ONLY
Tenant's Telephone No.: (765) 420-8111
Tenant's Fax No.: (765) 742-4379
Tenant's Business Name: Lafayette Community Bank
Tenant's Contact Person: David R. Zimmerman
<PAGE>
Guarantor(s): David R. & Linda S. Zimmerman Edward Chosnek
3728 E. 20 N. 5612 Prophets Rock Rd
Lafayette, IN 47905 W. Lafayette, IN 47906
The following riders and exhibit(s) are hereby incorporated into this
Lease and made a part of this Lease for all purposes:
Riders: Rider "A" General Lease Provisions (set forth in Articles
2 through 29).
Rider "B" Specific Lease Provisions (beginning with
Article 30).
Exhibit(s): Exhibit "A" - - Site Plan
IN WITNESS WHEREOF, the parties hereto have executed this Lease under
their respective hands and seals as of the day and year first above written.
WITNESSES TO LANDLORD: LANDLORD: KIMZAY GREENWOOD, INC.
/S/ BEVERLY SHERLATI By: /S/ BRUCE M. KAUDERER
- ----------------------------------- ---------------------
(corporate seal)
/S/ ANNA MARIE SCHMIDT Print Name: Bruce M. Kauderer
- ----------------------------------- -----------------
Title: Vice President
Date Signed: 10-28-99
--------
WITNESSES TO TENANT: TENANT: LAFAYETTE COMMUNITY BANK, INC.
/S/ DENISE J. HILTON By: /S/ DAVID R. ZIMMERMAN
- ----------------------------------- ----------------------
(corporate seal)
/S/ RENEE L. HAYNES Print Name: David R. Zimmerman
- ----------------------------------- ------------------
Title: President
Date Signed: 10-25-99
--------
SS#/Fed Tax ID # 35-2082918
----------
<PAGE>
FOR TENANT (CORPORATION)
STATE OF INDIANA )
) SS:
COUNTY OF TIPPECANOE )
On this 25th day of October, 1999, before me, a Notary Public in and
for the jurisdiction aforesaid, personally appeared David R. Zimmerman to me
personally known, who by me duly sworn did say that he is the President of
LAFAYETTE COMMUNITY BANK, INC.; that he knows the seal and said corporation;
that the seal affixed to this instrument is that corporate seal and that it was
so affixed by order of the Board of Directors of the corporation; and that he
acknowledges the execution of this instrument to be the voluntary act and deed
of the corporation by it voluntarily executed.
(Notarial Seal) /S/ MELANIE K. GARDINER
-----------------------
My Commission expires: January 2, 2001
---------------
County of Residence: Tippecanoe
<PAGE>
RIDER A
THIS RIDER A IS ATTACHED TO AND HEREBY MADE A PART OF THE LEASE
(SEE ALSO RIDER B).
2. Leased Premises, Term and Lease Year. The Leased Premises is
deemed to contain an amount of square feet of space equal to the Floor Area. The
Lease Term shall commence on the Lease Commencement Date. Tenant's duty to pay
Rent shall commence on the Rent Commencement Date. Notwithstanding the
foregoing, Tenant shall pay the first month's installment of Rent on the
execution hereof, which amount shall be applied as a credit against such first
monthly installment as and when due (and promptly refunded if, for any reason
other than Tenant's default, this Lease should be terminated by reason of
non-occurrence of the Lease Commencement Date). The Lease Term shall expire
without notice on the Expiration Date. On request, Tenant shall promptly deliver
to Landlord a statement in recordable form specifying the Rent Commencement Date
and the Expiration Date. The first Lease Year shall commence on the Rent
Commencement Date and end on the last day of the calendar month in which occurs
the first anniversary of the day immediately preceding the Rent Commencement
Date. Each succeeding Lease Year shall be each successive twelve (12) month
period.
3. (A) Base Rent. Tenant shall pay Base Rent at the annual rates
specified in the Base Rent Schedules in monthly installments paid in advance on
the first day of each calendar month in the amount specified in the Base Rent
Schedule. If the Rent Commencement Date is not the first of the month, the Base
Rent for that month shall be prorated. Should any Lease Year contain more or
less than twelve (12) months, Base Rent and other charges for such Lease Year
shall be appropriately prorated. All other payments to be made by Tenant
pursuant to this Lease are in addition to Base Rent. Tenant shall pay Base Rent
and other Rent to Landlord or its designated agent at the address Landlord
designates without Landlord making any demand. The obligation to pay Base Rent
and other Rent is an independent, unconditional covenant.
(B) Additional Rent. Base Rent and all other payments required
to be made by Tenant (including, but not limited to, Tax Rent and Common Area
Rent) shall be deemed to be and are included in the term "Rent", which shall be
due and payable on demand or together with the next Installment of Base Rent,
whichever first occurs, unless another time is expressly provided for payment
Landlord shall have die same rights and remedies for non-payment of any Rent or
any Security Deposit as for a non-payment of Base Rent. Tenant shall pay to
Landlord any tax or license fee measured by Tenant's Rents receivable by
Landlord; these taxes shall be paid by Tenant each month with monthly payments
of Rent.
(C) Late Rent. Any Rent or Security Deposit not paid within ten
110) days of when due shall bear Interest on the payable amount from the date
when due until paid at the Default Interest Rate (see Article 24(B)); in
addition, Tenant shall pay Landlord a Fifty ($50.00) Dollar late charge for each
overdue payment.
(D) Notwithstanding any alleged defense, counterclaim or offset
against Rent, Tenant shall continue to pay Landlord all Rent faithfully when
due, including during the continuance of any dispute or legal action, subject to
reimbursement if directed by the Court. Tenant hereby consents to the entry in
any court action of an order requiring Tenant to make Rent payments during the
pendency of the lawsuit. All Rent due to Landlord under this Lease shall, unless
and to the extent expressly otherwise provided herein, be due and payable
without any notice, demand, offset, credit, deduction or abatement.
4. Percentage Rent.
5. Taxes.
<PAGE>
(A) "Taxes" shall mean and include: real estate taxes; special and general
assessments; water and sewer rents and charges including connection or hookup
charges; governmental license and permit fees; charges for public or private
easements benefitting the Shopping Center; taxes on other areas made available
for the common use or benefit of tenants; and all other governmental impositions
and charges (extraordinary as well as ordinary, foreseen and unforeseen) which
are either a lien on the Shopping Center or which are charged, levied or
assessed on, or imposed in connection with, the use, occupancy or possession of
the Shopping Centers and/or which appear as a charge on a tax bill given to
Landlord by any official taxing authority; and also: taxes, license fees or
other charges measured by the rents receivable by Landlord from the Shopping
Center; occupancy taxes, rent taxes or similar taxes; interest on Tax
installment payments; and costs, expenses and fees (including attorneys' and
other experts' fees) incurred by Landlord in contesting and/or negotiating Taxes
with the public authorities (regardless of the outcome). If any method of
taxation prevailing on the date of this Lease is altered, so as a substitute for
the whole or any part of real estate taxes there is levied or assessed a
different kind of tax, the different tax shall be deemed included in "Taxes".
However, "Taxes" shall not include any inheritance, estate, succession,
transfer, gift, franchise or corporation tax, or any net income tax, profit tax
or capital tax imposed on Landlord. A copy of an official tax bill with respect
to a governmental tax or assessment shall be conclusive evidence of the amount
of a Tax. If the Leased Premises is located in Indiana, Ohio, Illinois or other
jurisdiction wherein taxes are billed or are payable in arrears after they have
accrued or become a lien, then the taxes that are payable or become a lien
during the calendar year in which the Lease Term is in effect shall be included
in the definition of "Taxes" shared in or payable by Tenant according to the
provisions of this Article even though the payment thereof relates to a fiscal
tax period in whole or in part occurring prior to the commencement of or after
tile end of the Lease Term.
(B) Tax Rent. As additional Rent for each year of this Lease (herein called
"Tax Rent"), Tenant shall pay to Landlord, in the manner hereinafter described,
tile product obtained by multiplying the aggregate amount of all Taxes payable
by Landlord for the then-current calendar year (or other fiscal or accounting
year selected by Landlord) by a fraction ("Tenant's Fraction"), the numerator of
which is the Floor Area of the Leased Premises, and the denominator of which is
the total square foot ground floor area which is leasable for space (on the
first day of the month in question) inside all the buildings of the Shopping
Center. Notwithstanding the foregoing, at Landlord's option Tenant's Fraction
may be appropriately adjusted with regard to Tax Rent and/or Common Area Rent to
exclude from the denominator thereof any land and/or building(s) in the Shopping
Center leased to or occupied by third parties with separate tax lots or parcels
for which they directly or indirectly pay taxes and/or who are responsible for
maintenance of portions of the Common Areas; provided that in such event the
Taxes or Common Area expenses paid by such third parties shall also be excluded
in the computation of Taxes and/or Yearly Common Area Costs. On the first day of
each month in advance, Tenant shall pay to Landlord one-twelfth (1/12th) of
Tenant's annual share of Tax Rent, based on Landlord's estimates. If after the
end of a calendar year (or other accounting period used by Landlord) the total
of the monthly payment, by Tenant for the year has exceeded or is less than the
annual Tax Rent actually due, then an adjustment shall be made with appropriate
payments to or repayment by Landlord. If the amount of any Taxee payable during
the current year shall not yet have been billed by the taxing authority, the
monthly Tax Rent then payable shall be based on the amount of the corresponding
Taxes for the immediately preceding Tax year, subject to immediate adjustment
(and payment of the adjusted amount by Tenant) when such Taxes are billed or
determined.
(C) Other Taxes. In addition to Tax Rent, Tenant shall pay in the entirety:
all taxes attributable to its signs, personal property and leasehold interests;
all taxes allocable or attributable to any improvements made by Tenant to the
Leased Premises; all occupancy taxes or other taxes on its right to occupy the
Leased Premises; all taxes on its Rent (including sales taxes on rents If the
Leased Premises is In Florida or In any other Jurisdiction Imposing a tax on
rent.); and other taxes imposed on tenants generally.
6. Security Deposit. On Tenant's execution of this Lease, Tenant shall pay
the Security Deposit as security for tile payment of Rent and Tenant's
performance and observance of this Lease. If Tenant defaults under this Lease,
or defaults
<PAGE>
under any other lease or agreement between Tenant and Landlord or an affiliate
of Landlord, Landlord may, without prejudice to any other available remedy,
apply the Security Deposit towards curing the default and compensating Landlord
for loss or damage arising from the default. At the expiration of this Lease, if
Tenant is not in default or otherwise liable to Landlord, the unapplied balance
of the Security Deposit shall be returned to Tenant. Tenant expressly agrees
that Tenant shall have no right to apply any portion of tile Security Deposit
against any of Tenant's obligations to pay any Rent hereunder and, if Tenant
shall seek to so apply such Security Deposit, Tenant shall on demand pay
liquidated damages to Landlord in a sum equal to two (2) times the amount of any
such unpaid Rent. If at any time Landlord applies part or all of the Security
Deposit, Tenant shall pay to Landlord the amount so applied, thereby increasing
the amount of the Security Deposit, so Landlord shall have on hand the full
original Security Deposit at all times. If Landlord transfers this Lease and
Security Deposit to a transferee, the transferor shall be released from
liability with respect to the Security Deposit or its return to Tenant; Tenant
shall look only to such transferee with respect thereto. Tenant shall not
mortgage, assign (except in connection with an assignment of this Lease by
Tenant which is otherwise expressly permitted by the terms of this Lease) or
encumber its interest in the Security Deposit, and any attempt to do so shall be
void. On any transfer by Tenant of its interest in this Lease, the Security
Deposit shall be deemed transferred to the assignee. In case of Tenant's
bankruptcy, reorganization or other similar proceeding, the Security Deposit
shall be deemed applied first to payment of unpaid Rent for periods prior to
institution of the proceedings.
7. Construction; Condition of Premises; Ownership of Installation. If
Tenant enters the Leased Premises before the Lease Commencement Date (but Tenant
shall have no such right except as may be expressly provided herein or with
Landlord's prior written consent), Tenant shall pay for all utilities used by it
and defend, indemnify and hold Landlord harmless from all liability which arises
out of Tenant's possession, use or occupancy during that period, and provide
Landlord with tile insurance referred to in Article 11(B), and the indemnity in
Article 11(A) shall apply and all other provisions of this Lease shall apply
except (unless otherwise stated herein) the obligation to pay Rent. Promptly
following the Lease Commencement Date, Tenant shall (subject to the provisions
of Article 10(E) and all other relevant provisions of this Lease) fixture and do
all other work, including installation of an attractive exterior lighted sign
above its entrance (see Article 10 (D)), in order to prepare the Leased Premises
for business operation, and complete its work, fully staff and stock its store,
and open for business promptly. Prior to operating its business, Tenant shall
obtain a permanent certificate of occupancy (or local equivalent) for the Leased
Premises from the local government agency having jurisdiction, and obtain final
lien waivers for all work performed by or on behalf of Tenant and forward copies
to Landlord. Tenant shall, at its sole expense, in doing any work, making any
installations, or in using, occupying or conducting business at the Leased
Premises, comply with all present and future laws, regulations, building codes
and/or fire codes applicable to the Leased Premises or to Tenant's use or
occupancy or business operations, including those that relate to installation,
maintenance, upgrading, repair or replacement of sprinkler systems, and Tenant
shall defend, indemnify and hold Landlord harmless from all losses, damages,
claims, liabilities, costs and expenses (including legal fees) arising out of
any failure to do so. Tenant acknowledges Landlord has made no representations,
and that Tenant has conducted all inspections it deems necessary (including
environmental), and Tenant accepts the Leased Premises and all the equipment,
apparatus, plumbing, heating, air conditioning, electric, water, waste disposal
and other systems relating thereto and the parking lot and the other Common Area
of the Shopping Center "AS IS". Landlord is not obligated with respect to either
the Leased Premises or the Shopping Center to make any improvements, changes,
installations, do any work, make any alterations, repairs or replacements, clean
out the Leased Premises, obtain any permits, licenses or governmental approvals,
or spend any money either to put Tenant in possession or to permit Tenant to
open for business, unless Landlord has so agreed expressly in this Lease. All
work other than that to be performed by Landlord, if any, shall be accomplished
by Tenant. Unless specifically stated otherwise in this Lease, it is deemed that
Landlord shall have tendered possession of the Leased Premises to Tenant
immediately on the signing of this Lease by both Landlord and Tenant. Except for
signs, merchandise counters or other easily removable similar trade fixtures
installed by Tenant at Tenant's expense, all alterations, decorations, additions
and improvements made by Tenant to the Leased Premises and including all heating
and air--conditioning units, equipment and apparatus at the Leased Premises and
other fixtures such as ceiling tiles and grids, lighting fixtures, electric
panel boxes,
<PAGE>
plumbing, boilers, floor and wall coverings, alarm systems, lights, toilet
fixtures, partitions, doors and utilities shall be deemed attached to the
freehold and be Landlord's property.
8. Common Area.
(A) Subject to subparagraph (C) below, Tenant and Its employees, agents,
and customers shall have the non- exclusive right to the use or benefit of the
Common Area to the extent and in the manner reasonably designated by Landlord.
Except as otherwise specified in this Lease, Landlord agrees to make all
necessary repairs and maintenance to the Common Area to keep same in good
condition, including without limitation sweeping and removal of snow, ice and
refuse, and landscaping maintenance.
(B) "Common Area" is hereby defined as the areas, equipment and facilities
of the Shopping Center or of any other land or property made available by
Landlord for the safety, benefit or convenience of tenants or their employees,
subtenants, customers or invitees, including (as illustrations and not in
limitation): parking areas, driveways, truck serviceways, sidewalks and curbs;
entrances and exits from the adjacent streets; traffic lights, traffic islands,
landscaped areas; meter rooms outside individual stores; fencing; lighting
facilities; sprinkler system serving landscaped areas or buildings; sewage
system outside tenants' stores; roofs, gutters and downspouts and the exterior
of outside walls (excluding storefronts) of buildings (without implying Tenant
may use the roofs or outside walls); directional or safety signs; Landlord's
pylon signs (but not individual tenant panels) and sign panels which identify
the Shopping Center. Tenant acknowledges that the Common Area may also be used
by occupants and/or invitees of properties adjoining the Shopping Center,
whether or not owned, leased or managed by Landlord.
(C) Landlord reserves the right at any time and from time to time to change
or reduce or add to the Common Area. Common Area shall be under the exclusive
control and management of Landlord (including the hours that parking area lights
are kept on). Tenant and its employees shall park their vehicles only in areas
Landlord designates for employee parking; if after one (1) violation notice is
given to Tenant a violation recurs by Tenant or its employees parking vehicles
in other than the employee parking areas, Landlord shall have the right to tow
such vehicle at Tenant's expense and/or levy an assessment against Tenant of
Forty ($40.00) Dollars per day for each vehicle. Tenant shall not permit trucks
or delivery vehicles used by it to be parked in the Common Area except where
Landlord permits. Landlord may impose parking charges by meter or otherwise, and
may close parts of the Common Area for such time necessary in its opinion to
prevent a dedication or accrual of rights in other persons, or to discourage
non-customer parking. Landlord shall not be obligated (although it may do so at
its option) to keep the Common Area illuminated to any extent after 10:00 P.M.
or on any Sunday or legal holiday.
(D) Common Area Rent. In the manner hereinafter described, Tenant shall pay
its share of "Yearly Common Area Costs" (hereinafter defined). On the first day
of each month in advance, Tenant shall pay to Landlord, as additional Rent
(herein called "Common Area Rent") one-twelfth (1/12th) of Tenant's annual share
of Landlord's estimated Yearly Common Area Costs, based on Landlord's estimates.
Tenant's annual share shall be determined by multiplying the Yearly Common Area
Costs by Tenant's Fraction (defined in Article 5(B)). For a portion of a
calendar month at the beginning of the Lease Term, Tenant's Common Area Rent
shall be prorated for that month.
(E) "Yearly Common Area Costs" shall mean and include all costs and
expenses incurred by Landlord during each twelve (12) month period selected by
Landlord for repair, replacement, painting, maintenance, protection and
operation of the Common Area and for insurance carried by Landlord with respect
to the Shopping Center, and insurance-related costs and expenses, including (by
way of examples and not in limitation) costs or expenses relating to: parking
areas, sidewalks and the like; storm water and sewage drainage and sanitary
control; removal of snow, ice and refuse (including use of trash
<PAGE>
compactors); gardening and landscaping; roof repairs; insuring buildings and
improvements and insuring for bodily injury and property damage liability,
including but not limited to insurance premiums, administrative costs, fees,
losses within deductibles and/or self-insured retentions for All-Risk Property
Insurance including Flood and Earthquake, Boiler & Machinery, Loss of Rents,
Crime, General and Umbrella liability, Workers Compensation, Automobile, and
such other coverages and limits as Landlord in its sole discretion deems
reasonable in the circumstances, all at the fair premiums (which may be at the
manual rates applicable to the Shopping Center), as if the Shopping Center was
the only property owned by Landlord (but notwithstanding the foregoing, such
insurance may be obtained through blanket policies as long as Landlord makes a
reasonable allocation of premiums to the Shopping Center, which allocation may
be based, inter alia, upon a uniform per square foot rate for all or
substantially all property owned by Landlord and affiliates); controlling or
eliminating puddling or flooding; lighting (including electric cost and
maintenance, repair or replacement of fixtures, poles and replacement of bulbs);
depreciation of property owned or rental paid for maintenance machinery and
equipment; taxes or fees payable by Landlord for any pylons, equipment or other
facilities; compensation to on-site personnel to implement services, patrol,
direct parking or police the Common Area; plus fifteen (15%) percent of the
Yearly Common Area Costs as a fixed administrative fee for Landlord. Landlord
may cause any services such as sweeping, snow removal, repairs, etc. to be
provided by independent contractors, and the fees paid shall be part of the
Yearly Common Area Costs.
(F) After the end of each accounting period, Landlord shall furnish a
statement of the actual Yearly Common Area Costs. If the statement shows that
the aggregate of Tenant's monthly estimates paid by Tenant during such year was
less than Tenant's Common Area Rent payable, Tenant shall pay the balance due to
Landlord within ten (10) days after receipt of the statement; and if the
statement shows that the aggregate paid exceeded the Common Area Rent payable,
Landlord shall either refund the excess or credit Tenant's next accruing Common
Area Rent. Tenant's failure to give Landlord written notice of any objection to
the statement within ninety (90) days after tile statement is sent shall
constitute a waiver of any objection or inquiry Tenant may have about the
statement or for any examination of Landlord's records. Tenant acknowledges
Landlord has not made any warranty, agreement or representation of any kind as
to the actual dollar amount of Yearly Common Area Costs or Tenant's dollar share
thereof.
9. Use of Premises.
(A) Tenant agrees that the Leased Premises will be used and occupied by
Tenant and/or any assignees, sublessees or other occupants (which reference to
assignees, sublessees and other occupants shall not be deemed to give Tenant any
rights to assign or sublet not specifically set forth in this Lease), or
permitted to be used and occupied by Tenant or any other such parties only for
the Permitted Use, and for no other use or purpose. Without limitation of the
foregoing, no sale or dispensing of lottery tickets, other gaming tickets,
liquor, wine or beer shall be permitted.
(B) Neither Tenant, nor any stockholder owning more than five (5%) percent
of Tenant if Tenant is a corporation, nor any person, corporation, partnership,
trust, other firm or entity which controls or is controlled by Tenant or is
under common control with Tenant, nor any subsidiary of Tenant, nor any business
organization affiliated with Tenant (including but not limited to any so-called
"parent company" of Tenant), nor any guarantor of this Lease, will, directly or
indirectly, conduct business at, or sell from, any other place situated within a
radius of one (1) miles of the Leased Premises any merchandise or services which
Tenant is permitted to sell or engage in any business which Tenant is permitted
to conduct in the Leased Premises. In addition to, and not in exclusion of, any
remedy available to Landlord for breach of the foregoing covenant, so long as
this covenant is being breached, Tenant's annual Base Rent shall be increased by
twenty-five (25%) percent.
(C) Tenant's Business Operations. Tenant shall keep the Leased Premises
open and operated continuously for business not less than from 9:00 A.M. to 5:00
P.M. Monday through Friday: 9:00 A.M. to 12:00 P.M. on Saturday and 1:00
<PAGE>
P.M. to 4:00 P.M. on Sunday. Tenant will continuously operate its business
therein with diligence fully staffed with personnel at the Leased Premises.
Tenant agrees for its part: no auction, fire, bankruptcy, going out of business
or similar sale will be conducted or advertised; no merchandise will be kept,
displayed or sold or business solicited in the Shopping Center outside the
Leased Premises; no nuisance will be permitted; nothing shall be done which is
unlawful, offensive or contrary to any law, ordinance, regulation or requirement
of any public authority, or which may be injurious to or adversely affect the
quality of the Leased Premises or the Shopping Center; no part of the Leased
Premises (especially the electric and plumbing systems, the floor and walls)
will be overloaded, damaged or defaced; no holes will be drilled in the stone or
brickwork or in concrete; no emission of any objectionable odors, sounds or
vibrations will be permitted. Tenant shall procure all licenses and permits
required for the use or occupancy of the Leased Premises and the business being
conducted herein; the storefront, show windows and signs will be repaired, kept
clean, in good condition and lighted; all merchandise and other property will be
delivered to or removed from the Leased Premises only by the rear entrance; all
garbage, waste and refuse will be kept stored temporarily inside the Leased
Premises and then regularly removed at Tenant's expense and, if Landlord opts,
only by a contractor designated by Landlord, provided its price is competitive.
Tenant will comply with the requirements of law and any requests of governmental
agencies or Landlord in its recycling program, if any. Tenant will cooperate
with Landlord and other tenants of the Shopping Center in promotions and
advertising, and will become a dues-paying member of any merchants' association
(or similar organization) of which fifty (50%) percent or more of the tenants
are members; or alternatively will become a participant of and shall pay its
prorata share (based on Tenant's relative store size) of any expenses incurred
by a marketing or promotion fund program now or hereafter established by
Landlord, if any. Tenant shall comply with all environmental statutes,
regulations or ordinances now or hereinafter enacted by government authorities.
Tenant shall not permit the release, emission, disposal, dumping or storage of
hazardous wastes (as defined in any such laws) into the septic tanks, sewers, or
other waste disposal facilities of the Shopping Center or anywhere in the
Shopping Center, or permit same to be brought into tile Leased Premises at any
time, and the provisions of this sentence shall survive the expiration of the
Lease Term. Tenant shall keep the Leased Premises free of rodents, vermin,
insects and other pests, and provide regular exterminator services at its own
expense, and, if Landlord opts, only by an exterminator designated by Landlord
provided its price is competitive. Tenant agrees that nothing will be done or
omitted which may either prevent the obtaining by Landlord or other tenants of
insurance on any part of the Shopping Center or on any personal property
thereon, or which may make void or voidable any such insurance, or which may
create any extra premiums for any insurance carried by Landlord or other
tenants. Tenant will comply with all requirements and recommendations of
Landlord's and Tenant's insurance companies and any rating bureau or similar
organization, including maintaining and servicing fire extinguishers.
(D) Tenant agrees to: not sell goods, solicit business or distribute
advertising matter in the Common Areas; not permit preparation of food or any
cooking, baking or frying in the Leased Premises. Tenant shall keep the
sidewalks, curbs and ramps (if any) adjacent to the Leased Premises (and also
all delivery areas, ramps, loading areas and docks used exclusively by Tenant)
in good and safe condition and free from snow, ice, and rubbish. Tenant will not
make or suffer any waste of the Leased Premises. Landlord shall not be liable
for the act of any other tenant or person who may cause damage to or who may
interfere with Tenant's use or occupancy of the Leased Premises or Tenant's
business.
10. (A) Utilities. Tenant shall provide and pay for its own heat, air
conditioning, water, gas, electricity, sewer, sprinklers and other utilities,
including application deposits and installation charges for meters and for
consumption or use of utilities. Tenant shall pay its share of sewer charges, if
any, reasonably determined by Landlord. Tenant shall keep sufficient heat to
prevent the pipes from freezing. If Tenant receives utilities through a meter
which supplies utilities to other tenants, Tenant will pay to Landlord Tenant's
proportionate share (based on relative square feet size of premises) of the
total meter charges. If Tenant receives water from Landlord's well or other
sources made available by Landlord (instead of from an independent water
company), Tenant shall pay for the water, and all costs and expenses for the
maintenance, repair, replacement
<PAGE>
and installation of tanks, electric costs, machinery, apparatus and facilities
shall be included in Yearly Common Area Costs. See Article 32 re Utility
Deregulation.
(B) Landlord's Repairs. Weather permitting and subject to Article 25,
Landlord shall, within thirty (30) days after receiving written notice from
Tenant, commence to make repairs, if necessary, to the foundation, the roof, the
exterior of the perimeter demising walls, and the load-bearing structural
columns and beams in the Leased Premises, except that if those repairs or
replacements arise from (i) repairs, installations, alterations, or improvements
by or for Tenant or anyone claiming under Tenant, or (ii) the fault or misuse of
Tenant or anyone claiming under Tenant, or (iii) default under the Lease by
Tenant, then Tenant shall make such repairs or replacements or, if Landlord
elects, Landlord may perform the work for Tenant's account and Tenant shall
reimburse Landlord for expenses incurred. In determining Landlord's repair
obligations, the expression "roof" does not include rooftop heating or air
conditioning units or other structures or apparatus on the roof serving the
Leased Premises, and "exterior of walls" does not include tile storefront, any
glass, windows, window sashes or frames, doors, door frames or hardware, trim or
closure devices, or any part of tile interior side of perimeter walls, all of
which shall be Tenant's duty to repair, maintain, and replace. In any event,
Landlord's obligation shall be only to make the repairs for which it is hereby
obligated, and Landlord shall not be liable for loss of business, loss of sales,
loss of profits or for any consequential damages or for damage to or loss of
personal property, fixtures or any interior elements of the Leased Premises
which are Tenant's responsibility to maintain or repair.
(C) Tenant's Repairs. Subject to Article 10(B), Tenant shall maintain and
make all repairs and alterations of every kind with respect to the Leased
Premises (including necessary replacements) to keep it in good condition
(including the storefront, glass, signs, ceilings, interior walls, interior side
of perimeter walls, floor, floor coverings, plumbing, electric, heating and air
conditioning, sprinklers and lighting fixtures), and do all required by any
laws, ordinances or requirements of public authorities. From the point they
serve the Leased Premises exclusively, whether located inside or outside, Tenant
shall make all repairs, replacements and alterations necessary to maintain in
good condition all lines, apparatus, and equipment relating to utilities
(including heating, air conditioning, water, gas, electricity and sewerage).
Tenant shall maintain a service contract for the regular seasonal maintenance of
the heating, ventilating and air conditioning ("HVAC") system servicing the
Leased Premises with a reputable HVAC contractor at all times during the Lease.
Additionally, if any air conditioning or heating equipment (or other utility
equipment) is damaged by vandalism, fire, lightning or other casualty, Tenant
shall repair (and, if necessary, replace) the equipment, notwithstanding Article
13. Tenant's sole right of recovery shall be against Tenant's insurers for loss
or damage to stock, furniture and fixtures, equipment, improvements and
betterments.
(D) Signs; Painting; Displays. No sign, other advertising or any other
thing may be placed by Tenant or anyone claiming under Tenant on the exterior of
the Leased Premises or on the interior part of either windows or doors without
Landlord's prior written approval, which shall not be unreasonably withheld.
Tenant shall not utilize flashing, painted, neon or moving signs or lights.
Tenant shall not paint, decorate or mark any part of the exterior. Tenant shall
install an exterior lighted sign or signs in compliance with Landlord's
specifications and keep the sign(s) (which must first be approved by Landlord in
writing) lit to at least 10:00 P.M. or to such later hour as requested by Land
lord, on all days of the year.
(E) Alterations. No alterations, installations, additions or improvements
will be made to the Leased Premises by Tenant without Landlord's prior written
approval. All installations, alterations, additions and improvements, whether by
Landlord, Tenant or any other person (except only sign panels and movable trade
fixtures installed at Tenant's cost) shall become, when made, a part of
Landlord's real estate, and on termination of the Lease Term shall be
surrendered with the Leased Premises in good condition. Tenant shall not have
the right to remove sign boxes. Tenant shall defend, indemnify and save Landlord
harmless from and against all claims for injury, loss or damage to person or
property caused by or resulting from doing any work. For any work that involves
penetration of the roof surface or alterations to the sprinkler system, Tenant
shall
<PAGE>
employ Landlord's contractor. The maintenance of any portion of the roof
affected by Tenant's work will be Tenant's responsibility, including repair of
areas of the Shopping Center that might be affected due to water penetration
through Tenant's roof work.
(F) Permits; Liens. All repairs, installations, alterations, improvements
and removals by Tenant will be done in a good and workmanlike manner, only after
Tenant has procured all permits. Tenant shall comply with all laws, ordinances
and regulations of public authorities and with all Landlord's and Tenant's
insurance requirements and with insurance inspection or rating bureaus; and the
work shall not adversely affect the structure of the building. Tenant shall pay
promptly when due all charges for labor and materials in connection with any
work done by or for Tenant or anyone claiming under Tenant. Tenant shall remove,
by payment, bonding or otherwise, within ten (10) days after notice, all liens
placed on the public record or in any way against Landlord's interest or the
Shopping Center resulting from any act of Tenant or from labor or materials
being alleged to have been supplied at the request of Tenant or anyone claiming
under Tenant, failing which Landlord may remove such lien and collect all
expenses incurred from Tenant as additional Rent. Tenant shall protect, defend,
save harmless and indemnify Landlord and any fee owner of the Shopping Center
from and against all losses, claims, liabilities, injuries, expenses (including
legal fees), lawsuits and damages arising out of any lien described above.
11. Indemnity; Insurance.
(A) Tenant shall protect, defend, save harmless and indemnify Landlord and
any fee owner of the Shopping Center from and against all losses, claims,
liabilities, injuries, expenses (including legal fees), lawsuits and damages of
whatever nature either (i) claimed to have been caused by or resulted from any
act, omission or negligence of Tenant or its subtenants, concessionaires,
employees, contractors and invitees no matter where occurring, or (ii) occurring
in the Leased Premises except if caused by Landlord's negligence. Landlord shall
not be liable under any circumstances for any injury or any loss or damage to or
interference with any merchandise, equipment, fixtures, furniture, furnishings
or other personal property or the business operations of Tenant or anyone in the
Leased Premises occasioned by (i) the act or omission of persons occupying other
premises, or (ii) any defect, latent or otherwise, in any building or the
equipment, machinery, utilities, or apparatus, or (iii) any breakage or leakage
of the roof, walls, floor, pipes or equipment, or (iv) any backing up, seepage
or overflow of water or sewerage, or (v) flood, rain, snowfall or other elements
or Acts of God. If Tenant makes shopping carts available, the foregoing
indemnity provisions shall apply to claims relating to the shopping carts; and
Tenant shall remove all shopping carts from the Common Area, as often as
necessary, so that the Common Area shall remain reasonably free of carts. All
shopping carts shall be stored inside the Leased Premises.
(B) Tenant's Insurance. Tenant shall maintain with financially responsible
insurance companies with a Best Rating of not less than A-VIII licensed to do
business in the state where the Leased Premises is located: (i) a commercial
general liability insurance policy with respect to the Leased Premises and its
appurtenances (including signs) naming Landlord as an additional insured with a
limit of not less than One Million ($1,000,000) Dollars; (ii) an umbrella
liability insurance policy with a limit of not less than Five Million
($5,000,000) Dollars, naming Landlord as an additional insured; (iii) an
insurance policy to cover heating and air-conditioning units against damage for
one hundred (100%) percent replacement cost; (iv) an all-risk property insurance
policy insuring all merchandise, leasehold improvements, furniture, fixtures and
other personal property, all at their replacement cost; and (v) business
interruption insurance. Tenant shall deliver these insurance policies or
certificates thereof, satisfactory to Landlord, issued by the insurance company
to Landlord with premiums prepaid on the signing of this Lease and thereafter at
least thirty (30) days prior to each expiring policy. Tenant's failure to
deliver the policies or certificates shall constitute a default. All policies of
insurance required of Tenant shall have terms of not less than one (1) year.
<PAGE>
12. Access to Premises. Landlord shall have the right (but shall not be
obligated) to enter the Leased Premises upon reasonable notice (and in case of
emergency without notice) to inspect or to show the Leased Premises to
prospective purchasers, mortgagees or tenants, or to make any repairs,
alterations, or improvements, including the installation or removal of pipes,
wires and other conduits serving other parts of the Shopping Center. Commencing
six (6) months prior to expiration of the Lease Term, Landlord may maintain "For
Rent" signs on the front or any other part of the exterior of the Leased
Premises. Landlord further reserves to itself the exclusive right at any time to
use the roof, foundation or exterior walls (other than Tenant's storefront) for
placing of signs or equipment or for purpose of additional construction.
13. Fire or Other Casualty.
(A) Tenant shall give prompt notice to Landlord in case of fire or other
damage to the Leased Premises.
(B) If (i) the Shopping Center buildings are damaged to the extent of more
than twenty-five (25%) percent of the replacement cost, or (ii) the Leased
Premises are damaged to the extent of more than fifty (50%) percent of the
replacement cost, or (iii) the Leased Premises are damaged and Tenant is not
operating for business as required by Article 9(C) at the time the damage
occurs, or (iv) the Leased Premises are damaged and less than one (1) year of
the Lease Term remains unexpired at the time of the fire or other casualty; then
in any of such events, Landlord may terminate this Lease by notice to Tenant
within ninety (90) days after such event, and on the date specified in the
notice this Lease shall terminate. If the damage renders the Leased Premises
wholly or partially untenantable, there shall be a fair and equitable
proportionate abatement of all Rent during that period. Unless this Lease is
terminated as aforesaid, this Lease shall remain in effect.
(C) If this Lease is not terminated by Landlord, this Lease shall continue
in full force and effect (Tenant waives any right conferred by any applicable
law to terminate this Lease based on the damage), and Tenant shall, immediately
on notice from Landlord, remove its fixtures, other property and debris as
required by Landlord, and then Landlord shall rebuild the Leased Premises to the
condition existing when the Leased Premises was originally delivered to Tenant;
and on completion thereof Tenant shall restore Tenant's property and promptly
reopen for business. Tenant shall use the proceeds of any recovery on Tenant's
insurance policies for restoration of improvements made by Tenant to the Leased
Premises, and for restoration and/or replacement of Tenant's equipment, trade
fixtures and inventory, and to cover any business interruption loss.
(D) The "replacement cost" as used in (B) above shall be determined by a
reputable contractor selected by Landlord.
14. Eminent Domain.
(A) If the whole of the Leased Premises are taken in connection with
eminent domain, the Lease Term shall expire when Landlord shall be divested of
its title, and Rent shall be apportioned as of that date.
(B) If only part of the Leased Premises is taken in connection with eminent
domain, and the ground floor area of the Leased Premises is reduced by more than
twenty (20%) percent and the part remaining shall not be reasonably adequate for
the operation of Tenant's business, Landlord or Tenant may terminate this Lease
by giving the other notice within thirty (30) days after such taking, effective
as of the date possession of the taken part shall be required for public use;
and Rent shall be apportioned as of that date.
(C) Tenant shall not have any claim for an award based on the loss of its
leasehold estate. Landlord shall be entitled to all damages in connection with
eminent domain. Tenant shall execute any instrument required by Landlord for
<PAGE>
the recovery of damages and to remit to Landlord any damage proceeds recovered,
except, however, Tenant may recover for itself damages for movable trade
fixtures which were installed by Tenant, provided Landlord's award is not
reduced thereby.
15. Defaults and Remedies.
(A) Any one of the following shall be a default by Tenant: (1) if Tenant
fails to pay Rent, Security Deposit or other money, or to provide a certificate
of insurance or to provide an estoppel certificate as required by Article 27
when due, or (2) if Tenant fails to perform or observe any agreement or
condition on its part to be performed or observed, other than the defaults
mentioned in the preceding clause (1) or in clauses (3) through (8) below, or if
Tenant defaults under any other lease or agreement between Tenant and Landlord
or an affiliate of Landlord, or (3) if Tenant's leasehold interest is levied on,
attached or taken by any process of law, or (4) if Tenant makes an assignment of
its property for the benefit of creditors, or (5) if any bankruptcy, insolvency
or reorganization proceeding or arrangement with creditors (whether through
court or by proposed composition with creditors) is commenced by or against
Tenant, or (6) if a receiver or trustee is appointed for any of Tenant's
property, or (7) if this Lease is transferred to or devolves on, or the Leased
Premises is occupied by, anyone other than Tenant except if specifically
permitted by this Lease, or (8) if Tenant closes the Leased Premises or ceases
doing business at the Leased Premises.
(B) If (i) a default described in subsection 15(A)(l) or in subsections
15(A)(3) through (7) inclusive occurs, or (ii) a default described in
subsections 15(A)(2) or 15(A)(8) occurs and continues for more than fifteen (15)
days after written notice from Landlord, then in any of such cases Landlord or
its agent shall have the right to enter the Leased Premises and dispossess
Tenant and all other occupants and their property by legal proceedings. Tenant
hereby waives any claim it might have for trespass or conversion or other
damages if Landlord exercises such remedies. Landlord may exercise the remedies
just mentioned without terminating this Lease. As an independent cumulative
right to obtaining possession without terminating this Lease, Landlord shall
have the right to terminate this Lease by giving Tenant written notice
specifying the day of termination (which shall be not less than five (5) days
from the date of the notice), on which date this Lease and all of Tenant's
rights will cease as a conditional limitation, as if that date specified in
Landlord's notices was the original date for expiration of this Lease; but in
all cases Tenant shall remain liable as hereinafter provided.
(C) Notwithstanding any re-entry, dispossession or termination of the Lease
by Landlord, Tenant will remain liable for damages to Landlord in an amount
equal to the aggregate of all Rents and other charges required to be paid up to
the time of such re-entry, dispossession or termination, and for Landlord's
damages arising out of the failure of Tenant to observe and perform Tenant's
covenants and, in addition, for each month of the period which would otherwise
have constituted the balance of the Lease Term, Tenant shall pay any deficiency
between the monthly installment of Base Rent plus the Tax Rent, Common Area Rent
and all other Rent that would have been payable, less the net amount of the
rents actually collected by Landlord from a new tenant, if any. Tenant will not
be entitled to any surplus. Furthermore, Tenant will be liable to Landlord for
all the expenses Landlord incurs for: legal fees related to obtaining possession
and making a new lease with another tenant; brokerage commissions in obtaining
another tenant; and expenses incurred in putting the Leased Premises in good
order and preparing for re-rental (together herein referred to as "Reletting
Costs"). In addition, Landlord may relet the Leased Premises, or any part
thereof, for a term which may be less or more than the period which would have
constituted the balance of the Lease Term and may grant reasonable concessions
or free rent to a new tenant. Landlord's refusal or failure to relet the Leased
Premises to a new tenant shall not release or affect Tenant's liability; and
Landlord shall not be liable for failure or refusal to relet, or for failure to
collect rent under such reletting.
<PAGE>
(D) In any case where Landlord shall have the right to hold Tenant liable
monthly, Landlord may elect to declare all the aggregate Rent for the remaining
balance of the Lease Term, as well as all accrued Rent, to be immediately due
and payable, and to recover immediately against Tenant all such Rent (for loss
of a bargain and not as a penalty).
(E) In the event of a breach or threatened breach of the Lease by Tenant,
Landlord shall have the right of injunction and the right to invoke any remedy
allowed at law or in equity. Mention of any particular remedy shall not preclude
Landlord from any other remedy in law or in equity.
(F) Tenant waives service of notice of intention to re-enter or institute
legal proceedings to that end. Tenant waives any rights of redemption as to the
Leased Premises granted by any present or future laws. The words "re-enter" and
"re-entry" are not restricted to their technical legal meaning.
(G) Landlord and Tenant mutually agree that they hereby waive trial by jury
in any action, proceeding or counterclaim brought by either against the other as
to any matters arising out of or in any way connected with this Lease, or their
relationship as Landlord and Tenant, or Tenant's use or occupancy. Tenant agrees
that no counterclaim or setoff will be interposed in any action by Landlord
based on non-payment of Rent, even if such counterclaim or setoff is based on
Landlord's alleged breach of a duty to repair or alleged breach of quiet
enjoyment, or any other allegation.
16. Subordination.
(A) This Lease is and shall be subject and subordinate to (i) all ground or
underlying leases and all mortgages or other security instruments now or
hereafter affecting such leases, and (ii) all mortgages or other security
instruments now or hereafter affecting the fee title of the Shopping Center, and
(iii) all renewals, modifications, consolidations, replacements and extensions
of any such ground or underlying leases and mortgages. This clause shall be
self-operative and no further instrument of subordination shall be required by
any ground or underlying lessee or by any mortgagee. In confirmation of such
subordination, Tenant agrees to execute promptly any instrument hat Landlord may
request. However, at the option of Landlord or such mortgagee or ground lessor
or secured party, this Lease shall be paramount to such mortgage or ground or
underlying lease or other security instrument.
(B) If Landlord transfers its interest in the Leased Premises, or
proceedings arc brought for foreclosure of any such mortgage or in ease of sale
in lieu thereof, or termination of any such ground or underlying lease, Tenant
shall, if requested, attorn to the transferee, mortgagee, ground or underlying
lessor and deliver, without charge, instruments acknowledging the attornment.
(C) Provided Tenant was given notice ill writing of the names and addresses
to which the notices should be sent, Tenant shall give prompt written notice of
any default by Landlord to the holder of all mortgages, ground or underlying
leases and security holders if the default is such as to give Tenant a right to
(i) terminate this Lease, or (ii) reduce the Rents or any other sums reserved,
or (iii) credit or offset any amounts against Rents. Any mortgagee, ground
lessor or security holder shall have the right to cure Landlord's default within
sixty (60) days after receipt of Tenant's notice; and no such rights or remedies
shall be exercised by Tenant until the expiration of said sixty (60) days (or
such additional time reasonably required to cure such default).
17. Waiver of Subrogation. Landlord and Tenant hereby release the other and
all other persons claiming under it from any and all liability for loss or
damage caused by any casualty, even if the casualty is brought about by the
fault or
<PAGE>
negligence of the other or of any persons claiming tinder the other. Tenant and
Landlord will cause their respective insurance companies to endorse their
respective insurance policies to permit a waiver of subrogation.
18. ASSIGNMENT OR SUBLETTING. Tenant shall not assign, mortgage, pledge, or
otherwise transfer or encumber this Lease or any interest therein, either
voluntarily or by operation of law or otherwise, or sublet the whole or any part
of the Leased Premises, or permit occupancy by anyone else, without obtaining on
each occasion Landlord's prior written consent, which consent Landlord may deny,
regardless of commercial reasonableness.
Notwithstanding the foregoing, if Tenant requests Landlord's consent to an
assignment and Tenant has not been in monetary or other material default under
the Lease at any time, Landlord shall not unreasonably withhold its consent to
an assignment of the Lease or a new occupant of the Leased Premises who would
use the Leased Premises for the purpose described in Article 1(M).
In any assignment the assignee must assume this Lease in writing on Landlord's
form. Any request for Landlord's consent to assignment or subletting shall be
accompanied by payment of Landlord's reasonable administrative and attorneys'
fees relating thereto. Notwithstanding an assignment or subletting or occupancy
of the Leased Premises by anyone other than Tenant, Tenant shall not be released
(nor shall any of Tenant's constituents, partners, or members be released) from
any obligations, liabilities or covenants under this Lease and shall continue to
remain responsible. Landlord shall have the right to collect Rent from any
assignee, subtenant or other Occupant without releasing Tenant or waiving any
right against Tenant for its default under this Article and without accepting
the payor as a permitted tenant. Any transfer of the controlling interest of (i)
any corporate stock of the controlling interest of; (ii) any partnership
interest in; or (iii) any membership interest in Tenant, or a merger,
consolidation or liquidation of or by Tenant, either voluntarily or by operation
of law, shall be deemed an assignment and require Landlord's consent as stated
above. Under any circumstances, Landlord shall not be liable for any money
damages to Tenant or Tenant's proposed assignee, transferee or subtenant for
refusal to consent to any assignment or transfer of this Lease or transfer of
Tenant's corporate stock or sale of Tenant's business or for refusal to consent
to any subletting; Tenant's sole remedy shall be specific performance.
19. Surrender and Holding Over.
(A) At the expiration or sooner termination of the tenancy hereby created,
Tenant shall surrender the Leased Premises in the same condition as the Leased
Premises were in upon delivery of possession thereof to Tenant, reasonable wear
and tear excepted, and damage by unavoidable casualty excepted to the extent
that the same is covered by Landlord's Property insurance policy, and Tenant
shall surrender all keys for the Leased Premises to Landlord and shall inform
Landlord of all combinations on locks, safes and vaults, if any, in the Leased
Premises. Prior to the expiration or sooner termination of this Lease, Tenant
shall remove any and all trade fixtures, equipment and other unattached items
which Tenant may have installed, stored or left in the Leased Premises or
elsewhere in the Shopping Center, and Tenant shall not remove any plumbing or
electrical fixtures or equipment, heating or air conditioning equipment, floor
coverings (including but not limited to wall-to-wall carpeting), walls or
ceilings, all of which shall be deemed to constitute a part of the freehold
and/or leasehold interest of Landlord, nor shall Tenant remove any fixtures or
machinery that were furnished or paid for by Landlord (whether initially
installed or replaced). The Leased Premises shall be left in a broom-clean
condition. If Tenant shall fail to remove its trade fixtures or other property
as provided in this Article 19, such fixtures and other property not removed by
Tenant shall be deemed abandoned by Tenant and at the option of Landlord shall
become the property of Landlord, or at Landlord's option may be removed by
Landlord at Tenant's expense, or placed in storage at Tenant's expense, or sold
or otherwise disposed of, in which event the proceeds of such sale or other
disposition shall belong to Landlord. In the event Tenant does not make any
repairs as
<PAGE>
required by this Article 19(A), Tenant shall be liable for and agrees to pay
Landlord's costs and expenses in making such repairs. Tenant's obligations and
covenants under this Article 19(A) shall survive the expiration or termination
of this Lease.
(B) If Tenant or anyone claiming under Tenant remains in possession of the
Leased Premises after the expiration of the Lease Term, that person shall be a
tenant at sufferance; and during such holding over, Base Rent shall be twice the
rate which was in effect immediately prior to the Lease Term expiration, which
Landlord may collect without admission that Tenant's estate is more than a
tenancy at sufferance, and all the other provisions of this Lease shall apply
insofar as the same are applicable to a tenancy at sufferance.
20. No Waivers by Landlord. No waiver by Landlord of any breach by Tenant
or requirement of obtaining Landlord's consent shall be deemed a waiver of any
other provision of this Lease or any subsequent breach of the same provision or
a waiver of any necessity for further consent. No payment by Tenant or
acceptance by Landlord of a lesser amount than due from Tenant shall be deemed
to be anything but payment on account, and Tenant's payment of a lesser amount
with a statement that the lesser amount is payment in full shall not be deemed
an accord and satisfaction. Landlord may accept the payment without prejudice to
recover the balance due or pursue any other remedy. Landlord may accept payments
even after default by Tenant without prejudice to subsequent or concurrent
rights or remedies available to Landlord under this Lease, at law or in equity.
Any acceptance by Landlord of any payment by Tenant after termination or
expiration of the Lease Term shall not constitute an acceptance of Rent l)ut
rather a payment to Landlord on account of Tenant's use and occupancy of the
Leased Premises. All rights and remedies which Landlord may have under this
Lease, at law or in equity shall be distinct, separate and cumulative and shall
not be deemed inconsistent with each other, and any or all of such rights and
remedies may be exercised at the same time.
21. Rules and Regulations. Tenant shall observe and comply with, and cause
its employees, agents, subtenants and concessionaires, and their employees and
agents, to observe and comply with all reasonable rules and regulations
promulgated by Landlord by notice to Tenant; and such rules and regulations
shall have the same force and effect as if originally contained in this Lease.
22. Failure of Performance by Tenant. If Tenant shall default under this
Lease, Landlord may, at its election, immediately or at any time thereafter,
without waiving any claim for breach of agreement, and without notice to Tenant,
cure such default or defaults for the account of Tenant, and the cost to
Landlord thereof plus interest at the Default Interest Rate shall be deemed to
be additional Rent and payable on demand. Tenant shall pay all reasonable
attorneys' fees, costs and expenses incurred by Landlord in enforcing the
provisions of this Lease, suing to collect Rent or to recover possession of the
Leased Premises, whether the lawsuit or other action was commenced by Landlord
or by Tenant.
23. Limitations on Landlord's Liability.
(A) "Tenant" includes the persons named expressly as Tenant and its
transferees, successors and assigns. Except as otherwise provided in the next
sentence, the agreements and conditions contained in this Lease shall be binding
on and inure to the benefit of the parties hereto and their transferees, legal
representatives, successors and assigns. "Landlord" means only the then-owner of
the lessor's interest in this Lease, and in the event of a transfer by Landlord
of its interest in this Lease, the transferor shall be automatically released
from all liability and obligations as Landlord subsequent to the transfer.
(B) Notwithstanding anything to the contrary, Tenant agrees it will look
solely to Landlord's estate in the Shopping Center as the sole asset for
collection of any claim, judgment or damages or enforcement of any other
judicial process
<PAGE>
requiring payment of money. Tenant agrees that no other assets of Landlord shall
be subject to levy, execution or other procedures to satisfy Tenant's rights or
remedies.
24. Miscellaneous Provisions.
(A) This Lease contains the entire agreement between the parties. No oral
statements or representations or written matter not contained in this Lease
shall have any force or effect. This Lease cannot be modified or terminated
orally, but only by a writing signed by Landlord and Tenant, except for a
termination expressly permitted by this Lease. If more titan one party executes
this Lease as "Tenant", the liability of all such signatories shall be joint and
several. Neither this Lease nor any memorandum, assignment or memorandum of
assignment thereof shall be recorded in any public records without Landlord's
prior written consent. Any obligation of any person shall be performed at its
sole cost and expense unless a contrary intent is expressly stated herein. Each
provision of this Lease shall be valid and enforced to the fullest extent
permitted by law. However, if any provision or the application thereof to any
person or circumstance shall to any extent be declared by a court to be invalid,
the remainder of this Lease shall not be affected. If Tenant is not an
individual, the person signing this document on behalf of Tenant represents (by
such signature) that he or she has been duly authorized by Tenant to execute
this document and that such signature creates a binding obligation of Tenant.
(B) The term "Default Interest Rate" as used in this Lease shall mean
Fifteen (15%) Percent per annum or the maximum interest rate permitted by law,
whichever is lower.
(C) Notwithstanding any other provision in this Lease, Landlord in its
absolute discretion shall have the option at any time to relocate Tenant from
the Leased Premises (the "Present Premises") into other premises in the Shopping
Center (the "New Premises"). Landlord shall give Tenant at least forty-five (45)
days notice of the approximate date Tenant is to move to the New Premises.
Landlord shall prepare the New Premises to the same extent that Landlord
prepared the Present Premises. The New Premises will have at least the same
amount of square foot area as the Present Premises. Landlord shall pay for
moving Tenant's inventory, fixtures, equipment and storefront sign to the New
Premises. Tenant shall cooperate with Landlord. Tenant will move its business
operations to the New Premises within forty-eight (48) hours after Landlord
notifies Tenant that it l~as substantially completed its preparation of the New
Premises. Tile New Premises will become the Leased Premises (instead of the
Present Premises) and the Rent (including all of Tenant's other monetary
obligations to Landlord under the Lease) and all the other terms and provisions
of this Lease shall be transferred to and continue to apply. without
interruption, to the New Premises from and after the date Tenant is required to
move pursuant to this Article.
(D) The submission of this Lease to Tenant for review or Tenant's signature
does not constitute a reservation of, or option for, the Leased Premises or a
representation that the business terms have been approved by executive officers
of Landlord or Landlord's Board of Directors. This Lease shall become effective
as a lease or agreement only upon mutual execution and delivery. A lease which
is not fully executed and delivered cannot be enforced in any manner and cannot
give rise to any rights or remedies.
(E) The provisions of this Lease shall be construed, in all respects,
without reference to any rule or canon requiring or permitting the construction
of provisions of documents against the interest of the party responsible for the
drafting of the same, it being the intention and agreement of the parties that
this Lease be conclusively deemed to be the joint product of both parties and
their counsel. Furthermore, the parties agree that this Lease may be executed
with revision markings (so-called "blacklining") appearing in the execution copy
(i.e., deleted text is overstricken and newly-inserted text is underscored or in
boldface); such "blacklining" shall not be accorded any significance or taken
into account in any way; this Lease shall be
<PAGE>
construed for all purposes as if all overstricken text were deleted and never
included in this Lease and all bold or underscored text were not bold or
underscored.
25. Unavoidable Delays. Where either party hereto is required to do
any act but is untimely in completing the act, the time attributable directly to
delays caused by an Act of God, hurricane, tornado, rain, snow, cold or other
weather, war, civil commotion, fire, or other casualty, labor difficulties, or
shortages of labor, materials or equipment, government regulation, or other
causes beyond such party's reasonable control shall not be counted in
determining the time during which such act is to be completed. In any case where
work is to be paid for out of insurance proceeds or condemnation awards, due
allowance shall be made for delays in the collection of such proceeds and
awards. The provisions of this Article shall not be applicable at all to excuse
or permit delay of the time for Tenant to pay Rent or other money or to obtain
and maintain insurance policies. If Landlord is unable to deliver the Leased
Premises by the end of one (1) year after Landlord's execution of this Lease,
then either party may terminate this Lease by giving thirty (30) days written
notice to the other at any time prior to tender.
26. Sole Broker. Tenant represents that no broker, finder, or other
person entitled to compensation (other than the Broker identified in Article 1)
was involved in this Lease, and that no conversations or prior negotiations were
had with any broker, finder or other possible claimant other than the Broker
concerning the renting of the Leased Premises. Tenant shall defend, indemnify
and hold Landlord harmless against any claims for compensation (including legal
fees incurred by Landlord) arising out of any conversations or negotiations had
by Tenant with anyone other than the Broker.
27. Estoppel Certificates. From time to time, within ten (10) days
following written notice, Tenant shall deliver to Landlord a signed and
acknowledged written statement certifying: the date of this Lease and that this
Lease is in full force and effect and unmodified except as stated; the monthly
Base Rent payable during the Lease Term; the date to which the Rent and other
payments have been paid; whether Landlord is in default, or if there are any
offsets, defenses, or counterclaims claimed by Tenant, and if a default, offset,
defense, or counterclaim is claimed, specifying the specific nature and default;
and stating any additional matters requested by Landlord or a mortgagee.
28. Shopping Center Changes. Neither Exhibit A nor this Lease is a
warranty by Landlord that the Shopping Center will remain as shown. Landlord may
relocate, increase, reduce or otherwise change the number, dimensions, or
locations of the parking areas, drives, exits, entrances, walks and other Common
Areas or buildings. If Landlord desires to modernize the facade of the Shopping
Center, Tenant shall, upon request of Landlord, install a new exterior sign and
improve its storefront, following the design of Landlord's architect. Landlord
reserves the right to use portions of the Common Area for construction-related
activities and to erect temporary scaffolding in front of the Leased Premises.
Tenant waives any claim for rent abatement, loss of business or damages arising
out of any reasonable and temporary inconvenience allegedly experienced by
Tenant during the course of any alteration, improvement or modernization, or
during any repair activities in which Land loud is engaged.
29. Notices. All notices intended to impose liability on the other
party or exercise a right ("Notice") shall be in writing and sent by certified
or registered mail, return receipt requested, or delivered by a nationally
recognized overnight courier (such as Federal Express or UPS) and in order to be
effective a copy of any notice of Landlord's default must be sent by Tenant to
the holders of any mortgages, ground leases or security interests as per Article
16(C). Notices shall be sent to the address set forth in Article 1 or to such
other address as may be designated by notice. Notices shall be effective the day
after the notice was sent, or if by courier delivery, the day delivered. The
purported giving of notice or exercise by Tenant of any right, option or
privilege by any means other than written notice given in strict compliance with
this Article shall be null, void and of no force or effect, even if any such
other means of communication succeeds in conveying actual notice. If courier
delivery is refused or not able to be made, the day delivery was first attempted
shall be deemed the delivery date. If Tenant defaults under the Lease then.
either concurrently with its notice to Tenant or at some time prior to the date
Tenant's rights under the Lease are
<PAGE>
extinguished because of the default(s). Landlord shall send a copy of the
default notice to David R. Zimmerman and Linda S. Zimmerman at 3728 E. 200 N.,
Lafayette, IN 47905 and Edward Chosnek at 5612 Prophets Rock Road, West
Lafayette, IN 47906 (the "Concerned Party"). Landlord will allow the Concerned
Party a fifteen day period (commencing not sooner than the expiration of
Tenant's cure period) in which to cure the default(s) on behalf of Tenant.
(END OF RIDER A)
SEE RIDER B ATTACHED HERETO AND HEREBY MADE A PART OF THIS LEASE.
<PAGE>
RIDER B
30. Notwithstanding anything provided herein, if there is any discrepancy
between Rider "A" and Rider "B", Rider "B" shall prevail.
31. Sign Criteria - Reference to Article 10(D). (A) Tenant must obtain
Landlord's written approval of its sign design drawings prior to the fabrication
and installation of Tenant's sign. Flashing, neon or moving lights on signs are
prohibited and the sign shall be placed in the designated area in such a manner
that it does not extend above the parapet of facade. In the event Landlord
revises the Shopping Center's signage criteria, or if Tenant desires to
materially alter his existing signage, Tenant shall then be required to submit
drawings and specifications of said signage prior to erection and fabrication
for Landlord's written approval, demonstrating compliance with any new criteria
Landlord has established. The sign shall be governed by all applicable
provisions of this Lease, including, but not limited to, Tenant's duty to repair
(Article 10) and insure (Article 11) the sign. The sign shall be subject to all
governmental authorities' codes and restrictions.
(B) Upon the expiration or sooner termination of this Lease, Tenant
shall remove its sign and restore the sign band/fascia to its original
condition.
32. Utility Deregulation.
(A) Landlord Controls Selection. Landlord and Tenant acknowledge that
new utility deregulation may allow Landlord to change electric service providers
in the future. If such deregulation goes into effect, Landlord shall have the
right at any time and from time to time during the Lease Term to either (i)
contract for service from a different company or companies providing electricity
service (each such company shall hereinafter be referred to as an "Alternative
Service Provider") or (ii) continue to contract for service from the present
electric utility company (the "Electric Service Provider").
(B) Tenant Shall Give Landlord Access. Tenant shall cooperate with
Landlord, the Electric Service Provider, and any Alternative Service Provider,
at all times as reasonably necessary, and allow the foregoing to have reasonable
access to any and all electric lines, feeders, risers, wiring, and any other
machinery within the Leased Premises.
(C) Landlord Not Responsible for Interruption of Service. Landlord
shall not be liable or responsible for any loss, damage, or expense that Tenant
may sustain or incur by reason on any change, failure, interference, disruption,
or defect in the supply or character of the electric energy furnished to the
Leased Premises, or if the quantity or character of the electric energy supplied
by the Electric Service Provider or any Alternative Service Provider is no
longer available or suitable for Tenant's requirements, and no such change,
failure, defect, unavailability, or unsuitability shall constitute an actual or
constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of rent, or relieve Tenant from any of its obligations under the
Lease.
33. Plans and Specs. (A) Within thirty (30) days of the date Landlord executes
this Lease, Tenant shall submit complete detailed drawings and specifications in
sufficient detail to obtain all necessary building permits (hereinafter
collectively referred to as "Plans") for all the work to be done by Tenant to
the Leased Premises. Each of Tenant's Plans submissions shall include two sets
of full-size construction drawings and specifications, as well as one set of
computerized construction drawings saved on 3.5" diskettes in .DWG or .DXF file
format. If Tenant fails to deliver these Plans to Landlord timely, Landlord
shall have the right to terminate this Lease and retain the Tenant's entire
security deposit as liquidated damages.
<PAGE>
(B) Landlord shall inform Tenant of any objections to the Plans
within thirty (30) days after receipt; then Tenant, within fifteen (15) days,
shall deliver to Landlord corrected Plans, which Landlord shall accept or reject
within the next fifteen (15) days.
(C) Tenant must obtain Landlord's approval of its drawings and
specifications prior to commencing any of its work at the Leased Premises.
Landlord's approval of Tenant's Plans shall not constitute an affirmation by
Landlord that they conform to law or impose any liability on Landlord. Tenant
shall immediately apply for all permits necessary for its work. After the
permits are issued and Landlord has completed the work, if any, that it has
specifically agreed in this Lease to do, Tenant shall promptly commence and
complete Tenant's work in conformity with the Plans, building department
requirements and all relevant laws and regulations. Before commencing its work,
Tenant will deliver to Landlord all of the following: (1) A contractor's
completion bond, in favor of Landlord as obligee, in form approved by Landlord,
issued by a surety company satisfactory to Landlord, guaranteeing completion of
Tenant's work in accordance with the Plans free of liens are security
agreements, and (2) comprehensive general liability insurance from Tenant's
contractor naming Landlord as additional insured for at least $5,000,000
combined single limit for bodily injury and property damage, and (3) the general
contractor's written indemnity agreement that the contractor shall indemnify,
defend, save and hold harmless Landlord, its mortgagee, agents, employees and
assigns, from all liabilities, claims, losses, liens, damages and suits of
whatsoever nature for personal injury, death or property damage alleged to arise
out of the work performed under the contract, whether by contractor or by any
subcontractor, and whether asserted against Landlord or contractor, and (4)
contractor's Workers' Compensation and Occupational Disease insurance with
statutory limits and employer's liability with a limit of at least $1,000,000.
(D) Tenant shall comply with all legal requirements during its work
and, when completed, Tenant's work must comply with all laws, ordinance,
regulations or orders of public authority, and with the requirements of the
appropriate Fire Insurance Rating Organization and Landlord's insurance company.
Prior to opening for business, Tenant shall obtain and deliver to Landlord the
certificate of occupancy (or its local equivalent) for the Leased Premises. If a
temporary Certificate of Occupancy is issued, Tenant shall deliver a copy of
that document to Landlord and then, upon issuance of a permanent Certificate of
Occupancy, immediately forward a copy of it to Landlord.
(E) If Landlord or its representative inspects the Leased Premises
and determines that Tenant's work is not being done in accordance with the
approved Plans, Tenant shall correct any deficiencies or omissions immediately.
(F) Tenant shall not permit any mechanic's or other lien to be filed
either against the Leased Premises or the Shopping Center or Tenant's leasehold
interest by reason or work, labor, services or materials supplied. If any lien
is filed, Tenant shall, within ten (10) days after notice of the filing, cause
it to be discharged of record, failing which Landlord, in addition to any other
right or remedy, may (but shall not be obligated to) discharge such lien by
deposit, bonding proceedings or by payment of the claimed amount for Tenant's
account. Any amounts so paid, together with interest at the Lease Interest Rate
from the date of payment, shall be paid by Tenant to Landlord on demand as
additional Rent. Nothing herein shall be construed as the consent or required of
Landlord to any contractor, subcontractor, laborer or materialman to perform
work or furnish materials. Furthermore, nothing herein shall give Tenant the
authority to contract for or permit the rendering of any service or furnishing
of any material that could give rise to the filing of any lien.
(G) Tenant shall require contractor to furnish to both Tenant and
Landlord on completion of the work a guaranty, for a period of one (1) years
from final completion of all work, that all work and materials will be free from
all defects and that all apparatus (e.g., air-conditioning equipment) will
develop capacities and characteristics specified in the approved Plans upon use,
and that whenever within one (1) years of the final acceptance of the work,
contractor is notified in writing by either Landlord or Tenant that any
equipment, material or workmanship is defective or in some way does not meet
specifications,
<PAGE>
contractor shall immediately replace, repair or otherwise correct the defect or
deficiency without cost to Landlord. Additionally, the following items shall be
guaranteed for periods in excess of the one (1) year: Motor Compressor Units -
five (5) years; Exterior Walls - two (2) years (guaranteed against air and
moisture leakage); Roofing - two (2) years.
(H) In the event Tenant's work involves the construction of a
demising wall, Tenant shall physically indicate the proposed location of the
demising wall on the floor of the Leased Premises, notify Landlord's architect
that the location has been marked and that construction of the wall is about to
begin, and give Landlord's architect a reasonable opportunity to come to the
Leased Premises and inspect the proposed placement of the wall.
(I) For any Tenant work that involves penetration of the roof
surface, Tenant shall employ Landlord's roofing contractor, thereby ensuring
that the roofing bond and/or warranty will remain in full force and effect. The
maintenance of Tenant's roof work will be the sole responsibility of Tenant and
shall include the repair and adjoining areas that might have been affected due
to water penetration through Tenant's roof work.
END OF RIDER B
<PAGE>
EXHIBIT "A"
NOTE: THIS SITE PLAN SHOWS THE APPROXIMATE LOCATION OF THE LEASED PREMISES AND
THE APPROXIMATE CONFIGURATION OF THE LEASED PREMISES AND ADJACENT AREAS, AND IS
ONLY ILLUSTRATIVE OF THE SIZE AND RELATIONSHIP OF THE STORES AND COMMON AREAS
GENERALLY, ALL OF WHICH ARE SUBJECT TO CHANGE. THE SHOWING OF ANY NAMES OF
TENANTS, PARKING SPACES, CURB CUTS OR TRAFFIC CONTROLS SHALL NOT BE DEEMED TO BE
A REPRESENTATION OR WARRANTY BY LANDLORD THAT ANY TENANTS WILL BE AT THE
SHOPPING CENTER OR THAT ANY PARKING SPACES, CURB CUTS OR TRAFFIC CONTROLS WILL
CONTINUE TO EXIST.
THE LEASED PREMISES SHALL BE THE STOREROOM IDENTIFIED BELOW:
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), entered into this 20th
day of December, 1999, and effective January 1, 2000, by and between Lafayette
Community Bancorp, an Indiana corporation ("Employer"), and David R. Zimmerman,
a resident of Tippecanoe County, Indiana ("Employee").
WITNESSETH
WHEREAS, Employer desires to encourage Employee to make valuable
contributions to Employer's business operations and not to seek or accept
employment elsewhere;
WHEREAS, Employee desires to be assured of a secure minimum
compensation from Employer for his services over a defined term;
WHEREAS, Employer desires to assure the continued services of
Employee on behalf of Employer on an objective and impartial basis and without
distraction or conflict of interest in the event of an attempt by any person to
obtain control of Employer;
WHEREAS, Employer recognizes that when faced with a proposal for a
change of control of Employer, Employee will have a significant role in helping
the Board of Directors assess the options and advising the Board of Directors on
what is in the best interests of Employer and its shareholders, and it is
necessary for Employee to be able to provide this advice and counsel without
being influenced by the uncertainties of his own situation;
WHEREAS, Employer desires to provide fair and reasonable benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, Employer desires reasonable protection of its confidential
business and customer information which it will develop over the years at
substantial expense and assurance that Employee will not compete with Employer
for a reasonable period of time after termination of his employment with
Employer, except as otherwise provided herein.
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual covenants and undertakings herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employer and Employee, each intending to be legally bound, covenant and agree as
follows:
1. Employment. Upon the terms and subject to the conditions set forth
in this Agreement, Employer employs Employee as Employer' s president and chief
executive officer, and Employee accepts such employment.
2. Positions. (a) Officer. Employee agrees to serve as Employer's
president and chief executive officer and to perform such duties in that office
as may reasonably be assigned to him by Employer's Board of Directors; provided,
however that such duties shall be performed in or from the principal executive
offices of Employer, currently located in Lafayette, Indiana, and shall be of
the character as those generally associated with the office of president and
chief executive officer. Employee shall not be required to be absent from the
location of the principal executive offices of Employer on travel status or
otherwise more than 45 days in any calendar year. Employer shall not, without
the written consent of Employee, relocate or transfer Employee
<PAGE>
to a location more than 30 miles from his principal residence. Although while
employed by Employer, Employee shall devote substantially all his business time
and efforts to Employer's business and shall not engage in any other related
business. Employee may use his discretion in fixing his hours and schedule of
work consistent with the proper discharge of his duties.
(b) Board of Directors. During the Term of this Agreement, Employer
agrees to elect Employee as one of the directors of Lafayette Community Bank
("Bank") and further agrees to use its best efforts to cause Employee to be
nominated and elected as a director of Employer, including in such latter case
to solicit proxies and vote pursuant to such proxies in favor of Employee's
election as a director of Employer; subject in all cases to the fiduciary duties
of the Board of Directors of Bank and Employer and the requirements of
government regulatory agencies or authorities.
3. Term. The term of this Agreement shall begin on January 1, 2000
(the "Effective Date") and shall end on the date which is three years following
such date; provided, however, that such term shall be extended automatically for
an additional year on each anniversary of the Effective Date, unless either
party hereto gives written notice to the other party not to so extend prior to
an anniversary, in which case no further automatic extension shall occur and the
term of this Agreement shall end two years subsequent to the anniversary as of
which the notice not to extend for an additional year is given (such term,
including any extension thereof shall herein be referred to as the "Term").
Notwithstanding the foregoing, this Agreement shall automatically terminate (and
the Term of this Agreement shall thereupon end) without notice when Employee
attains 65 years of age.
4. Salary. Employee shall receive an annual minimum salary of One
Hundred and five thousand Dollars ($105,000) ("Base Compensation") payable at
regular intervals in accordance with Employer's normal payroll practices in
effect from time to time. The Board of Directors of Employer shall review
Employee's salary on an annual basis and may, in its discretion, consider and
declare from time to time increases in the Base Compensation that it pays
Employee. Any and all increases in Employee's salary pursuant to this section
shall cause the level of Base Compensation to be increased by the amount of each
such increase for purposes of this Agreement. The increased level of Base
Compensation as provided in this section shall become the level of Base
Compensation for the remainder of the Term of this Agreement until there is a
further increase in Base Compensation as provided herein. .
5. Benefit Programs. During the term of this Agreement, Employee
shall be entitled to participate in or receive benefits under (i) any life,
health, hospitalization, medical, dental, disability or other insurance policy
or plan, (ii) pension, retirement or employee stock ownership plan, (iii) bonus
or profit-sharing plan or program, (iv) deferred compensation plan or
arrangement, and (v) any other employee benefit plan, program or arrangement,
made available by Employer on the date of this Agreement and from time to time
in the future to Employer's directors, officers and employees on a basis
consistent with the terms, conditions and overall administration of the
foregoing plans, programs or arrangements and with respect to which Employee is
otherwise eligible to participate or receive benefits. The foregoing shall not
prohibit Employer, in its sole discretion, from amending, modifying, freezing,
suspending or terminating such plans, if any, from time to time in the future.
6. General Policies. (a) So long as Employee is employed by Employer
pursuant to this Agreement, Employee shall receive reimbursement from Employer
for all reasonable business expenses incurred in the course of his employment by
Employer, upon submission to Employer of written vouchers and statements for
reimbursement. Employee shall attend, at his discretion, those professional
meetings, conventions, and/or similar functions that he deems appropriate and
useful for purposes of keeping abreast of current developments in the industry
and/or promoting the interests of Employer.
(b) So long as Employee is employed by Employer pursuant to this
Agreement, Employee shall be entitled to office space and working conditions
consistent with his position as president and chief executive officer.
<PAGE>
(c) During the term of this Agreement, Employee shall be entitled to
four (4) weeks per calendar year of paid vacation, which shall be utilized at
such times when his absence will not materially impair Employer's normal
business functions. In addition to the vacation described above, Employee also
shall be entitled to all paid holidays customarily given by Employer to its
officers.
(d) All other matters relating to the employment of Employee by
Employer not specifically addressed in this Agreement shall be subject to the
general policies regarding employees of Employer in effect from time to time.
7. Termination. Subject to the respective continuing obligations of
the parties, including but not limited to those set forth in subsections 9(a),
9(b), 9(c), and 9(d) hereof, Employee's employment by Employer may be terminated
prior to the expiration of the Term of this Agreement as follows:
(a) Employer, by action of its Board of Directors and upon written notice to
Employee, may terminate Employee's employment with Employer immediately for
cause. For purposes of this subsection 7(a), "cause" shall be defined as (i)
Employee's personal dishonesty of a material nature affecting Employee's ability
to perform his duties under this Agreement, (ii) Employee's incompetence in the
performance of his duties and obligations under this Agreement, (iii) Employee's
willful misconduct or gross negligence, (iv) Employee's breach of fiduciary duty
involving personal profit, (v) Employee's intentional failure to perform stated
duties, (vi) Employee's conviction of any criminal offense which involves
dishonesty or breach of trust or conviction of any felony, (vii) any requirement
of a government agency or authority having jurisdiction over Employer or Bank,
or (viii) any material violation by Employee of any material provision or
covenant of this Agreement.
(b) Employer, by action of its Board of Directors, may terminate Employee's
employment with Employer without cause at any time; provided, however, that the
"date of termination" for purposes of determining benefits payable to Employee
under subsection 8(b) hereof shall be the date which is 30 days after Employee
receives written notice of such termination.
(c) Employee, by written notice to Employer, may terminate his employment with
Employer immediately for cause. For purposes of this subsection 7(c), "cause"
shall be defined as (i) any action by Employer's Board of Directors to remove
the Employee as president and chief executive officer of Employer without the
prior written consent of Employee, except where the Employer's Board of
Directors properly acts to remove Employee from such office for "cause" as
defined in subsection 7(a) hereof, (ii) any action by Employer's Board of
Directors to materially limit, increase, or modify Employee's duties and/or
authority as president and chief executive officer of Employer (including his
authority, subject to corporate controls no more restrictive than those in
effect on the date hereof, to hire and discharge employees who are not bona fide
officers of Employer) without the prior written consent of Employee, except such
change in duties as may be required by any government agency or authority having
jurisdiction over Employer or Bank, or as may be required for the Board to
perform its fiduciary obligations, (iii) any failure of Employer to obtain the
assumption of the obligation to perform this Agreement by any successor, as
contemplated in Section 18 hereof; (iv) any removal of Employee from or any
failure by the shareholders of Employer and Bank to elect or re-elect the
Employee as a director of Employer and Bank; (v) any removal of employee from or
failure of the Board of Directors of Employer and Bank to elect or re-elect
Employee as president and chief executive officer of Employer or such other
office requiring the performance of the duties of president and chief executive
officer of Employer, except as a result of his disability, or (vi) any material
violation by Employer of any material provision or covenant of this Agreement.
(d) Employee, upon sixty (60) days written notice to Employer, may terminate his
employment with Employer without cause.
<PAGE>
(e) Employee's employment with Employer shall terminate in the event of
Employee's death or disability. For purposes hereof, "disability" shall be
defined as Employee's inability by reason of illness or other physical or mental
incapacity to perform the duties required by his employment for any consecutive
One Hundred Eighty (180) day period, provided that notice of any termination by
Employer because of Employee's "disability" shall have been given to Employee
prior to the full resumption by him of the performance of such duties.
(f) Nothing contained in this Agreement shall impair, affect or change any
requirements otherwise imposed upon Employer or Employee by applicable statute,
law, rule, regulation or other legal requirement, including, without limitation,
Employee's COBRA rights upon termination of employment.
8. Termination Payments. In the event of termination of Employee's
employment with Employer pursuant to section 7 hereof, compensation shall
continue to be paid by Employer to Employee as follows:
(a) In the event of termination pursuant to subsection 7(a) or 7(d),
compensation provided for herein (including Base Compensation) shall continue to
be paid, and Employee shall continue to participate in the employee benefit,
retirement, and compensation plans and other perquisites as provided in sections
5 and 6 hereof, through the date of termination specified in the notice of
termination. Any benefits payable under insurance, health, retirement and bonus
plans as a result of Employee's participation in such plans through such date
shall be paid when due under those plans. The date of termination specified in
any notice of termination pursuant to subsection 7(a) shall be no later than the
last business day of the month in which such notice is provided to Employee.
(b) (i) In the event of termination pursuant to subsection 7(b)
or 7(c), compensation provided for herein (including Base
Compensation) shall continue to be paid, and Employee shall
continue to participate in the employee benefit,
retirement, and compensation plans and other perquisites as
provided in sections 5 and 6 hereof, through the date of
termination specified in the notice of termination. Any
benefits payable under insurance, health, retirement and
bonus plans as a result of Employee's participation in such
plans through such date shall be paid when due under those
plans.
(ii) If the termination occurs during the two-year period
following a Change of Control, Employee shall be entitled
to receive from Employer an aggregate amount equal to 2.99
times the average annual base salary and 2.99 times the
average bonus paid to the Employee by the Employer and/or
all subsidiaries in the last fiscal year prior to the date
of termination. Payment of such amount shall be made in
semi-monthly installments each equal to 1/72nd of such
amount payable in the same sequence of semi-monthly
payments as followed by the Employer for the payment of
salary, beginning on the first salary payment date
following the date of termination and continuing until paid
in full, or at the option of Employee, in a lump sum no
later than thirty (30) calendar days following the date of
termination.
(iii) If the termination does not occur during the two-year
period following a Change of Control, Employee shall be
entitled to continue to receive from Employer his Base
Compensation at the rates in effect at the time of
termination for the period of time equal to the remaining
Term of the Agreement. Payment of such amount shall be made
in semi-monthly installments in the same sequence of
semi-monthly payments as followed by the Employer for the
payment of salary, beginning on the first salary payment
date following the date of termination and continuing until
paid in full, or at the option of Employee, in a lump sum
no later than thirty (30) calendar days following the date
of termination.
<PAGE>
(iv) In lieu of the COBRA coverage otherwise available to
the Employee, during the greater of 18 months or the period
of time equal to the remaining Term of the Agreement,
Employer will maintain in full force and effect for the
continued benefit of Employee each employee welfare benefit
plan (as such term is defined in the Employee Retirement
Income Security Act of 1974, as amended) in which Employee
was entitled to participate immediately prior to the date
of his termination, unless an essentially equivalent and no
less favorable benefit is provided by a subsequent employer
of Employee. If the terms of any employee welfare benefit
plan of Employer do not permit continued participation by
Employee, Employer will arrange to provide to Employee a
benefit substantially similar to, and no less favorable
than, the benefit he was entitled to receive under such
plan at the end of the period of coverage.
(v) For purposes of this Agreement, a "Change of Control"
shall mean (A) any merger, tender offer, consolidation or
sale of substantially all of the assets of Employer, or
related series of such events, as a result of which: (1)
shareholders of Employer immediately prior to such event
hold less than 50% of the outstanding voting securities of
Employer or its survivor or successor immediately after
such event; (2) persons holding less than 25% of such
securities before such event own more than 50% of such
securities after such event; or (3) persons constituting a
majority of the Board of Directors were not directors of
Employer for at least 24 preceding months; (B) any sale,
lease, exchange, transfer, or other disposition of all or
any substantial part of the assets of the Employer; or (C)
any acquisition by any person or entity, directly or
indirectly, of the beneficial ownership of 40% or more of
the outstanding voting stock of the Employer, excluding
acquisitions by individuals or entities who at the date of
this Agreement were either a Director of the Employer or
the beneficial owner (either directly or indirectly) of 10%
or more of the voting securities of the Employer.
(c) In the event of termination pursuant to subsection 7(e),
compensation provided for herein (including Base Compensation) shall continue to
be paid, and Employee shall continue to participate in the employee benefit,
retirement, and compensation plans and other perquisites as provided in sections
5 and 6 hereof, (i) in the event of Employee's death, through the date of death,
or (ii) in the event of Employee's disability, through the date of proper notice
of disability as required by subsection 7(e). Any benefits payable under
insurance, health, retirement and bonus plans as a result of Employer's
participation in such plans through such date shall be paid when due under those
plans.
(d) Employer will permit Employee or his personal representative(s)
or heirs, during a period of three months following Employee's termination of
employment (as specified in the notice of termination) by Employer for the
reasons set forth in subsections 7(b) or (c), if such termination follows a
Change of Control, to require Employer, upon written request, to purchase all
outstanding stock options previously granted to Employee under any Employer
stock option plan then in effect whether or not such options are then
exercisable or have terminated at a cash purchase price equal to the amount by
which the aggregate "fair market value" of the shares subject to such options on
the date of termination specified in the notice of termination exceeds the
aggregate option price for such shares. For purposes of this Section 8(d), "fair
market value" shall mean between the reported closing bid and ask prices for the
shares of common stock of the Company as quoted by the National Association of
Securities Dealer Automated Quotation System ("NASDAQ"). If the common stock of
the Employer is not quoted on NASDAQ, the fair market value shall be determined
by the Compensation Committee of the Board based upon quotations of the entities
which make a market in the Company's stock. In the event no entities make a
market in the Company's stock, "fair market value" shall mean the amount agreed
upon by the Employee and the Company. If the Employee and the Company are unable
to reach an agreement regarding the fair market value of the stock within ten
(10) days of the date of termination specified in the notice of termination,
then the Employee and the Company shall each select an appraisal firm and the
two firms shall determine the fair market value of the Employee's stock. If the
two appraisal firms cannot agree upon the
<PAGE>
value within thirty (30) days of their appointment, they shall appoint a third
appraiser, the decision of a majority of the three (3) appraisers shall be final
and binding on the Employee and the Company; provided, however, the Employee may
elect, by notifying the Company within thirty (30) days after the date of
termination specified in the notice of termination, to have the following
definition of "fair market value" apply for purposes of this Section 8(d): the
per share book value of the Company's stock, calculated in accordance with
generally accepted accounting principles as of the last day of the month
coinciding with or immediately preceding the date of termination as specified in
the notice of termination. The costs of any appraisals shall be paid one-half by
the Employer and one-half by the Employee or his personal representative(s) or
heirs, as the case may be.
9. Confidentiality and Non-Compete Covenants. In order to induce
Employer to enter into this Agreement, Employee hereby agrees as follows:
(a) While Employee is employed by Employer and for a period of two
years after termination of such employment for reasons other than those set
forth in subsections 7(b) or (c) of this Agreement, Employee shall not divulge
or furnish any trade secrets (as defined in IND. CODE Section 24-2-3-2) of
Employer or any confidential information acquired by him while employed by
Employer concerning the policies, plans, procedures or customers of employer to
any person, firm or corporation, other than Employer or upon its written
request, or use any such trade secret or confidential information directly or
indirectly for Employee's own benefit or for the benefit of any person, firm or
corporation other than Employer, since such trade secrets and confidential
information are confidential and shall at all times remain the property of
Employer.
(b) For a period of two years after termination of Employee's
employment by Employer for reasons other than those set forth in subsections
7(b) or (c) of this Agreement, Employee shall not directly or indirectly (i)
provide banking or bank-related services to or solicit the banking or
bank-related business of any customer of Employer at the time of such provision
of services or solicitation which Employee served either alone or with others
while employed by Employer in any city, town, borough, township, village or
other place in which Employee performed services for Employer while employed by
it, (ii) assist any actual or potential competitor of Employer to provide
banking or bank-related services to or solicit any such customer's banking or
bank-related business in any such place, or (iii) solicit or encourage any
employee of Employer or Bank to terminate his or her employment with Employer or
Bank.
(c) While Employee is employed by Employer and for a period of one
year after termination of Employee's employment by Employer for reasons other
than those set forth in subsections 7(b) or (c) of this Agreement, Employee
shall not, directly or indirectly, as principal, agent, or trustee, or through
the agency of any corporation, partnership, trade association, agent or agency,
engage in any banking or bank-related business or venture which competes with
the business of Employer as conducted during Employee's employment by Employer
within a radius of fifty (50) miles of Employer's main office.
(d) If Employee's employment by Employer is terminated for any
reason, Employee will turn over immediately thereafter to Employer all business
correspondence, letters, papers, reports, customers' lists, financial
statements, credit reports or other confidential information or documents of
Employer or its affiliates in the possession or control of Employee, all of
which writings are and will continue to be the sole and exclusive property of
Employer or its affiliates.
If Employee's employment by Employer is terminated during the Term of
this Agreement for reasons set forth in subsections 7(b) or (c) or this
Agreement, Employee shall have no obligations to Employer with respect to
noncompetition and nonsolicitation under subsections 9(b) and 9(c), but the
obligations with respect to trade secrets, confidential information and property
under subsections 9(a) and 9(d) shall continue.
<PAGE>
10. Notice of Termination. Any termination of Employee's employment
with Employer as contemplated by section 7 hereof, except in the circumstances
of Employee's death, shall be communicated by written "Notice of Termination" by
the terminating party to the other party hereto. Any "Notice of Termination"
pursuant to subsections 7(a), 7(c) or 7(e) shall indicate the specific
provisions of this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for such
termination.
11. Suspensions. If Employee is suspended and/or temporarily
prohibited from participating in the conduct of Employer's or any affiliates'
affairs by a notice served under section 8(e)(3) or (g)(1) of the Federal
Deposit Insurance Act (12 U.S.C. Section 1818(e)(3) and (g)(1)), Employer's
obligations under this Agreement shall be suspended as of the date of service,
unless stayed by appropriate proceedings. If the charges in the notice are
dismissed, Employer shall (i) pay Employee all or part of the compensation
withheld while its obligations under this Agreement were suspended and (ii)
reinstate (in whole or in part) any of its obligations which were suspended.
12. Removal. If Employee is removed and/or permanently prohibited
from participating in the conduct of Employer's or any affiliates' affairs by an
order issued under section 8(e)(4) or (g)(1) of the Federal Deposit Insurance
Act (12 U.S.C. Section 1818(e)(4) or (g)(1)), all obligations of Employer under
this Agreement shall terminate as of the effective date of the order, but vested
rights of the parties to the Agreement shall not be affected. If Employer is in
default (as defined in section 3(x)(1) of the Federal Deposit Insurance Act),
all obligations under this Agreement shall terminate as of the date of default,
but this provision shall not affect any vested rights of Employer or Employee.
13. Regulatory Oversight. All obligations under this Agreement may be
terminated except to the extent determined that the continuation of the
Agreement is necessary for the continued operation of Employer by order of any
state or federal banking regulatory agency with supervision of the Employer or
any of its affiliates, unless stayed by appropriate proceedings, and Employer
shall be under no obligation to perform any of its obligations hereunder if it
is informed in writing by any state or federal banking regulatory agency with
supervision of the Employer or any of its affiliates that performance of its
obligations would constitute an unsafe or unsound banking practice.
14. Legal Fees. If a dispute arises regarding the termination of
Employee pursuant to section 7 hereof or as to the interpretation or enforcement
of this Agreement and Employee obtains a final judgment in his favor in a court
of competent jurisdiction or his claim is settled by Employer prior to the
rendering of a judgment by such a court, all reasonable legal fees and expenses
incurred by Employee in contesting or disputing any such termination or seeking
to obtain or enforce any right or benefit provided for in this Agreement or
otherwise pursuing his claim shall be paid by Employer, to the extent permitted
by law.
15. Death. Should Employee die after termination of his employment
with Employer while any amounts are payable to him hereunder, this Agreement
shall inure to the benefit of and be enforceable by Employee's executors,
administrators, heirs, distributees, devisees and legatees and all amounts
payable hereunder shall be paid in accordance with the terms of this Agreement
to Employee's devisee, legatee or other designee or, if there is no such
designee, to his estate.
16. Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to Employee: 3728 East 200 North Lafayette,IN 47905
If to Employer: Lafayette Community Bancorp
<PAGE>
2 North 4th Street
Lafayette, Indiana 47901
or to such other address as either party hereto may have furnished to the other
party in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
17. Governing Law. The validity, interpretation, and performance of
this Agreement shall be governed by the laws of the State of Indiana, without
reference to the choice of law principles or rules thereof.
18. Successors and Assigns. Employer shall require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of Employer, by agreement in
form and in substance satisfactory to Employee to expressly assume and agree to
perform this Agreement in the same manner and same extent that Employer would be
required to perform it if no such succession had taken place. Failure of
Employer to obtain such agreement prior to the effectiveness of any such
succession shall be a material intentional breach of this Agreement and shall
entitle Employee to terminate his employment with Employer pursuant to
subsection 7(C) hereof. As used in this Agreement, "Employer" shall mean
Employer as hereinbefore defined and any successor to its business or assets as
aforesaid.
19. Modification. No provision of this agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by Employee and Employer. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a wavier of dissimilar provisions or conditions at the same or
any prior subsequent time. No agreements or representation, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement.
20. Validity. The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement which shall remain in full force and effect.
21. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.
22. Assignment. This Agreement is personal in nature and neither
party hereto shall, without consent of the other, assign or transfer this
Agreement or any rights or obligations hereunder except as provided in section
15 and section 18 above. Without limiting the foregoing, Employee's right to
receive compensation hereunder shall not be assignable or transferable, whether
by pledge, creation of a security interest or otherwise, other than a transfer
by his will or by the laws of descent or distribution as set forth in section 14
hereof, and in the event of any attempted assignment or transfer contrary to
this paragraph, Employer shall have no liability to pay any amounts so attempted
to be assigned or transferred. This Agreement shall be assigned to a yet-to-be
formed subsidiary of the Employer, if and when the Employer commences operations
of a financial institution through such subsidiary. The Employer shall guarantee
obligations of such subsidiary hereunder.
23. Limitations. Anything in this Agreement to the contrary
notwithstanding in the event Employer's independent public accountants determine
that any payment by Employer to or for the benefit of Employee, whether paid or
payable pursuant to the terms of this Agreement, would be non-deductible by
employer for federal income tax purposes because of Section 280G of the Code,
then the amount payable to or for the benefit of Employee pursuant to the
Agreement shall be reduced (but not below zero) to the Reduced Amount. For
purposes of this Section 23, the "Reduced Amount" shall be the amount which
<PAGE>
maximizes the amount payable without causing the payment to be non-deductible by
Employer because of Section 280G of the Code.
24. Document Review. Employer and Employee hereby acknowledge and agree
that each (i) has read this Agreement in its entirety prior to executing it,
(ii) understands the provisions and effects of this Agreement, (iii) has
consulted with such attorneys, accountants and financial and other advisors as
it or he has deemed appropriate in connection with their respective execution of
this Agreement, and (iv) has executed this Agreement voluntarily and knowingly.
EMPLOYEE HEREBY UNDERSTANDS, ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT HAS
BEEN PREPARED BY LEGAL COUNSEL TO THE EMPLOYER AND THAT HE HAS NOT RECEIVED ANY
ADVICE, COUNSEL OR RECOMMENDATION WITH RESPECT TO THIS AGREEMENT FROM SUCH
COUNSEL.
* * * * * *
IN WITNESS WHEREOF, the parties have caused the Agreement to be executed
and delivered as of the 20th day of December, 1999.
LAFAYETTE COMMUNITY BANCORP
("Employer")
By: /S/ EDWARD CHOSNEK
----------------------------
Edward Chosnek, Chairman
of the Board of Directors
/S/ DAVID R. ZIMMERMAN
----------------------------
David R. Zimmerman ("Employee")
EXHIBIT 10.6
LCBBHC, INC. THE FARMERS AND MERCHANTS BANK
P.O. BOX 676 302 S OLD US HWY 41 P O BOX 519
LAFAYETTE, IN 47902 BOSWELL, IN 47921-0519
ACCOUNT #: 1770 - NEW
Loan Number
Date AUGUST 24, 1999
-----------------------------
Maturity Date AUGUST 24, 1999
---------------------
Loan Amount $ 250,000.00
----------------------
Renewal Of
------------------------
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS
"I" includes each borrower above, "You" means the lender, its
jointly and severally. successors and assigns.
For value received, I promise to pay to you, or your order, at your address
listed above the PRINCIPAL sum of TWO HUNDRED FIFTY THOUSAND AND NO/100* * * * *
* * * * * * * * * * * * * * * Dollars $250,000.00
[ ] Single Advance: I will receive all of this principal sum on . No additional
advances are contemplated under this note.
[X] Multiple Advance: The principal sum shown above is the maximum amount of
principal I can borrower under this note. On AUGUST 24, 1999
I will receive the amount of $ 0.00 and future principal advances are
contemplated.
Conditions: The conditions for future advances are BY APPROVAL OF LOAN
OFFICER
[X] Open End Credit: You and I agree that I may borrow up to the maximum
amount of principal more than one time. This feature is subject to all
other conditions and expires on AUGUST 24, 2000.
[ ] Closed End Credit: You and I agree that I may borrow up to the maximum
only one time (and subject to all other conditions).
INTEREST: I agree to pay interest on the outstanding principal balance from
AUG. 24, 1999 at the rate of 8.700% per year until
FIRST CHANGE DATE
[ ] Variable Rate: This rate may then change as stated below.
[ ] The future rate will be EQUAL TO the following index rate: THE
FARMERS AND MERCHANTS BANK'S BASE RATE, WHICH MAY CHANGE AT THEIR
DISCRETION
[ ] No Index: The future rate will not be subject to any internal or
external index. It will be entirely in your control.
[ ] Frequency and Timing: The rate on this note may change as often as
DAILY.
[ ] A change in the interest rate will take effect ON THE SAME DAY.
[ ] Limitations: During the term of this loan, the applicable annual
interest rate will not be more than 21.000% or less than
8.000 %. The rate may not change more than % each.
Effect of Variable Rate: A change in the interest rate will have the
following effect on the payments:
[ ] The amount of each scheduled payment will change.
[ ] The amount of the final payment will change.
[X] THE AMOUNT DUE AT MATURITY WILL CHANGE.
ACCRUAL METHOD: Interest will be calculated on a ACTUAL / 365 basis.
POST MATURITY RATE: I agree to pay interest on the unpaid balance of this
note owing after maturity, and until paid in full, as stated below:
[X] on the same fixed or variable rate basis in effect before maturity
(as indicated above).
[ ] at a rate equal to .
[ ] LATE CHARGE: If a payment is made more than days
after it is due, I agree to pay a later charge of .
[ ] ADDITIONAL CHARGES: In addition to interest, I agree to pay the following
charges which [ ] are [ ] are not included in the principal
amount above:
PAYMENTS: I agree to pay this note as follows:
[X] Interest: I agreed to pay accrued interest AT MATURITY
[ ] Principal: I agree to pay the principal AUGUST 24, 2000
[ ] Installments: I agree to pay this note in
payments. The first payment will be in the amount of $
and will be due .
A payment of $ will be due
thereafter. The final payment of the entire unpaid
balance of principal and interest will be due .
[ ] Unpaid Interest: Any accrued interest not paid when due (whether due by
reason of a schedule of payments or due because of Lender's demand) will
become part of the principal thereafter, and will bear interest at the
interest rate in effect from time to time as provided for in this agreement.
ADDITIONAL TERMS: THIS LOAN IS SECURED BY A PERSONAL GUARANTY DATED AUGUST 24,
1999
<PAGE>
[ ] SECURITY: This note is separately secured by (describe separate
document by type and date):
(This section is for your internal use. Failure to list a separate security
document, mean the agreement will not secure this note.)
Signature for Lender
X /S/ WILLIAM F. COOK
- ----------------------------------
WILLIAM F. COOK
- ----------------------------------
UNIVERSAL NOTE
PURPOSE: This purpose of this loan is BUSINESS OPERATING EXPENSE
SIGNATURE: I AGREE TO THE TERMS OF THIS NOTE
(INCLUDING THOSE ON PAGE 2). I have received a copy on today's date.
LCBBHC, INC.
- ----------------------------------
BY: /S/ DAVID R. ZIMMERMAN
- ----------------------------------
DAVID R. ZIMMERMAN, PRESIDENT
BY: /S/ EDWARD CHOSNEK
- ----------------------------------
EDWARD CHOSNEK, SECRETARY
- ----------------------------------
<PAGE>
More than one Signer
Boswell, Indiana August 24, 1999
TO THE FARMERS AND MERCHANTS BANK:
FOR VALUE RECEIVED and in consideration of credit given or to be given, or of
advances made or to be made, or of other financial accommodation afforded or to
be afforded to
LCBBHC, INC.
- -------------------------------------------------------------------------
(hereinafter referred to as the "Debtor"), by THE FARMERS AND MERCHANTS BANK,
Boswell, Indiana,
(hereinafter called the "Bank"), or its assigns, we DAVID R. ZIMMERMAN and
EDWARD CHOSNEK and STEVEN W. NORFLEET and THOMAS A. MCDONALD hereby jointly and
severally guarantee the full and prompt payment, at maturity and at all times
thereafter, with interest, and all costs, expenses, and attorney's fees, of any
and all notes, bills, drafts, commercial paper, and other obligations of said
Debtor of every kind, whether signed, accepted, drawn or endorsed by said Debtor
that are or shall be owned, held or acquired, whether through discount,
overdraft, purchase, direct loan, or as collateral, or otherwise, by said Bank,
or its assigns, either for said Debtor or for any owner or holder thereof:
PROVIDED, That the separate liability thereon and hereon of each of the
undersigned shall not at any time exceed the sum of TWO HUNDRED FIFTY THOUSAND
AND no/100 Dollars ($250,000.00*****).
This guaranty, not exceeding the said sun, shall be and remain a continuing
and unconditional guaranty for the payment of any and all such notes, bills,
drafts, commercial paper, and other obligations, and shall continue and be in
force until written notice of its discontinuance shall be actually received by
said Bank, or its assigns, and also, until all such notes, bills, drafts,
commercial paper, and other obligations, existing before receipt of such notice,
shall be fully paid.
To the amount aforesaid, we hereby jointly and severally promise and agree
to pay any and all such notices, bills, drafts, commercial paper, and other
obligations without any relief whatever from valuation or appraisement laws.
The granting of credit from time to time by said Bank, or its assigns, to
said Debtor in excess of the amount of this guaranty and without notice to the
undersigned, is hereby also authorized and shall in no way affect or impair this
guaranty.
We hereby jointly and severally and expressly waive notice of the acceptance
of this guaranty, and of any and all such notes, bills, drafts, commercial
paper, and other obligations, and we also waive notice of non-acceptance,
non-payment, and notice of protest thereof, and in the event any such debt is
not paid at maturity, we further agree that suit may be brought directly and
immediately against the undersigned without first exhausting the person or
persons primarily liable therefore, such suit to be brought either against the
undersigned alone or impleaded with the person or persons so primarily liable,
as may be deemed best by said Bank, or its assigns.
This guaranty shall include any and all renewals of any and all such notes,
bills, drafts, commercial paper, and other obligations in connection with any
and all business done by said Debtor with or through said The Farmers and
Merchants Bank, or its assigns.
<PAGE>
/S/ DAVID R. ZIMMERMAN
- ----------------------
DAVID R. ZIMMERMAN
/S/ EDWARD CHOSNEK
- ----------------------
EDWARD CHOSNEK
/S/ STEVEN W. NORFLEET
- ----------------------
STEVEN W. NORFLEET
/S/ THOMAS A. MCDONALD
- ----------------------
THOMAS A. MCDONALD
<PAGE>
LCBBHC, INC. THE FARMERS AND MERCHANTS BANK
P.O. BOX 676 302 S OLD US HWY 41 P O BOX 519
LAFAYETTE, IN 47902 BOSWELL, IN 47921-0519
Line of Credit No.
Date AUGUST 24, 1999
----------------
Max. Credit Amt. $ 250,000.00
---------------
Loan Ref. No.
---------------------
BORROWER'S NAME AND ADDRESS LENDER'S NAME AND ADDRESS
"I" includes each borrower above, "You" means the lender,
jointly and severally. its successors and assigns.
You have extended to me a line of credit in the AMOUNT of TWO HUNDRED FIFTY
THOUSAND AND NO/100 $250,000.00 You will make loans to me from time to time
until 3:00 P .m. on AUGUST 24, 2000. Although the line of credit expires on that
date, I will remain obligated to perform all my duties under this agreement so
long as I owe you any money advanced according to the terms of this agreement,
as evidenced by any note or notes I have signed promising to repay these
amounts.
This line of credit is an agreement between you and me. It is not intended
that any third party receive any benefit from this agreement, whether by direct
payment, reliance for future payment or in any other manner. This agreement is
not a letter of credit.
1. AMOUNT: This line of credit is:
[X] OBLIGATORY: You may not refuse to make a loan to me under this line
of credit unless one of the following occurs:
a. I have borrowed the maximum amount available to me;
b. This line of credit has expired;
c. I have defaulted on the note (or notes) which show my
indebtedness under this line of credit;
d. I have violated any term of this line of credit or any note or
other agreement entered into in connection with this line of credit;
e.
----------------------------------------------------------------
----------------------------------------------------------------.
[ ] DISCRETIONARY: You may refuse to make a loan to me under this line of
credit once the aggregate outstanding advances equal or exceed
$ .
--------------------------------------------------- ----------------
Subject to the obligatory or discretionary limitations above, this line of
credit is:
[ ] OPEN-END (Business or Agricultural only): I may borrow up to the
maximum amount of principal more than one time.
[ ] CLOSED-END: I may borrow up to the maximum only one time.
2. PROMISSORY NOTE: I will repay any advances made according to this line
of credit agreement as set out in the promissory note, I signed on
AUGUST 24, 1999 , or any note(s) I sign at a later time which represent
advances under this agreement. The note(s) set(s) out the terms relating
to maturity, interest rate, repayment and advances. If indicated on the
promissory note, the advances will be made as follows:
BY APPROVAL OF LOAN OFFICER.
3. RELATED DOCUMENTS: I have signed the following documents in connection
with this line of credit and note(s) entered into in accordance with
this line of credit:
[ ] security agreement dated [ ]
[ ] mortgage dated [ ]
---------------------------
[ ] guaranty dated AUGUST 24, 1999 [ ]
--------------------------
4. REMEDIES: If I am in default on the note(s) you may:
a. take any action as provided in the related documents;
b. without notice to me, terminate this line of credit.
By selecting any of these remedies you do not give up your right to later
use any other remedy. By deciding not to use any remedy should I default,
you do not waive your right to later consider the event a default, if it
happens again.
5. COSTS AND FEES: If you hire an attorney to enforce this agreement I will
pay your reasonable attorney's fees, where permitted by law. I will also
pay your court costs and costs of collection, where permitted by law.
6. COVENANTS: For as long as this line of credit is in effect or I owe you
money for advances made in accordance with the line of credit, I will do the
following:
a. maintain books and records of my operations relating to the need for
this line of credit;
b. permit you or any of your representatives to inspect and/or copy
these records;
c. provide to you any documentation requested by you which support the
reason for making any advance under this line of credit;
d. permit you to make any advance payable to the seller (or seller and
me) of any items being purchased with that advance;
e.
----------------------------------------------------------------
----------------------------------------------------------------.
<PAGE>
7. NOTICES: All notices or other correspondence with me should be sent to my
address stated above. The notice or correspondence shall be effective when
deposited in the mail, first class, or delivered to me in person.
8. MISCELLANEOUS: This line of credit may not be changed except by a written
agreement signed by you and me. The law of the state in which you are
located will govern this agreement. Any term of this agreement with is
contrary to applicable law will not be effective, unless the law permits you
and me to agree to such a variation.
FOR THE LENDER
/s/ WILLIAM F. COOK
- ----------------------------------------
Title PRESIDENT
----------------------------------
SIGNATURES: I AGREE TO THE TERMS OF THIS LINE OF CREDIT.
I HAVE RECEIVED A COPY ON TODAY'S DATE.
LCBBHC, INC.
- ----------------------------------------
BY: /S/ DAVID R. ZIMMERMAN
- ----------------------------------------
DAVID R. ZIMMERMAN, PRESIDENT
BY: /S/ EDWARD CHOSNEK
- ----------------------------------------
EDWARD CHOSNEK, SECRETARY
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the inclusion, in this Registration Statement of
Lafayette Community Bancorp on Form SB-2, of our Report of Independent Auditors,
dated March 10, 2000, on the balance sheet of Lafayette Community Bancorp as of
December 31, 1999 and the related statements of operations, changes in
shareholders' deficit and cash flows for the period of January 29, 1999 (date of
inception) to December 31, 1999, and to the reference to us under the heading
"Experts" in this Registration Statement.
/S/ CROWE, CHIZEK AND COMPANY, LLP
Crowe, Chizek and Company, LLP
Indianapolis, Indiana
April 6, 2000
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ JOHN R. BASHAM, II
- -----------------------------------
DIRECTOR
Printed Name John R. Basham, II
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ EDWARD CHOSNEK
- -----------------------------------
DIRECTOR
Printed Name Edward Chosnek
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ DONALD J. EHRLICH
- -----------------------------------
DIRECTOR
Printed Name Donald J. Ehrlich
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ STEVEN HOGWOOD
- -----------------------------------
DIRECTOR
Printed Name Steven Hogwood
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ CONNIE L. KOLESZAR
- -----------------------------------
DIRECTOR
Printed Name Connie L. Koleszar
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ THOMAS A. MCDONALD
- -----------------------------------
DIRECTOR
Printed Name Thomas A. McDonald
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ STEVEN W. NORFLEET
- -----------------------------------
DIRECTOR
Printed Name Steven W. Norfleet
- -----------------------------------
Dated: April 6, 2000
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned, a Director
of Lafayette Community Bancorp (the "Company"), an Indiana corporation with its
principal office located in Lafayette, Indiana, does hereby severally make,
constitute and appoint Michael T. Mootz as his true and lawful attorney-in-fact
and agent, with full power of substitution and re-substitution, for and on his
behalf and in his name, place and stead, and in all capacities, (a) to execute
any and all registration statements and any and all amendments, revisions,
supplements, exhibits and other documents in connection therewith relating to
the proposed registration, offering and sale of common stock of the Company; (b)
to file any and all of the foregoing, in substantially the form which has been
presented to me or which any of the above-named attorneys-in-fact and agents may
approve, with the Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended (the "Act"), and the rules and regulations promulgated
thereunder, and any state securities laws, rules or regulations; and (c) to do,
or cause to be done, any and all other acts and things whatsoever as fully and
to all intents and purposes as the undersigned might or could do in person which
any of the above-named attorneys-in-fact and agents may deem necessary or
advisable in the premises and in order to enable the Company to register its
debt securities under and otherwise comply with the Act and the rules and
regulations promulgated thereunder, and any state securities laws, rules or
regulations; hereby approving, ratifying and confirming all actions heretofore
or hereafter lawfully taken, or caused to be taken, by any of the above-named
attorneys-in-fact and agents by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of
the day and year indicated below.
/S/ DAVID R. ZIMMERMAN
- -----------------------------------
DIRECTOR
Printed Name David R. Zimmerman
- -----------------------------------
Dated: April 6, 2000
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND THE STATEMENT OF OPERATIONS FILED AS PART OF THE
REGISTRATION STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-29-1999
<PERIOD-END> DEC-31-1999
<CASH> 4
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 35
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 106
<LONG-TERM> 0
0
0
<COMMON> 10
<OTHER-SE> (81)
<TOTAL-LIABILITIES-AND-EQUITY> 35
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 1
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 85
<INCOME-PRETAX> (86)
<INCOME-PRE-EXTRAORDINARY> (86)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (81)
<EPS-BASIC> (.081)
<EPS-DILUTED> (.081)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
