As filed with the Securities and Exchange Commission on September 26, 1996
---------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)
JEFFERSON BANKSHARES, INC.
(Name of issuer)
JEFFERSON BANKSHARES, INC.
(Name of Person(s) Filing Statement)
Common Stock, $2.50 Par Value Per Share
(Title of Class of Securities)
472387109
(CUSIP Number of Class of Securities)
William M. Watson, Jr., Esq.
123 East Main Street
Post Office Box 711
Charlottesville, Virginia 22902
(804) 972-1100
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of the Person(s) Filing Statement)
----------------------
Copies to
Robert E. Stroud, Esq.
McGuire, Woods, Battle & Boothe, L.L.P.
418 East Jefferson Street
Post Office Box 1288
Charlottesville, Virginia 22902
(804) 977-2500
(Agent for Service of Process)
----------------------
September 26, 1996
(Date Tender Offer First Published,
Sent or Given to Security Holders)
CALCULATION OF FILING FEE
Transaction Valuation* Amount of filing fee
$35,000,000 $7,000
*Calculated solely for the purpose of determining the filing fee, based upon the
purchase of 1,250,000 shares at $28.00 per share.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
<PAGE>
Item 1. Security and Issuer.
(a) The issuer of the securities to which this Schedule 13E-4 relates
is Jefferson Bankshares, Inc., a Virginia corporation (the "Company"), and the
address of its principal executive office is 123 East Main Street,
Charlottesville, Virginia 22902. The Company's mailing address is Post Office
Box 711, Charlottesville, Virginia 22902.
(b) This Schedule 13E-4 relates to the offer by the Company to purchase
up to 1,250,000 shares (or such lesser number of shares as are properly
tendered) of its common stock, $2.50 par value per share (the "Shares"),
15,146,470 of which Shares were outstanding as of September 25, 1996, at prices
not in excess of $28.00 nor less than $25.00, per Share in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
September 26, 1996 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"), copies of which are
attached as Exhibits (a)(1) and (a)(2), respectively, and incorporated herein by
reference. The Company reserves the right, in its sole discretion, to purchase
more than 1,250,000 shares. Officers and directors of the Company may
participate in the Offer on the same basis as the Company's other shareholders.
The Company has been advised that no director or executive officer of the
Company intends to tender any shares pursuant to the Offer. The information set
forth in "Introduction", "The Offer -- Section 1, Number of Shares; Proration"
and "The Offer - - Section 15, Extension of Offer; Termination; Amendment of the
Offer to Purchase is incorporated herein by reference.
(c) The information set forth in "Introduction" and "The Offer --
Section 8, Price Range of Shares; Dividends" of the Offer to Purchase is
incorporated herein by reference.
(d) Not applicable.
Item 2. Source and Amount of Funds or Other Consideration.
(a)-(b) The information set forth in "The Offer -- Section 9,
Source and Amount of Funds" of the Offer to Purchase is incorporated herein by
reference.
Item 3. Purpose of the Tender Offer and Plans or Proposals of the Issuer or
Affiliate.
(a)-(j) The information set forth in "Introduction" and "The Offer --
Section 9, Source and Amount of Funds," "The Offer -- Section 2, Purpose of the
Offer; Certain Effects of the Offer," "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" and
"The Offer -- Section 12, Effects of the Offer on the Market for Shares;
Registration under the Exchange Act" of the Offer to Purchase is incorporated
herein by reference.
Item 4. Interest in Securities of the Issuer.
The information set forth in "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
Item 5. Contracts, Arrangements, Understandings or Relationships with Respect
to the Issuer's Securities.
The information set forth in "Introduction" and "The Offer -- Section
9, Source and Amount of Funds," "The Offer -- Section 2, Purpose of the Offer;
Certain Effects of the Offer," and "The Offer -- Section 11, Interest of
Directors and Officers; Transactions and Arrangements Concerning Shares" of the
Offer to Purchase is incorporated herein by reference.
Item 6. Persons Retained, Employed, or to be Compensated.
The information set forth in "Introduction" and "The Offer -- Section
16, Fees and Expenses" of the Offer to Purchase is incorporated herein by
reference.
Item 7. Financial Information.
(a)-(b) The information set forth in "The Offer -- Section 10, Certain
Information Concerning the Company" of the Offer to Purchase is incorporated
herein by reference, the information set forth on pages 24 through 37 of the
Company's Annual Report to Shareholders for the year ended December 31, 1995,
and the information set forth in Item 1 of the Company's Quarterly Report on
Form 10-Q for the six months ended June 30, 1996, is incorporated herein by
reference.
Item 8. Additional Information.
(a) Not applicable.
(b) The information set forth in "The Offer -- Section 13, Certain
Legal Matters; Regulatory Approvals" of the Offer to Purchase
is incorporated herein by reference.
(c) The information set forth in "The Offer -- Section 12, Effects
of the Offer on the Market for Shares; Registration under the
Exchange Act" of the Offer to Purchase is incorporated herein
by reference.
(d) Not applicable.
(e) The information set forth in the Offer to Purchase and
Letter of Transmittal is incorporated herein by reference.
Item 9. Material to Be Filed as Exhibits.
(a)(1) Form of Offer to Purchase, dated September 26, 1996
(2) Form of Letter of Transmittal (including Certification of
Taxpayer Identification Number on Form W-9).
(3) Form of Notice of Guaranteed Delivery.
(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(5) Form of Letter to Clients for Use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(6) Form of Letter to Shareholders of the Company, dated September
26, 1996, from O. Kenton McCartney, President of the Company.
(7) Form of Memorandum, dated September 26, 1996, to the Company's
employees, including participants in the Company's Employee
Stock Purchase Plan.
(8) Form of Question and Answer Brochure
(9) Text of Press Release issued by the Company, dated September
26, 1996.
(10) Text of Notice published in the Wall Street Journal on
September 26, 1996.
(11) Text of Press Announcement to be published in local and
regional newspapers on or after September 26, 1996.
(b)(1) Line of Credit/Loan Agreement/Promissory Note dated
September 16, 1996 between the Company and Wachovia Bank of
North Carolina, N.A. relating to $40,000,000 line of credit.
(2) Commitment Letter dated September 16, 1996 from
Wachovia Bank of North Carolina, N.A. relating to
$15,000,000 line of credit.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) (1) Pages 24 through 37 of the Company's Annual Report to
Shareholders, filed as Exhibit 13 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995
are incorporated herein by reference.
(2) Item 1 of the Company's Quarterly Report on Form 10-Q
for the six months ended June 30, 1996, are incorporated
herein by reference.
(3) The Company's Dividend Reinvestment Plan, filed as
Exhibit 99(a) to the Company's Registration Statement on
Form S-3 (33-34945) is incorporated herein by reference.
(4) The Company's Employee Stock Purchase Plan, filed as
Exhibit 99 to the Company's Registration Statement on S-8
filed October 21, 1994 is incorporated herein by reference.
(5) First Amendment, dated September 26, 1995, to the
Company's Employee Stock Purchase Plan, incorporated by
reference to the Company's Quarterly Report on Form 10-Q for
the nine months ended September 30, 1995.
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Schedule 13E-4 is true, complete and
correct.
September 26, 1996 JEFFERSON BANKSHARES, INC.
By: O. Kenton McCartney
President and Chief Executive Officer
[Exhibit (a)(1)]
JEFFERSON BANKSHARES, INC. [LOGO]
Offer to Purchase for Cash up to
1,250,000 Shares of its Common Stock
At a Purchase Price Not in Excess of $28.00
Nor less than $25.00 per Share
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL
RIGHTS EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON OCTOBER 31, 1996,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
Jefferson Bankshares, Inc., a Virginia corporation (the "Company"), hereby
invites its shareholders to tender shares of its Common Stock, $2.50 par value
per share (the "Shares"), at prices not in excess of $28.00 nor less than $25.00
per Share in cash, as specified by shareholders tendering their Shares, upon the
terms and subject to the conditions set forth herein and in the related Letter
of Transmittal (which together constitute the "Offer"). Each shareholder
desiring to tender Shares must specify in the Letter of Transmittal the price
(not more than $28.00 nor less than $25.00 per Share) at which such shareholder
is willing to have his or her Shares purchased by the Company. The Company will
determine the single price per Share (the "Purchase Price"), not in excess of
$28.00 nor less than $25.00 per Share, that it will pay for Shares properly
tendered pursuant to the Offer, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders. The Company will
select the lowest Purchase Price that will allow it to buy 1,250,000 Shares (or
such lesser number of Shares as are properly tendered at prices not in excess of
$28.00 nor less than $25.00 per Share). All Shares properly tendered at prices
at or below the Purchase Price and not withdrawn will be purchased at the
Purchase Price, subject to the terms and the conditions of the Offer, including
the proration and conditional tender provisions. All Shares acquired in the
Offer will be acquired at the Purchase Price. The Company reserves the right, in
its sole discretion, to purchase more than 1,250,000 Shares pursuant to the
Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. SEE SECTION 7.
The Shares are traded on the Nasdaq National Market. On September 25, 1996,
the last full trading day on the Nasdaq National Market prior to the
announcement and commencement of the Offer, the closing price as reported on the
Nasdaq National Market was $24.50 per Share. SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 8.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES,
AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION.
SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER,
CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS
WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR
PRICES AT WHICH TO TENDER.
IMPORTANT
Any shareholder wishing to tender all or any part of his or her Shares should
either (a) complete and sign a Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal and either mail or
deliver it with any required signature guarantee and any other required
documents to The Bank of New York (the "Depositary"), and either mail or deliver
the stock certificates for such Shares to the Depositary (with all such other
documents) or tender such Shares pursuant to the procedure for book-entry tender
set forth in Section 3, or (b) request a broker, dealer, commercial bank, trust
company or other nominee to effect the transaction for such shareholder. Holders
of Shares registered in the name of a broker, dealer, commercial bank, trust
company or other nominee should contact such person if they desire to tender
their Shares. Any shareholder who desires to tender Shares and whose
certificates for such Shares cannot be delivered to the Depositary or who cannot
comply with the procedure for book-entry transfer or whose other required
documents cannot be delivered to the Depositary, in any case, by the expiration
of the Offer must tender such Shares pursuant to the guaranteed delivery
procedure set forth in Section 3.
TO TENDER SHARES PROPERLY, SHAREHOLDERS MUST COMPLETE THE SECTION OF THE
LETTER OF TRANSMITTAL RELATING TO THE PRICE AT WHICH THEY ARE TENDERING SHARES.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may
be directed to the Information Agent, Georgeson & Company Inc. or to the Dealer
Managers at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase.
<PAGE>
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
The Date of this Offer to Purchase is September 26, 1996
<PAGE>
THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON BEHALF
OF THE COMPANY OR THE DEALER MANAGERS AS TO WHETHER SHAREHOLDERS SHOULD TENDER
OR REFRAIN FROM TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT
AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN
CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED HEREIN OR IN THE RELATED
LETTER OF TRANSMITTAL. IF GIVEN OR MADE, ANY SUCH RECOMMENDATION OR ANY SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE DEALER MANAGERS.
<PAGE>
TABLE OF CONTENTS
Section Page
TABLE OF CONTENTS (i)
SUMMARY S-1
INTRODUCTION 1
THE OFFER 2
1. Number of Shares; Proration. 2
2. Purpose of the Offer; Certain Effects of the Offer 3
3. Procedures for Tendering Shares. 5
4. Withdrawal Rights 7
5. Purchase of Shares and Payment of Purchase Price 8
6. Conditional Tender of Shares 9
7. Certain Conditions of the Offer 9
8. Price Range of Shares; Dividends 10
9. Source and Amount of Funds 11
10. Certain Information Concerning the Company 11
11. Interest of Directors and Officers; Transactions
and Arrangements Concerning Shares 15
12. Effects of the Offer on the Market for Shares;
Registration under the Exchange Act 15
13. Certain Legal Matters; Regulatory Approvals 16
14. Certain Federal Income Tax Consequences 16
15. Extension of Offer; Termination; Amendment 18
16. Fees and Expenses 19
17. Miscellaneous 19
SCHEDULE A A-1
GLOSSARY FACING BACK COVER
LIST OF CERTAIN FORMS INSIDE BACK COVER
<PAGE>
SUMMARY
This general summary is solely for the convenience of the Company's shareholders
and is qualified in its entirety by reference to the full text and more specific
details in this offer to purchase.
Purchase Price. The Company will select a single Purchase Price
which will be not more than $28.00 nor less than
$25.00 per Share, which represents a 2.0% to 14.3%
premium to the closing price for the Shares on the
last trading day before the announcement and
commencement of the Offer. All Shares tendered at
or below the Purchase Price will be purchased by the
Company at the Purchase Price, subject to
proration. Each shareholder desiring to tender Shares
must specify in the Letter of Transmittal the price
(not more than $28.00 nor less than $25.00 per Share)
at which such shareholder is willing to have his or
her Shares purchased by the Company. Shareholders who
are willing to sell their Shares at any price
within the foregoing range may so indicate on the
Letter of Transmittal by checking the box in Box #2.
Number of Shares to Be
Purchased. 1,250,000 Shares (or such lesser number of Shares
as are properly tendered). The Company reserves the
right, in its sole discretion, to purchase more
than 1,250,000 Shares. See Section 15.
Amount of Shares. Each shareholder may tender all or any portion of
Shares owned by such shareholder.
How to Tender Shares. See the following page and Section 3. Shareholders
with questions may call the Information Agent,
the Dealer Managers, or the Depositary, or consult your
broker for assistance.
Brokerage Commissions. None.
Stock Transfer Tax. None, if payment is made to the registered holder.
Expiration Date. The Offer will expire at 5:00 P.M., New York City
time, on October 31, 1996 unless extended by the
Company.
Payment Date. As soon as practicable after the Expiration Date.
Position of The Company
And Its Directors. Neither the Company nor its Board of Directors
makes any recommendation to any shareholder as to
whether to tender or refrain from tendering Shares.
Withdrawal Rights. Tendered Shares may be withdrawn at any time until
5:00 P.M., New York City time, on October 31, 1996,
unless the Offer is extended by the Company. See
Section 3.
<PAGE>
Odd Lots. Shareholders who own fewer than 100 Shares as of
September 25, 1996 and who tender all such Shares
at or below the Purchase Price and who check Box
#5, "Odd Lots," on the Letter of Transmittal will
have their Shares accepted before other tendered
Shares. By accepting the Offer, such an Odd Lot Holder
would not only avoid brokerage commissions but also
would avoid any discounts to the market price
typically charged by brokers for executing odd lot
trades.
Further Developments
Regarding The Offer. Call the Information Agent or the Dealer
Managers, or consult your broker. Please see below
and the back cover for the address and telephone
numbers of the Dealer Managers and the Information
Agent.
Dividend Payable on
October 31, 1996. The Company's dividend of $.22 per Share declared on
September 25, 1996 payable to holders of record on
October 7, 1996 will be paid on October 31, 1996.
Shareholders of record on October 7, 1996 will be
entitled to receive such dividend, even on Shares sold
in this Offer.
<PAGE>
Dividend Reinvestment
Plan Participants. Participants in the Company's Dividend Reinvestment Plan
may tender Shares to be purchased on October 31, 1996
pursuant to such plan in connection with the payment of
the Company's latest dividend on that date by checking
the box in Box #7 on the Letter of Transmittal. See
Section 3.
Glossary. Several defined terms are used throughout the Offer. A
glossary of selected terms appears at the end of this
Offer to Purchase.
Summary Instructions
For Tendering. If you hold Share certificates and wish to tender those
Shares, you must complete the Letter of Transmittal (the
blue form) as follows:
<PAGE>
o List the certificates and the number of
Shares that you are tendering in Box #1.
o Check the box specifying the price at which
you are tendering in Box #2.
o If you want to give us special payment
instructions, complete Box #3.
o If you want to give us special delivery
instructions, complete Box #4.
o If you are an Odd Lot Holder who is tendering
all your shares, complete Box #5.
o If you want to make a conditional tender of
Shares, complete Box #6.
o If you are a participant in the Company's
Dividend Reinvestment Plan, complete Box #7.
o If you are a participant in the Company's
Employee Stock Purchase Plan, complete Box
#8.
o If your Shares are being delivered by
book-entry or your certificates are being
delivered pursuant to a Notice of Guaranteed
Delivery, complete Box #9.
o Complete substitute Form W-9 to certify your
tax identification number.
o Sign the Letter of Transmittal in Box #10 (in
certain circumstances, signatures must be
guaranteed in Box #10).
You must deliver your Share certificate(s) or comply
with one of the alternate delivery methods. See Section
3.
These documents must be received by the Depositary, The
Bank of New York, no later than 5:00 P.M. New York City
time on October 31, 1996.
Please see Section 3 and the Letter of Transmittal for
more details about how to tender Shares.
Important Numbers. For information, please call:
Information Agent (Georgeson & Company Inc.):
(800) 223-2064.
Dealer Managers (Goldman, Sachs & Co.): (800) 323-5678,
Ext. 9477
<PAGE>
To The Holders Of Common Stock Of Jefferson Bankshares, Inc.:
INTRODUCTION
Jefferson Bankshares, Inc., a Virginia corporation (the "Company"), invites
its shareholders to tender shares of its Common Stock, $2.50 par value per share
(the "Shares"), at prices not in excess of $28.00 nor less than $25.00 per
Share, as specified by shareholders tendering their Shares, upon the terms and
subject to the conditions set forth herein and in the related Letter of
Transmittal (which together constitute the "Offer"). Each shareholder desiring
to tender Shares must specify in Box #2 of the Letter of Transmittal the price
(not more than $28.00 nor less than $25.00 per Share) at which such shareholder
is willing to have his or her Shares purchased by the Company. Shareholders who
are willing to sell their Shares at any price within the foregoing range may
check the box in Box #2 of the Letter of Transmittal to so indicate. The Company
will determine the single price per Share, not in excess of $28.00 nor less than
$25.00 per Share, net to the seller in cash (the "Purchase Price"), that it will
pay for Shares properly tendered pursuant to the Offer, taking into account the
number of Shares so tendered and the prices specified by tendering shareholders.
The Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $28.00 nor less than $25.00 per Share). All Shares
properly tendered at prices at or below the Purchase Price and not withdrawn
will be purchased at the Purchase Price, upon the terms and subject to the
conditions of the Offer, including the proration and conditional tender
provisions. Shares tendered at prices in excess of the Purchase Price and Shares
not purchased because of proration or conditional tender will be returned. The
Company reserves the right, in its sole discretion, to purchase more than
1,250,000 Shares pursuant to the Offer. See Section 15.
THIS OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. SEE SECTION 7.
Upon the terms and subject to the conditions of the Offer, if at the
expiration of the Offer more than 1,250,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1) who properly tender all their
Shares at or below the Purchase Price and then on a pro rata basis from all
other shareholders who properly tender at prices at or below the Purchase Price
(and do not withdraw them prior to the expiration of the Offer), other than
shareholders who tender conditionally, and for whom the condition is not
satisfied. See Sections 1 and 6. All stock certificates representing Shares not
purchased pursuant to the Offer, including Shares tendered at prices greater
than the Purchase Price and not withdrawn and Shares not purchased because of
proration or conditional tenders, will be returned at the Company's expense to
the shareholders who tendered such Shares.
The Purchase Price will be paid to the tendering shareholder in cash for all
Shares purchased. Tendering shareholders will not be obligated to pay brokerage
commissions, solicitation fees or, subject to Instruction 9 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Company.
HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 THAT IS INCLUDED IN THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. Foreign Shareholders should request Form W-8 from the
Depositary. The Company will pay all fees and expenses of the Dealer Managers,
the Depositary and the Information Agent incurred in connection with the Offer.
See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER. HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY
RECOMMENDATION TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING
THEIR SHARES AND NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION. SHAREHOLDERS ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN
THE OFFER, CONSULT THEIR OWN INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN
DECISIONS WHETHER TO TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE
PRICE OR PRICES AT WHICH TO TENDER.
As of September 25, 1996, the Company had issued and outstanding 15,146,470
Shares and had reserved 197,000 Shares for issuance upon exercise of outstanding
stock options and 1,795,720 Shares for issuance under the Company's Employee
Stock Purchase Plan and the Company's Dividend Reinvestment Plan, and other
stock plans for employees and non-employee directors. The 1,250,000 Shares that
the Company is offering to purchase pursuant to the Offer represent
approximately 8.3% of the outstanding Shares. The Shares are traded on the
Nasdaq National Market under the symbol "JBNK". On September 25, 1996, the last
full trading day on the Nasdaq National Market prior to the announcement and
commencement of the Offer, the closing price as reported on the Nasdaq National
Market was $24.50 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES. See Section 8.
THE OFFER
1. Number of Shares; Proration.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase up to 1,250,000 Shares or such lesser number of Shares as are properly
tendered (and not withdrawn in accordance with Section 4) prior to the
Expiration Date (as defined below) at prices not in excess of $28.00 nor less
than $25.00 net per Share in cash. This Offer will expire at 5:00 P.M., New York
City time, on October 31, 1996 (the "Expiration Date"), unless and until the
Company, in its sole discretion, shall have extended the period of time during
which the Offer will remain open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. See Section 15 for a description of the Company's
right to extend, delay, terminate or amend the Offer. The Company reserves the
right to purchase more than 1,250,000 Shares pursuant to the Offer. In
accordance with applicable regulations of the Securities and Exchange Commission
(the "Commission"), the Company may purchase pursuant to the Offer an additional
amount of Shares not to exceed 2% of the number of Shares outstanding on
September 25, 1996 without amending or extending the Offer. See Section 15. In
the event of an over-subscription of the Offer as described below, Shares
tendered at or below the Purchase Price prior to the Expiration Date will be
subject to proration, except for Odd Lots as explained below. The proration
period also expires on the Expiration Date.
The Company will select the lowest Purchase Price that will allow it to buy
1,250,000 Shares (or such lesser number of Shares as are properly tendered at
prices not in excess of $28.00 nor less than $25.00 per Share). The Company
reserves the right, in its sole discretion, to purchase more than 1,250,000
Shares. All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, subject to the terms
and the conditions of the Offer, including the proration and conditional tender
provisions. All Shares purchased in the Offer will be purchased at the Purchase
Price.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED IN THE OFFER. SEE SECTION 7.
In accordance with Instruction 7 of the Letter of Transmittal, shareholders
desiring to tender Shares must specify the price, not in excess of $28.00 nor
less than $25.00 per Share, at which they are willing to sell their Shares to
the Company (sometimes referred to as a "modified Dutch Auction" tender
process). Shareholders who are willing to sell their Shares at whatever price
may be established by the modified Dutch Auction tender process within the
foregoing range may check the box in Box #2 of the Letter of Transmittal to so
indicate. As promptly as practicable following the Expiration Date, the Company
will, in its sole discretion, determine the Purchase Price that it will pay for
Shares properly tendered pursuant to the Offer and not withdrawn, taking into
account the number of Shares tendered and the prices specified by tendering
shareholders. The Company intends to select the lowest Purchase Price, not in
excess of $28.00 nor less than $25.00 net per Share in cash, that will enable it
to purchase 1,250,000 Shares (or such lesser number of Shares as are properly
tendered) pursuant to the Offer. The Company reserves the right, in its sole
discretion, to purchase more than 1,250,000 Shares. Shares properly tendered
pursuant to the Offer at or below the Purchase Price and not withdrawn will be
purchased at the Purchase Price, subject to the terms and conditions of the
Offer, including the proration and conditional tender provisions. All Shares
tendered and not purchased pursuant to the Offer, including Shares tendered at
prices in excess of the Purchase Price and Shares not purchased because of
proration or conditional tender, will be returned to the tendering shareholders
at the Company's expense as promptly as practicable following the Expiration
Date.
The Company will be deemed to have accepted for payment, subject to
proration, Shares tendered at or below the Purchase Price and not withdrawn if,
as and when the Company gives oral or written notice to The Bank of New York
(the "Depositary") of its acceptance of such Shares for purchase pursuant to the
Offer. Payment for Shares accepted for purchase pursuant to the Offer will be
made by depositing the aggregate Purchase Price for such Shares with the
Depositary, which will act as agent for the tendering shareholders for the
purpose of receiving payment from the Company and transmitting such payments to
tendering shareholders.
Priority of Purchases. Upon the terms and subject to the conditions of the
Offer, if more than 1,250,000 Shares have been properly tendered at prices at or
below the Purchase Price and not withdrawn prior to the Expiration Date, the
Company will purchase properly tendered Shares on the basis set forth below:
(a) first, all Shares properly and unconditionally tendered and not
withdrawn prior to the Expiration Date by any Odd Lot Holder (as
defined below) who:
(1) tenders all Shares owned beneficially or of record by such
Odd Lot Holder at a price at or below the Purchase Price
(tenders of less than all Shares owned by such shareholder will
not qualify for this preference); and
(2) completes the box captioned "Odd Lots" on the Letter
of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery; and
(b) second, after purchase of all of the foregoing Shares, all Shares
properly and conditionally tendered at or below the Purchase Price
in accordance with Section 6, for which the condition was
satisfied, and all other Shares tendered properly and
unconditionally at prices at or below the Purchase Price and not
withdrawn prior to the Expiration Date, on a pro rata basis (with
appropriate adjustments to avoid purchases of fractional Shares)
as described below; and
(c) third, if necessary, Shares properly and conditionally tendered at
or below the Purchase Price and not withdrawn prior to the
Expiration Date, selected by random lot in accordance with Section
6.
Odd Lots. For purposes of the Offer, the term "Odd Lots" shall mean all
Shares properly tendered prior to the Expiration Date at prices at or below the
Purchase Price and not withdrawn by any person (an "Odd Lot Holder") who owned,
beneficially or of record, as of the close of business on September 25, 1996, an
aggregate of fewer than 100 Shares (and so certified in the appropriate place on
the Letter of Transmittal and, if applicable, on the Notice of Guaranteed
Delivery). In order to qualify for this preference, an Odd Lot Holder must
tender all such Shares in accordance with the procedures described in Section 3.
As set forth above, Odd Lots will be accepted for payment before proration, if
any, of the purchase of other tendered Shares. This preference is not available
to partial tenders or to beneficial or record holders of an aggregate of 100 or
more Shares, even if such holders have separate accounts or certificates
representing fewer than 100 Shares. By accepting the Offer, an Odd Lot Holder
would not only avoid the payment of brokerage commissions but also would avoid
any applicable odd lot discounts to the market price in a sale of such holder's
Shares through a broker. Any shareholder wishing to tender all of such
shareholder's Shares pursuant to this Section should complete the box captioned
"Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery.
Proration. If more than 1,250,000 Shares are properly tendered, proration
will occur, and shareholders (other than Odd Lot Holders who tender all their
Shares at or below the Purchase Price) will likely not be able to sell all the
Shares tendered. The Company will determine the proration factor as soon as
practicable following the Expiration Date. Proration for each shareholder
tendering Shares, other than Odd Lot Holders who tender all of their Shares at
or below the Purchase Price, shall be based on the ratio of (i) the number of
Shares the Company determines to purchase divided by (ii) the total number of
Shares tendered by all shareholders at or below the Purchase Price, excluding
from both the numerator and the denominator Odd Lot Holders who tendered all of
their Shares at or below the Purchase Price. Each Shareholder will then sell an
amount of Shares equal to the number of his or her Shares validly tendered times
the proration factor. Because of the difficulty in determining the number of
Shares properly tendered (including Shares tendered by guaranteed delivery
procedures, as described in Section 3) and not withdrawn, and because of the odd
lot procedure, the Company does not expect that it will be able to announce the
final proration factor or to commence payment for any Shares purchased pursuant
to the Offer until approximately seven trading days after the Expiration Date.
The preliminary results of any proration will be announced by press release as
promptly as practicable after the Expiration Date. Shareholders may obtain such
preliminary information from the Depositary or the Dealer Managers and may be
able to obtain such information from their brokers.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to record holders of Shares and will be furnished to brokers, banks and similar
persons whose names, or the names of whose nominees, appear on the Company's
shareholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
2. Purpose of the Offer; Certain Effects of the Offer.
The Company believes that the purchase of Shares is an attractive use of a
portion of the Company's available capital on behalf of its shareholders and is
consistent with the Company's long-term goal of increasing shareholder value.
The Company believes it has adequate sources of capital to complete the Share
repurchase and pursue business opportunities.
Over time, the Company's profitable operations have contributed to the growth
of a capital base that exceeds all applicable regulatory standards and the
amount of capital needed to support the Company's banking business. After
evaluating a variety of alternatives to utilize more effectively its capital
base and to attempt to maximize shareholder value, the Company's management and
its Board of Directors believe that the purchase of Shares pursuant to the Offer
is a positive action that is intended to accomplish the desired objectives.
Other actions previously employed, including a high dividend payout ratio and
periodic open market purchases of Shares, have enhanced shareholder value, but
capital remains at high levels, and this affects the Company's ability to
produce desired returns for shareholders.
The Offer is designed to restructure the Company's balance sheet in order to
increase return on equity and earnings per share by reducing the amount of
equity and Shares outstanding. Based upon the current market price of its
Shares, the Company believes that purchase of the Shares is an attractive use of
its funds. Following the purchase of the Shares, the Company believes funds
provided by earnings combined with its other sources of liquidity will be fully
adequate to meet its funding needs for the foreseeable future. Upon completion
of the Offer, the Company expects that it and its wholly owned subsidiary bank,
Jefferson National Bank (the "Bank"), will continue to maintain the highest
regulatory standard for capital, which is designated as "well capitalized" under
the prompt corrective action scheme enacted by the Federal Deposit Insurance
Corporation Improvement Act of 1991.
The Offer will enable shareholders to sell all or a portion of their Shares
at prices greater than the market prices prevailing immediately prior to the
announcement of the Offer. Shareholders may determine the price or prices (not
greater than $28.00 nor less than $25.00 per Share) at which they are willing to
sell their Shares, and, if any such Shares are purchased pursuant to the Offer,
to sell those Shares for cash without the usual transaction costs associated
with open-market sales. In addition, shareholders owning fewer than 100 Shares,
whose Shares are purchased pursuant to the Offer, not only will avoid the
payment of brokerage commissions but will also avoid any applicable odd lot
discounts to the market price typically charged by brokers for executing odd lot
trades.
Shareholders who do not tender their Shares pursuant to the Offer and
shareholders who otherwise retain an equity interest in the Company as a result
of a partial tender of Shares or a proration pursuant to Section 1 of the Offer
will continue to be owners of the Company with the attendant risks and rewards
associated with owning the equity securities of the Company. As noted above, the
Company, following completion of the Offer, will maintain the highest regulatory
capital ranking. Consequently, the Company believes that shareholders will not
be subject to materially greater risk as a result of the reduction of the
capital base.
Shareholders who determine not to accept the Offer will realize a
proportionate increase in their relative equity interest in the Company and,
thus, in the Company's earnings and assets, subject to any risks resulting from
the Company's purchase of Shares and the Company's ability to issue additional
equity securities in the future. For shareholders who do not tender or who
otherwise maintain an equity interest in the Company, the trading price of the
Shares may increase as a result of the Offer. There is no assurance, however,
that the purchase of Shares will achieve its objectives or that the Shares will
trade at or above the price range being offered by the Company.
In addition, to the extent the purchase of Shares pursuant to the Offer
results in a reduction of the number of shareholders of record, the Company's
costs for services to shareholders may be reduced. Finally, the Offer may affect
the Company's ability to qualify for pooling-of-interests accounting treatment
for any merger transaction for approximately the next two years.
NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO
SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES AND
NEITHER HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH RECOMMENDATION. SHAREHOLDERS
ARE URGED TO EVALUATE CAREFULLY ALL INFORMATION IN THE OFFER, CONSULT THEIR OWN
INVESTMENT AND TAX ADVISORS AND MAKE THEIR OWN DECISIONS WHETHER TO TENDER
SHARES AND, IF SO, HOW MANY SHARES TO TENDER AND THE PRICE OR PRICES AT WHICH TO
TENDER.
The Company may in the future purchase additional Shares on the open market,
in private transactions, through tender offers or otherwise. Any such purchase
may be on the same terms or on terms which are more or less favorable to
shareholders than the terms of the Offer. However, Rule 13e-4 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prohibits the
Company and its affiliates from purchasing any Shares, other than pursuant to
the Offer, until at least ten business days after the Expiration Date. Any
possible future purchases by the Company will depend on many factors, including
the market price of the Shares, the results of the Offer, the Company's business
and financial position and general economic and market conditions.
Shares the Company acquires pursuant to the Offer will be restored to the
status of authorized and unissued Shares and will be available for the Company
to issue without further shareholder action (except as required by applicable
law or the rules of the Nasdaq National Market or any other securities exchange
on which the Shares are listed) for purposes including, but not limited to, the
acquisition of other businesses, the raising of additional capital for use in
the Company's business and the satisfaction of obligations under existing or
future employee benefit plans. The Company has no current plans for reissuance
of the Shares repurchased pursuant to the Offer.
3. Procedures for Tendering Shares.
Proper Tender of Shares. For Shares to be tendered properly pursuant to the
Offer, (a) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below),
together with a properly completed and duly executed Letter of Transmittal, the
blue form (or manually signed facsimile thereof), including any required
signature guarantees and any other documents required by the Letter of
Transmittal, must be received prior to 5:00 P.M., New York City time, on the
Expiration Date by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase or (b) the tendering shareholder must comply
with the guaranteed delivery procedure set forth below. IN ACCORDANCE WITH
INSTRUCTION 7 OF THE LETTER OF TRANSMITTAL, SHAREHOLDERS DESIRING TO TENDER
SHARES PURSUANT TO THE OFFER MUST PROPERLY INDICATE IN THE SECTION CAPTIONED
"PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED" IN BOX #2 OF
THE LETTER OF TRANSMITTAL THE PRICE (IN MULTIPLES OF $.125) AT WHICH THEIR
SHARES ARE BEING TENDERED, OR INDICATE THAT THEY ARE WILLING TO SELL THEIR
SHARES AT ANY PRICE WITHIN THE FOREGOING RANGE. Shareholders who desire to
tender Shares at more than one price must complete a separate Letter of
Transmittal for each price at which shares are tendered, provided that the same
Shares cannot be tendered (unless properly withdrawn previously in accordance
with the terms of the Offer) at more than one price. IN ORDER TO PROPERLY TENDER
SHARES, ONE AND ONLY ONE PRICE BOX MUST BE CHECKED IN THE APPROPRIATE SECTION ON
EACH LETTER OF TRANSMITTAL.
In addition, Odd Lot Holders who tender all such Shares must complete Box #5,
"Odd Lots" on the Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery, in order to qualify for the preferential treatment
available to Odd Lot Holders as set forth in Section 1.
Signature Guarantees and Method of Delivery. No signature guarantee is
required (i) if the Letter of Transmittal is signed by the registered holder of
the Shares (which term, for purposes of this Section 3, shall include any
participant in The Depository Trust Company or Philadelphia Depository Trust
Company (collectively, the "Book-Entry Transfer Facilities") whose name appears
on a security position listing as the owner of the Shares) tendered therewith
and such holder has not completed either Box #3, "Special Payment Instructions"
or Box #4, "Special Delivery Instructions" on the Letter of Transmittal; or (ii)
if Shares are tendered for the account of a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., a commercial bank, a trust company, a savings bank, a savings and loan
association, or a credit union which has membership in an approved signature
guarantee program and has an office, branch or agency in the United States (each
such entity being hereinafter referred to as an "Eligible Institution"). See
Instruction 1 of the Letter of Transmittal. If a certificate for Shares is
registered in the name of a person other than the person executing a Letter of
Transmittal, or if payment is to be made, or Shares not purchased or tendered
are to be issued, to a person other than the registered holder, then the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case, signed exactly as the name of the registered holder appears on the
certificate, and the signature(s) on the stock power and the Letter of
Transmittal must be guaranteed by an Eligible Institution.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of
certificates for such Shares (or a timely confirmation of a book-entry transfer
of such Shares into the Depositary's account at a Book-Entry Transfer Facility
as described above), a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) and any other documents
required by the Letter of Transmittal. THE METHOD OF DELIVERY OF ALL DOCUMENTS,
INCLUDING CERTIFICATES FOR SHARES, THE LETTER OF TRANSMITTAL AND ANY OTHER
REQUIRED DOCUMENTS, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. IF
DELIVERY IS BY MAIL, THEN REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED.
Book-entry Delivery. The Depositary will establish an account with respect to
the Shares for purposes of the Offer at each Book-Entry Transfer Facility within
two business days after the date of this Offer to Purchase, and any financial
institution that is a participant in a Book-Entry Transfer Facility's system may
make book-entry delivery of the Shares by causing such facility to transfer
Shares into the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedures for transfer. Although delivery of Shares may be effected
through a book-entry transfer into the Depositary's account at a Book-Entry
Transfer Facility, either (i) a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required signature
guarantees and any other required documents must, in any case, be transmitted to
and received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or (ii) the
guaranteed delivery procedure described below must be followed. DELIVERY OF
DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE
DEPOSITARY.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share certificates cannot be delivered to the
Depositary prior to the Expiration Date (or the procedures for book-entry
transfer cannot be completed on a timely basis) or if time will not permit all
required documents to reach the Depositary prior to the Expiration Date, such
Shares may nevertheless be tendered, provided that all of the following
conditions are satisfied:
(a) such tender is made by or through an Eligible Institution;
(b) the Depositary receives by hand, mail, telegram or facsimile
transmission, prior to the Expiration Date, a properly completed and
duly executed Notice of Guaranteed Delivery substantially in the
form the Company has provided with this Offer to Purchase
(specifying the price at which the Shares are being tendered); and
(c) the certificates for all tendered Shares, in proper form for
transfer (or confirmation of book-entry transfer of such Shares into
the Depositary's account at one of the Book-Entry Transfer
Facilities), together with a properly completed and duly executed
Letter of Transmittal (or a manually signed facsimile thereof) and
any required signature guarantees or other documents required by the
Letter of Transmittal, are received by the Depositary within three
trading days after the date of receipt by the Depositary of such
Notice of Guaranteed Delivery.
Return of Shares. If any tendered Shares are not purchased, or if less than
all Shares evidenced by a shareholder's certificates are tendered, certificates
for unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at a Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering shareholder at
the appropriate Book-Entry Transfer Facility, in each case without expense to
such shareholder.
Dividend Reinvestment and Employee Stock Purchase Plans. The Depositary for
the Offer also acts as the agent of participants in the Company's Dividend
Reinvestment Plan and Employee Stock Purchase Plan (the "Plans"). Participants
in the Plans may use the Letter of Transmittal to tender such participants'
Shares in the Offer by completing either Box #7 or Box #8, as appropriate on the
Letter on Transmittal. Each participant may direct that all, some or none of the
Shares credited to the participant's account are to be tendered. Shareholders
who intend to tender Shares held in the Plans in addition to Shares which are
not held in the Plans may use one Letter of Transmittal to tender all of such
Shares if such participant wishes to tender all such Shares at the same price
(even if such shareholders have received more than one copy of the Offer).
Separate Letters of Transmittal must be used if a participant in the Plans
intends to tender Shares held in the Plans and Shares not held in the Plans at
different prices. See Instruction 7 to the Letter of Transmittal. Participants
in the Plans who do not wish to tender their shares held in the Plans do not
need to take any action. Participants may complete either Box #7 or Box #8, as
appropriate, on only one Letter of Transmittal submitted by such participant. If
a participant submits more than one Letter of Transmittal and completes such box
on more than one Letter of Transmittal, the participant will be deemed to have
elected to tender all Shares allocated to the shareholder's account under the
relevant Plan at the lowest of the prices specified in such Letters of
Transmittal. Participants in the Dividend Reinvestment Plan who wish to tender
the Shares that will be allocated to their accounts under that Plan on October
31, 1996, in connection with the payment of the Company's quarterly dividend on
that day, should so indicate on the Letter of Transmittal. Participants in the
Dividend Reinvestment Plan may determine the number of Shares allocated to them
on October 31, 1996 under that Plan after 4:00 P.M. New York City time on that
day by reference to the average of the high and low trade prices of the
Company's shares on October 31, 1996 (which may be obtained from the Information
Agent or from brokers), taking into account that the dividend per Share payable
on October 31, 1996 (which will be used to purchase Shares under the Dividend
Reinvestment Plan for participants in that Plan) will be $.22. Participants in
the Dividend Reinvestment Plan may withdraw such Shares by following the
procedure for withdrawal of Shares before 5:00 P.M. New York City time, on
October 31, 1996. See Section 4.
Backup Federal Income Tax Withholding. TO PREVENT BACKUP FEDERAL INCOME TAX
WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE TO SHAREHOLDERS FOR SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SHAREHOLDER WHO DOES NOT OTHERWISE
ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH
THE SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN
OTHER INFORMATION BY COMPLETING THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL.
Withholding for Foreign Shareholders. Foreign shareholders may be required to
submit Form W-8, certifying non-United States status, to avoid backup
withholding. See Instructions 17 and 18 of the Letter of Transmittal. For a
discussion of certain federal income tax consequences to tendering shareholders,
see Section 14. For this purpose, a "foreign shareholder" is a shareholder that
is not (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States, any State or any political subdivision thereof or (iii) any
estate or trust the income of which is subject to United States federal income
taxation regardless of the source of such income. Even if a foreign shareholder
has provided the required certification to avoid backup withholding, the
Depositary will withhold federal income taxes equal to 30% of the gross payments
payable to a foreign shareholder or his or her agent unless the Depositary
determines that an exemption from or a reduced rate of withholding is available
pursuant to a tax treaty or that an exemption from withholding is applicable
because such gross proceeds are effectively connected with the conduct of a
trade or business in the United States. In order to obtain an exemption from or
a reduced rate of withholding pursuant to a tax treaty, a foreign shareholder
must deliver to the Depositary a properly completed Form 1001. In order to
obtain an exemption from withholding on the grounds that the gross proceeds paid
pursuant to the Offer are effectively connected with the conduct of a trade or
business within the United States, a foreign shareholder must deliver to the
Depositary a properly completed Form 4224. The Depositary will determine a
shareholder's status as a foreign shareholder and eligibility for a reduced rate
of, or an exemption from, withholding by reference to any outstanding
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding (e.g., Form 1001 or Form 4224) unless facts and
circumstances indicate that such reliance is not warranted. A foreign
shareholder may be able to obtain a refund of all or a portion of any tax
withheld if such shareholder meets one of the three tests for sale treatment
described in Section 14 or is otherwise able to establish that no tax or a
reduced amount of tax is due. Backup withholding generally will not apply to
amounts subject to the 30% or treaty-reduced rate of withholding.
Determination of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid for Shares to be accepted and the validity,
form, eligibility (including time of receipt) and acceptance of any tender of
Shares will be determined by the Company, in its sole discretion, and its
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders of any Shares that it determines
are not in appropriate form or the acceptance for payment of or payment for
which may be unlawful. The Company also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender with
respect to any particular Shares or any particular shareholder. No tender of
Shares will be deemed to have been properly made until all defects or
irregularities have been cured by the tendering shareholder or waived by the
Company. None of the Company, the Dealer Managers, the Depositary, or any other
person shall be obligated to give notice of any defects or irregularities in
tenders, nor shall any of them incur any liability for failure to give any such
notice.
Tendering Shareholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. A tender of Shares pursuant to any of the procedures
described above will constitute the tendering shareholder's acceptance of the
terms and conditions of the Offer, as well as the tendering shareholder's
representation and warranty to the Company that (a) such shareholder has a net
long position in the Shares being tendered within the meaning of Rule 14e-4
promulgated by the Commission under the Exchange Act and (b) the tender of such
Shares complies with Rule 14e-4. It is a violation of Rule 14e-4 for a person,
directly or indirectly, to tender shares for such person's own account unless,
at the time of tender and at the end of the proration period or period during
which shares are accepted by lot (including any extensions thereof), the person
so tendering (i) has a net long position equal to or greater than the amount of
(x) Shares tendered or (y) other securities convertible into or exchangeable or
exercisable for the Shares tendered and will acquire such Shares for tender by
conversion, exchange or exercise and (ii) will deliver or cause to be delivered
such Shares in accordance with the terms of the Offer. Rule 14e-4 provides a
similar restriction applicable to the tender or guarantee of a tender on behalf
of another person. The Company's acceptance for payment of Shares tendered
pursuant to the Offer will constitute a binding agreement between the tendering
shareholder and the Company upon the terms and conditions of the Offer.
4. Withdrawal Rights.
Except as otherwise provided in this Section 4, tenders of Shares pursuant to
the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company pursuant to the Offer, may also be withdrawn
at any time after 12:00 midnight, New York City time, on November 30, 1996. For
a withdrawal to be effective, a notice of withdrawal must be in written,
telegraphic or facsimile transmission form and must be received in a timely
manner by the Depositary at one of its addresses set forth on the back cover of
this Offer to Purchase. Any such notice of withdrawal must specify the name of
the tendering shareholder, the name of the registered holder, if different from
that of the person who tendered such Shares, the number of Shares tendered and
the number of Shares to be withdrawn. If the certificates for Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the release of such certificates, the tendering shareholder must also
submit the certificate numbers shown on the particular certificates evidencing
the Shares to be withdrawn and the signature on the notice of withdrawal must be
guaranteed by an Eligible Institution (except in the case of Shares tendered by
an Eligible Institution). If Shares have been tendered pursuant to the procedure
for book-entry transfer set forth in Section 3, the notice of withdrawal also
must specify the name and the number of the account at the applicable Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise comply
with the procedures of such facility. None of the Company, the Dealer Managers,
the Depositary or any other person shall be obligated to give notice of any
defects or irregularities in any notice of withdrawal nor shall any of them
incur liability for failure to give any such notice. All questions as to the
form and validity (including time of receipt) of notices of withdrawal will be
determined by the Company, in its sole discretion, which determination shall be
final and binding.
Withdrawals may not be rescinded and any Shares withdrawn will thereafter be
deemed not properly tendered for purposes of the Offer unless such withdrawn
Shares are properly retendered prior to the Expiration Date by again following
one of the procedures described in Section 3.
If the Company extends the Offer, is delayed in its purchase of Shares or is
unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain tendered Shares on behalf of the Company, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in this Section 4.
5. Purchase of Shares and Payment of Purchase Price.
Upon the terms and subject to the conditions of the Offer, as promptly as
practicable following the Expiration Date, the Company (i) will determine the
Purchase Price it will pay for the Shares properly tendered and not withdrawn
prior to the Expiration Date, taking into account the number of Shares so
tendered and the prices specified by tendering shareholders, and (ii) will
accept for payment and pay for (and thereby purchase) Shares properly tendered
at prices at or below the Purchase Price and not withdrawn prior to the
Expiration Date. For purposes of the Offer, the Company will be deemed to have
accepted for payment (and therefore purchased) Shares that are tendered at or
below the Purchase Price and not withdrawn (subject to the proration and
conditional tender provisions of the Offer) only when, as and if it gives oral
or written notice to the Depositary of its acceptance of such Shares for payment
pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, promptly following
the Expiration Date the Company will accept for payment and pay a single
Purchase Price per Share for 1,250,000 Shares (subject to increase or decrease
as provided in Section 15) or such lesser number of Shares as are properly
tendered at prices not in excess of $28.00 nor less than $25.00 per Share and
not withdrawn as permitted in Section 4.
The Company will pay for Shares purchased pursuant to the Offer by depositing
the aggregate Purchase Price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from the
Company and transmitting payment to the tendering shareholders.
In the event of proration, the Company will determine the proration factor
and pay for those tendered Shares accepted for payment as soon as practicable
after the Expiration Date; however, the Company does not expect to be able to
announce the final results of any proration and commence payment for Shares
purchased until approximately seven trading days after the Expiration Date.
Certificates for all Shares tendered and not purchased, including all Shares
tendered at prices in excess of the Purchase Price and Shares not purchased due
to proration or conditional tender, will be returned (or, in the case of Shares
tendered by book-entry transfer, such Shares will be credited to the account
maintained with the Book-Entry Transfer Facility by the participant therein who
so delivered such Shares) to the tendering shareholder at the Company's expense
as promptly as practicable after the Expiration Date without expense to the
tendering shareholders. Under no circumstances will interest on the Purchase
Price be paid by the Company by reason of any delay in making payment. In
addition, if certain events occur, the Company may not be obligated to purchase
Shares pursuant to the Offer. See Section 7.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances permitted by
the Offer) if unpurchased Shares are to be registered in the name of, any person
other than the registered holder, or if tendered certificates are registered in
the name of any person other than the person signing the Letter of Transmittal,
the amount of all stock transfer taxes, if any (whether imposed on the
registered holder or such other person), payable on account of the transfer to
such person will be deducted from the Purchase Price unless satisfactory
evidence of the payment of the stock transfer taxes, or exemption therefrom, is
submitted. See Instruction 9 of the Letter of Transmittal.
ANY TENDERING SHAREHOLDER OR OTHER PAYEE WHO FAILS TO COMPLETE FULLY, SIGN
AND RETURN TO THE DEPOSITARY THE FORM W-9 INCLUDED WITH THE LETTER OF
TRANSMITTAL MAY BE SUBJECT TO REQUIRED BACKUP FEDERAL INCOME TAX WITHHOLDING OF
31% OF THE GROSS PROCEEDS PAID TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO
THE OFFER. SEE SECTION 3. ALSO SEE SECTION 3 REGARDING FEDERAL INCOME TAX
CONSEQUENCES FOR FOREIGN SHAREHOLDERS.
6. Conditional Tender of Shares.
Under certain circumstances set forth in Section 1 above, the Company may
prorate the number of Shares purchased pursuant to the Offer. As discussed in
Section 14, the number of Shares to be purchased from a particular shareholder
might affect the tax consequences to such shareholder of such purchase and such
shareholder's decision whether to tender. Accordingly, a shareholder may tender
Shares subject to the condition that a specified minimum number, if any, must be
purchased, and any shareholder wishing to make such a conditional tender should
so indicate in Box #6, "Conditional Tender", on the Letter of Transmittal and,
if applicable, on the Notice of Guaranteed Delivery. It is the tendering
shareholder's responsibility to calculate such minimum number of Shares and each
shareholder is urged to consult his or her own tax advisor. If the effect of
accepting tenders on a pro rata basis is to reduce the number of Shares to be
purchased from any shareholder below the minimum number so specified, such
tender will automatically be deemed withdrawn, except as provided in the next
paragraph, and Shares tendered by such shareholder will be returned as soon as
practicable after the Expiration Date.
However, if so many conditional tenders would be deemed withdrawn that the
total number of Shares to be purchased falls below 1,250,000 Shares, then to the
extent feasible, the Company will select enough of such conditional tenders,
which would otherwise have been deemed withdrawn, to purchase such desired
number of Shares. In selecting among such conditional tenders, the Company will
select by random lot and will limit its purchase in each case to the designated
minimum number of Shares to be purchased.
7. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, the Company shall not be
required to accept for payment, purchase or pay for any Shares tendered, and may
terminate or amend the Offer or may postpone the acceptance for payment of, or
the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f)
under the Exchange Act, if at any time on or after September 26, 1996 and prior
to the time of payment for any such Shares (whether any Shares have theretofore
been accepted for payment, purchased or paid for pursuant to the Offer) any of
the following events shall have occurred (or shall have been determined by the
Company to have occurred) that, in the Company's sole judgment in any such case
and regardless of the circumstances giving rise thereto (including any action or
omission to act by the Company), makes it inadvisable to proceed with the Offer
or with such acceptance for payment or payment:
(a) there shall have been threatened, instituted or pending any action or
proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or any other person, domestic or foreign, before
any court, authority, agency or tribunal that directly or indirectly (i)
challenges the making of the Offer, the acquisition of some or all of the Shares
pursuant to the Offer or otherwise relates in any manner to the Offer, or (ii)
in the Company's sole judgment, could materially and adversely affect the
business, condition (financial or other), income, operations or prospects of the
Company and its subsidiaries, taken as a whole, or otherwise materially impair
in any way the contemplated future conduct of the business of the Company or any
of its subsidiaries or materially impair the contemplated benefits of the Offer
to the Company;
(b) there shall have been any action threatened, pending or taken, or
approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced or deemed to be applicable to the Offer or the Company or any of its
subsidiaries, by any court or any authority, agency or tribunal that, in the
Company's sole judgment, would or might directly or indirectly (i) make the
acceptance for payment of, or payment for, some or all of the Shares illegal, or
otherwise restrict or prohibit consummation of the Offer; (ii) delay or restrict
the ability of the Company, or render the Company unable, to accept for payment
or pay for some or all of the Shares; (iii) materially impair the contemplated
benefits of the Offer to the Company; or (iv) materially and adversely affect
the business, condition (financial or other), income, operations or prospects of
the Company and its subsidiaries, taken as a whole, or otherwise materially
impair in any way the contemplated future conduct of the business of the Company
or any of its subsidiaries;
(c) there shall have occurred (i) any general suspension of trading in, or
limitation on prices for, securities on any national securities exchange or in
the over-the-counter market; (ii) the declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States; (iii) the
commencement of a war, armed hostilities or other international or national
calamity directly or indirectly involving the United States; (iv) any limitation
(whether or not mandatory) by any governmental, regulatory or administrative
agency or authority on, or any event that, in the Company's sole judgment, might
affect, the extension of credit by banks or other lending institutions in the
United States; (v) any significant decrease in the market price of the Shares or
in the general level of market prices of equity securities in the United States
or abroad or any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in the sole judgment of
the Company, have a material adverse effect on the Company's business,
operations or prospects or the trading in the Shares; (vi) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or (vii) any decline in either the Standard
and Poor's Index of 500 Industrial Companies or the Standard and Poor's Bank
Index by an amount in excess of 10 percent measured from the close of business
on September 25, 1996;
(d) a tender or exchange offer with respect to some or all of the Shares
(other than the Offer), or a merger or acquisition proposal for the Company,
shall have been proposed, announced or made by another person or shall have been
publicly disclosed, the Company shall have received an offer, or an indication
of interest, from a third party with respect to the acquisition of all or
substantially all of the Company's assets; or the Company shall have learned
that (i) any person or "group" (within the meaning of Section 13(d)(3) of the
Exchange Act) shall have acquired or proposed to acquire beneficial ownership of
more than five percent of the outstanding Shares, or (ii) any new group shall
have been formed that beneficially owns more than five percent of the
outstanding Shares; or
(e) any change or changes shall have occurred in the business, financial
condition, assets, income, operations, prospects or stock ownership of the
Company or its subsidiaries that, in the sole judgment of the Company's Board of
Directors, is or may be material to the Company or its subsidiaries.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances (including any action or
inaction by the Company) giving rise to any such condition, and may be waived by
the Company, in whole or in part, at any time and from time to time in its sole
discretion. The Company's failure at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time. Any determination by the Company concerning the events described above
will be final and binding.
8. Price Range of Shares; Dividends.
The Shares are traded on the Nasdaq National Market. The following table sets
forth, for the periods indicated, the high and low closing prices per Share as
reported on the Nasdaq National Market and the cash dividends paid per Share in
each such fiscal quarter:
1994 Dividends
High Low Declared
1st Quarter $22.75 $18.50 $.17
2nd Quarter 23.13 18.50 .17
3rd Quarter 23.25 20.75 .17
4th Quarter 21.13 17.13 .17
1995
1st Quarter $20.75 $19.13 $.19
2nd Quarter 22.13 19.13 .19
3rd Quarter 23.50 21.00 .19
4th Quarter 23.50 20.13 .19
1996
1st Quarter $22.63 $20.00 $.22
2nd Quarter 22.50 20.63 .22
3rd Quarter (through September 25) 25.88 21.50 .22
-----------------------------------------------------------------------------
TENDER OFFER RANGE $28.00 $25.00
-----------------------------------------------------------------------------
On September 25, 1996, the last full trading day prior to the announcement
and commencement of the Offer, the closing price on the Nasdaq National Market
was $24.50 per Share. SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES. Current market quotations for the Shares may be obtained from
the Information Agent or from your broker.
All decisions with respect to the payment of future dividends will be made by
the Board of Directors based upon the Company's earnings, financial condition,
anticipated cash needs and such other considerations as the Board of Directors
deems relevant. On September 25, 1996, the Board of Directors declared a
dividend of $.22 per Share payable on October 31, 1996 to shareholders of record
on October 7, 1996. Shareholders of record on October 7, 1996 will be entitled
to receive such dividend, even on Shares sold in the Offer. The Company
anticipates that quarterly dividend payments subsequent to the termination of
the Offer will continue to be made in amounts not less than the most recent
quarter. However, future dividend payments are subject to future earnings
results and other financial considerations, and the Board of Directors may in
its discretion increase or decrease the quarterly dividend. There can be no
assurance that the level of dividends will be consistent with the current
dividends.
9. Source and Amount of Funds.
Assuming that the Company purchases 1,250,000 Shares pursuant to the Offer at
a price not in excess of $28.00 nor less than $25.00 per Share, the cost to the
Company (excluding fees and expenses related to the Offer) is estimated to be
between $31,250,000 and $35,000,000. The Company has a line of credit (the
"Wachovia Facility") from Wachovia Bank of North Carolina, N.A. ("Wachovia") in
the amount of $40,000,000 that will be used in conjunction with its normal
working capital to fund the purchase of the Shares tendered pursuant to the
Offer. The line of credit has a term commencing on September 25, 1996 and ending
January 23, 1997, and represents a general obligation of the Company without
additional security. Borrowings under the line of credit bear a floating
interest rate of LIBOR (London Interbank Offered Rate) plus 50 basis points (or
6.03% as of September 25, 1996), payable at maturity. The Company expects that
the principal source of repayment will be dividends received by the Company from
the Bank, derived from the Bank's cash and other liquid investments as well as
short-term borrowings, which may or may not be secured by assets of the Bank.
The payment of such dividends is subject to the approval of the Bank's Board of
Directors, and, in the case of dividends in excess of approximately $30,000,000,
regulatory approval of the Office of the Comptroller of the Currency (the
"OCC").
The Company also has a commitment for a second line of credit from Wachovia
that will expire unless accepted by the Company before close of business on
December 6, 1996. The second line would be in the amount of $15,000,000 for a
term commencing on the expiration date of the $40,000,000 line of credit and
ending January 22, 1998, and would be used to refinance a portion of the
Company's borrowings under the first line, if necessary. Borrowings under the
second line would also represent a general obligation of the Company without
additional security, bear a floating interest rate of LIBOR plus .45% payable
quarterly in arrears and would be subject to other terms, including a facility
fee of 5 basis points (.05%) payable in advance, and financial covenants
customary in this type of transaction.
The Company also expects that the principal source of repayment of the second
line will be dividends received by the Company from the Bank, subject to the
approval of the Bank's Board of Directors and, if necessary, the OCC.
<PAGE>
To the extent that dividends paid by the Bank to the Company are derived from
borrowings by the Bank, the Company expects that the interest rate on such
borrowings by the Bank will be lower than the interest rates under the Company's
lines of credit described above.
10. Certain Information Concerning the Company.
General. The Company is a bank holding company incorporated in 1979. The
Company owns one subsidiary bank (the "Bank") and four nonbank subsidiaries. The
Company regularly seeks reasonable opportunities to expand its asset base and
trade area and related business endeavors. Within the last five years the
Company has acquired three banks, and the Bank has purchased deposits of a
federal savings bank from the Resolution Trust Corporation, and deposits
associated with offices of two other banks.
Financial Information. Additional financial information concerning the
Company is contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1995 and the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, copies of which can be obtained from the
Information Agent upon request. See "Additional Information".
Financial Results for the Current Quarter. Financial results for the quarter
that will end on September 30, 1996 are not available and are not included
herein. The Company expects to make public its earnings results and other
relevant financial information for that quarter and the year to date in a news
release on or about October 10, 1996. Copies of that news release will be
available to shareholders from the Information Agent by calling 800-223-2064.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
Although final results are not yet available, the Company projects that net
income in the quarter ending September 30, 1996 will be in the range of $7.0
million to $7.3 million and that net income per share will be in the range of
$.46 to $.48. In the third quarter of 1995, net income was $6.1 million and net
income per share was $.40. The foregoing is a forward looking statement based
upon unaudited financial results through August 31, 1996 and certain financial
trends that are expected to contribute to attaining the projected third quarter
financial results. The expected results for net income and net income per share
involve a number of assumptions, risks, and uncertainties that could cause the
results to differ materially from those anticipated. These assumptions, risks,
and uncertainties include, but are not limited to, any unexpected or unforeseen,
material items of income or expense, any gains or losses resulting from
operations that are not currently known, any revaluations of assets, either
higher or lower, that might impact net income and earnings per share, any
contingency for which the Company may determine the need to establish a
valuation allowance, and any legal or regulatory directive requiring the
recognition of income or expense.
SHAREHOLDERS ARE URGED TO CONSIDER THE POTENTIAL IMPACT ON THE COMPANY'S
SHARE PRICE OF THE FINANCIAL RESULTS FOR THE QUARTER ENDING SEPTEMBER 30, 1996.
Selected Historical Consolidated Financial Information. The following table
presents certain consolidated financial information with respect to the Company,
excerpted or derived from the audited financial statements contained in the
Company's Annual Report to Shareholders (which are included as exhibits to its
Report on Form 10-K) for the years ended December 31, 1995 and December 31, 1994
and from unaudited financial statements contained in the Company's Quarterly
Report on Form 10-Q for the quarters ended June 30, 1996 and June 30, 1995. The
selected information below is qualified in its entirety by reference to such
Reports (which may be obtained from the Information Agent on request and may be
inspected or obtained at the offices of the U. S. Securities and Exchange
Commission in the manner set forth below) and the financial information and
related notes contained therein.
[Intentionally left blank]
<PAGE>
Summary Financial Information
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
At or for Year Ended At or for Six Months Ended
December 31, June 30 (Unaudited),
----------------------------------------------------------------
1995 1994 1996 1995
---------------------------------------------- -----------------
<S> <C>
Income Statement Data
Interest Income $146,373 $129,496 $75,176 $71,328
Interest Expense 58,644 45,393 28,915 27,987
---------------------------------------------- -----------------
Net Interest Income 87,729 84,103 46,261 43,341
Provison for Loan Losses 3,020 1,600 1,620 960
Non-interest Income 19,019 17,910 9,600 8,232
Non-interest Expense 66,580 66,423 33,622 33,371
Provison for Income Tax Expense 12,285 11,390 7,106 5,791
---------------------------------------------- -----------------
Net Income $24,863 $22,600 $13,513 $11,451
============================================== =================
Net Income Per Share $1.64 $1.49 $.89 $.76
Dividends Declared Per Share $.76 $.68 $.44 $.38
- --------------------------------------------------------------------------------------------------------------
Balance Sheet Data
Assets $2,051,188 $1,925,950 $2,080,770 $2,019,702
Earnings Assets 1,878,599 1,740,048 1,909,601 1,834,610
Investment Securities:
Available for Sale 188,669 170,815 193,023 176,232
Held to Maturity 454,509 467,733 418,678 463,094
Loans, Net of Unearned Income 1,220,421 1,101,500 1,282,900 1,170,284
Deposits 1,793,199 1,688,872 1,794,668 1,771,484
Shareholder's Equity 226,540 206,553 229,229 217,509
Book Value per Share $14.92 $13.62 $15.14 $14.34
Shares Outstanding 15,182,235 15,170,250 15,144,572 15,171,764
- --------------------------------------------------------------------------------------------------------------
Selected Financial Ratios
Return on Average Assets 1.25% 1.18% 1.33% 1.17%
Return on Average Equity 11.43 11.05 11.76 10.76
Average Equity to Average Assets 10.92 10.65 11.29 10.90
Net Interest Margin, Taxable Equivalent 4.88 4.87 4.98 4.94
Allowance for Loan Losses to Loans, Net of 1.10 1.25 1.10 1.19
Unearned Income
Non-Performing Assets to Total Assets .50 .67 .42 .51
Annualized Net Loan Losses to Average Loans .29 .16 .16 .15
</TABLE>
<PAGE>
Unaudited Pro Forma Financial Information. The following unaudited pro forma
financial information for the yearended December 31, 1995 and the six months
ended June 30, 1996 shows the effects of the purchase of 1,250,000 Shares
pursuant to the Offer. The pro forma financial information should be read in
conjunction withthe audited financial statements and related notes contained in
the Company's Annual Report on Form 10-K for the year ended December 31, 1995
and the unaudited financial statements contained in the Company'sQuarterly
Report on Form 10-Q for the quarter ended June 30, 1996. The pro forma financial
information does not purport to be indicative of the results that would have
actually been attained had the purchase of the Sharesbeen completed at the dates
indicated or that may be attained in the future.
Selected Pro Forma Financial Information
(Dollars in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
At or for the Year Ended At or for the Six Month Ended
December 31, 1995 June 30, 1996
------------------------------------------------------------------------------------------
Pro Forma Pro Forma Unaudited Pro Forma ProForma
Historical $25.00 $28.00 Historical $25.00 $28.00
-------------- --------------------------------------------- -------------- --------------
<S> <C>
Income Statement Data
Net Interest Income $87,729 $85,845 $85,619 $46,261 $45,319 $45,206
Net Income 24,863 23,638 23,491 13,513 12,901 12,827
Net Income per Share $1.64 $1.70 $1.69 $.89 $.93 $.92
Average Number of Shares 15,181,152 13,931,152 13,931,152 15,168,061 13,918,061 13,918,061
- -----------------------------------------------------------------------------------------------------------------------------
Balance Sheet Data
Assets $2,051,188 $2,051,188 $2,051,188 $2,080,770 $2,080,770 $2,080,770
Debt to Purchase Shares 0 31,250 35,000 0 31,250 35,000
Shareholders' Equity 226,540 195,290 191,540 229,229 197,979 194,229
Book Value per Share $14.92 $14.02 $13.75 $15.14 $14.25 $13.98
Shares Outstanding 15,182,235 13,932,235 13,932,235 15,144,572 13,894,572 13,894,572
- -----------------------------------------------------------------------------------------------------------------------------
Selected Financial Ratios
Return on Average Assets 1.25% 1.19% 1.18% 1.33% 1.27% 1.26%
Return on Average Equity 11.43 12.70 12.88 11.76 12.99 13.16
Average Equity to Average Assets 10.92 9.35 9.16 11.29 9.75 9.57
</TABLE>
Notes to Pro Forma Financial Information
(1) The pro forma financial information reflects the purchase of 1,250,000
Shares of common stock at $25.00 and $28.00 per share, as appropriate.
(2) The balance sheet data give effect to the purchase of Shares as of the
balance sheet date. The income statement data give effect to the purchase of
Shares as of the beginning of each period presented.
<PAGE>
(3) The funds used to purchase Shares were considered to have been obtained from
borrowings under the Wachovia Facility at a rate of interest equal to LIBOR
plus 50 basis points or 6.03% and a tax rate of 35%. To the extent that
these borrowings are repaid with the proceeds of dividends received by the
Company from the Bank, which are in turn financed by the Bank from its
borrowings, the rate of interest paid by the Bank may be slightly less
(about .5%) than the rate paid by the Company. The income statement data
reflects the additional interest expense on borrowings as if such borrowings
were outstanding at the beginning of each period presented. The income
statement does not reflect a savings by the Bank of state franchise tax as a
result of reducing capital, that the Company expects will be approximately
$350,000 annually, commencing in the year following such reduction of
capital by the Bank.
(4) The purchase of Shares was allocated to common stock at its $2.50 per share
par value, and the remainder of the purchase price was allocated to retained
earnings.
(5) Costs incurred in connection with the Offer will be capitalized as part of
the cost of the Shares purchased, and consequently no effect of the costs is
reflected in the Pro Forma Financial Information.
Additional Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports and other information with the U. S. Securities and Exchange
Commission (the "Commission") relating to its business, financial condition and
other matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, options granted to them, the
principal holders of the Company's securities and any material interest of such
persons in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's shareholders and filed with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 2120, Washington, D.C. 20549; at its
regional offices located at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, New York, New York 10048, and on
the Commission's Internet web site (http://www.sec.gov). Copies of such material
may also be obtained by mail, upon payment of the Commission's customary
charges, from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549.
11. Interest of Directors and Officers; Transactions and Arrangements
Concerning Shares.
As of September 25, 1996, the Company had issued and outstanding 15,146,470
Shares, and had reserved 1,992,720 Shares for issuance upon exercise of
outstanding stock options and for issuance under the Company's Employee Stock
Purchase Plan, the Company's Dividend Reinvestment Plan, and other stock plans
for employees and non-employee directors. The 1,250,000 Shares that the Company
is offering to purchase represent approximately 8.3% of the outstanding Shares.
As of September 25, 1996, the Company's directors and executive officers as a
group (18 persons) beneficially owned an aggregate of 834,389 Shares (including
awards granted but not yet vested under the Company's 1985 Incentive Stock Plan)
representing approximately 5.51% of the outstanding Shares, assuming the
exercise by such persons of their currently exercisable options and assuming
vesting of such awards. The Company has been advised that no director or
executive officer of the Company intends to tender any Shares pursuant to the
Offer.
If the Company purchases 1,250,000 Shares pursuant to the Offer, then after
the purchase of Shares pursuant to the Offer, the Company's executive officers
and directors as a group would own beneficially approximately 6.00% of the
outstanding Shares immediately after the Offer, assuming the exercise by such
persons of their currently exercisable options and assuming vesting of such
awards.
Except as set forth in Schedule A, neither the Company, nor any subsidiary of
the Company nor, to the best of the Company's knowledge, any of the Company's
directors or executive officers, nor any affiliates of any of the foregoing, had
any transactions involving the Shares during the 40 business days prior to the
date hereof.
Except for outstanding options to purchase Shares granted from time to time
over recent years to certain employees (including executive officers) of the
Company pursuant to stock option plans for employees, and except as otherwise
described herein, neither the Company nor, to the best of the Company's
knowledge, any of its affiliates, directors or executive officers, or any of the
directors or executive officers of any of its affiliates is a party to any
contract, arrangement, understanding or relationship with any other person
relating, directly or indirectly, to the Offer with respect to any securities of
the Company including, but not limited to, any contract, arrangement,
understanding or relationship concerning the transfer or the voting of any such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations.
12. Effects of the Offer on the Market for Shares; Registration
under the Exchange Act.
The Company's purchase of Shares pursuant to the Offer will reduce the number
of Shares that might otherwise be traded publicly and may reduce the number of
shareholders. Nonetheless, the Company anticipates that there will be a
sufficient number of Shares outstanding and publicly traded following
consummation of the Offer to ensure a continued trading market for the Shares.
Based upon published guidelines of the Nasdaq National Market, the Company
believes that following its purchase of Shares pursuant to the Offer, the
Company's remaining Shares will continue to qualify to be quoted on the Nasdaq
National Market.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit to their customers using such Shares as collateral. The Company
believes that, following the purchase of Shares pursuant to the Offer, the
Shares will continue to be "margin securities" for purposes of the Federal
Reserve Board's margin regulations.
The Shares are registered under the Exchange Act, which requires, among other
things, that the Company furnish certain information to its shareholders and the
Commission and comply with the Commission's proxy rules in connection with
meetings of the Company's shareholders. The Company believes that its purchase
of Shares pursuant to the Offer will not result in the Company's remaining
shares becoming eligible for deregistration under the Exchange Act.
13. Certain Legal Matters; Regulatory Approvals.
The Company is not aware of any license or regulatory permit that appears to
be material to the Company's business that might be adversely affected by the
Company's acquisition of Shares as contemplated herein or of any approval or
other action by, or any filing with, any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, that
would be required for the acquisition or ownership of Shares by the Company as
contemplated herein. Should any such approval or other action be required, the
Company presently contemplates that such approval or other action will be
sought. The Company is unable to predict whether it may determine that it is
required to delay the acceptance for payment of or payment for Shares tendered
pursuant to the Offer pending the outcome of any such matter. There can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that the failure to
obtain any such approval or other action might not result in adverse
consequences to the Company's business. The Company's obligations under the
Offer to accept for payment and pay for Shares is subject to certain conditions.
See Section 7.
14. Certain Federal Income Tax Consequences.
General. The federal income tax discussion set forth below summarizes
the principal federal income tax consequences to U. S. shareholders of sales of
Shares pursuant to the Offer and is included for general information only. The
discussion does not address all aspects of federal income taxation that may be
relevant to a particular shareholder or any relevant foreign, state, local or
other tax laws. Certain shareholders (including insurance companies, tax-exempt
entities, foreign persons, financial institutions, broker dealers, employee
benefit plans, personal holding companies and persons who acquired their Shares
upon the exercise of employee stock options or as compensation) may be subject
to special rules not discussed below. The discussion is based on laws,
regulations, rulings and court decisions currently in effect, all of which are
subject to change, possibly with retroactive effect. The Company has neither
requested nor obtained a written opinion of counsel or a ruling from the
Internal Revenue Service (the "Service") with respect to the tax matters
discussed below. EACH SHAREHOLDER IS URGED TO CONSULT AND RELY ON THE
SHAREHOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO THE
SHAREHOLDER OF SELLING SHARES PURSUANT TO THE OFFER, INCLUDING THE APPLICATION
OF FOREIGN, STATE, LOCAL OR OTHER TAX LAWS.
A sale of Shares pursuant to the Offer will constitute a "redemption" under
the Internal Revenue Code of 1986 (the "Code") and will be a taxable transaction
for federal income tax purposes. If the redemption qualifies as a sale of Shares
by a shareholder under Section 302 of the Code, the shareholder will recognize
gain or loss equal to the difference between (i) the cash received pursuant to
the Offer and (ii) the shareholder's tax basis in the Shares surrendered
pursuant to the Offer. If the redemption does not qualify as a sale of Shares
under Section 302, the shareholder will not be treated as having sold Shares but
will be treated as having received a dividend taxable as ordinary income in an
amount equal to the cash received pursuant to the Offer. As described below,
whether a redemption qualifies for sale treatment will depend largely on the
total number of the shareholder's Shares (including any Shares constructively
owned by the Shareholder) that are purchased. A shareholder desiring to obtain
sale treatment therefore may want to make a conditional tender, as described in
Section 6, to make sure that a minimum number of his or her Shares (if any) are
purchased.
Sale Treatment. Under Section 302 of the Code, a redemption of Shares
pursuant to the Offer will be treated as a sale of such Shares for federal
income tax purposes if such redemption (i) results in a "complete redemption" of
all of the shareholder's stock in the Company, (ii) is "substantially
disproportionate" with respect to the shareholder, or (iii) is "not essentially
equivalent to a dividend" with respect to the shareholder. In determining
whether any of these three tests under Section 302 is satisfied, a shareholder
must take into account not only Shares that the shareholder actually owns, but
also any Shares that the shareholder is treated as owning pursuant to the
constructive ownership rules of Section 318 of the Code. Under these rules, a
shareholder generally is treated as owning (i) Shares owned by the shareholder's
spouse, children, grandchildren, and parents, (ii) Shares owned by certain
trusts of which the shareholder is a beneficiary in proportion to the
shareholder's interest, (iii) Shares owned by any estate of which the
shareholder is a beneficiary in proportion to the shareholder's interest, (iv)
Shares owned by any partnership or "S corporation" in which the shareholder is a
partner or shareholder in proportion to the shareholder's interest, (v) Shares
owned by any non-S corporation of which the shareholder owns at least 50% in
value of the stock and (vi) Shares that the shareholder has an option or similar
right to acquire. A shareholder that is a partnership or S corporation, estate,
trust, or non-S corporation is treated as owning stock owned (as the case may
be) by partners or S corporation shareholders, by estate beneficiaries, by
certain trust beneficiaries, and by 50% shareholders of a non-S corporation.
Stock constructively owned by a person generally is treated as being owned by
that person for the purpose of attributing ownership to another person.
A redemption of Shares from a shareholder pursuant to the Offer will result
in a "complete redemption" of all the shareholder's stock in the Company if,
either (i) the Company purchases all of the Shares actually and constructively
owned by the shareholder, or (ii) the shareholder actually owns no Shares after
all transfers of Shares pursuant to the Offer, constructively owns only Shares
owned by certain family members, and the shareholder qualifies to and does waive
(pursuant to Section 302(c)(2) of the Code) constructive ownership of Shares
owned by family members. Any shareholder desiring to waive such constructive
ownership of Shares should consult a tax advisor about the applicability of
Section 302(c)(2).
A redemption of Shares from a shareholder pursuant to the Offer will be
"substantially disproportionate" with respect to the shareholder if the number
of Shares actually and constructively owned by the shareholder (expessed as a
percentage of all Shares outstanding immediately after all redemptions of Shares
pursuant to the Offer is less than 80% of the number of Shares actually and
constructively owned by the shareholder (expressed as a percentage of all Shares
outstanding) immediately before such redemptions. If exactly 1,250,000 Shares
are redeemed pursuant to the Offer, the number of Shares outstanding after
consummation of the Offer will be approximately 91.75% of the number of Shares
currently outstanding. Consequently, in that case a shareholder must dispose of
more than 26.60% (i.e., 100% minus 80% of 91.75%) of the number of Shares the
shareholder actually and constructively owns in order possibly to qualify for a
substantially disproportionate redemption. If the Company were to exercise its
right to purchase an additional 2% of the outstanding Shares, the number of
Shares outstanding immediately after consummation of the Offer would be
approximately 89.75% of the number of Shares outstanding as of September 25,
1996. Accordingly, a shareholder would have to dispose of more than 28.20%
(i.e., 100% minus 80% of 89.75%) of the number of Shares the shareholder
actually and constructively owns in order possibly to qualify for a
substantially disproportionate redemption.
A redemption of Shares from a shareholder pursuant to the Offer will be "not
essentially equivalent to a dividend" if pursuant to the Offer, the shareholder
experiences a "meaningful reduction" in his or her proportionate interest in the
Company, including voting rights, participation in earnings, and liquidation
rights, arising from the actual and constructive ownership of Shares. The
Service has indicated in a published ruling that a very small reduction in the
proportionate interest of a small minority shareholder who does not exercise any
control over corporate affairs generally constitutes a "meaningful reduction" in
the shareholder's interest in the company. The fact that the redemption fails to
qualify as a sale pursuant to the other two tests is not taken into account in
determining whether the redemption is "not essentially equivalent to a
dividend." If exactly 1,250,000 Shares are redeemed pursuant to the Offer, the
number of Shares outstanding will be reduced by approximately 8.25%.
Consequently, in that case a shareholder must dispose of more than 8.25% of the
number of Shares the shareholder actually and constructively owns in order to
have any reduction in the shareholder's proportionate stock interest in the
Company. If the Company were to exercise its right to purchase an additional 2%
of the outstanding Shares, a shareholder would have to dispose of more than
10.25% of the number of Shares the shareholder actually and constructively owns
in order to have any reduction in the shareholder's proportionate interest.
Shareholders should be aware that their ability to satisfy any of the
foregoing tests also may be affected by proration pursuant to the Offer.
THEREFORE, UNLESS A SHAREHOLDER MAKES A CONDITIONAL TENDER (SEE SECTION 6), THE
SHAREHOLDER (OTHER THAN AN ODD LOT HOLDER WHO TENDERS ALL OF HIS OR HER SHARES
AT OR BELOW THE PURCHASE PRICE) CAN BE GIVEN NO ASSURANCE, EVEN IF HE OR SHE
TENDERS ALL OF THE SHAREHOLDER'S SHARES, THAT THE COMPANY WILL PURCHASE A
SUFFICIENT NUMBER OF SUCH SHARES TO PERMIT THE SHAREHOLDER TO SATISFY ANY OF THE
FOREGOING TESTS. Shareholders also should be aware that an acquisition or
disposition of Shares in the market or otherwise as part of a plan that includes
the shareholder's tender of Shares pursuant to the Offer might be taken into
account in determining whether any of the foregoing tests is satisfied.
Shareholders are urged to consult their own tax advisors with regard to whether
acquisitions from or sales to third parties, including market sales, and a
tender may be so integrated.
If any of the foregoing three tests is satisfied, the shareholder will
recognize gain or loss equal to the difference between the amount of cash
received pursuant to the Offer and the shareholder's tax basis in the Shares
sold. Such gain or loss must be determined separately for each block of Shares
sold (i.e., Shares that were acquired in a single transaction), and will be
capital gain or loss if the shareholder held the Shares as a capital asset.
Capital gain or loss generally will be long-term capital gain or loss if, when
the Company accepts the Shares for payment, the shareholder held the Shares for
more than one year. Long-term capital gains of individuals, estates and trusts
currently are subject to federal income tax at a maximum rate of 28%. Short-term
capital gains of individuals, estates and trusts generally are subject to a
maximum federal income tax rate of 39.6%. Capital gains of corporations
generally are taxed at the federal income tax rates applicable to corporate
ordinary income.
Dividend Treatment. If none of the foregoing three tests under Section 302 of
the Code is satisfied, the shareholder generally will be treated as having
received a dividend taxable as ordinary income in an amount equal to the amount
of cash received by the shareholder pursuant to the Offer, to the extent the
Company has sufficient accumulated or current earnings and profits. The Company
expects that its current and accumulated earnings and profits will be sufficient
to cover the amount of any payments pursuant to the Offer that are treated as
dividends.
Dividend income of individuals, estates and trusts generally is subject to
federal income tax at a maximum rate of 39.6%. Dividend income of corporations,
subject to the provisions discussed below, generally is subject to federal
income tax at a maximum rate of 35%. To the extent that the purchase of Shares
from any shareholder pursuant to the Offer is treated as a dividend, the
shareholder's tax basis in any Shares that the shareholder actually or
constructively owns after consummation of the Offer should be increased by the
shareholder's tax basis in the Shares surrendered pursuant to the Offer.
Treatment of Dividend Income for Corporate Shareholders. In the case of a
corporate shareholder, if the cash received for Shares pursuant to the Offer is
treated as a dividend, the dividend income may be eligible for the 70%
dividends-received deduction under Section 243 of the Code. The
dividends-received deduction is subject to certain limitations; for example, the
deduction may not be available if the corporate shareholder does not satisfy
certain holding period requirements with respect to its tendered Shares or if
the Shares are "debt-financed portfolio stock." If a dividends-received
deduction is available, the dividend (having arisen in a non-pro rata
redemption) also likely will be treated as an "extraordinary dividend" under
Section 1059 of the Code. In that case the corporate shareholder's tax basis in
its remaining Shares (for purposes of determining gain or loss on a future
disposition) will be reduced (but not below zero) by the amount of any
"extraordinary dividend" not taxed because of the dividends-received deduction.
Any amount of the "extraordinary dividend" not taxed because of the
dividends-received deduction and in excess of the corporate shareholder's tax
basis for the remaining Shares generally will be subject to tax as gain on a
subsequent sale or disposition of those Shares. Corporate shareholders should
consult their tax advisors as to the availability of the dividends-received
deduction and the application of Section 1059 of the Code.
SEE SECTION 3 WITH RESPECT TO THE APPLICATION OF BACKUP FEDERAL INCOME TAX
WITHHOLDING.
15. Extension of Offer; Termination; Amendment.
The Company expressly reserves the right, in its sole discretion, at any time
and from time to time, and regardless of whether or not any of the events set
forth in Section 7 shall have occurred or shall be deemed by the Company to have
occurred, to extend the period of time during which the Offer is open and
thereby delay acceptance for payment of, and payment for, any Shares by giving
oral or written notice of such extension to the Depositary and making a public
announcement thereof. During any such extension, all Shares previously tendered
and not withdrawn will remain subject to the Offer. The Company also expressly
reserves the right, in its sole discretion, to terminate the Offer and not
accept for payment or pay for any Shares not theretofore accepted for payment or
paid for or, subject to applicable law, to postpone payment for Shares upon the
occurrence of any of the conditions specified in Section 7 hereof by giving oral
or written notice of such termination or postponement to the Depositary and
making a public announcement thereof. The Company's reservation of the right to
delay payment for Shares which it has accepted for payment is limited by Rule
13e-4(f)(5) promulgated under the Exchange Act, which requires that the Company
must pay the consideration offered or return the Shares tendered promptly after
termination or withdrawal of a tender offer. Subject to compliance with
applicable law, the Company further reserves the right, in its sole discretion,
and regardless of whether any of the events set forth in Section 7 shall have
occurred or shall be deemed by the Company to have occurred, to amend the Offer
in any respect (including, without limitation, by increasing or decreasing the
number of Shares the Company may purchase or the range of prices it may pay
pursuant to the Offer). Amendments to the Offer may be made at any time and from
time to time effected by public announcement thereof, such announcement, in the
case of an extension, to be issued no later than 9:00 a.m., New York City time,
on the next business day after the last previously scheduled or announced
Expiration Date. Any public announcement made pursuant to the Offer will be
disseminated promptly to shareholders in a manner reasonably designed to inform
shareholders of such change. Without limiting the manner in which the Company
may choose to make a public announcement, except as required by applicable law,
the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company materially changes the terms of the Offer or the information
concerning the Offer, or if it waives a material condition of the Offer, the
Company will extend the Offer to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Exchange Act. These rules require that the
minimum period during which an offer must remain open following material changes
in the terms of the offer or information concerning the offer (other than a
change in price or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality of such terms or
information. If (i) the Company increases or decreases the price to be paid for
Shares or the number of Shares being sought in the Offer or the Dealer Managers'
soliciting fees and, in the event of an increase in the number of Shares being
sought, such increase exceeds two percent of the outstanding Shares and (ii) the
Offer is scheduled to expire at any time earlier than the expiration of a period
ending on the tenth business day from, and including, the date that such notice
of an increase or decrease is first published, sent or given in the manner
specified in this Section 15, the Offer will be extended until the expiration of
such period of ten business days.
The Company reserves the right, in its sole discretion, to purchase more than
1,250,000 Shares pursuant to the Offer. The acceptance for payment by the
Company of additional Shares not to exceed two percent (2%) of the Shares
outstanding (302,929 Shares) shall not be deemed an increase requiring the Offer
to be extended.
16. Fees and Expenses.
The Company has retained Goldman, Sachs & Co. ("Goldman Sachs") to act as the
Dealer Managers in connection with the Offer. Goldman Sachs will receive a fee
of $.14 per Share purchased by the Company in the Offer, but not less than
$175,000, for their services as Dealer Managers. The Company also has agreed to
reimburse Goldman Sachs for certain reasonable out-of-pocket expenses incurred
in connection with the Offer, including fees and expenses of counsel, and to
indemnify Goldman Sachs against certain liabilities in connection with the
Offer, including liabilities under the federal securities laws. Goldman Sachs
have rendered various investment banking and other advisory services to the
Company in the past, for which they have received customary compensation, and
can be expected to render similar services to the Company in the future.
The Company has retained The Bank of New York to act as Depositary in
connection with the Offer. The Depositary may contact holders of Shares by mail,
telephone, telegraph and personal interviews and may request brokers, dealers
and other nominee shareholders to forward materials relating to the Offer to
beneficial owners. The Depositary will receive reasonable and customary
compensation for its services, will be reimbursed by the Company for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities in connection with the Offer, including certain liabilities under
the federal securities laws.
The Company has retained Georgeson & Company Inc. to act as Information Agent
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telegraph and personal interviews and may request
brokers, dealers and other nominee shareholders to forward materials relating to
the Offer to beneficial owners. The Information Agent will receive reasonable
and customary compensation for its services, will be reimbursed by the Company
for certain reasonable out-of-pocket expenses and will be indemnified against
certain liabilities in connection with the Offer, including certain liabilities
under the federal securities laws.
No fees or commissions will be payable to brokers, dealers or other persons
(other than fees to the Dealer Managers, the Information Agent and the
Depositary as described above) for soliciting tenders of Shares pursuant to the
Offer. The Company, however, upon request, will reimburse brokers, dealers and
commercial banks for customary mailing and handling expenses incurred by such
persons in forwarding the Offer and related materials to the beneficial owners
of Shares held by any such person as a nominee or in a fiduciary capacity. No
broker, dealer, commercial bank or trust company has been authorized to act as
the agent of the Company, the Dealer Managers or the Depositary for purposes of
the Offer. The Company will pay or cause to be paid all stock transfer taxes, if
any, on its purchase of Shares except as otherwise provided in Instruction 9 in
the Letter of Transmittal.
17. Miscellaneous.
The Company is not aware of any jurisdiction where the making of the Offer is
not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such law,
the Offer will not be made to (nor will tenders be accepted from or on behalf
of) the holders of Shares residing in such jurisdiction. In any jurisdiction the
securities or blue sky laws of which require the Offer to be made by a licensed
broker or dealer, the Offer is being made on the Company's behalf by the Dealer
Managers or one or more registered brokers or dealers licensed under the laws of
such jurisdiction.
Pursuant to Rule 13e-4 of the General Rules and Regulations under the
Exchange Act, the Company has filed with the Commission an Issuer Tender Offer
Statement on Schedule 13E-4 which contains additional information with respect
to the Offer. Such Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and in
the same manner as is set forth in Section 10 with respect to information
concerning the Company.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGERS IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE DEALER MANAGERS.
JEFFERSON BANKSHARES, INC.
September 26, 1996
<PAGE>
SCHEDULE A
CERTAIN TRANSACTIONS INVOLVING THE COMPANY'S SHARES
BY THE COMPANY'S
EXECUTIVE OFFICERS AND DIRECTORS
During the 40 business days prior to September 25, 1996, the only transactions
effected in the Shares by the Company's executive officers and directors were as
follows:
<TABLE>
<CAPTION>
Person who Date of Number Where and How
Effected Transaction Transaction of Shares Price the Transaction was Effected
- ------------------------------------ ----------------- --------------- -------------- -------------------------------------
<S> <C>
Campbell, Jr., Robert H. 07-31-1996 78.4813 $22.4020 Dividend Reinvestment
Campbell, Jr., Robert H. 07-31-1996 22.3194 22.4020 Optional Cash Purchase under Dividend
Reinvestment Plan
Campbell, Jr., Robert H. 07-31-1996 2.2154 22.4020 Dividend Reinvestment
(by Spouse)
Casteen, III, John T. 07-31-1996 23.8599 22.4020 Dividend Reinvestment
Eagleburger, Lawrence S. 07-31-1996 5.1539 22.5000 Dividend Reinvestment
Fulton, Jr., Donald W. 07-31-1996 49.4326 22.4020 Dividend Reinvestment
Fulton, Jr., Donald W. 08-01-1996 4.3956 22.7500 Purchase under Employee Stock Purchase
Plan
Fulton, Jr., Donald W. 09-03-1996 4.2328 23.6250 Purchase under Employee Stock Purchase
Plan
Glaize, III, Fred L. 07-31-1996 67.8402 22.5000 Dividend Reinvestment
Glaize, III, Fred L. 07-31-1996 27.9502 22.4020 Dividend Reinvestment
Glaize, III, Fred L. 07-31-1996 25.5772 22.4020 Dividend Reinvestment
(by Glaize Development)
Glaize, III, Fred L. 08-01-1996 17.7285 22.5625 Purchase under Directors Deferred
Compensation Plan
Harrell, Henry H. 07-31-1996 20.0837 22.5000 Dividend Reinvestment
Harrell, Henry H. 07-31-1996 98.6492 22.4020 Dividend Reinvestment
Harrell, Henry H. 08-01-1996 27.7008 22.5625 Purchase under Directors Deferred
Compensation Plan
Kay, Jr., Alex J. 07-31-1996 25.0774 22.5000 Dividend Reinvestment
Kay, Jr., Alex J. 08-01-1996 27.7008 22.5625 Purchase Under Directors Deferred
Compensation Plan
McCartney, O. K. 07-31-1996 109.9773 22.4020 Dividend Reinvestment
McCartney, O. K. 08-01-1996 21.9780 22.7500 Purchase under Employee Stock Purchase
Plan
McCartney, O. K. 09-03-1996 21.1640 23.6250 Purchase under Employee Stock Purchase
Plan
Nelson, Jr., Allen T. 07-31-1996 1.6762 22.4020 Dividend Reinvestment
Nelson, Jr., Allen T. 08-01-1996 8.7912 22.7500 Purchase under Employee Stock Purchase
Plan
<PAGE>
Nelson, Jr., Allen T. 09-03-1996 8.4656 23.6250 Purchase under Employee Stock Purchase
Plan
Rosenthal, Gilbert M. 07-31-1996 78.5736 22.5000 Dividend Reinvestment
Rosenthal, Gilbert M. 07-31-1996 76.4651 22.4020 Dividend Reinvestment
Rosenthal, Gilbert M. 08-01-1996 17.7285 22.5625 Purchase under Directors Deferred
Compensation Plan
Watson, Jr., William M. 07-31-1996 23.2484 22.4020 Dividend Reinvestment
Watson, Jr., William M. 08-02-1996 39.5604 22.7500 Purchase under Employee Stock Purchase
Plan
Watson, Jr., William M. 09-03-1996 38.0952 23.6250 Purchase under Employee Stock Purchase
Plan
Williamson, Jr., H. A. 07-31-1996 147.7908 22.4020 Dividend Reinvestment
</TABLE>
<PAGE>
GLOSSARY
Bank. Jefferson National Bank, 123 East Main Street,
Charlottesville, VA 22902.
Book-entry
Transfer Facilities. The Depository Trust Company, 55 Water Street, New York,
NY 10041 and Philadelphia Depository Trust Company,
2000 Market Street, Philadelphia, PA 19103, collectively.
Code. The Internal Revenue Code of 1986.
Commission. The Securities and Exchange Commission.
Company. Jefferson Bankshares, Inc., 123 East Main
Street, Charlottesville, VA 22902.
Dealer Managers. Goldman, Sachs & Co., 85 Broad Street, New York, NY
10004. The Dealer Managers are available to answer
questions regarding the Offer and the procedure for
tendering Shares. You may call the Dealer Managers on
(800) 323-5678 Ext. 9477 or (212) 902-9477.
Depositary. The Bank of New York., 101 Barclay Street, New York,
NY 10286. Your Letter of Transmittal (and share
certificates, if applicable) must be received by The
Bank of New York by the Expiration Date.
Eligible
Institution. Any member firm of a registered national securities
exchange, member of the National Association of
Securities Dealers, Inc., a commercial bank, a
trust company, a savings bank, a savings and loan
association, or a credit union with membership in an
approved signature guarantee program, having an office,
branch or agency in the United States.
Exchange Act. The Securities Exchange Act of 1934, as amended.
Expiration Date. The time and date at which the Offer shall expire, which
shall be 5:00 P.M., New York City time, on October 31,
1996, unless extended by the Company.
Foreign Shareholder. A shareholder that is not (i) a citizen or resident of the
United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the
United States, any State or any political subdivision
thereof, or (iii) any estate or trust the income of which
is subject to United States federal income taxation
regardless of the source of such income.
Information Agent. Georgeson & Company Inc., Wall Street Plaza, New York,
NY 10005. The Information Agent is available to
answer questions regarding the Offer and the
procedure for tendering Shares. You may call the
Information Agent on (800) 223-2064 or (212) 440-9800.
OCC. The Office of the Comptroller of the Currency.
Odd Lots. All Shares properly tendered prior to the Expiration
Date at prices at or below the Purchase Price and not
withdrawn by any Odd Lot Holder.
Odd Lot Holder. Any person who owned, beneficially or of record, as of
the close of business on September 25, 1996, an
aggregate of fewer than 100 Shares (and so certifies in
the appropriate place on the Letter of Transmittal and,
if necessary, on the Notice of Guaranteed Delivery).
Offer. The Company's Offer to Purchase for cash up to 1,250,000
Shares of its common stock at a Purchase Price not in
excess of $28.00 nor less than $25.00 per Share, together
with the related Letter of Transmittal.
Plans. The Company's Dividend Reinvestment Plan and Employee
Stock Purchase Plan.
<PAGE>
Purchase Price. The single per Share price, not in excess of $28.00
nor less than $25.00 per Share, that the Company will
pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered
and the prices specified by tendering shareholders.
The Company will select the lowest Purchase Price that
will allow it to buy 1,250,000 Shares.
Shares. Shares of Jefferson Bankshares, Inc. common stock,
par value $2.50 per share.
LIST OF CERTAIN FORMS
Letter of
Transmittal. The blue form which accompanies this Offer to Purchase.
Shareholders wishing to Tender Shares must complete, sign and
return the Letter of Transmittal (and share certificates, if
applicable) to the Depositary by the Expiration Date.
Notice of
Guaranteed
Delivery. The form for use if you desire to tender Shares, but cannot
deliver your Share certificates to the Depositary (or complete
procedures for book-entry transfer) prior to the Expiration
Date. Note that this document does require a signature
guarantee by an Eligible Institution (such as your broker).
Transmittal
Form. The yellow form for use if you wish to tender Shares held
in "street" name by your broker. For such Shares, you
must use the broker instruction letter, not the Letter of
Transmittal.
<PAGE>
Manually signed photocopies of the Letter of Transmittal will be accepted from
Eligible Institutions. The Letter of Transmittal and certificates for Shares and
any other required documents should be sent or delivered by each shareholder or
his or her broker, dealer, commercial bank, trust company or nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<PAGE>
By Mail:
Tender & Exchange Department
P.O. Box 11248
Church Street Station
New York, NY 10286-1248
By Facsimile:
(For Eligible Institutions Only)
(212) 815-6213
Confirm Facsimile by Telephone
(For Confirmation Only)
(800) 507-9357
By Hand/Overnight Delivery:
Tender & Exchange Department
101 Barclay Street
Receive and Deliver Window
New York, NY 10286
<PAGE>
Any questions or requests for assistance or additional copies of this Offer to
Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery may be
directed to the Information Agent at the telephone numbers and locations listed
below. Shareholders may also contact their local broker, dealer, commercial bank
or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
Georgeson & Company Inc. [LOGO]
Wall Street Plaza
New York, New York 10005
(800) 223-2064 TOLL FREE
(212) 440-9800 in New York.
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
(800) 323-5678 ext. 9477 TOLL FREE
(212) 902-9477 in New York.
September 26, 1996
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO ACCOMPANY COMMON SHARES
OF
JEFFERSON BANKSHARES, INC.
TENDERED PURSUANT TO THE OFFER TO PURCHASE
DATED SEPTEMBER 26, 1996
THE EXCHANGE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON THURSDAY, OCTOBER 31, 1996, UNLESS THE OFFER IS EXTENDED.
TO: THE BANK OF NEW YORK, DEPOSITARY
<TABLE>
<S> <C>
BY MAIL: BY FACSIMILE: BY HAND OR OVERNIGHT COURIER:
Tender & Exchange Department (For Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station CONFIRM FACSIMILE BY TELEPHONE: Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
(For Confirmation Only)
(800) 507-9357
</TABLE>
BEFORE CHECKING ANY BOX BELOW, PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL, OR
CALL EITHER OF THE FOLLOWING FOR ASSISTANCE:
THE INFORMATION AGENT: THE DEALER MANAGERS:
GEORGESON & COMPANY INC. GOLDMAN, SACHS & CO.
(800) 223-2064 Toll Free (800) 323-5678 Ext. 9477 Toll Free
(212) 440-9800 (call collect) in New York. (212) 902-9477 in New York.
<TABLE>
<CAPTION>
BOX #1
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 3 AND 4. FOR TENDER OF SHARES IN THE JEFFERSON BANKSHARES, INC. DIVIDEND REINVESTMENT PLAN OR EMPLOYEE
STOCK PURCHASE PLAN, SEE INSTRUCTIONS 5 AND 6.)
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON STOCK CERTIFICATE NO. OF SHARES NO. OF SHARES
CERTIFICATE(S)) NUMBER(S)* REPRESENTED BY TENDERED**
CERTIFICATE(S)*
TOTAL
</TABLE>
* Need not be completed by Book-Entry Holders (see below).
** Unless otherwise indicated in this column, a holder will be deemed to
have tendered all of the shares of Jefferson Bankshares, Inc. Common
Stock represented by the certificate(s) indicated in the second
column. See Instruction 4.
<PAGE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN THOSE SHOWN
ABOVE OR TRANSMISSION OF INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN THOSE
LISTED ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
If they are not already printed in Box #1 above, the names and addresses of
the registered owners should be printed or legibly written, as they appear on
the certificates representing Shares (defined below) tendered with this Letter
of Transmittal. The certificates, the number of Shares that I wish to tender,
and the purchase price at which such shares are being tendered will be indicated
in the appropriate boxes.
This Letter of Transmittal is to be used only: (a) if certificates for
Shares are to be forwarded with it; or (b) if a tender of Shares is to be made
by book-entry delivery to the account maintained by the Depositary at either The
Depository Trust Company ("DTC") or the Philadelphia Depository Trust Company
("PHDTC") (collectively, the "Book-Entry Transfer Facilities" and individually,
a "Book-Entry Transfer Facility") pursuant to Section 3 of the Offer to
Purchase; or (c) if a tender of Shares held pursuant to the Jefferson
Bankshares, Inc. Dividend Reinvestment Plan or Employee Stock Purchase Plan is
to be made.
If my certificates are not immediately available or I cannot deliver my
certificates for Shares and all other required documents to the Depositary at or
before the Expiration Date (as defined in the Offer to Purchase), or I am unable
to comply with the procedure for book-entry delivery on a timely basis, I
understand that in each case I can tender my Shares pursuant to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
TO THE BANK OF NEW YORK:
Ladies and Gentlemen:
The undersigned shareholder(s) ("I") hereby tender to Jefferson Bankshares,
Inc., a Virginia corporation ("you"), the above described shares of your Common
Stock, par value $2.50 per share (the "Shares"), at the price per Share
indicated in this Letter of Transmittal, net to me in cash, upon the terms and
subject to the conditions set forth in your Offer to Purchase dated September
26, 1996, receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which together constitute the "Offer").
Subject to and effective on acceptance for payment of the Shares tendered
hereby in accordance with the terms of the Offer (including, if the Offer is
extended or amended, the terms or conditions of any such extension or
amendment), I hereby sell, assign, and transfer to you or upon your order all
right, title, and interest in and to all Shares tendered hereby or order the
registration of such Shares tendered by book-entry delivery that are purchased
pursuant to the Offer. I hereby irrevocably constitute and appoint the
Depositary as my attorney-in-fact with respect to such Shares, with full power
of substitution (such power of attorney being an irrevocable power coupled with
an interest), to:
(a) deliver certificates for such Shares, or transfer ownership of
such Shares on the account books maintained by the Book-Entry Transfer
Facility, together in either such case with all accompanying evidences of
transfer and authenticity, to you or upon your order, upon receipt by the
Depositary, as my agent, of the Purchase Price (defined below) with respect
to such Shares;
(b) present certificates for such Shares for transfer on your books;
and
(c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares, subject to the next paragraph, all in
accordance with the terms of the Offer.
I hereby represent and warrant that:
(1) within the meaning of Rule 13e-4 under the Securities Exchange Act
of 1934, as amended, I "own" the Shares tendered hereby and have full power
and authority to validly tender, sell, assign, and transfer the Shares
tendered hereby;
(2) when and to the extent you accept the Shares for purchase, you
will acquire good, marketable, and unencumbered title to them, free and
clear of all security interests, liens, charges, encumbrances, conditional
sales agreements, or other obligations relating to their sale or transfer,
and not subject to any adverse claim;
(3) at your request, I will execute and deliver any additional
documents to the Depositary as you deem necessary or desirable to complete
the assignment, transfer, and purchase of the Shares I have tendered; and
(4) I have read and agree to all of the terms of the Offer.
<PAGE>
I understand that you will determine the per Share price within the range
of $25.00 to $28.00 (the "Purchase Price") that you will pay for Shares validly
tendered and not withdrawn pursuant to the Offer, taking into account the number
of Shares so tendered and the prices specified by tendering shareholders. I
understand that you will select the Purchase Price that will enable you to
purchase 1,250,000 Shares (or such lesser number of Shares as are properly
tendered at prices within the range of $25.00 to $28.00) pursuant to the Offer;
and that you reserve the right, in your sole discretion, to purchase more
Shares. I understand that you will purchase at the Purchase Price all Shares
validly tendered and not withdrawn at prices at or below the Purchase Price, net
to the seller in cash, on the terms and subject to the conditions of the Offer,
including its proration provisions, and that you will return all Shares not
purchased, including Shares tendered and not withdrawn at prices greater than
the Purchase Price and Shares not purchased because of proration.
I recognize that under certain circumstances set forth in the Offer to
Purchase, you may not be required to purchase any of the Shares tendered hereby
or may accept for payment, pro rata with Shares tendered by other shareholders,
fewer than all of the Shares tendered hereby. In either event, I understand that
certificate(s) for any Shares not tendered or not purchased will be returned to
me at the address indicated above, unless otherwise indicated under the Special
Payment Instructions or Special Delivery Instructions below. I recognize that
you have no obligation, pursuant to the Special Payment Instructions, to
transfer any certificate for Shares from the name of their registered holder, or
to order the registration or transfer of such Shares tendered by book-entry
delivery, if you purchase none of the Shares represented by such certificate or
tendered by such book-entry delivery.
I understand that tenders of Shares pursuant to any one of the procedures
described in Section 3 of the Offer to Purchase and in the Instructions to this
Letter of Transmittal will constitute a binding agreement between you and me
upon the Offer's terms.
The check for the Purchase Price for such of the tendered Shares you
purchase will be issued to my order and mailed to the address indicated above
(unless otherwise indicated under the Special Payment Instructions or the
Special Delivery Instructions below).
All authority conferred or agreed to be conferred in this Letter of
Transmittal shall survive my death or incapacity, and all my obligations under
this Letter of Transmittal shall be binding upon my heirs, personal
representatives, successors, and assigns. Except as stated in the Offer to
Purchase, I cannot revoke this tender.
<PAGE>
BOX #2
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(SEE INSTRUCTION 7.)
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
SHARES TENDERED AT PRICE DETERMINED
BY DUTCH AUCTION
[ ] I want to maximize the chance of having Jefferson Bankshares, Inc.
purchase all the Shares I am tendering (subject to the possibility
of proration). Accordingly, by checking this one box INSTEAD OF ONE
OF THE PRICE BOXES BELOW, I hereby tender Shares and I am willing to
accept the Purchase Price resulting from the modified Dutch Auction
tender process. This action will result in my receiving a price per
Share of as low as $25.00 or as high as $28.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER
By checking one of the boxes below INSTEAD OF THE BOX ABOVE, I hereby
tender Shares at the price checked below. This action could result in
none of my Shares being purchased if the Purchase Price for the Shares
is less than the price checked.
Price (in dollars) per Share at which Shares are being tendered:
[ ] $25.000 [ ] $25.625 [ ] $26.250 [ ] $26.875 [ ] $27.500
[ ] $25.125 [ ] $25.750 [ ] $26.375 [ ] $27.000 [ ] $27.625
[ ] $25.250 [ ] $25.875 [ ] $26.500 [ ] $27.125 [ ] $27.750
[ ] $25.375 [ ] $26.000 [ ] $26.625 [ ] $27.250 [ ] $27.875
[ ] $25.500 [ ] $26.125 [ ] $26.750 [ ] $27.375 [ ] $28.000
BOX #3
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 8, 9, 13 AND 17.)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the aggregate Purchase Price of Shares
purchased are to be issued in a name other than mine and sent to someone
other than me.
Issue:
[ ] Check to:
[ ] Certificates to:
Name(s):_________________________________________
Address:_________________________________________
_________________________________________________
(Zip Code)
_________________________________________________
(Taxpayer Identification or Social Security No.)
BOX #4
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 8, AND 13.)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or any check for the aggregate Purchase Price of Shares purchased,
issued in my name, are to be mailed to someone other than me, or to me at an
address other than that shown above.
Mail:
[ ] Check to:
[ ] Certificates to:
Name(s):______________________________________________
Address:______________________________________________
______________________________________________________
(Zip Code)
Box #5
ODD LOTS
(SEE INSTRUCTION 10.)
To be completed ONLY if I own, beneficially or of record, as of the
close of business on September 25, 1996, an aggregate of fewer than 100
Shares, all of which are being tendered. I either (check one box):
[ ] was the beneficial or record owner, as of the close of business on
September 25, 1996, of an aggregate of fewer than 100 Shares, all of
which are being tendered; or
[ ] am a broker, dealer, commercial bank, trust company, or other
nominee that (a) is tendering for the beneficial owner(s) thereof,
Shares with respect to which I am the record holder, and (b)
believe, based upon representations made to me by such beneficial
owner(s), that each such person was the beneficial owner, as of the
close of business on September 25, 1996, of an aggregate of fewer
than 100 Shares and is tendering all of such Shares.
The Odd Lot Shares are being tendered at the price per Share indicated
in Box #2 entitled "Price (In Dollars) Per Share At Which Shares Are
Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
BOX #6
CONDITIONAL TENDER
(SEE INSTRUCTION 11.)
[ ] Check here ONLY if my tender of Shares is conditional on your
purchasing all or a minimum number of the tendered Shares and as set
forth below:
Minimum number of Shares to be sold:_________________________Shares.
The Shares conditionally tendered are being tendered at the price
per Share indicated in Box #2 entitled, "Price (In Dollars) Per Share
At Which Shares Are Being Tendered."
BOX #7
THE FOLLOWING IS TO BE COMPLETED ONLY BY
PARTICIPANTS IN JEFFERSON BANKSHARES, INC. DIVIDEND REINVESTMENT PLAN
(SEE INSTRUCTION 5.)
I hereby direct The Bank of New York, as Agent of the Jefferson
Bankshares, Inc. Dividend Reinvestment Plan (the "DRIP") to tender to
Jefferson Bankshares, Inc., upon the terms and subject to the conditions
set forth in this Letter of Transmittal and in the related Offer to
Purchase, the indicated number of Shares in my DRIP Account.
I AM A PARTICIPANT IN THE DRIP AND I WISH TO TENDER THE NUMBER OF SHARES
IN MY DRIP ACCOUNT SET FORTH BELOW (CHECK ONLY ONE BOX):
[ ] Check here to tender all Shares in my DRIP account, including Shares
to be purchased with the dividend to be paid on October 31, 1996
(See Instruction 5);
OR
[ ] Check here to tender the following number of Shares in my DRIP
account:________________________________Shares.
The Shares in my DRIP account are to be tendered at the price per Share
indicated in Box #2 entitled, "Price (In Dollars) Per Share At Which
Shares Are Being Tendered."
<PAGE>
BOX #8
THE FOLLOWING IS TO BE COMPLETED ONLY BY
PARTICIPANTS IN JEFFERSON BANKSHARES, INC. EMPLOYEE STOCK PURCHASE PLAN
(SEE INSTRUCTION 6.)
I hereby direct The Bank of New York, as Agent of the Jefferson
Bankshares, Inc. Employee Stock Purchase Plan (the "ESPP") to tender to
Jefferson Bankshares, Inc., upon the terms and subject to the conditions
set forth in this Letter of Transmittal and in the related Offer to
Purchase, the indicated number of Shares in my ESPP Account.
I AM A PARTICIPANT IN THE ESPP AND I WISH TO TENDER THE NUMBER OF SHARES
IN MY ESPP ACCOUNT SET FORTH BELOW:
[ ] Check here to tender the following number of Shares in my ESPP account:
_____________________Shares.
The Shares in my ESPP account are to be tendered at the price per Share
indicated in Box #2 entitled, "Price (In Dollars) Per Share At Which Shares Are
Being Tendered."
BOX #9
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
DELIVERY TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution __________________________
Check Box of Applicable Book-Entry Facility:
[ ] The Depository Trust Company
[ ] The Philadelphia Depository Trust Company
Account Number ______________ Transaction Code Number ______________
[ ] CHECK HERE IF CERTIFICATES FOR TENDERED SHARES ARE BEING DELIVERED
PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE
DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s) _______________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________
Check Box of Applicable Book-Entry Transfer Facility and Give Account Number
if delivered by Book-Entry Delivery:
[ ] The Depository Trust Company
[ ]The Philadelphia Depository Trust Company
Account Number ___________________ Transaction Code Number ____________
<PAGE>
BOX #10
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
(PLEASE COMPLETE AND RETURN THE ENCLOSED FORM W-9)
(Must be signed by the registered holder(s) exactly as name(s) appear(s)
on certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificate(s) and
documents transmitted with this Letter of Transmittal. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or another person acting in a fiduciary or
representative capacity, please set forth full title and see Instruction
8.)
_______________________________________________________________________
_______________________________________________________________________
Signature(s) of Owner(s)
Dated: ________________________, 1996
Name(s): ______________________________________________________________
(Please Print)
Capacity (full title): ________________________________________________
Address: ______________________________________________________________
(Include Zip Code)
Area Code(s) and
Telephone Number(s): (Daytime) ________________ (Evening) ____________
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 8)
Name of Firm: _____________________________________________________
Authorized Signature: _____________________________________________
Name: _____________________________________________________________
(Please Print)
Title: ____________________________________________________________
Address: __________________________________________________________
(Include Zip Code)
Area Code and
Telephone Number: _________________________________________________
Dated: _____________________, 1996
PLEASE REMEMBER TO INCLUDE YOUR SHARE CERTIFICATE(S)
AND COMPLETE THE ENCLOSED FORM W-9.
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required if either:
(a) I am the registered holder of the Shares (which term, for purposes
of this document, shall include any participant in a Book-Entry Transfer
Facility whose name appears on a security position listing as the owner of
such Shares) and I sign my name exactly as the name of the registered
holder appears on the certificate tendered with this Letter of Transmittal,
and I have not completed either Box #3 entitled "Special Payment
Instructions" or Box #4 entitled "Special Delivery Instructions"; or
(b) such Shares are tendered for the account of a member firm of a
registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., a commercial bank, a trust
company, a savings bank, a savings and loan association or a credit union,
which has membership in an approved signature guarantee program and has an
office, branch or agency in the United States (each such entity, an
"Eligible Institution").
In all other cases, an Eligible Institution must guarantee all signatures
on this Letter of Transmittal. See Instruction 8.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be used only if (a) certificates
for Shares are delivered with it to the Depositary (or certificates will be
delivered pursuant to a Notice of Guaranteed Delivery previously sent to the
Depositary), or (b) a tender of Shares is being made concurrently pursuant to
the procedure for tender by book-entry transfer set forth in Section 3 of the
Offer to Purchase, or (c) a tender is being made of Shares (the "Plan Shares")
in either or both of the Jefferson Bankshares, Inc. Dividend Reinvestment Plan
(the "DRIP") or Employee Stock Purchase Plan (the "ESPP"). Certificates for all
physically tendered Shares or confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of Shares tendered
electronically, as well as instructions to the Agent of the DRIP or ESPP to
tender Plan Shares, together in each case with a properly completed and duly
executed Letter of Transmittal or duly executed and manually signed facsimile of
it, and any other documents required by this Letter of Transmittal, should be
mailed or delivered to the Depositary at the appropriate address set forth
herein and must be delivered to the Depositary on or before the Expiration Date
(as defined in the Offer to Purchase). DELIVERY OF DOCUMENTS TO ONE OF THE
BOOK-ENTRY TRANSFER FACILITIES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
If my certificates for Shares are not immediately available or I cannot
deliver certificates for my Shares and all other required documents to the
Depositary before the Expiration Date, or my Shares cannot be delivered on a
timely basis pursuant to the procedures for book-entry transfer, I must, in any
such case, tender my Shares by or through an Eligible Institution by properly
completing and duly executing and delivering a Notice of Guaranteed Delivery (or
facsimile of it) and by otherwise complying with the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure, certificates for all physically tendered Shares or book-entry
confirmations, as the case may be, as well as a properly completed and duly
executed Letter of Transmittal (or facsimile of it) and all other documents
required by this Letter of Transmittal, must be received by the Depositary
within three trading days after receipt by the Depositary of such Notice of
Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, facsimile transmission or mail to the Depositary and must include a
signature guarantee by an Eligible Institution in the form set forth in such
Notice. For Shares to be tendered validly pursuant to the guaranteed delivery
procedure, the Depositary must receive the Notice of Guaranteed Delivery on or
before the Expiration Date.
I UNDERSTAND THAT THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING
CERTIFICATES FOR SHARES, IS AT MY OPTION AND RISK. IF DELIVERY IS BY MAIL, I
FURTHER UNDERSTAND THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ASSURE DELIVERY.
<PAGE>
I understand that you will not accept any alternative, conditional or
contingent tenders, nor will you purchase any fractional Shares, except as
expressly provided in the Offer to Purchase. By execution of this Letter of
Transmittal (or a facsimile of it), I waive any right I might have to receive
notice of the acceptance of my tender.
3. INADEQUATE SPACE. If the space provided in Box #1 entitled "Description
of Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares should be listed on a separate signed schedule and attached to this
Letter of Transmittal. If a signature guarantee is required by this Letter of
Transmittal, any such separate signed schedule must also contain a signature
guarantee.
4. PARTIAL TENDERS AND UNPURCHASED SHARES. (Not applicable if I tender
Shares by book-entry transfer.) If fewer than all of the Shares evidenced by any
certificate are to be tendered, I must fill in the number of Shares that are to
be tendered in the column entitled "No. of Shares Tendered," in Box #1 entitled
"Description of Shares Tendered." In such case, if any tendered Shares are
purchased, a new certificate for the remainder of the Shares (including any
Shares not purchased) evidenced by the old certificate(s) will be issued and
sent to the registered holder(s), unless otherwise specified in either Box #3
entitled "Special Payment Instructions" or Box #4 entitled "Special Delivery
Instructions", as soon as practicable after the Expiration Date. Unless
otherwise indicated, all Shares represented by the certificate(s) listed and
delivered to the Depositary will be deemed to have been tendered.
5. DIVIDEND REINVESTMENT PLAN. If I am a participant in the Jefferson
Bankshares, Inc. Dividend Reinvestment Plan (the "DRIP") and wish to have The
Bank of New York, as Agent thereof (the "Agent"),tender all or part of the
Shares in my DRIP account, I will so indicate by completing Box #7, in addition
to completing the other relevant sections of this Letter of Transmittal and
complying with the provisions of the Offer. I understand that I can either cause
the Agent to tender all of the Shares in my DRIP account, including Shares to be
purchased with the dividend payable on October 31, 1996, or tender such number
of Shares in my DRIP account as I specify. I understand that I may determine the
number of Shares allocated to my DRIP account on October 31, 1996, under the
DRIP after 4:00 p.m. New York City time on October 31, 1996, by computing the
average of the high and low trade prices of Shares on that day (which may be
obtained from the Information Agent or from brokers), taking into account that
the dividend per Share payable on October 31, 1996 (which will be used to
purchase Shares under the DRIP for participants in that plan) will be $.22. I
may withdraw my tender of Shares in my DRIP account before 5:00 p.m. New York
City time on that date, by following the procedure for withdrawal of Shares. My
failure to check any block in Box #7 will result in none of the Shares in my
DRIP account being tendered for purchase by you.
6. EMPLOYEE STOCK PURCHASE PLAN. If I am a participant in the Jefferson
Bankshares, Inc. Employee Stock Purchase Plan (the "ESPP") and wish to have The
Bank of New York, as Agent thereof (the "Agent"), tender all or part of the
Shares in my ESPP account I will so indicate by completing Box #8 in addition to
completing the other relevant sections of this Letter of Transmittal and
complying with the provisions of the Offer. I understand that I can specify the
number of Shares in my ESPP account that I want the Agent to tender. My failure
to complete Box #8 will result in none of the Shares in my ESPP account being
tendered for purchase by you.
7. INDICATION OF PRICE AT WHICH SHARES ARE BEING TENDERED. For Shares to be
properly tendered, I understand I MUST check the box indicating the price per
Share at which I am tendering Shares in Box #2 entitled "Price (In Dollars) Per
Share At Which Shares Are Being Tendered". By checking the appropriate box in
Box #2, I may either (a) accept the price per Share determined by the modified
Dutch Auction, in which case the price per Share that I will receive may be as
low as $25.00 or as high as $28.00, or (b) designate the price per Share at
which I want to tender my Shares, in which case I will receive the Purchase
Price per Share determined in accordance with the terms of the Offer if my
designated price does not exceed the Purchase Price. ONLY ONE BOX MAY BE
CHECKED. IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED, THERE IS NO
PROPER TENDER OF SHARES. If I wish to tender portions of my Share holdings at
different prices, I must complete a separate Letter of Transmittal for each
price at which I wish to tender each such portion of my Shares. The same Shares
cannot be tendered (unless previously properly withdrawn as provided in Section
4 of the Offer to Purchase) at more than one price.
<PAGE>
8. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
(a) If I am the registered holder(s) of the Shares tendered hereby, I
understand that my signature(s) must correspond exactly with the name(s) as
written on the face of the certificate(s) without any change whatsoever.
(b) If the tendered Shares are registered in my name and that of one
or more joint holders, each such other holder must sign this Letter of
Transmittal along with me.
(c) If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles of it) as there are
different registrations of certificates.
(d) If this Letter of Transmittal is signed by me and all other
registered holder(s) of the Shares listed and transmitted hereby, no
endorsement(s) of certificate(s) representing such Shares or separate stock
power(s) are required.
(e) If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, or if payment is to be
made or the certificate(s) for Shares not tendered or not purchased are to
be issued to a person other than the registered holder(s), the
certificate(s) must be endorsed or accompanied by appropriate stock
power(s), in either case signed exactly as the name(s) of the registered
holder(s) appears on the certificate(s). SIGNATURE(S) ON SUCH
CERTIFICATE(S) OR STOCK POWER(S) MUST BE GUARANTEED BY AN ELIGIBLE
INSTITUTION. See Instruction 1.
(f) If this Letter of Transmittal or any certificate(s) or stock
power(s) is signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary
or representative capacity, such persons should so indicate and must submit
proper evidence satisfactory to you of their authority so to act, if you so
request.
9. STOCK TRANSFER TAXES. Except as provided in this Instruction 9, no stock
transfer tax stamps or funds to cover such stamps need accompany this Letter of
Transmittal. I understand that you will pay or cause to be paid any stock
transfer taxes payable on the transfer to you of Shares purchased pursuant to
the Offer. If, however:
(a) payment of the aggregate Purchase Price for Shares tendered hereby
and accepted for purchase is to be made to any person other than the
registered holder(s);
(b) Shares not tendered or not accepted for purchase are to be
registered in the name(s) of any person(s) other than the registered
holder(s); or
(c) tendered certificates are registered in the name(s) of any
person(s) other than the person(s) signing this Letter of Transmittal;
then the Depositary will deduct from such aggregate Purchase Price the amount of
any stock transfer taxes (whether imposed on the registered holder, such other
person or otherwise) payable on account of the transfer to such person, unless
satisfactory evidence of the payment of such taxes or any exemption from them is
submitted to the Depositary.
<PAGE>
10. ODD LOTS. As described in Section 1 of the Offer to Purchase, if you
are to purchase fewer than all Shares tendered and not withdrawn before the
Expiration Date, the Shares purchased first will consist of all Shares tendered
by any shareholder who owned of record or owned beneficially, as of the close of
business on September 25, 1996, an aggregate of fewer than 100 Shares, and who
tenders all of his or her Shares at or below the Purchase Price (an "Odd Lot
Holder"). This preference will not be available unless Box #5 entitled "Odd
Lots" is completed.
11. CONDITIONAL TENDERS. As described in Sections 1 and 6 of the Offer to
Purchase, I understand that I may condition my tender on all or a minimum number
of my tendered Shares being purchased ("Conditional Tenders"). If you are to
purchase less than all Shares tendered and not withdrawn before the Expiration
Date, the Depositary will perform a preliminary proration, and any Shares
tendered at or below the Purchase Price pursuant to a Conditional Tender for
which the condition was not satisfied shall be deemed withdrawn, subject to
reinstatement if such Conditionally Tendered Shares are subsequently selected by
random lot for purchase subject to Section 1 of the Offer to Purchase. In
selecting among such conditional tenders, you will select by random lot and will
limit your purchase in each case to the designated minimum number of shares to
be purchased. All tendered Shares shall be deemed unconditionally tendered
unless Box #6 entitled "Conditional Tender" is completed. I understand that the
Conditional Tender alternative is made available so that I may be assured that
the purchase of my Shares pursuant to the Offer will be treated as a sale of
such Shares, rather than the payment of a dividend, for federal income tax
purposes. See Section 14 of the Offer to Purchase. ODD LOT SHARES, WHICH WILL
NOT BE SUBJECT TO PRORATION, CANNOT BE CONDITIONALLY TENDERED. It is my
responsibility to calculate the minimum number of Shares that must be purchased
from me in order for the purchase to qualify for sale (rather than dividend)
treatment under federal income tax laws, and I understand I should consult with
my own tax advisor in this regard.
12. ORDER OF PURCHASE IN EVENT OF PRORATION. The Depositary will treat all
certificates tendered by a shareholder as a single lot of Shares. If proration
is required, the Depositary will prorate against the aggregate number of shares
which I have tendered, then issue and return one certificate for the balance of
shares not purchased. If I tender both certificated shares and shares held in my
DRIP and ESPP accounts and proration is required, the Depositary will effect the
purchase first of certificated shares, then of shares held in my DRIP account
and then of shares in my ESPP account.
13. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If certificate(s) for Shares
not tendered or not purchased and/or check(s) are to be issued in a name other
than mine (or a name other than the signer of the Letter of Transmittal) or if
such certificates and/or checks are to be sent to someone other than me (or
someone other than the person signing the Letter of Transmittal) or to the
signer at a different address, then in any such case Box #3 entitled "Special
Payment Instructions" and/or Box #4 entitled "Special Delivery Instructions"
should be completed as applicable and signatures must be guaranteed by an
Eligible Institution as described in Instruction 1.
14. IRREGULARITIES. All questions as to the number of Shares to be
accepted, the price to be paid therefor and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any tender of Shares
will be determined by you in your sole discretion, which determinations shall be
final and binding on all parties. I understand you reserve the absolute right to
reject any or all tenders of Shares you determine not to be in proper form or
the acceptance of which or payment for which may, in the opinion of your
counsel, be unlawful. You also reserve the absolute right to waive any of the
conditions of the Offer and any defect or irregularity in the tender of any
particular Shares, and your interpretation of the terms of the Offer (including
these instructions) will be final and binding on all parties. No tender of
Shares will be deemed to be properly made until all defects and irregularities
have been cured or waived. Unless waived, any defects or irregularities in
connection with tenders must be cured within such time as you shall determine.
None of you, the Dealer Managers (as defined in the Offer to Purchase), the
Depositary, or any other person is or will be obligated to give notice of any
defects or irregularities in tenders and none will incur any liability for
failure to give any such notice.
15. LOST OR MISPLACED CERTIFICATES. If I have lost or misplaced my
certificate(s) for Shares, I understand that I should contact the Depositary for
instructions and procedures about tendering Shares, or getting replacement
certificates issued in my name.
16. QUESTIONS AND REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions
and requests for assistance may be directed to, or additional copies of the
Offer to Purchase, the Notice of Guaranteed Delivery and this Letter of
Transmittal may be obtained from, the Information Agent at the address and
telephone number set forth at the end of this Letter of Transmittal, or from my
broker, dealer, commercial bank or trust company.
<PAGE>
17. FORM W-9 AND FORM W-8. Shareholders other than corporations and certain
foreign persons may be subject to backup federal income tax withholding. If I do
not establish to the satisfaction of the Depositary an exemption from backup
federal income tax withholding, I will provide the Depositary with a correct
taxpayer identification number ("TIN") on Form W-9, which is provided with this
Letter of Transmittal. For an individual, I understand that the TIN will
generally be the individual's social security number. Failure to provide the
information requested or to make the certification on the Form W-9 may subject
me to 31% backup federal income tax withholding on the payments made to or for
me with respect to Shares purchased pursuant to the Offer. Failing to furnish a
correct TIN may subject me to a $50 penalty imposed by the Internal Revenue
Service. Providing false information may result in additional penalties. Backup
withholding is not an additional tax. Rather, the tax liability of a person
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained. If I
am a foreign person, I should submit Form W-8 to certify that I am exempt from
backup withholding. Form W-8 may be obtained from the Depositary.
18. WITHHOLDING ON FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the Depositary
will withhold federal income taxes equal to 30% of the gross payments payable to
a foreign shareholder or its agent unless the Depositary determines that an
exemption from or a reduced rate of withholding is available pursuant to a tax
treaty or an exemption from withholding is applicable because such gross
proceeds are effectively connected with the conduct of a trade or business in
the United States. If I am a foreign shareholder, I understand that in order to
obtain an exemption from or a reduced rate of withholding pursuant to a tax
treaty, I must deliver to the Depositary a properly completed Form 1001. For
this purpose, I am a foreign shareholder if I am not (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States, any State or any political
subdivision thereof, or (iii) any estate or trust the income of which is subject
to United States federal income taxation regardless of the source of such
income. In order to obtain an exemption from withholding on the grounds that the
gross proceeds paid pursuant to the Offer are effectively connected with the
conduct of a trade or business within the United States, I must deliver to the
Depositary a properly completed Form 4224. The Depositary will determine my
status as a foreign shareholder and eligibility for a reduced rate of, or an
exemption from, withholding by reference to outstanding certificates or
statements concerning eligibility for a reduced rate of, or exemption from,
withholding (e.g., Form 1001 or Form 4224) unless facts and circumstances
indicate that such reliance is not warranted. As a foreign shareholder I may be
eligible to obtain a refund of all or a portion of any tax withheld if I meet
one of the three tests for sale treatment described in Section 14 of the Offer
to Purchase or am otherwise able to establish that no tax or a reduced amount of
tax is due. Backup withholding generally will not apply to amounts subject to
the 30% or treaty-reduced rate of withholding. I understand that foreign
shareholders are urged to consult their tax advisors regarding the application
of federal income tax withholding, including eligibility for a withholding tax
reduction or exemption and refund procedures.
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary with such
shareholder's correct taxpayer identification number ("TIN") on Substitute Form
W-9 below. If the Depositary is not provided with the correct TIN, the Internal
Revenue Service (the "IRS") may subject the shareholder or other payee to a $50
penalty. In addition, payments that are made to such shareholder or other payee
with respect to Shares purchased pursuant to the Offer may be subject to backup
withholding.
Certain Shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. For a foreign individual to qualify as an exempt recipient, he or
she must submit a Form W-8, signed under penalties of perjury, attesting to that
individual's exempt status. A Form W-8 can be obtained from the Depositary.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, the Shareholder may obtain a refund.
<PAGE>
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payment made to a shareholder or other
payee with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of the shareholder's correct TIN by completing
the form below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such shareholder is awaiting a TIN) and that:
(a) the IRS has not notified the shareholder that the shareholder is
subject to backup withholding as a result of failure to report all interest
or dividends; or
(b) the IRS has notified the shareholder that the shareholder is no
longer subject to backup withholding.
WHAT NUMBER TO PROVIDE TO THE DEPOSITARY
The shareholder is required to give the Depositary the TIN (either a social
security number or employer identification number) of the record owner of the
Shares. If the Shares are in more than one name or are not in the name of the
actual owner, the shareholder should consult his or her tax advisor as to which
number to report.
PAYER'S NAME: JEFFERSON BANKSHARES, INC.
<TABLE>
<CAPTION>
<C> <S> <C>
Part 1 -- PLEASE PROVIDE YOUR TIN ON THE LINE BELOW
Part 2 -- AWAITING TIN
SUBSTITUTE AND CERTIFY BY SIGNING AND DATING THE BOX BELOW. [ ] Check box if applicable and
Social security number or Employer identification complete certificate below.
below
DEPARTMENT OF THE TREASURY CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE INFORMATION
INTERNAL REVENUE SERVICE PROVIDED ON THIS FORM IS TRUE, CORRECT, AND COMPLETE.
PAYER'S REQUEST FOR TAXPAYER SIGNATURE DATE
IDENTIFICATION NUMBER (TIN)
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECK THE BOX
IN PART 2 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either:
(a) I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office; or
(b) I intend to mail or deliver an application in the near future.
I understand that if I do not provide a taxpayer identification number
within 60 days, 31% of all reportable payments made to me thereafter
will be withheld until I provide a number.
___________________________ _____________________________
Signature Date
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
Georgeson & Company, Inc.
Wall Street Plaza
New York, New York 10005
(800) 223-2064 TOLL FREE
(212) 440-9800 (call collect) in New York.
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(800) 323-5678 ext. 9477 TOLL FREE
(212) 902-9477 in New York.
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together
with certificates for the Shares being tendered and all other required
documents), or a Notice of Guaranteed Delivery must be received prior to
5:00 p.m. New York City time, on October 31, 1996. PLEASE REMEMBER TO
INCLUDE YOUR SHARE CERTIFICATE(S) AND COMPLETE THE FORM W-9.
[Exhibit (a)(3)]
JEFFERSON BANKSHARES, INC.
NOTICE OF GUARANTEED DELIVERY OF SHARES OF COMMON STOCK
This form or a facsimile hereof must be used to accept the Offer (as defined
below) if:
1. certificates for shares of common stock, $2.50 par value per share
(the "Shares"), of Jefferson Bankshares, Inc., a Virginia corporation (the
"Company"), cannot be delivered to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Company's Offer to Purchase dated September 26,
1996 (the "Offer to Purchase")); or
2. the procedure for book-entry transfer (set forth in Section 3 of the
Offer to Purchase) cannot be completed on a timely basis; or
3. the Letter of Transmittal (or a facsimile thereof) and all other
required documents cannot be delivered to the Depositary prior to the Expiration
Date.
This form, properly completed and duly executed, may be delivered by
hand, mail or facsimile transmission to the Depositary. See Section 3 of the
Offer to Purchase.
To: The Bank of New York, Depositary
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand or Overnight Courier:
<S> <C>
Tender & Exchange Department (For Eligible Institutions Only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 Confirm Facsimile by Telephone: New York, NY 10286
(For Confirmation Only)
(800) 507-9357
</TABLE>
Delivery of this instrument to an address other than set forth above or
transmission of instructions via a facsimile number other than as set forth
above does not constitute a valid delivery.
This form is not to be used to guarantee signatures. If a signature on
a Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in Box #10 entitled "Please Sign Here"
on the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company at the price per Share
indicated in this Notice of Guaranteed Delivery, upon the terms and subject to
the conditions set forth in the Offer to Purchase and the related Letter of
Transmittal (which together constitute the "Offer"), receipt of both of which is
hereby acknowledged, Shares pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase.
BOX #1
- -------------------------------------------------------------------------------
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(See Instruction 7 on the Letter of Transmittal.)
- -------------------------------------------------------------------------------
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
- -------------------------------------------------------------------------------
SHARES TENDERED AT PRICE DETERMINED
BY DUTCH AUCTION
[ ] I want to maximize the chance of having Jefferson Bankshares, Inc.
purchase all the Shares I am tendering (subject to the possibility of
proration). Accordingly, by checking this one box INSTEAD OF ONE OF THE
PRICE BOXES BELOW, I hereby tender Shares and I am willing to accept the
Purchase Price resulting from the modified Dutch Auction tender process.
This action will result in my receiving a price per Share of as low as
$25.00 or as high as $28.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER
By checking one of the boxes below INSTEAD OF THE BOX ABOVE, I hereby tender
Shares at the price checked below. This action could result in none of my Shares
being purchased if the Purchase Price for the Shares is less than the price
checked.
Price (in dollars) per Share at which Shares are being tendered:
[ ] $25.000 [ ] $25.625 [ ] $26.250 [ ] $26.875 [ ] $27.500
[ ] $25.125 [ ] $25.750 [ ] $26.375 [ ] $27.000 [ ] $27.625
[ ] $25.250 [ ] $25.875 [ ] $26.500 [ ] $27.125 [ ] $27.750
[ ] $25.375 [ ] $26.000 [ ] $26.625 [ ] $27.250 [ ] $27.875
[ ] $25.500 [ ] $26.125 [ ] $26.750 [ ] $27.375 [ ] $28.000
<PAGE>
BOX #2
ODD LOTS
(See Instruction 10 on the Letter of Transmittal.)
To be completed ONLY if I own, beneficially or of record, as of the close of
business on September 25, 1996, an aggregate of fewer than 100 Shares, all of
which are being tendered. I either (check one box):
[ ] was the beneficial or record owner, as of the close of business on
September 25, 1996, of an aggregate of fewer than 100 Shares, all of which
are being tendered; or
[ ] am a broker, dealer, commercial bank, trust company, or other nominee that
(a) is tendering for the beneficial owner(s) thereof, Shares with respect
to which I am the record holder, and (b) believe, based upon
representations made to me by such beneficial owner(s), that each such
person was the beneficial owner, as of the close of business on September
25, 1996, of an aggregate of fewer than 100 Shares and is tendering all of
such Shares.
The Odd Lot Shares are being tendered at the price per Share indicated in Box #1
entitled "Price (In Dollars) Per Share At Which Shares Are Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
BOX #3
CONDITIONAL TENDER
(See Instruction 11 on the Letter of Transmittal.)
[ ] Check here ONLY if my tender of Shares is conditional on your purchasing
all or a minimum number of the tendered Shares and as set forth below:
Minimum number of Shares to be sold: ______________________Shares.
The Shares conditionally tendered are being tendered at the price per Share
indicated in Box #1 entitled, "Price (In Dollars) Per Share At Which Shares
Are Being Tendered."
BOX #4
(Please type or print)
Certificate Nos. (if available):_____________
Name(s):_____________________________________
Address(es):_________________________________
_____________________________________________
Area Code(s) and Telephone
Number(s)____________________________________
BOX #5
SIGN HERE
_________________________________________
Dated: ___________________________________
If Shares will be tendered by book-entry transfer,
check one box:
[ ] The Depository Trust Company
[ ] The Philadelphia Depository Trust Company
Account Number: __________________________
<PAGE>
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)
The undersigned is a member firm of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc., a
commercial bank, a trust company, a savings bank, a savings and loan association
or a credit union, which has membership in an approved signature guarantee
program and has an office, branch, or agency in the United States and represents
that: (a) the above-named person(s) "own(s)" the Shares tendered hereby within
the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934,
as amended, and (b) such tender of Shares complies with such Rule 14e-4, and
guarantees that the Depositary will receive (i) certificates of the Shares
tendered hereby in proper form for transfer, or (ii) confirmation that the
Shares tendered hereby have been delivered pursuant to the procedure for
book-entry transfer (set forth in Section 3 of the Offer to Purchase) into the
Depositary's account at The Depository Trust Company or The Philadelphia
Depository Trust Company, as the case may be, together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof) and any other
documents required by the Letter of Transmittal, all within three trading days
after the date the Depositary receives this Notice of Guaranteed Delivery.
Authorized Signature: ______________ Address: __________________________
Name: ______________________________ ___________________________________
(Please Print) (Including Zip Code)
Title: _____________________________ Area Code, Telephone Number: ______
Name of Firm: ______________________ Date: _______________________, 1996
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES
MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
[Exhibit (a)(4)]
JEFFERSON BANKSHARES, INC.
Offer To Purchase For Cash Up To
1,250,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $28.00
Nor Less Than $25.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON OCTOBER 31, 1996,
UNLESS THE OFFER IS EXTENDED.
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
Jefferson Bankshares, Inc., a Virginia corporation (the "Company"), has
appointed us to act as Dealer Managers in connection with its offer to purchase
for cash up to 1,250,000 shares of its Common Stock, $2.50 par value per share
(the "Shares"), at prices not in excess of $28.00 nor less than $25.00 per
Share, specified by shareholders tendering their Shares, upon the terms and
subject to the conditions set forth in its Offer to Purchase, dated September
26, 1996, and in the related Letter of Transmittal (which together constitute
the "Offer").
The Company will determine the single per Share price, not in excess of
$28.00 nor less than $25.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,250,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $28.00 nor less than $25.00 per
Share). All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, subject to the terms
and conditions of the Offer, including the proration and conditional tender
provisions. The Company reserves the right, in its sole discretion, to purchase
more than 1,250,000 Shares pursuant to the Offer. See Sections 1 and 15 of the
Offer to Purchase.
Upon the terms and subject to the conditions of the Offer, if, at the
expiration of the Offer, more than 1,250,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1 of the Offer to Purchase) who
properly tender all their Shares at or below the Purchase Price and then on a
pro rata basis from all other shareholders who properly tender at prices at or
below the Purchase Price (and do not withdraw them prior to the expiration of
the Offer), other than shareholders who tender conditionally, and for whom the
condition is not satisfied. See Sections 1 and 6 of the Offer to Purchase. All
stock certificates representing Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn and Shares not purchased because of proration or conditional tenders,
will be returned at the Company's expense to the shareholders who tendered such
Shares.
The Depositary for the Offer also acts as the agent of participants in
the Company's Dividend Reinvestment Plan and Employee Stock Purchase Plan (the
"Plans") and will make available to the participants whose accounts are credited
with Shares under the Plans all documents furnished to shareholders generally in
connection with the Offer. Certain participants in the Plans will also receive
additional copies of such documents directly if they also hold Shares in nominee
accounts or in different names. Participants in the Plans may use the Letter of
Transmittal to tender such participants' Shares in the Offer by completing
either Box #7 or Box #8, as appropriate, on the Letter of Transmittal. Each
participant may direct that all, some or none of the Shares credited to the
participant's account are to be tendered. Shareholders who intend to tender
Shares held in the Plans in addition to Shares which are not held in the Plans
may use one Letter of Transmittal to tender all of such Shares if such
participant wishes to tender all such Shares at the same price (even if such
shareholders have received more than one copy of the Offer). Separate Letters of
Transmittal must be used if a participant in the Plans intends to tender Shares
at different prices. See Instruction 7 to the Letter of Transmittal.
Participants in the Plans who do not wish to tender their shares held in the
Plans do not need to take any action. Participants may complete either Box #7 or
Box #8, as appropriate, on only one Letter of Transmittal submitted by such
participant. If a participant submits more than one Letter of Transmittal and
completes such box on more than one Letter of Transmittal, the participant will
be deemed to have elected to tender all Shares allocated to the shareholder's
account under the relevant Plan at the lowest of the prices specified in such
Letters of Transmittal. Participants in the Dividend Reinvestment Plan who wish
to tender the Shares that will be allocated to their accounts under that Plan on
October 31, 1996, in connection with the payment of the Company's quarterly
dividend on that day, should so indicate on the Letter of Transmittal.
Participants in the Dividend Reinvestment Plan may confirm the number of Shares
allocated to them on October 31, 1996 under that Plan after 4:00 P.M. New York
City time on that day by reference to the average of the high and low trade
price of the Company's Shares on October 31, 1996 (which may be obtained from
the Information Agent or from brokers), taking into account that the dividend
per Share payable on October 31, 1996 (which will be used to purchase Shares
under the Dividend Reinvestment Plan for participants in that Plan) will be
$.22. Participants in the Dividend Reinvestment Plan may withdraw such Shares by
following the procedure for withdrawal of Shares, before 5:00 P.M. New York City
time on October 31, 1996. See Section 4 of the Offer to Purchase. Participants
in the Plans are urged to read the Letter of Transmittal and related materials
carefully.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED PURSUANT TO THE OFFER. SEE SECTION 7 OF THE OFFER TO PURCHASE.
No fees or commissions will be payable to brokers, dealers or any
person for soliciting tenders of Shares pursuant to the Offer other than fees
paid to the Dealer Managers, the Information Agent or the Depositary as
described in the Offer to Purchase. The Company will, upon request, reimburse
Soliciting Dealers for reasonable and customary handling and mailing expenses
incurred by them in forwarding materials relating to the Offer to their
customers. For purposes of this letter, Soliciting Dealer includes (i) any
broker or dealer in securities, including Goldman, Sachs & Co., as "Dealer
Managers," in its capacity as a broker or dealer, which is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. (the "NASD"), (ii) any foreign broker or dealer not eligible for
membership in the NASD which agrees to conform to the NASD's Rules of Fair
Practice in soliciting tenders outside the United States to the same extent as
if it were an NASD member, or (iii) any bank or trust company. The Company will
pay all stock transfer taxes applicable to its purchase of Shares pursuant to
the Offer, subject to Instruction 9 of the Letter of Transmittal.
No broker, dealer, bank, trust company or fiduciary shall be deemed to
be the agent of the Company, The Bank of New York as "Depositary," the Dealer
Managers or Georgeson & Company Inc., as "Information Agent," for purposes of
the Offer.
For your information and for forwarding to your clients for whom you
hold Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Offer to Purchase, dated September 26, 1996;
2. Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your nominee,
with space provided for obtaining such clients' instructions with regard to the
Offer;
3. Letter, dated September 26, 1996, from O. Kenton McCartney,
President and Chief Executive Officer of the Company, to shareholders of the
Company;
4. Letter of Transmittal for your use and for the information of
your clients (together with accompanying Form W-9 and guidelines); and
5. Notice of Guaranteed Delivery to be used to accept the Offer if the
Share certificates and all other required documents cannot be delivered to the
Depositary by the Expiration Date or if the procedure for book-entry transfer
cannot be completed on a timely basis; and
6. A return envelope addressed to The Bank of New York, as Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER,
PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON OCTOBER 31, 1996, UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal and any other required documents should be sent
to the Depositary with either certificate(s) representing the tendered Shares or
confirmation of their book-entry transfer all in accordance with the
instructions set forth in the Letter of Transmittal and the Offer to Purchase.
As described in Section 3, "The Offer - Procedures for Tendering
Shares," of the Offer to Purchase, tenders may be made without the concurrent
deposit of stock certificates or concurrent compliance with the procedure for
book-entry transfer, if such tenders are made for the account of a member firm
of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc., a commercial bank, a trust company, a
savings bank, a savings and loan association, or a credit union with membership
in an approved signature guarantee program having an office, branch or agency in
the United States. Certificates for Shares so tendered (or a confirmation of a
book-entry transfer of such Shares into the Depositary's account at one of the
"Book-Entry Transfer Facilities" described in the Offer to Purchase), together
with a properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) and any required signature guarantees or any other
documents required by the Letter of Transmittal, must be received by the
Depositary within three trading days after timely receipt by the Depositary of a
properly completed and duly executed Notice of Guaranteed Delivery.
Any inquiries you may have with respect to the Offer should be
addressed to the Depositary, the Information Agent or the Dealer Managers at
their respective addresses and telephone numbers set forth on the back cover
page of the Offer to Purchase.
Additional copies of the enclosed material may be obtained from the
Information Agent, telephone: (800) 223-2064 or, in New York, (212) 440-9800.
Very truly yours,
Goldman, Sachs & Co.
Enclosures
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON AS AN AGENT OF THE COMPANY OR ANY OF ITS AFFILIATES, THE DEALER
MANAGERS OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED
THEREIN.
[Exhibit (a)(5)]
Jefferson Bankshares, Inc.
Offer To Purchase For Cash Up To
1,250,000 Shares Of Its Common Stock
At A Purchase Price Not In Excess Of $28.00
Nor Less Than $25.00 Per Share
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON OCTOBER 31, 1996,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated
September 26, 1996, and the related Letter of Transmittal (which together
constitute the "Offer") in connection with the Offer by Jefferson Bankshares,
Inc., a Virginia corporation (the "Company"), to purchase up to 1,250,000 shares
of its Common Stock, $2.50 par value per share (the "Shares") at prices not in
excess of $28.00 nor less than $25.00 per Share, specified by tendering
shareholders, upon the terms and subject to the conditions set forth in the
Offer.
The Company will determine the single per Share price, not in excess of
$28.00 nor less than $25.00 per Share, net to the seller in cash (the "Purchase
Price"), that it will pay for Shares properly tendered pursuant to the Offer,
taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest Purchase Price that
will allow it to buy 1,250,000 Shares (or such lesser number of Shares as are
properly tendered at prices not in excess of $28.00 nor less than $25.00 per
Share). All Shares properly tendered at prices at or below the Purchase Price
and not withdrawn will be purchased at the Purchase Price, subject to the terms
and conditions of the Offer, including the proration and conditional tender
provisions. The Company reserves the right, in its sole discretion, to purchase
more than 1,250,000 Shares pursuant to the Offer. See Sections 1 and 15 of the
Offer to Purchase.
Upon the terms and subject to the conditions of the Offer, if, at the
expiration of the Offer, more than 1,250,000 Shares are properly tendered at or
below the Purchase Price and not withdrawn, the Company will buy Shares first
from all Odd Lot Holders (as defined in Section 1 of the Offer to Purchase) who
properly tender all their Shares at prices at or below the Purchase Price and
then on a pro rata basis from all other shareholders who properly tender at or
below the Purchase Price (and do not withdraw them prior to the expiration of
the Offer), other than shareholders who tender conditionally and for whom the
condition is not satisfied. See Sections 1 and 6 of the Offer to Purchase. All
stock certificates representing Shares not purchased pursuant to the Offer,
including Shares tendered at prices greater than the Purchase Price and not
withdrawn and Shares not purchased because of proration or conditional tenders,
will be returned at the Company's expense to the shareholders who tendered such
Shares.
The Depositary for the Offer also acts as the agent for the
participants in the Company's Dividend Reinvestment Plan and Employee Stock
Purchase Plan (the "Plans") and will make available to the participants whose
accounts are credited with Shares under the Plans all documents furnished to
shareholders generally in connection with the Offer. Certain participants in the
Plans will also receive additional copies of such documents directly, if they
also hold Shares in nominee accounts or in different names. Participants in the
Plans may use the Letter of Transmittal to tender such participant's Shares in
the Offer by completing either Box #7 or Box #8, as appropriate, on the Letter
of Transmittal. Each participant may direct that all, some or none of the Shares
credited to the participant's account are to be tendered. Shareholders who
intend to tender Shares held in the Plans in addition to Shares which are not
held in the Plans may use one Letter of Transmittal to tender all of such Shares
if such participant wishes to tender all such Shares at the same price (even if
such shareholders have received more than one copy of the Offer). Separate
Letters of Transmittal must be used if a participant in the Plans intends to
tender Shares at different prices. See Instruction 7 to the Letter of
Transmittal. Participants in the Plans who do not wish to tender their shares
held in the Plans do not need to take any action. Participants may complete
either Box #7 or Box #8, as appropriate, on only one Letter of Transmittal
submitted by such participant. If a participant submits more than one Letter of
Transmittal and completes such box on more than one Letter of Transmittal, the
participant will be deemed to have elected to tender all Shares allocated to the
shareholder's account under the relevant Plan at the lowest of the prices
specified in such Letters of Transmittal. Participants in the Dividend
Reinvestment Plan who wish to tender the Shares that will be allocated to their
accounts under that Plan on October 31, 1996, in connection with the payment of
the Company's quarterly dividend on that day, should so indicate on the Letter
of Transmittal. Participants in the Dividend Reinvestment Plan may determine the
number of Shares allocated to them on October 31, 1996 under that Plan after
4:00 P.M. New York City time on that day, by computing the average of the high
and low trade prices of the Company's Shares on October 31, 1996 (which may be
obtained from the Information Agent or from brokers), taking into account that
the dividend per Share payable on October 31, 1996 (which will be used to
purchase Shares under the Dividend Reinvestment Plan for participants in that
Plan) will be $.22. Participants in the Dividend Reinvestment Plan may withdraw
such Shares by following the procedure for withdrawal of Shares, before 5:00
P.M. New York City time on October 31, 1996. See Section 4 of the Offer to
Purchase. Participants in the Plans are urged to read the Letter of Transmittal
and related materials carefully.
We are the owner of record of Shares held for your account. As such, we
are the only ones who can tender your Shares, and then only pursuant to your
instructions. We are sending you the Letter of Transmittal for your information
only; you cannot use it to tender Shares we hold for your account.
Please instruct us as to whether you wish us to tender any or all of
the Shares we hold for your account on the terms and subject to the conditions
of the Offer.
We call your attention to the following:
1. You may tender Shares at prices not in excess of $28.00 nor
less than $25.00 per Share as indicated in the attached Instruction Form, net
to you in cash.
2. You may tender your Shares conditioned upon the Company's
purchasing all or a minimum number of your Shares.
3. The Offer is not conditioned on any minimum number of Shares
being tendered pursuant to the Offer.
4. The Offer, proration period and withdrawal rights will expire at
5:00 P.M., New York City time, on October 31, 1996, unless the Company extends
the Offer.
5. The Offer is for 1,250,000 Shares, constituting approximately 8.3%
of the Shares outstanding as of September 25, 1996. The Company reserves the
right, in its sole discretion, to purchase more than 1,250,000 Shares.
6. Tendering shareholders will not be obligated to pay any brokerage
commissions, solicitation fees, or, subject to Instruction 9 of the Letter of
Transmittal, stock transfer taxes on the Company's purchase of Shares pursuant
to the Offer.
7. If you beneficially held, as of the close of business on September
25, 1996, an aggregate of fewer than 100 Shares, and you instruct us to tender
on your behalf all such Shares at or below the Purchase Price before the
Expiration Date (as defined in the Offer to Purchase) and check the box
captioned "Odd Lots" in the attached Transmittal Form, the Company, upon the
terms and subject to the conditions of the Offer, will accept all such Shares
for purchase before proration, if any, of the purchase of other Shares properly
tendered at or below the Purchase Price.
8. If you wish to tender portions of your Shares at different prices,
you must complete a separate Transmittal Form for each price at which you wish
to tender each such portion of your Shares. We must submit separate Letters of
Transmittal on your behalf for each price you will accept.
If you wish to have us tender any or all of your Shares, please so
instruct us by completing, executing, detaching and returning to us the attached
Transmittal Form. An envelope to return your Transmittal Form to us is enclosed.
If you authorize us to tender your Shares, we will tender all such Shares unless
you specify otherwise on the attached Instruction Form.
YOUR TRANSMITTAL FORM SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT
US TO SUBMIT A TENDER ON YOUR BEHALF ON OR BEFORE THE EXPIRATION DATE OF THE
OFFER. THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON OCTOBER 31, 1996, UNLESS THE COMPANY EXTENDS THE OFFER.
As described in Section 1 of the Offer to Purchase, if more than
1,250,000 Shares have been properly tendered at prices at or below the Purchase
Price and not withdrawn prior to the Expiration Date (as defined in the Offer to
Purchase), the Company will purchase properly tendered Shares on the basis set
forth below:
(a) first, all Shares properly and unconditionally tendered and not
withdrawn prior to the Expiration Date by any Odd Lot Holder (as defined in
Section 1 of the Offer to Purchase) who:
(1) tenders all Shares owned beneficially or of record by such
Odd Lot Holder at a price at or below the Purchase Price (tenders of
less than all Shares owned by such shareholder will not qualify for
this preference); and
(2) completes the box captioned "Odd Lots" on the
Letter of Transmittal and, if applicable, on the Notice of
Guaranteed Delivery; and
(b) second, after purchase of all of the foregoing Shares, all other
Shares properly and conditionally tendered at prices at or below the Purchase
Price in accordance with Section 6 of the Offer to Purchase for which the
condition was satisfied, and all other Shares properly and unconditionally
tendered at or below the Purchase Price and not withdrawn prior to the
Expiration Date, on a pro rata basis (with appropriate adjustments to avoid
purchases of fractional Shares) as described in Section 1 of the Offer to
Purchase; and
(c) third, if necessary, Shares properly and conditionally tendered at
or below the Purchase Price and not withdrawn prior to the Expiration Date,
selected by random lot in accordance with Section 6 of the Offer to Purchase.
You may condition your tender on the Company purchasing a minimum
number of your tendered Shares. In such case, if as a result of the proration
provisions in the Offer to Purchase the Company would purchase less than such
minimum number of your Shares, then the Company will not purchase any of your
Shares, except as provided in the next sentence. If so many conditional tenders
would be deemed withdrawn that the total number of such Shares to be purchased
falls below 1,250,000 Shares, then to the extent feasible, the Company will
select enough of such conditional tenders, which would otherwise have been
deemed withdrawn, to purchase such desired number of Shares. In selecting such
conditional tenders, the Company will select by random lot and will limit its
purchase in each case to the designated minimum number of Shares to be
purchased. See Sections 1 and 6 of the Offer to Purchase.
The Offer is being made to all holders of Shares. The Company is not
aware of any jurisdiction where the making of the Offer is not in compliance
with applicable law. If the Company becomes aware of any jurisdiction where the
making of the Offer is not in compliance with any valid applicable law, the
Company will make a good faith effort to comply with such law. If, after such
good faith effort, the Company cannot comply with such law, the Offer will not
be made to, nor will tenders be accepted from or on behalf of, holders of Shares
residing in such jurisdiction. In any jurisdiction the securities or blue sky
laws of which require the Offer to be made by a licensed broker or dealer, the
Offer is being made on the Company's behalf by the Dealer Managers or one or
more registered brokers or dealers licensed under the laws of such jurisdiction.
<PAGE>
TRANSMITTAL FORM for Shares Held by Brokers,
Dealers, Commercial Banks, Trust Companies and Other Nominees.
INSTRUCTIONS FOR TENDER OF SHARES OF JEFFERSON BANKSHARES, INC.
Please tender to Jefferson Bankshares, Inc. (the "Company"), on (our)
(my) behalf, the number of Shares indicated below, which are beneficially owned
by (us) (me) and registered in your name, upon terms and subject to the
conditions contained in the Offer to Purchase of the Company dated September 26,
1996, and the related Letter of Transmittal, the receipt of both of which is
acknowledged.
Number of Shares to be tendered: _________________ Shares
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING TENDERED
(See Instruction on the Letter of Transmittal.)
CHECK ONLY ONE BOX.
IF MORE THAN ONE BOX IS CHECKED OR IF NO BOX IS CHECKED,
THERE IS NO PROPER TENDER OF SHARES
SHARES TENDERED AT PRICE DETERMINED
BY DUTCH AUCTION
[ ] I want to maximize the chance of having Jefferson Bankshares, Inc. purchase
all the Shares I am tendering (subject to the possibility of proration).
Accordingly, by checking this one box INSTEAD OF ONE OF THE PRICE BOXES
BELOW, I hereby tender Shares and I am willing to accept the Purchase Price
resulting from the modified Dutch Auction tender process. This action will
result in my receiving a price per Share of as low as $25.00 or as high as
$28.00.
OR
SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER
By checking one of the boxes below INSTEAD OF THE BOX ABOVE, I hereby tender
Shares at the price checked below. This action could result in none of my Shares
being purchased if the Purchase Price for the Shares is less than the price
checked.
Price (in dollars) per Share at which Shares are being tendered:
[ ] $25.000 [ ] $25.625 [ ] $26.250 [ ] $26.875 [ ] $27.500
[ ] $25.125 [ ] $25.750 [ ] $26.375 [ ] $27.000 [ ] $27.625
[ ] $25.250 [ ] $25.875 [ ] $26.500 [ ] $27.125 [ ] $27.750
[ ] $25.375 [ ] $26.000 [ ] $26.625 [ ] $27.250 [ ] $27.875
[ ] $25.500 [ ] $26.125 [ ] $26.750 [ ] $27.375 [ ] $28.000
<PAGE>
ODD LOTS
(See Instruction 10 on the Letter of Transmittal.)
[ ] Check here ONLY if I was the beneficial or record owner, as of the close of
business on September 25, 1996, of an aggregate of fewer than 100 Shares,
all of which are being tendered.
The Odd Lot Shares are being tendered at the price per Share indicated
above in the box entitled "Price (In Dollars) Per Share At Which Shares Are
Being Tendered."
ODD LOT SHARES CANNOT BE CONDITIONALLY TENDERED
CONDITIONAL TENDER
(See Instruction 11 on the Letter of Transmittal.)
[ ] Check here ONLY if my tender of Shares is conditional on the Company
purchasing all or a minimum number of the tendered Shares, and as set forth
below:
Minimum number of Shares to be sold:__________________ Shares.
The Shares I conditionally tendered are being tendered at the price per Share
indicated above in the box entitled "Price (In Dollars) Per Share At Which
Shares Are Being Tendered."
<PAGE>
THE METHOD OF DELIVERY OF THIS DOCUMENT IS AT THE OPTION AND RISK OF THE
TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE OFFER.
HOWEVER, NEITHER THE COMPANY NOR ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION
TO SHAREHOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING THEIR SHARES.
EACH SHAREHOLDER MUST MAKE THE DECISION WHETHER TO TENDER SHARES AND, IF SO, HOW
MANY SHARES AND AT WHAT PRICE OR PRICES SHARES SHOULD BE TENDERED.
Signature(s):_______________________ Address:__________________________________
- ------------------------------------ -----------------------------------------
(Including Zip Code)
Name(s):____________________________ Area Code and Telephone Number:__________
(Please Print)
_____________________________ Date:_____________________________, 1996
(Please Print)
- -------------------------------------------------
(Employer Identification or Social Security Number)
IMPORTANT: SHAREHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED FORM W-9
WITH THEIR INSTRUCTION FORM.
Exhibit (a)(6)
JEFFERSON BANKSHARES, INC. [LOGO]
September 26, 1996
Dear Shareholders of Jefferson Bankshares, Inc.:
Over time, Jefferson Bankshares' profitable operations have contributed
to the growth of a capital base that exceeds all applicable regulatory standards
and the amount of capital needed to support the Company's banking business.
After evaluating a variety of alternatives to utilize this strong capital base
more effectively and to maximize value to our shareholders, we have determined
that a repurchase of our own shares is currently the best alternative to
accomplish those objectives. The Board of Directors has approved a repurchase of
1,250,000 shares of the Company's common stock, or 8.3 percent of our 15.1
million outstanding shares. A copy of the Offer to Purchase is enclosed.
The Company is conducting the offer through a procedure referred to as a
"modified Dutch Auction." This procedure allows you to select the price at which
you are willing to sell, or tender, all or part of your shares within a price
range of not more than $28.00 per share and not less than $25.00 per share. Upon
expiration of the offer, we will select the lowest purchase price from those
shares tendered that will allow us to buy 1,250,000 shares. All shares purchased
in the offer will receive the same purchase price, even those shares that are
tendered below the purchase price. In addition, if you own less than 100 shares
and tender all of your shares at or below the purchase price, you will receive
priority in the event more than 1,250,000 shares are tendered. No brokerage fees
or commissions will be charged by us if you tender your shares.
We encourage each shareholder to read carefully the Offer to Purchase
and related materials. Neither Jefferson Bankshares, Inc. nor our Board of
Directors make any recommendation whether to tender shares to the Company. You
should make your decision independently after consulting with your advisors.
To assist us with this offer, we have engaged Goldman, Sachs & Co. to
serve as the Dealer Managers and Georgeson & Company Inc. to serve as
Information Agent. Representatives from these firms may contact you by phone to
make sure you have received the Offer to Purchase and related materials and to
answer any questions you may have. If you need information or additional forms,
please call toll-free the Information Agent at 800-223-2064 or the Dealer
Managers at 800-323-5678 extension 9477.
Unless otherwise extended, the offer will expire at 5:00 p.m. New York
City time on October 31, 1996. We again encourage you to read carefully the
enclosed material.
As always, we appreciate your interest in Jefferson Bankshares.
Sincerely,
O. Kenton McCartney
President and CEO
[Exhibit (a)(7)]
MEMO PLEASE CIRCULATE
DATE: September 26, 1996
TO: All Staff
FROM: O. Kenton McCartney
RE: Tender Offer for Jefferson's Common Stock
Contact: Donald W. Fulton, Jr. - 804-972-1115
- ----------------------------------------------------------------
At Jefferson Bankshares' Board of Directors Meeting yesterday, September
25, 1996, the board approved the purchase of 1,250,000 shares of our common
stock by means of what is termed a "Modified Dutch Auction Tender." It is more
fully described in the attached news release. We have made every effort to
communicate this action to members of the Jefferson community as quickly as
possible. Below you will find the answer to some questions that are likely to
arise from our public announcement. We will provide other information as
conditions warrant.
Question: Why is Jefferson offering to repurchase its stock?
Answer: Over time, Jefferson's profitable operations have contributed to the
growth of a capital base that exceeds all applicable regulatory standards and
the amount of capital needed to support our banking business. After evaluating a
variety of alternatives to utilize more effectively our capital base and to
attempt to maximize shareholder value, Jefferson's management and its Board of
Directors believe that the purchase of Shares pursuant to the Offer is a
positive action that is intended to improve returns to our shareholders. Our
financial projections indicate that the purchase of shares will increase
earnings per share and return on shareholders' equity.
Question: Who's idea was this?
Answer: At its March meeting, Jefferson's Board of Directors at the
recommendation of management, hired Goldman, Sachs & Co. to be its advisor in
certain strategic planning matters. Working with Jefferson's management,
Goldman, Sachs conducted a detailed analysis of Jefferson's capital structure to
determine how to maximize shareholder value by improving return on shareholders'
equity while maintaining a high level of financial security and preserving
future strategic options. Based upon the results of a series of financial models
developed by Goldman, a purchase of shares appeared to be the best means to
accomplish the desired objectives. The Dutch Auction Tender method was
determined to be the best way to acquire shares in the shortest period of time.
Question: How should I respond to questions?
Answer: Jefferson has hired a special Information Agent to handle all questions.
The Information Agent is Georgeson & Company Inc. and their toll-free telephone
number is 800-223-2064. Because Jefferson is the purchaser of the shares, and
because securities laws are involved, it is highly important that all questions
be referred to the Information Agent. No member of Jefferson's staff is allowed
or authorized to answer any questions or give any advice regarding the tender
offer. We are aware that many shareholders are customers of the bank and have
ties or relationships with staff members. You should handle these situations as
diplomatically as possible, but in any event, all questions must be referred to
the Information Agent.
Question: What do I say if a shareholder asks, "Should I sell (tender) my
stock?'
Answer: Members of the Jefferson staff must not give any investment advice to
shareholders. The shareholder must make his or her own investment decision. You
should not express an opinion as to whether you think the tender offer is a
"good deal" or a "bad deal." While the shareholder may call the Information
Agent or the Dealer Managers (Goldman, Sachs) they will not receive investment
advice from either organization.
Question: What do I do if someone brings a Letter of Transmittal to me or my
office?
Answer: Because tenders must be received by The Bank of New York within a
limited amount of time, we cannot take the responsibility for having any
shareholder's tender delivered. Shareholders must send tenders directly to The
Bank of New York at the address provided in the tender offer documents. That
address is:
The Bank of New York
Tender & Exchange Department
P.O. Box 11248
New York, NY 10286-1248
Question: May employees of Jefferson tender shares in the offer?
Answer: Yes. Employees who own shares of Jefferson common stock (either
directly or through the Employee Stock Purchase Plan) are eligible to tender
their shares. You will receive a complete copy of the same documents that are
being provided to other shareholders.
[Exhibit (a)(8)]
JEFFERSON BANKSHARES, INC. [LOGO]
QUESTIONS AND ANSWERS
ABOUT THE OFFER OF
JEFFERSON BANKSHARES, INC.,
TO PURCHASE FOR CASH UP TO 1,250,000 SHARES
OF COMMON STOCK AT A PURCHASE PRICE OF
$25.00 TO $28.00 PER SHARE
September 26, 1996
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE OFFER OF JEFFERSON BANKSHARES, INC.
TO PURCHASE ITS STOCK
The following information is designed to answer frequently asked questions about
the offer by Jefferson Bankshares, Inc. to purchase shares of its common stock.
Shareholders are referred to the Offer to Purchase and Letter of Transmittal for
a detailed description of the terms and conditions of the offer.
Q. What Is This Offer To Purchase?
A. Jefferson Bankshares, Inc., ("Jefferson" or the "Company") is
inviting its shareholders to tender shares of its common stock, $2.50
par value per share (the "Shares"), at prices not in excess of $28.00
nor less than $25.00 per Share in cash, as specified by shareholders
tendering their Shares, upon the terms and subject to the conditions
set forth in its Offer to Purchase, dated September 26, 1996, and in
the enclosed Letter of Transmittal (which together constitute the
"Offer"). The Company will determine the single per Share price,
not in excess of $28.00 nor less than $25.00 per Share, net to the
seller in cash (the "Purchase Price"), that it will pay for Shares
properly tendered pursuant to the Offer, taking into account the
number of Shares so tendered and the prices specified by tendering
shareholders. The Company will select the lowest Purchase Price
that will allow it to buy 1,250,000 Shares (or such lesser number
of Shares as are properly tendered at prices not in excess of
$28.00 nor less than $25.00 per Share) This type of issuer tender
offer is commonly referred to as a "modified Dutch Auction".
Q. What Is A "Modified Dutch Auction?"
A. A modified Dutch Auction is a process whereby a company makes a
direct tender offer to its own shareholders to purchase a specified
number of shares of its stock within a specified price range per
share, and pays the highest price at which it accepts shares to all
shareholders whose shares are accepted. In this case, Jefferson is
making a direct offer to all of its shareholders to purchase in the
aggregate 1,250,000 shares of its common stock at a price not in
excess of $28.00 nor less than $25.00 per share. This process allows
each shareholder to elect whether to sell stock, and the price the
shareholder is willing to sell at within the given price range.
After receiving tenders of Shares, at the termination of the Offer,
the Company will choose the lowest price within the specified range
that will permit it to purchase the amount of securities sought and
this price will become the Purchase Price.
Q. What Will Be The Final Purchase Price?
A. All Shares acquired in the Offer will be acquired at the Purchase
Price. The Company will select the lowest Purchase Price that will
allow it to buy up to 1,250,000 Shares. All shareholders tendering at
or below the Purchase Price will receive the same amount. For example,
if 750,000 Shares are tendered at $25.00 per Share, 500,000 Shares are
tendered at $26.00 per Share and 500,000 are tendered at $27.00 per
Share, 1,250,000 Shares will be purchased at $26.00 per Share from the
persons who tendered at $25.00 and $26.00, and the 500,000 Shares
tendered at $27.00 per Share will be returned and not purchased.
Q. What Will Happen If More Than 1.25 Million Shares Are
Tendered At Or Below The Purchase Price?
A. In the event more than 1.25 million Shares are tendered at or below the
Purchase Price, Shares tendered at or below the Purchase Price will be
subject to proration. For example, if the Offer is oversubscribed at
110% (i.e. 1,375,000 are tendered at or below the Purchase Price),
approximately 91% of each tender will be purchased provided, however,
that the Company reserves the right, in its sole discretion, to
purchase more than 1,250,000 Shares in the Offer.
Q. At What Price May I Tender My Shares?
A. Shareholders may elect to tender their Shares either (a) in increments
of 1/8th of a dollar ($.125) starting at $25.00 per Share up to and
including $28.00 per Share, or (b) at the Purchase Price as determined
by the modified Dutch Auction process. The election as to the number of
Shares and the price a shareholder is willing to tender are to be
indicated on the Letter of Transmittal.
Q. How Do I Tender My Shares?
A. If you hold your Shares in certificate form, you must either: (a)
return a properly completed Letter of Transmittal (the blue form)
and any other documents required by the Letter of Transmittal,
together with the certificates for the Shares being tendered, to the
Depositary, The Bank of New York, which must receive them by 5:00
P.M. New York City time on October 31, 1996; or (b) comply with
the Guaranteed Delivery procedure described in Section 3 of the
Offer to Purchase. If you hold Shares in street name (i.e., through a
broker), you should call your broker and ask how to tender your Shares.
If you are a broker and are tendering Shares in book-entry form for
your customers, you must comply with either the Book-Entry Delivery or
Guaranteed Delivery procedure described in Section 3 of the Offer to
Purchase.
Q. What Do I Do If I Have Lost My Certificates, Or If They Have
Been Mutilated, Destroyed Or Stolen, But I Still Want To Tender Them?
A. Call the Depositary at (800) 507-9357 or (212) 815-5829 in New
York for instructions for tendering Shares in such circumstances.
Q. Do I Have To Sell My Stock To The Company?
A. No. A shareholder is not required to tender any stock.
Q. What Happens If I Do Not Tender My Stock To The Company To Purchase?
A. Nothing will happen if you do not tender any or all of your Shares.
Your Shares will remain outstanding without a change in the terms or
ownership rights. You will continue to own the same number of Shares
without any adjustment, and you will continue to receive the same
dividend and voting rights. However, since the Company will purchase up
to 1,250,000 of its outstanding Shares, the percentage of the
outstanding stock which you own will increase since the number of
outstanding Shares will be reduced.
Q. What If The Terms Of The Offer Change?
A. In the event the Expiration Date is extended or if the terms of the
Offer are materially changed, the Company will generally give notice of
the change and, under certain circumstances, at least 10 business days
from such notice, shareholders will be able to change or withdraw their
tender.
Q. Can I Tender Part Of My Stock At Different Prices?
A. Yes, you can elect to tender part of your stock at one price and an
additional amount at a second price. For example, if you owned 1,500
Shares, you could tender 500 Shares at $25.00, 500 at $26.00 and keep
the remaining 500 Shares. However, you cannot tender the same stock at
different prices. In the prior example, the shareholder owning 1,500
Shares cannot tender 1,500 at $25.00 and 1,500 at $26.00. If you tender
some Shares at one price and other Shares at a different price, you
must use a separate Letter of Transmittal for each price.
Q. Is There Any Brokerage Commission?
A. No. The Company will purchase stock directly from each
shareholder at the Purchase Price without the use of a broker.
Q. What If I Am A Participant In The Company's Dividend
Reinvestment Plan Or Employee Stock Purchase Plan?
A. If you are a participant in the Company's Dividend Reinvestment
Plan or in its Employee Stock Purchase Plan (the "Plans"), you may
instruct The Bank of New York, as Agent of the Plans, to tender
Shares allocated to your account in such Plans. You will receive all
documents furnished to shareholders generally in connection with
the Offer. Certain participants in the Plans will also receive
additional copies of such documents directly, if they also hold
Shares in nominee accounts or in different names. You may use the
Letter of Transmittal to instruct the Agent to tender your Shares
in the Offer by completing either Box #7 or Box #8, as appropriate,
on the Letter of Transmittal. You may direct that all, some, or none
of the Shares credited to your Plan account(s) are to be tendered.
Q. What If I Am A Plan Participant And Wish To Tender Both Plan And
Non-Plan Shares?
A. If you intend to tender Shares held in the Plans in addition to Shares
which are not held in the Plans, you may use one Letter of Transmittal
to tender all of such Shares if you wish to tender all such Shares at
the same price (even if you have received more than one copy of the
Offer). Separate Letters of Transmittal must be used if you intend to
tender Shares held in the Plans and Shares not held in the Plans at
different prices. See Instruction 7 to the Letter of Transmittal.
Q. How Do I Tender Plan Shares?
A. If you do not wish to tender your shares held in the Plans, you do not
need to take any action. If you wish to tender Plan Shares, you
must complete either Box #7 or Box #8, as appropriate, on only one
Letter of Transmittal submitted by you. If you submit more
than one Letter of Transmittal and complete such box on more than
one Letter of Transmittal, you will be deemed to have elected to
tender all Shares allocated to your account under the relevant Plan
at the lowest of the prices specified in such Letters of Transmittal.
If you wish to tender the Shares that will be allocated to your
Dividend Reinvestment Plan account on October 31, 1996, in
connection with the payment of the Company's quarterly dividend on
that day, you should so indicate on the Letter of Transmittal. You are
urged to read the Letter of Transmittal and related materials
carefully.
Q. How Do I Determine How Many Shares I Have In My Dividend
Reinvestment Plan Account, And The Amount I Will Receive For
Tendering Them?
A. You can determine how many Shares you have in your Dividend
Reinvestment Plan ("DRIP") account, including the Shares allocated
to your account on October 31, 1996 in connection with the payment
of the Company's quarterly dividend on that day, by reference to
your most recent DRIP Statement and by computing the average of
the high and low trade prices of the Company's Shares on October 31,
1996 (which may be obtained from your broker or the Information
Agent, Georgeson & Company Inc. after 4:00 P.M. New York City
time on October 31, 1996), taking into account that the dividend
per Share payable on October 31, 1996 will be $.22. By way of
example, if on the dividend record date (October 7, 1996) you hold
110 Shares in certificate form and 20.1234 Shares in your DRIP
account, the dividend on your certificate Shares will be $24.20 (110
times $.22), and the dividend on your DRIP Shares will be $4.43
(20.1234 times $.22). If the DRIP purchase price on October 31,
1996 is $25.00 per Share, the total dividends of $28.63 would
purchase an additional 1.1452 Shares, and the total number of
Shares held in your DRIP account available for tender would increase
to 21.2686 (20.1234 plus 1.1452).
Q. Can I Change Or Cancel My Tender?
A. You may increase or decrease the number of Shares indicated in the
Letter of Transmittal or withdraw it entirely up until 5:00 P.M. on
October 31, 1996. Generally after October 31, 1996, you cannot withdraw
your tender. If you desire to change or withdraw your tender, you are
responsible to make certain that a valid withdrawal is received by the
October 31, 1996 deadline. Except as discussed in the Offer to
Purchase, tenders are irrevocable after the October 31, 1996 deadline.
Q. How Do I Tender My Shares If My Shares Are Held By My Broker?
A. If your Shares are registered in street name with a broker, dealer,
commercial bank, trust company or other nominee, you will need to
contact your broker, bank or other nominee. A separate transmittal form
must be given to the nominee, which will instruct the nominee to make
the tender of your Shares for you. You cannot tender such Shares using
the Letter of Transmittal even though you may have received one for
your information.
Q. Can You Summarize The Process By Which Shares Are Validly Tendered?
A. Generally, for certificated Shares you must complete the Letter of
Transmittal (the blue form) as follows:
o List the certificates and the number of Shares that you are
tendering in Box #1.
o Check the box specifying the price at which you are tendering
in Box #2.
o If you want to give us special payment instructions, complete
Box #3.
o If you want to give us special delivery instructions, complete
Box #4.
o If you are an Odd Lot Holder who is tendering all your shares,
complete Box #5.
o If you want to make a conditional tender of Shares, complete
Box #6.
o If you are a participant in the Company's Dividend
Reinvestment Plan, complete Box #7.
o If you are a participant in the Company's Employee Stock
Purchase Plan, complete Box #8.
o If your Shares are being delivered by book-entry or your
certificates are being delivered pursuant to a Notice of
Guaranteed Delivery, complete Box #9.
o Complete substitute Form W-9 to certify your tax identification
number.
o Sign the Letter of Transmittal in Box #10 (in certain
circumstances, signatures must be guaranteed in Box #10).
You must deliver your Share certificate or comply with one of the
alternate delivery methods. See Section 3 of the Offer to Purchase.
These documents must be received by the Depositary, The Bank of New
York, no later than 5:00 P.M. on October 31, 1996. If you are tendering
Shares held by a broker, commercial bank, trust company or other
nominee, a separate letter of instructions must be given to your
nominee who will, on the basis of your instructions, tender shares for
you. Please see Section 3 and the Letter of Transmittal for more
details about how to tender Shares.
Q. How Can I Get More Information?
A. If you have a question, please call our Information Agent,
Georgeson & Company Inc., at (800) 223-2064 or (212) 440-9800 in
New York, or our Dealer Managers, Goldman, Sachs & Co., at (800)
323-5678 ext. 9477 or (212) 902-9477 in New York, from 9:00 a.m.
- 5:00 p.m., Monday through Friday.
This brochure is neither an offer to purchase nor a solicitation of an offer to
sell securities. The offer to purchase the stock of the Company is made only by
the Jefferson Bankshares, Inc. Offer to Purchase document dated September 26,
1996 and the accompanying Letter of Transmittal.
[Exhibit (a)(9)]
CONTACTS: Donald W. Fulton, Jr. Maria Weisensee
Vice President-Investor Relations Georgeson & Company, Inc.
804-972-1115 212-440-9847
Immediate
September 26, 1996
JEFFERSON BANKSHARES OFFERS TO BUY
UP TO $35 MILLION OF ITS COMMON STOCK
Charlottesville, VA ..... Jefferson Bankshares, Inc. (NASDAQ NMS: JBNK)
announced today that its Board of Directors has authorized the repurchase of up
to 1,250,000 shares of its common stock, which represents 8.3 percent of its
15.1 million outstanding shares. The offer to purchase shares will be conducted
as a "Modified Dutch Auction Tender." Under this procedure, Jefferson's
shareholders will be given the opportunity to sell part or all of their shares
to the Corporation at a price of not less than $25.00 per share and not more
than $28.00 per share. This price range represents a 2.0 percent to 14.3 percent
premium to yesterday's closing price of $24.50 per share. Based upon the minimum
and maximum offering prices specified in the offer, the aggregate purchase
price, if 1,250,000 shares are purchased, would range from $31.3 million to
$35.0 million. The offer to purchase shares will expire at 5:00 p.m. New York
City time on October 31, 1996 unless extended by Jefferson.
In addition to announcing the share repurchase, Jefferson's Board of
Directors also declared a quarterly cash dividend of $.22 per common share
payable on October 31, 1996 to shareholders of record on October 7, 1996. This
dividend remains unchanged from the previous quarter.
<PAGE>
Under the procedures for a Modified Dutch Auction Tender, shareholders
may offer to sell all or a portion of the shares they own at a price not more
than the maximum price ($28.00), nor less than the minimum price ($25.00)
specified in the tender. Upon the expiration of the offer, Jefferson will select
the lowest purchase price that will allow it to buy 1,250,000 shares. All shares
purchased in the offer will receive the same price. If the number of shares
tendered is equal to or less than 1,250,000 shares, the purchase price will be
the highest price specified by tendering shareholders. If the number of shares
tendered is greater than the number sought, the Corporation will select the
lowest price that will allow it to buy the number of shares it seeks.
Hovey S. Dabney, Jefferson's Chairman of the Board, stated, "Jefferson is
making the tender offer because its Board of Directors believes that the
purchase of shares pursuant to the offer should have beneficial effects on
shareholder value while maintaining a strong capital base to support the needs
of our business and our customers."
O. Kenton McCartney, Jefferson's President and Chief Executive Officer,
added, "After studying a number of alternatives, we selected the Modified Dutch
Auction Tender because it is a positive action that has the potential for
improving shareholder returns in an expeditious manner. Based upon proforma
financial analyses, the purchase of shares should have the effect of increasing
earnings per share and raising the return on shareholders' equity."
Concurrently with making the announcement of the offer to purchase
shares, Jefferson also made public a projection of its third quarter earnings
results. Jefferson projects that net income for the quarter ending September 30,
1996 will be in a range of $7.0 million to $7.3 million, and net income per
share will be in a range of $.46 to $.48. The foregoing is a forward looking
statement based upon unaudited financial results through August 31, 1996, and
certain financial trends that are expected to contribute to attaining the
projected third quarter financial results. The results for net income and net
income per share involve a number of assumptions, risks, and uncertainties that
could cause the results to differ materially from those anticipated. Those
assumptions, risks, and uncertainties are more completely described in the
Schedule 13E-4 that is being filed with the Securities and Exchange Commission
in conjunction with the offer to purchase shares.
Jefferson Bankshares, Inc. is a bank holding company based in
Charlottesville, Virginia and has approximately $2.1 billion in total assets.
Its subsidiary bank, Jefferson National Bank has 97 banking offices and 56
automated teller locations serving a significant portion of Virginia.
Goldman, Sachs & Co. will act as dealer managers for the offer, and The
Bank of New York will be the depositary for the shares tendered. Questions or
requests for assistance may be directed to Georgeson & Company Inc., the
information agent at 1-800-223-2064.
This announcement is neither an offer to purchase nor a solicitation to
sell Shares of Jefferson Bankshares, Inc. common stock. The offer is made solely
by the Offer to Purchase dated September 26, 1996 and the related Letter of
Transmittal.
[Exhibit (a)(10)]
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated
September 26, 1996, and the related Letter of Transmittal that are being mailed
to shareholders of Jefferson Bankshares, Inc. on or about September 26, 1996.
While the Offer is being made to all shareholders of the Company, tenders will
not be accepted from or on behalf of shareholders in any jurisdiction in which
the acceptance thereof would not be in compliance with the laws of such
jurisdiction. In those jurisdictions whose laws require that the Offer be made
by a licensed broker or dealer, the Offer shall be deemed to be made on behalf
of the Company by Goldman, Sachs & Co. as Dealer Managers or one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
by
JEFFERSON BANKSHARES, INC.
Up to 1,250,000 Shares of its Common Stock
at a Purchase Price not Greater than
$28.00 nor less than $25.00 per Share
Jefferson Bankshares, Inc., a Virginia corporation (the "Company"),
invites its shareholders to tender shares of its Common Stock, $2.50 par value
per share (the "Shares") at prices not in excess of $28.00 nor less than $25.00
per Share in cash, as specified by shareholders tendering Shares, upon the terms
and subject to the conditions set forth in the Offer to Purchase, dated
September 26, 1996 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which together constitute the "Offer"). The information contained
in the Offer to Purchase and the Letter of Transmittal is incorporated by
reference herein in its entirety.
THE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF SHARES BEING
TENDERED. THE OFFER IS HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS SET
FORTH IN THE OFFER.
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON OCTOBER 31, 1996, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
Neither the Company nor its Board of Directors makes any recommendation to
shareholders as to whether to tender or refrain from tendering their Shares and
neither has authorized any person to make any such recommendation. Shareholders
must make their own decisions whether to tender Shares and, if so, how many
Shares to tender and the price or prices at which to tender.
<PAGE>
The Company will, upon the terms and subject to the conditions of the
Offer, determine the single price per Share, not in excess of $28.00 nor less
than $25.00 per Share, net to the seller in cash (the "Purchase Price"), that it
will pay for Shares properly tendered taking into account the number of Shares
so tendered and the prices specified by tendering shareholders, that will allow
it to buy 1,250,000 Shares (or such lesser number of Shares as are properly
tendered and not withdrawn) at a price not in excess of $28.00 nor less than
$25.00 per Share. The Company reserves the right, in its sole discretion, to
purchase more than 1,250,000 Shares. All Shares properly tendered at prices at
or below the Purchase Price and not withdrawn will be purchased at the Purchase
Price, upon the terms and subject to the conditions of the Offer, including the
proration terms and conditional tender provisions. For purposes of the Offer,
the Company will be deemed to have accepted for payment, subject to proration,
Shares tendered at or below the Purchase Price and not withdrawn if, as and when
the Company gives oral or written notice to The Bank of New York (the
"Depositary") of its acceptance of such Shares for purchase pursuant to the
Offer. Payment for Shares accepted for purchase pursuant to the Offer will be
made by depositing the aggregate Purchase Price for such Shares with the
Depositary, which will act as agent for the tendering shareholders for the
purpose of receiving payment from the Company and transmitting such payments to
tendering shareholders.
Upon the terms and subject to the conditions of the Offer, in the event
that at the Expiration Date (as defined below) more than 1,250,000 Shares (or
such greater number of Shares as the Company elects to purchase) are properly
tendered and not withdrawn at or below the Purchase Price, proration will occur
for each shareholder, other than Odd Lot Holders (as defined in the Offer) who
tender all their Shares. In that event, the Company will purchase properly
tendered Shares in the following order of priority: (a) first, all Shares
properly and unconditionally tendered at or below the Purchase Price prior to
the Expiration Date (and not withdrawn) by any Odd Lot Holder, who: (1) tenders
all Shares owned by such Odd Lot Holder at a price at or below the Purchase
Price (partial tenders will not qualify for this preference); and (2) completes
the section entitled "Odd Lots" on the Letter of Transmittal and, if applicable,
on the Notice of Guaranteed Delivery; (b) second, after purchase of all of the
foregoing Shares, all Shares properly and conditionally tendered in accordance
with Section 6 of the Offer to Purchase, for which the condition was satisfied,
and all other Shares tendered properly and unconditionally at or below the
Purchase Price, on or prior to the Expiration Date (and not withdrawn), on a pro
rata basis, if necessary (with adjustments to avoid purchases of fractional
Shares); and (c) third, if necessary, Shares properly and conditionally tendered
at or below the Purchase Price on or before the Expiration Date (and not
withdrawn), selected by random lot in accordance with Section 6 of the Offer to
Purchase. The term "Expiration Date" means 5:00 p.m. New York City time, on
October 31, 1996, unless and until the Company, in its sole discretion, shall
have extended the period of time during which the Offer will remain open, in
which event the term "Expiration Date" shall refer to the latest time and date
at which the Offer, as so extended by the Company, shall expire.
The Company believes that the purchase of Shares is an attractive use of a
portion of the Company's available capital on behalf of its shareholders and is
consistent with the Company's long-term goal of increasing shareholder value.
The Company believes it has adequate sources of capital to complete the Share
repurchase and pursue business opportunities.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the period of time during which the Offer
is open and thereby delay acceptance for payment of, and payment for, any
Shares, by giving oral or written notice of such extension to the Depositary and
making a public announcement thereof. During any such extension, all Shares
previously tendered and not withdrawn will remain subject to the Offer. The
Company also expressly reserves the right, in its sole discretion, to terminate
the Offer and not accept for payment or pay for any Shares not theretofore
accepted for payment or paid for and to amend the Offer in any respect
(including by increasing or decreasing the number of Shares the Company may
purchase or the range of prices it may pay pursuant to the Offer).
Except as otherwise provided in the Offer, tenders of Shares pursuant to
the Offer will be irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time prior to the Expiration Date and, unless theretofore
accepted for payment by the Company as provided in the Offer to Purchase, may
also be withdrawn after 12:00 midnight, New York City time, on November 30,
1996. For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses as set forth on the back cover of the Offer to Purchase.
Any such notice of withdrawal must specify the name of the person who tendered
the Shares to be withdrawn, the number of Shares to be withdrawn and the name of
the registered holder, if different from that of the person who tendered such
Shares. If the certificates have been delivered or otherwise identified to the
Depositary, then, prior to the release of such certificates, the tendering
shareholder must submit the certificate numbers shown on the particular
certificates evidencing the Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, as defined
in the Offer to Purchase, except in the case of Shares tendered by an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer set forth in the Offer to Purchase, the notice of withdrawal
must specify the name and the number of the account at the applicable Book-Entry
Transfer Facility (as defined in the Offer to Purchase) to be credited with the
withdrawn Shares and otherwise comply with the procedures of such facility.
The Offer to Purchase and Letter of Transmittal contain important
information that should be read before shareholders decide whether to accept or
reject the Offer and, if accepted, at what price or prices to tender their
Shares. These materials are being mailed to all record owners of Shares and are
being furnished to brokers, banks and similar persons whose names, or the names
of whose nominees, appeared on the Company's shareholder list as of September
25, 1996 (or, if applicable, who are listed as participants in a clearing
agency's security position listing) for transmittal to beneficial owners of
Shares.
The information required to be disclosed by Rule 13e-4(d)(1) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated in this notice by reference.
Copies of the Offer to Purchase and the Letter of Transmittal may be
obtained from the Information Agent at the address set forth below and will be
furnished promptly at the Company's expense. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Managers.
Shareholders may also contact their broker, dealer, commerical bank or trust
company for assistance concerning the Offer.
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
Wall Street Plaza
New York, NY 10005
(212) 440-9800
or
Call Toll-Free (800) 223-2064
The Dealer Managers for the Offer are:
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
(212) 902-9477
or
Call Toll-Free (800) 323-5678 ext. 9477
September 26, 1996
[Exhibit (a)(11)]
This announcement is neither an Offer to Purchase nor a solicitation of an offer
to sell shares of Jefferson Bankshares, Inc. common stock. The offer is made
solely by the Offer to Purchase dated September 26, 1996 and the related Letter
of Transmittal, copies of which may be obtained from the Information Agent.
[LOGO] JEFFERSON BANKSHARES, INC.
Offers to
Purchase For Cash up to 1,250,000 Shares of its
Common Stock
At a Purchase Price Not Greater Than $28.00 Nor Less
Than $25.00 Per Share
- --------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON OCTOBER 31, 1996,
UNLESS THE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
The Information Agent for the Offer is:
Georgeson & Company Inc.
Wall Street Plaza
New York, New York 10005
(800) 223 - 2064 TOLL FREE
(212) 440 - 9800 in New York
The Dealer Managers for the Offer are:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
in New York State: (212) 902 - 9477
Other Areas: (800) 323 - 5678 ext. 9477 (TOLL FREE)
September 26, 1996
WACHOVIA
Wachovia Bank of North Carolina, N.A.
100 North Main Street
Winston-Salem, North Carolina 27150-3099
September 16, 1996
Mr. 0. Kenton McCartney
President and Chief Executive Officer
Jefferson Bankshares, Inc.
P.O. Box 711
Charlottesville, Virginia 22902
RE: Line of Credit/Loan Agreement/Promissory Note
Dear Kenton:
Wachovia Bank of North Carolina, N. A. (the "Lender") agrees to open a line of
credit (the "Line of Credit") effective September 25, 1996 in favor of Jefferson
Bankshares, Inc., a Virginia corporation (the "Borrower"), so the Borrower may
borrow, from time to time, subject to the terms and conditions of this letter
(the "Agreement"), up to a maximum aggregate amount outstanding of forty million
dollars ($40,000,000.00) (the "Committed Amount"). The Line of Credit shall be
used for the purpose of purchasing Jefferson Bankshares, Inc.'s stock.
The obligation of the Borrower to repay any Advances under the Line of Credit
shall be evidenced by the promissory note (the "Note"). The terms and conditions
of the Agreement are incorporated in the Note by reference as though the same
were written therein. Accrued interest on all Advances under the Line of Credit
shall be payable on each Interest Payment Date as hereafter defined.
On January 23, 1997 (the "Maturity Date"), the Lender's obligation to make
Advances or extend further credit under the Line of Credit shall cease and the
aggregate outstanding principal amount of all Advances under the Line of Credit,
together with accrued interest thereon, shall be paid in full. All payments of
principal and interest due on the Note shall be made in immediately available
funds in Winston-Salem, North Carolina.
1. Lender's obligation to make Advances under the Line of Credit is
subject to the following conditions precedent: (i) the Lender shall
have received, on or before the date of the first Advance (a) a copy
of the Resolutions of the Board of Directors of the Borrower,
certified on such date, authorizing the execution and delivery of the
Agreement, and the borrowing hereunder and the execution and
delivery of the Note; (b) a Certificate of Incumbency certifying the
persons duly elected or appointed to, and are presently acting as
incumbents of, the offices of the Borrower set forth opposite their
respective names, and that opposite the names of each his true
<PAGE>
signature appears (c) such additional documents as the Lender may
reasonably request; (ii) on the date of any Advance, each of the
representations and warranties made by the Borrower in Paragraph 4
hereof shall be true on and as of the date of the making of such
Advance with the same force and effect as if made on and as of such
date; and (iii) at the time of each Advance, the Borrower and each
Subsidiary shall be in compliance with all the terms and provisions
set forth herein on their part to be observed and performed, and no
event of default as specified in Paragraph 7 hereof, nor any event
which upon notice or lapse of time, or both, would constitute such an
event of default, shall have occurred at the time of such Advance.
2. For purposes of this Agreement the following terms shall have the
following definitions:
A. "Advance" shall mean any borrowing by the Borrower hereunder.
B. "Business Day" means any other day than Saturday, Sunday, or other
day on which commercial banks in North Carolina are authorized or
required to be closed under the laws of the State of North Carolina.
C. "Interest Period" shall mean for any Advance the period commencing
on the date such Advance is made and ending:
(i)In the case of an Advance bearing interest at the Adjusted LIBOR
Rate, on that day which is the numerically corresponding day in
the first, second, or third calendar month thereafter, as the
Borrower may select hereunder except that each such Interest
Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of such appropriate subsequent
calendar month;
(ii)In the case of an Advance bearing interest at the Base Rate, the
earlier of (i) that day which such Advance is repaid or (ii) the
Maturity Date.
Not withstanding the forgoing, (i) each Interest Period which
would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, in the case of an
Advance bearing interest at the Adjusted LIBOR Rate, if such next
succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day), (ii) if any Interest
Period would otherwise commence before and end after the Maturity
Date, such Interest Period shall end on such date, and (iii)
notwithstanding clause (ii) above, no Interest Period for any
Advance bearing interest at the Adjusted LIBOR Rate shall have a
duration of less than thirty (30) days; if the Interest Period
for any such Advance would otherwise be a shorter period, such
Advance shall bear interest at the Base Rate.
D. "Interest Payment Date" shall mean the last day of each Interest
Period and, if such Interest Period is longer than 90 days, at intervals
of 90 days from the first day thereof.
E. "Base Rate" shall mean for any day, the rate per annum equal to one
percent below the Prime Rate for such day. For purposes of determining
<PAGE>
the Base Rate, changes in the Prime Rate will be effective on the date
of each such change.
F. "Prime Rate" shall mean for any day that interest rate so denominated
and set by the Lender from time to time as an interest rate basis for
borrowings. The Prime Rate is one of several interest rate bases used by
the Lender. The Lender lends at interest rates above and below the Prime
Rate.
G. "Generally Accepted Accounting Principles" means generally accepted
accounting principles, as recognized by the American Institute of
Certified Public Accounts, consistently applied and maintained on a
consistent basis for the Borrower throughout the period indicated and
consistent with the financial practice of the Borrower after the date
hereof; provided however, that, in the event that changes in Generally
Accepted Accounting Principles shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrower's certified public
accounts, to the extent that such changes would modify accounting terms
used in this Agreement or the interpretation or computation thereof,
such changes shall be followed in defining such accounting terms only
from and after the date this Agreement shall have been amended to the
extent necessary to reflect any such changes in the terms and conditions
of this Agreement.
H. "Person" shall mean an individual, corporation, a partnership, an
association, a trust, or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
I. "London Interbank Offered Rate (LIBOR Rate)" means, for any
Interest Period, the rate per annum determined by the Lender on the
basis of the offered rate for deposits in Dollars of amounts equal to
the aggregate principal amount of the Line of Credit which is
outstanding on the first day of such Interest Period for a one, two
or three-month period beginning on the first Business Day of such
Interest Period, which rates appear on the display designated as
page "3750" of the Telerate Service (or such other service or
services as may be nominated by the British Bankers' Association
for the purpose of displaying London interbank offered rates for
Dollar deposits), determined as of 1:00 p.m., New York time, two (2)
Business Days prior to the first day of such Interest Period;
provided, however, that (i) if more than one such offered rate
appears on the display designated as page "3750" of the Telerate
Service (or such other page as may replace 3750 of that service or
such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank
offered rates for Dollar deposits), "LIBOR" will be the arithmetic
average (rounded, if necessary, to the nearest 1/100 of one percent
or, if there is no nearest 1/100 of one percent, to the next higher
1/100 of one percent) of such offered rates, and (ii) if no such
offered rate appears on the display designated as page "3750" of the
Telerate Service (or such other page as may replace 3750 of that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London
interbank offered rates for Dollar deposits), "LIBOR" will be the
arithmetic average (rounded, if
<PAGE>
necessary, to the nearest 1/100 of one percent or, if there is no
nearest 1/100 of one percent, to the next higher 1/100 of one
percent) of rates quoted by not less than two major banks in New York
City, selected by the Lender, at approximately 1:00 p.m., New York
City time, two (2) Business Days prior to the first day of such
Interest Period, for deposits in Dollars offered to leading
European banks for a period comparable to such Interest Period in
an amount comparable to the aggregate principal amount of the Line
of Credit which is outstanding on the first day of such Interest
Period.
J. "Adjusted London Interbank Offered Rate (Adjusted LIBOR Rate)"
applicable to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the nearest higher
1/100th of 1%) by dividing (i) the applicable London Interbank Offered
Rate for such Interest Period by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage.
K. "Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed
by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member
bank of the Federal Reserve System in respect of "Eurocurrency
Liabilities" (or in respect of any other category of liabilities which
includes deposits by reference to which the interest rate on loans
bearing interest at a rate based on the LIBOR Rate is determined or any
category of extensions of credit or other assets which includes loans by
a non-United States office of any bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically
on and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.
L. "Subsidiary" and "Subsidiaries" means any corporation of which fifty
percent (50%) or more of the voting stock at any time is owned or
controlled directly or indirectly by the Borrower.
M. "Material Adverse Effect" or "Material Adverse Change" means a
material adverse effect upon, or a material adverse change in, any of
(i) the financial condition, operations, business, properties, or
prospects of the Borrower and its Subsidiaries, taken as a whole, (ii)
the ability of the Borrower to perform under this Agreement, any other
loan document or any other material contract to which the Borrower is a
party in any material respect; (iii) the legality, validity or
enforceability of this Agreement or other loan document (other than a
change expressly permitted under the Agreement or resulting from any act
or omission by the Lender).
N. "ERISA" shall mean the Employment Retirement Income Security
Act of 1974, as amended for time to time, and all rules and
regulations from time to time promulgated thereunder.
Words importing the singular include the plural and vice versa unless
the context otherwise requires.
<PAGE>
3. Each Advance under the Line of Credit shall bear interest for each day
at (i) the Adjusted LIBOR Rate plus one half of one percent or (ii) the
Base Rate.
After the occurrence of an Event of Default hereunder, which Event of
Default is not waived by the Lender in writing, interest on any unpaid
Advance shall bear interest at the rate per annum equal to (i) the
Adjusted LIBOR Rate plus 3.75% or (ii) as provided for in item 8, the
Base Rate plus 3.75% (the "Default Rate") and shall due and payable on
demand.
In all cases, interest shall be calculated on the outstanding principal
amount of each outstanding Advance on the basis of a 360-day year and
the actual days during which such Advance is outstanding.
4. Borrower represents and warrants to the Lender that (i) it is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; (ii) the
making and performance by Borrower of this Agreement and the Note are
within Borrower's corporate powers and will not contravene any
provisions of law or its charter or by-laws or of any indenture or
other agreement or instrument to which it is now or by which it or
any of its properties may be bound or affected; (iii) it has the
corporate authority to execute, deliver and perform this Agreement
and to borrow in accordance with the terms of this Agreement and it
has taken all necessary and appropriate corporate action to authorize
the borrowing under and the execution, delivery and performance of
this Agreement and the Note; (iv) this Agreement is and the Note,
when executed and delivered, will be valid in accordance with their
respective terms; (v) there are no pending or threatened proceedings
before any court or administrative body which might materially and
adversely affect the financial condition or operations of Borrower,
(vi) the annual audit reports and quarterly financial statement of
Borrower and consolidated Subsidiaries for the fiscal year and quarter
most recently ended previously furnished to the Lender have been
prepared in accordance with the generally acceptable accounting
principles and fairly present the financial condition of
Borrower and consolidated Subsidiaries as of such due date and since
such date there has been no material adverse change in such
condition; and (vii) there are no material liabilities of Borrower and
consolidated Subsidiaries, direct, contingent or otherwise, not
reflected in such audit reports and financial statements referred to in
clause (vi) above.
5. Financial Statements: So long as the Lender's obligation to extend
credit under this Line of Credit exists or any amount payable
on the Note remains unpaid, the Borrower agrees to furnish
the Lender:
a. Annual audited consolidated financial statements of the Borrower
and its Subsidiaries for each fiscal year, prepared in conformity
with Generally Accepted Accounting Principles by an independent
certified public accountant satisfactory to the Lender delivered
to the Lender within 90 days after the close of business of the
fiscal period
b. Quarterly consolidated financial statements of the Borrower and
its Subsidiaries statements for each fiscal quarter, prepared in
conformity with Generally Accepted Accounting Principles and
<PAGE>
compiled by an independent certified public accountant
satisfactory to the Lender and the FR Y-9C of the Borrower
delivered to the Lender within 60 days after the close of
business of the fiscal period
c. With each delivery of financial statements required above
Borrower will deliver to the Lender a certificate signed by an
authorized representative stating that the Borrower is in
compliance with the provisions of this Agreement and Note.
The Borrowers also shall provide the Lender, with reasonable promptness,
such further information regarding the Borrower's business affairs and
financial condition as the Lender may reasonably request.
6. Covenants: So long as the Lender's obligation to extend credit under
the Line of Credit exists or any amount payable on the Note remains
unpaid, the Borrower agrees that:
a. Affirmative Covenants: The Borrower will and will require its
Subsidiaries to adhere to the following Affirmative
Covenants:
1. Maintain insurance, in such amounts and against
such risks, as is satisfactory to the Lender.
2. Maintain its corporate existence and comply with all
valid and applicable statutes, rules and regulations,
and maintain its properties in good operating
condition.
3. Comply with all statutes and government regulations and
pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent,
and other obligations, which, if unpaid, might become a
lien against the property of the Borrower or any
Subsidiaries, except liabilities being contested in good
faith and against which, if requested by the Lender, the
Borrower will set up reserves satisfactory to the Lender.
b. Negative Covenants: The Borrower also agrees to:
1. Negative Pledge on all assets. The Borrower shall not,
nor shall it permit any subsidiary to, incur, create,
assume or permit to exist any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind upon
any of its real or personal property, including those
arising under conditional sales or other title retention
agreements, except permitted encumbrances.
c. Pari Passu with Other Obligations: The Borrower shall ensure
that its obligations under this Agreement rank and will
continue to rank at least pari passu with all of its other
unsecured obligations and unsubordinated obligations, other
than obligations preferred by operation of law.
<PAGE>
d. More Restrictive Agreements: The Borrower shall, upon entering
into or amending any agreement, document or instrument relating
to or evidencing indebtedness for borrowed money (i) provide the
Lender with notice thereof and a copy of such agreement,
document, instrument or amendment within five days after it is
executed by the Borrower, and (ii) if, in the Lender's opinion,
such agreement, document, instrument or amendment contains any
representation, warranty, covenant or event of default that is in
addition to or more restrictive than the representations,
warranties, covenants and events of default contained in this
Agreement, enter into any amendments to this Agreement within
thirty days after such request that, in the opinion of the
Lender, are necessary to make the representations, warranties,
covenants and events of default in this Agreement as restrictive
as those contained in such agreement, document, instrument or
amendment.
7. The occurrence or existence of any one or more of the following events
or conditions will constitute an Event of Default by the Borrower
under this Agreement, whereupon the Lender's obligation to make
Advances under the Line of Credit will immediately terminate and the
Note and all indebtedness of the Borrower to the Lender will, at the
option of the Lender, immediately become due and payable without
presentation, demand, protest, or notice of any kind, all of which are
hereby expressly waived by the Borrower, and the Borrower will pay the
reasonable attorney's fee incurred by the Lender in connection with
such default or recourse against any collateral held by the Lender
as security for the indebtedness owed by the Borrower:
a. Nonpayment when due, whether by acceleration or otherwise,
of any payment of interest or of principal and interest on the
Note;
b. Nonpayment when due of any fee or other charge under this
Agreement;
c. A breach or failure of performance by the Borrower or any
Subsidiary of any other provision of this Agreement which is
not remedied within 30 days after written notice by the
Lender;
d. A material representation or warranty by the Borrower shall prove
to have been false or erroneous when made or when deemed made or
any certificate or financial statement provided to the Lender
proves to be inaccurate in any material respect when delivered or
when deemed to have been delivered;
e. The Borrower, or any Subsidiary: (i) files a petition or has
a petition filed against it under the Bankruptcy Code (as it
now exists or may be amended) or any admission seeking the
relief therein provided, (ii) is unable, or admits in
writing its inability, to pay its debts as they become
due, (iii) makes an assignment for the benefit of
creditors, (iv) has a receiver appointed, voluntarily or
otherwise, for its property, (v) is adjudicated as bankrupt,
(vi) suspends business, (vii) permits a judgment in the amount
of $ 1,000,000.00 or more to be obtained against it which
is not promptly appealed and secured pending appeal, (viii)
<PAGE>
becomes insolvent, however, otherwise evidenced, or (ix)
breaches or defaults under any other agreement involving the
borrowing of money or the extension of credit in excess of
$10,000,000.00 under which the Borrower or any Subsidiary may
be obligated as borrower or guarantor, if such default
consists of the failure to pay any indebtedness when due or
if such default permits or causes (or upon lapse of time or
notice or both would permit or cause) the acceleration of any
indebtedness or the termination of any commitment to lend;
f. (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934) of 25% or more of
the outstanding shares of the voting stock of the
Borrower or any ownership of Jefferson National Bank, or
(ii) as of any date a majority of the Board of Directors of the
Borrower consists of individuals who were not either (A)
directors of the Borrower as of the corresponding date of the
previous year, (B) selected or nominated to become directors
by the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of
Directors of the Borrower of which a majority consisted of
individuals described in clauses (A) and (B).
g. The occurrence of any Material Adverse Change, or of any event
condition, or state of facts which could reasonably be expected
to result in a Material Adverse Change.
The Borrower severally covenants that it will, at the expense of the
Borrower, promptly upon their obtaining knowledge thereof, give to the
Lender written notice of: (a) any Event of Default under the Agreement,
and (b) any event which, upon proper notice to the Borrower or the
passage of time or both, would become an Event of Default under this
Agreement.
8. If, after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with
the interpretation or administration thereof (any such agency
being referred to an "Authority" and any such event being referred
to as a "Change of Law"), or compliance by any bank (or its lending
office) with any request or directive (whether or not having the force
of law) of any Authority shall make it unlawful or impossible for the
Lender to make, maintain or fund Advances bearing interest at the
Adjusted LIBOR Rate, the Lender shall forthwith give notice to the
Borrower, whereupon until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligation of the Lender to make Advances bearing interest at the
Adjusted LIBOR Rate shall be suspended. Advances shall instead be made
bearing interest at the Base Rate.
9. (a) The Borrower may, upon at least one Business Days' notice to the
Lender, prepay any Advances bearing interest at the Base Rate in whole
at any time, or from time to time in part in amounts aggregating at
least $1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment
<PAGE>
(b) Except as provided in item 8 above, the Borrower may not prepay all
or any portion of the principal amount of any Advance bearing interest
at the Adjusted LIBOR Rate prior to the maturity thereof.
10. The Borrower will, and will cause each Subsidiary to, comply with ERISA
and the regulations and requirements of the Pension Benefit Guaranty
Corporation, except where the necessity of such compliance is being
contested in good faith through appropriate proceedings.
11. In the event any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provision hereof or
thereof.
12. No amendment or waiver of any provision of this Agreement or consent to
any departure the Borrower therefore shall in any event be effective
unless the same shall be in writing and signed by the Lender. Any such
amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
13. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns; provided that the Borrower may not assign or otherwise transfer
any of its rights under this Agreement.
14. This Agreement and the Note issued and all other documents furnished
hereunder shall be governed by and be construed according to the laws of
the State of North Carolina.
If the forgoing terms and conditions are acceptable to the Borrower, please
indicate the Borrower's agreement to such terms and conditions by executing this
Agreement in the appropriate space provided below and by executing the Note and
returning this Agreement and the Note to the Lender. This Agreement and the Note
must be returned to the Lender by 5:00 PM EDT on October 25, 1996 or this offer
shall be null and void.
Sincerely,
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:_________________________________
Randall T. Warren, Vice President
ACCEPTED AND AGREED TO THIS ____DAY OF _________________,1996
JEFFERSON BANKSHARES, INC.
By:___________________________________
Its:___________________________________
<PAGE>
PROMISSORY NOTE
$40,000,000.00 ________________, 1996
FOR VALUE RECEIVED, the undersigned JEFFERSON BANKSHARES, INC., a
Virginia Corporation (the "Borrower"), hereby promises to pay to the order of
WACHOVIA BANK OF NORTH CAROLINA, N.A., a national banking association (together
with its endorsees, successors, and assigns, the "Lender"), the principal sum of
Forty Million and No/100th Dollars ($40,000,000.00), or so much thereof as shall
have been disbursed from time to time and remain unpaid, on the dates provided
for in the Agreement herein referred to below. The Borrower promises to pay
interest on the unpaid principal amount of this Note on the dates and at the
rate or rates provided for in the Agreement. Interest on any overdue principal
of and, to the extent permitted by law, overdue interest on the principal amount
hereof shall bear interest at the Default Rate. All such payments of principal
and interest shall be made in lawful money of the United States in Federal or
other funds immediately available at the principal office of the Lender located
at 100 North Main Street, Winston-Salem, North Carolina 27101, or at such other
locations as the holder of this Note may designate in writing.
This Note evidences indebtedness in respect to each Advance made
hereunder, is the Note referred to in and issued pursuant to, and is subject to
the terms and provisions of, the Agreement, dated as of September 25, 1996,
between the Borrower and the Lender (as the same may be so modified, amended,
supplemented or restated, the "Agreement") to which Agreement reference is
hereby made for a statement of said terms and provisions. This Note is entitled
to the benefits of the Agreement.
Upon the occurrence and during the continuation of any Event of Default,
the Lender may declare the entire unpaid principal balance advanced hereunder
and all accrued interest to be immediately due and payable in the manner and
with the effect provided in the Agreement, and may thereafter exercise any of
the remedies referred to in the Agreement or existing under applicable law.
Capitalized terms used herein and not otherwise defined shall have the meanings
given them in the Agreement. Advances by the Lender to the Borrower evidenced by
this Note shall be made during the time period specified in the Agreement and in
accordance with the terms and conditions in the Agreement.
This Note may be prepaid in whole or in part only on the terms and
conditions set forth in the Agreement.
<PAGE>
TIME IS OF THE ESSENCE OF THIS CONTRACT. In addition and not in
limitation of the foregoing and the provisions of the Agreement, the Borrower
further agrees to pay all expenses of collection, including reasonable
attorney's fees, if this Note shall be collected by law or through an attorney
at law, or in bankruptcy, receivership or other court proceedings.
This Note shall be governed by and construed under the internal laws of
the State of North Carolina, without giving effect to principles of conflicts of
laws. This Note is intended to be effective as an instrument executed under
seal.
PRESENTMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY
THE BORROWER.
Executed under hand and seal of the Borrower on the date first above
written.
ATTEST: JEFFERSON BANKSHARES, INC.
By:_____________________________ By:___________________________
Its: Secretary Its:____________________________
[CORPORATE SEAL]
WACHOVIA
Wachovia Bank of North Carolina, N.A.
100 North Main Street
Winston-Salem, North Carolina 27150-3099
September 16, 1996
Mr. 0. Kenton McCartney
President and Chief Executive Officer
Jefferson Bankshares, Inc.
P.O. Box 711
Charlottesville, Virginia 22902
RE: Line of Credit/Loan Agreement/Promissory Note
Dear Kenton:
Wachovia Bank of North Carolina, N. A. (the "Lender") agrees to open a line of
credit (the "Line of Credit") effective January 23, 1997, in favor of Jefferson
Bankshares, Inc., a Virginia corporation (the "Borrower"), so the Borrower may
borrow, from time to time, subject to the terms and conditions of this letter
(the "Agreement"), up to a maximum aggregate amount outstanding of fifteen
million dollars ($15,000,000.00) (the "Committed Amount"). The Line of Credit
shall be used for the purpose of purchasing Jefferson Bankshares, Inc.'s stock.
The obligation of the Borrower to repay any Advances under the Line of Credit
shall be evidenced by the promissory note (the "Note"). The terms and conditions
of the Agreement are incorporated in the Note by reference as though the same
were written therein. Accrued interest on all Advances under the Line of Credit
shall be payable on each Interest Payment Date as hereafter defined.
On January 22, 1998, (the "Maturity Date") the Lender's obligation to make
Advances or extend further credit under the Line of Credit shall cease and the
aggregate outstanding principal amount of all Advances under the Line of Credit,
together with accrued unpaid interest thereon, shall be paid in full. All
payments of principal and interest due on the Note shall be made in immediately
available funds in Winston-Salem, North Carolina.
This Line of Credit is subject to a facility fee of five basis points per annum
payable annually in advance.
1. Lender's obligation to make Advances under the Line of Credit is
subject to the following conditions precedent: (i) the Lender shall
have received, on or before the date of the first Advance (a) a copy
of the Resolutions of the Board of Directors of the Borrower,
certified on such date,
<PAGE>
authorizing the execution and delivery of the Agreement, and the
borrowing hereunder and the execution and delivery of the Note; (b)
a Certificate of Incumbency certifying the persons duly elected or
appointed to, and are presently acting as incumbents of, the offices of
the Borrower set forth opposite their respective names, and that
opposite the names of each his true signature appears (c) such
additional documents as the Lender may reasonably request; (ii) on the
date of any Advance, each of the representations and warranties made
by the Borrower in Paragraph 4 hereof shall be true on and as of the
date of the making of such Advance with the same force and effect as
if made on and as of such date; and (iii) at the time of each Advance,
the Borrower and each Subsidiary shall be in compliance with all the
terms and provisions set forth herein on their part to be observed and
performed, and no event of default as specified in Paragraph 7 hereof,
nor any event which upon notice or lapse of time, or both, would
constitute such an event of default, shall have occurred at the time of
such Advance.
2. For purposes of this Agreement the following terms shall have the
following definitions:
A. "Advance" shall mean any borrowing by the Borrower hereunder.
B. "Business Day" means any other day than Saturday, Sunday, or
other day on which commercial banks in North Carolina are authorized
or required to be closed under the laws of the State of North Carolina.
C. "Interest Period" shall mean for any Advance the period
commencing on the date such Advance is made and ending:
(i)In the case of an Advance bearing interest at the Adjusted LIBOR
Rate, on that day which is the numerically corresponding day in
the first, second, or third calendar month thereafter, as the
Borrower may select hereunder except that each such Interest
Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of such appropriate subsequent
calendar month;
(ii)In the case of an Advance bearing interest at the Base Rate, the
earlier of (i) that day which such Advance is repaid or (ii) the
Maturity Date.
Not withstanding the forgoing, (i) each Interest Period which
would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, in the case of an
Advance bearing interest at the Adjusted LIBOR Rate, if such next
succeeding Business Day falls in the next succeeding calendar
month, on the next preceding Business Day), (ii) if any Interest
Period would otherwise commence before and end after the Maturity
Date, such Interest Period shall end on such date, and (iii)
notwithstanding clause (ii) above, no Interest Period for any
Advance bearing interest at the Adjusted LIBOR Rate shall have a
duration of less than thirty (30) days; if the Interest Period
for any such Advance would otherwise be a shorter period, such
Advance shall bear interest at the Base Rate.
<PAGE>
D. "Interest Payment Date" shall mean the last day of each Interest
Period and, if such Interest Period is longer than 90 days, at intervals
of 90 days from the first day thereof.
E. "Base Rate" shall mean for any day, the rate per annum equal to one
percent below the Prime Rate for such day. For purposes of determining
the Base Rate, changes in the Prime Rate will be effective on the date
of each such change.
F. "Prime Rate" shall mean for any day that interest rate so denominated
and set by the Lender from time to time as an interest rate basis for
borrowings. The Prime Rate is one of several interest rate bases used by
the Lender. The Lender lends at interest rates above and below the Prime
Rate.
G. "Generally Accepted Accounting Principles" means generally accepted
accounting principles, as recognized by the American Institute of
Certified Public Accounts, consistently applied and maintained on a
consistent basis for the Borrower throughout the period indicated and
consistent with the financial practice of the Borrower after the date
hereof; provided however, that, in the event that changes in Generally
Accepted Accounting Principles shall be mandated by the Financial
Accounting Standards Board, or any similar accounting body of comparable
standing, or shall be recommended by the Borrower's certified public
accounts, to the extent that such changes would modify accounting terms
used in this Agreement or the interpretation or computation thereof,
such changes shall be followed in defining such accounting terms only
from and after the date this Agreement shall have been amended to the
extent necessary to reflect any such changes in the financial covenants
and other terms and conditions of this Agreement.
H. "Person" shall mean an individual, corporation, a partnership, an
association, a trust, or any other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
I. "London Interbank Offered Rate (LIBOR Rate)" means, for any Interest
Period, the rate per annum determined by the Lender on the basis of the
offered rate for deposits in Dollars of amounts equal to the aggregate
principal amount of the Line of Credit which is outstanding on the first
day of such Interest Period for a one, two, or three-month period
beginning on the first Business Day of such Interest Period, which rates
appear on the display designated as page "3750" of the Telerate Service
(or such other service or services as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank
offered rates for Dollar deposits), determined as of 1:00 p.m., New York
time, two (2) Business Days prior to the first day of such Interest
Period; provided, however, that (i) if more than one such offered rate
appears on the display designated as page "3750" of the Telerate Service
(or such other page as may replace 3750 of that service or such other
service or services as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates
<PAGE>
for Dollar deposits), "LIBOR" will be the arithmetic average (rounded,
if necessary, to the nearest 1/100 of one percent or, if there is no
nearest 1/100 of one percent, to the next higher 1/100 of one percent)
of such offered rates, and (ii) if no such offered rate appears on the
display designated as page "3750" of the Telerate Service (or such other
page as may replace 3750 of that service or such other service or
services as may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for Dollar
deposits), "LIBOR" will be the arithmetic average (rounded, if
necessary, to the nearest 1/100 of one percent or, if there is no
nearest 1/100 of one percent, to the next higher 1/100 of one percent)
of rates quoted by not less than two major banks in New York City,
selected by the Lender, at approximately 1:00 p.m., New York City time,
two (2) Business Days prior to the first day of such Interest Period,
for deposits in Dollars offered to leading European banks for a period
comparable to such Interest Period in an amount comparable to the
aggregate principal amount of the Line of Credit which is outstanding on
the first day of such Interest Period.
J. "Adjusted London Interbank Offered Rate (Adjusted LIBOR Rate)"
applicable to any Interest Period means a rate per annum equal to the
quotient obtained (rounded upwards, if necessary, to the nearest higher
1/100th of 1%) by dividing (i) the applicable London Interbank Offered
Rate for such Interest Period by (ii) 1.00 minus the Euro-Dollar Reserve
Percentage.
K. "Euro-Dollar Reserve Percentage" means for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed
by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member
bank of the Federal Reserve System in respect of "Eurocurrency
Liabilities" (or in respect of any other category of liabilities which
includes deposits by reference to which the interest rate on loans
bearing interest at a rate based on the LIBOR Rate is determined or any
category of extensions of credit or other assets which includes loans by
a non-United States office of any bank to United States residents). The
Adjusted London Interbank Offered Rate shall be adjusted automatically
on and as of the effective date of any change in the Euro-Dollar Reserve
Percentage.
L. "Subsidiary" and "Subsidiaries" means any corporation of which
fifty percent (50%) or more of the voting stock at any time is owned or
controlled directly or indirectly by the Borrower.
M. Nonperforming Loans" means the sum of loans and leases 90 or more
days past due, nonaccrual loans and leases, and restructured loans and
leases as categorized in the Board of Governors of the Federal Reserve
System FR Y-9C Report of Consolidated Financial Statements for Bank
Holding Companies.
N. "OREO" means assets categorized as other real estate owned in the
Board of Governors of the Federal Reserve System FR Y-9C Report of
Consolidated Financial Statements for Bank Holding Companies.
<PAGE>
O. "Total Loans" means end of period gross loans and leases minus
unearned income as categorized in the Board of Governors of the Federal
Reserve System FR Y-9C Report of Consolidated Financial Statements for
Bank Holding Companies.
P. "Tangible Equity" means perpetual preferred stock and related surplus
+ common stock + surplus + undivided profits and capital reserves - net
unrealized loss on marketable securities + cumulative foreign currency
translation adjustments + minority interest in consolidated subsidiaries
- intangible assets + qualifying mortgage servicing rights + qualifying
purchased credit card relationships.
Q. "Total Assets" means quarterly average assets - intangible
assets + qualifying mortgage servicing rights + qualifying purchased
credit card relationships
R. "Funded Debt" means other borrowed funds plus subordinated notes and
debentures less any advances from the Federal Home Loan Bank as
categorized in the Board of Governors of the Federal Reserve System FR
Y-9C Report of Consolidated Financial Statements for Bank Holding
Companies.
S. "Total Capitalization" means other borrowed funds plus subordinated
notes and debentures less any advances from the Federal home Loan Bank
plus total equity capital as categorized in the Board of Governors of
the Federal Reserve System FR Y-9C Report of Consolidated Financial
Statements for Bank Holding Companies.
T. "Material Adverse Effect" or "Material Adverse Change" means a
material adverse effect upon, or a material adverse change in, any of
(i) the financial condition, operations, business, properties, or
prospects of the Borrower and its Subsidiaries, taken as a whole, (ii)
the ability of the Borrower to perform under this Agreement, any other
loan document or any other material contract to which the Borrower is a
party in any material respect; (iii) the legality, validity or
enforceability of this Agreement or other loan document (other than a
change expressly permitted under the Agreement or resulting from any act
or omission by the Lender).
U. "Loan Loss Reserve" means that Loan Loss Reserve categorized
in the Board of Governors of the Federal Reserve System FR Y-9C
Report of Consolidated Financial Statements for Bank Holding
Companies.
V. "ERISA" shall mean the Employment Retirement Income Security
Act of 1974, as amended for time to time, and all rules and
regulations from time to time promulgated thereunder.
Words importing the singular include the plural and vice versa unless
the context otherwise requires.
<PAGE>
3. Each Advance under the Line of Credit shall bear interest for each day
at (i) the Adjusted LIBOR Rate plus 45 basis points or (ii) the Base
Rate.
After the occurrence of an Event of Default hereunder, which Event of
Default is not waived by the Lender in writing, interest on any unpaid
Advance shall bear interest at the rate per annum equal to (i) the
Adjusted LIBOR Rate plus 3.75% or (ii) as provided for in item 8, the
Base Rate plus 3.75% (the "Default Rate") and shall due and payable on
demand.
In all cases, interest shall be calculated on the outstanding principal
amount of each outstanding Advance on the basis of a 360-day year and
the actual days during which such Advance is outstanding.
4. Borrower represents and warrants to the Lender that (i) it is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation; (ii) the
making and performance by Borrower of this Agreement and the Note are
within Borrower's corporate powers and will not contravene any
provisions of law or its charter or by-laws or of any indenture or
other agreement or instrument to which it is now or by which it or
any of its properties may be bound or affected; (iii) it has the
corporate authority to execute, deliver and perform this Agreement
and to borrow in accordance with the terms of this Agreement and it
has taken all necessary and appropriate corporate action to authorize
the borrowing under and the execution, delivery and performance of
this Agreement and the Note; (iv) this Agreement is and the Note,
when executed and delivered, will be valid in accordance with their
respective terms; (v) there are no pending or threatened proceedings
before any court or administrative body which might materially and
adversely affect the financial condition or operations of Borrower,
(vi) the annual audit reports and quarterly financial statement of
Borrower and consolidated Subsidiaries for the fiscal year and quarter
most recently ended previously furnished to the Lender have been
prepared in accordance with the generally acceptable accounting
principles and fairly present the financial condition of
Borrower and consolidated Subsidiaries as of such due date and since
such date there has been no material adverse change in such
condition; and (vii) there are no material liabilities of Borrower and
consolidated Subsidiaries, direct, contingent or otherwise, not
reflected in such audit reports and financial statements referred to in
clause (vi) above.
5. Financial Statements: So long as the Lender's obligation to extend
credit under this Line of Credit exists or any amount payable on
the Note remains unpaid, the Borrower agrees to furnish the
Lender:
a. Annual audited consolidated financial statements of the Borrower
and its Subsidiaries for each fiscal year, prepared in conformity
with Generally Accepted Accounting Principles by an independent
certified public accountant satisfactory to the Lender delivered
to the Lender within 90 days after the close of business of the
fiscal period.
b. Quarterly consolidated financial statements of the Borrower and
its Subsidiaries statements for each fiscal quarter, prepared in
conformity with Generally Accepted Accounting Principles and
<PAGE>
compiled by an independent certified public accountant
satisfactory to the Lender and the FR Y-9C of the Borrower
delivered to the Lender within 60 days after the close of
business of the fiscal period.
c. With each delivery of financial statements required above
Borrower will deliver to the Lender a certificate signed by an
authorized representative stating that the Borrower is in
compliance with the provisions of this Agreement and Note.
The Borrowers also shall provide the Lender, with reasonable promptness,
such further information regarding the Borrower's business affairs and
financial condition as the Lender may reasonably request.
6. Covenants: So long as the Lender's obligation to extend credit under
the Line of Credit exists or any amount payable on the Note remains
unpaid, the Borrower agrees that:
a. Affirmative Covenants: The Borrower will and will require its
Subsidiaries to adhere to the following Affirmative Covenants:
1. Maintain insurance, in such amounts and against
such risks, as is satisfactory to the Lender.
2. Maintain its corporate existence and comply with all
valid and applicable statutes, rules and regulations,
and maintain its properties in good operating
condition.
3. Comply with all statutes and government regulations and
pay promptly when due all taxes, assessments,
governmental charges, claims for labor, supplies, rent,
and other obligations, which, if unpaid, might become a
lien against the property of the Borrower or any
Subsidiaries, except liabilities being contested in good
faith and against which, if requested by the Lender, the
Borrower will set up reserves satisfactory to the Lender.
b. Negative Covenants: The Borrower also agrees to:
1. Negative Pledge on all assets. The Borrower shall not,
nor shall it permit any subsidiary to, incur, create,
assume or permit to exist any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind upon
any of its real or personal property, including those
arising under conditional sales or other title retention
agreements, except permitted encumbrances.
c. Financial Covenants: The Borrower also agrees to comply
with the following Financial Convents at each fiscal quarter
end:
1. Tangible Equity divided by Total Assets shall at all
times be 7.5% or greater for the Borrower on a fully
consolidated basis.
<PAGE>
2. Nonperforming Loans + OREO divided by Total Loans + OREO
shall at no time exceed 2.00% for the Borrower on a fully
consolidated basis.
3. Funded Debt/Total Capitalization Ratio not to exceed
25.00% for the Borrower on a fully consolidated basis.
4. Loan Loss Reserve shall be at all times equal to
or greater than nonperforming loans.
d. Pari Passu with Other Obligations: The Borrower shall ensure that
its obligations under this Agreement rank and will continue to
rank at least pari passu with all of its other unsecured
obligations and unsubordinated obligations, other than
obligations preferred by operation of law.
e. More Restrictive Agreements: The Borrower shall, upon entering
into or amending any agreement, document or instrument relating
to or evidencing indebtedness for borrowed money (i) provide the
Lender with notice thereof and a copy of such agreement,
document, instrument or amendment within five days after it is
executed by the Borrower, and (ii) if, in the Lender's opinion,
such agreement, document, instrument or amendment contains any
representation, warranty, covenant or event of default that is in
addition to or more restrictive than the representations,
warranties, covenants and events of default contained in this
Agreement, enter into any amendments to this Agreement within
thirty days after such request that, in the opinion of the
Lender, are necessary to make the representations, warranties,
covenants and events of default in this Agreement as restrictive
as those contained in such agreement, document, instrument or
amendment.
7. The occurrence or existence of any one or more of the following events
or conditions will constitute an Event of Default by the Borrower
under this Agreement, whereupon the Lender's obligation to make
Advances under the Line of Credit will immediately terminate and the
Note and all indebtedness of the Borrower to the Lender will, at the
option of the Lender, immediately become due and payable without
presentation, demand, protest, or notice of any kind, all of which are
hereby expressly waived by the Borrower, and the Borrower will pay the
reasonable attorney's fee incurred by the Lender in connection with
such default or recourse against any collateral held by the Lender
as security for the indebtedness owed by the Borrower:
a. Nonpayment when due, whether by acceleration or otherwise,
of any payment of interest or of principal and interest on the
Note;
b. Nonpayment when due of any fee or other charge under this
Agreement;
<PAGE>
c. A breach or failure of performance by the Borrower or any
Subsidiary of any other provision of this Agreement which is
not remedied within 30 days after written notice by the
Lender;
d. A material representation or warranty by the Borrower shall prove
to have been false or erroneous when made or when deemed made or
any certificate or financial statement provided to the Lender
proves to be inaccurate in any material respect when delivered or
when deemed to have been delivered;
e. The Borrower, or any Subsidiary: (i) files a petition or has
a petition filed against it under the Bankruptcy Code (as it
now exists or may be amended) or any admission seeking the
relief therein provided, (ii) is unable, or admits in
writing its inability, to pay its debts as they become
due, (iii) makes an assignment for the benefit of
creditors, (iv) has a receiver appointed, voluntarily or
otherwise, for its property, (v) is adjudicated as bankrupt,
(vi) suspends business, (vii) permits a judgment in the
amount of $1,000,000.00 or more to be obtained against it
which is not promptly appealed and secured pending appeal,
(viii) becomes insolvent, however, otherwise evidenced, or
(ix) breaches or defaults under any other agreement involving
the borrowing of money or the extension of credit in excess of
$10,000,000.00 under which the Borrower or any Subsidiary may
be obligated as borrower or guarantor, if such default
consists of the failure to pay any indebtedness when due or
if such default permits or causes (or upon lapse of time or
notice or both would permit or cause) the acceleration of any
indebtedness or the termination of any commitment to lend;
f. (i) any Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934) of 25% or more of
the outstanding shares of the voting stock of the
Borrower or any ownership of Jefferson National Bank, or
(ii) as of any date a majority of the Board of Directors of the
Borrower consists of individuals who were not either (A)
directors of the Borrower as of the corresponding date of the
previous year, (B) selected or nominated to become directors
by the Board of Directors of the Borrower of which a majority
consisted of individuals described in clause (A), or (C)
selected or nominated to become directors by the Board of
Directors of the Borrower of which a majority consisted of
individuals described in clauses (A) and (B).
g. The occurrence of any Material Adverse Change, or of any event
condition, or state of facts which could reasonably be expected
to result in a Material Adverse Change.
The Borrower severally covenants that it will, at the expense of the
Borrower, promptly upon their obtaining knowledge thereof, give to the
Lender written notice of: (a) any Event of Default under the Agreement,
and (b) any event which, upon proper notice to the Borrower or the
passage of time or both, would become an Event of Default under this
Agreement.
<PAGE>
8. If, after the date hereof, the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank, or comparable agency charged with
the interpretation or administration thereof (any such agency
being referred to an "Authority" and any such event being referred
to as a "Change of Law"), or compliance by any bank (or its lending
office) with any request or directive (whether or not having the force
of law) of any Authority shall make it unlawful or impossible for the
Lender to make, maintain or fund Advances bearing interest at the
Adjusted LIBOR Rate, the Lender shall forthwith give notice to the
Borrower, whereupon until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, the
obligation of the Lender to make Advances bearing interest at the
Adjusted LIBOR Rate shall be suspended. Advances shall instead be made
bearing interest at the Base Rate.
9. (a) The Borrower may, upon at least one Business Days' notice to the
Lender, prepay any Advances bearing interest at the Base Rate in whole
at any time, or from time to time in part in amounts aggregating at
least $ 1,000,000, by paying the principal amount to be prepaid together
with accrued interest thereon to the date of prepayment
(b) Except as provided in item 8 above, the Borrower may not prepay all
or any portion of the principal amount of any Advance bearing interest
at the Adjusted LIBOR Rate prior to the maturity thereof.
10. The Borrower will, and will cause each Subsidiary to, comply with ERISA
and the regulations and requirements of the Pension Benefit Guaranty
Corporation, except where the necessity of such compliance is being
contested in good faith through appropriate proceedings.
11. In the event any provision of this Agreement shall be held invalid or
unenforceable by any court of competent jurisdiction, such holding shall
not invalidate or render unenforceable any other provision hereof or
thereof.
12. No amendment or waiver of any provision of this Agreement or consent to
any departure the Borrower therefore shall in any event be effective
unless the same shall be in writing and signed by the Lender. Any such
amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
13. The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns; provided that the Borrower may not assign or otherwise transfer
any of its rights under this Agreement.
14. This Agreement and the Note issued and all other documents furnished
hereunder shall be governed by and be construed according to the laws of
the State of North Carolina.
If the forgoing terms and conditions are acceptable to the Borrower, please
indicate the Borrower's agreement to such terms and conditions by executing this
<PAGE>
Agreement in the appropriate space provided below and by executing the Note and
returning this Agreement and the Note to the Lender. This Agreement and the Note
must be returned to the Lender by 5:00 PM EDT on December 6, 1996 or this offer
shall be null and void.
Sincerely,
WACHOVIA BANK OF NORTH CAROLINA, N.A.
By:_____________________________________
Randall T. Warren, Vice President
ACCEPTED AND AGREED TO THIS ___ DAY OF _______________,1996
JEFFERSON BANKSHARES, INC.
By:____________________________________
Its:____________________________________
<PAGE>
PROMISSORY NOTE
$15,000,000.00 ______________, 1996
FOR VALUE RECEIVED, the undersigned JEFFERSON BANKSHARES,
INC., a Virginia Corporation (the "Borrower"), hereby promises to pay to the
order of WACHOVIA BANK OF NORTH CAROLINA, N.A., a national banking association
(together with its endorsees, successors, and assigns, the "Lender"), the
principal sum of Fifteen Million and No/100th Dollars ($15,000,000.00), or so
much thereof as shall have been disbursed from time to time and remain unpaid,
on the dates provided for in the Agreement herein referred to below. The
Borrower promises to pay interest on the unpaid principal amount of this Note on
the dates and at the rate or rates provided for in the Agreement. Interest on
any overdue principal of and, to the extent permitted by law, overdue interest
on the principal amount hereof shall bear interest at the Default Rate. All such
payments of principal and interest shall be made in lawful money of the United
States in Federal or other funds immediately available at the principal office
of the Lender located at 100 North Main Street, Winston-Salem, North Carolina
27101, or at such other locations as the holder of this Note may designate in
writing.
This Note evidences indebtedness in respect to each Advance made
hereunder, is the Note referred to in and issued pursuant to, and is subject to
the terms and provisions of, the Agreement, dated as of September 25, 1996,
between the Borrower and the Lender (as the same may be so modified, amended,
supplemented or restated, the "Agreement") to which Agreement reference is
hereby made for a statement of said terms and provisions. This Note is entitled
to the benefits of the Agreement.
Upon the occurrence and during the continuation of any Event of Default,
the Lender may declare the entire unpaid principal balance advanced hereunder
and all accrued interest to be immediately due and payable in the manner and
with the effect provided in the Agreement, and may thereafter exercise any of
the remedies referred to in the Agreement or existing under applicable law.
Capitalized terms used herein and not otherwise defined shall have the meanings
given them in the Agreement. Advances by the Lender to the Borrower evidenced by
this Note shall be made during the time period specified in the Agreement and in
accordance with the terms and conditions in the Agreement.
This Note may be prepaid in whole or in part only on the terms and
conditions set forth in the Agreement.
TIME IS OF THE ESSENCE OF THIS CONTRACT. In addition and not in
limitation of the foregoing and the provisions of the Agreement, the Borrower
further agrees to pay all expenses of collection, including reasonable
attorney's fees, if this Note shall be collected by law or through an attorney
at law, or in bankruptcy, receivership or other court proceedings.
<PAGE>
This Note shall be governed by and construed under the internal laws of
the State of North Carolina, without giving effect to principles of conflicts of
laws. This Note is intended to be effective as an instrument executed under
seal.
PRESENTMENT, DEMAND, PROTEST AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY
THE BORROWER.
Executed under hand and seal of the Borrower on the date first above
written.
ATTEST: JEFFERSON BANKSHARES, INC.
By:________________________________ By:____________________________
Its: Secretary Its:___________________________
[CORPORATE SEAL]
