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Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
JEFFERSON SAVINGS BANCORP, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 6712 43-1625841
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
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14915 Manchester Road
Ballwin, Missouri 63011
(314) 227-3000
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
_____________________________
DAVID V. MCCAY
President and Chief Executive Officer
Jefferson Savings Bancorp, Inc.
14915 Manchester Road
Ballwin, Missouri 63011
(314) 227-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_____________________________
Copies to:
JOHN K. PRUELLAGE, ESQ. SAM ROSEN, ESQ.
Lewis, Rice & Fingersh, L.C. Shannon Gracey, Ratliff & Miller, L.L.P.
500 N. Broadway, Suite 2000 1600 Bank One Tower
St. Louis, Missouri 63102 500 Throckmorton
(314) 444-7600 Fort Worth, Texas 76102-3899
(817) 336-9333
_____________________________
Approximate date of commencement of proposed sale of the securities to the
public:
As soon as practicable after the effective date of this Registration Statement.
If the securities being registered on this Form are being offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box.[_]
_____________________________
CALCULATION OF REGISTRATION FEE
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| <S> | <C> | <C> | <C> | <C> |
| | | Proposed maximum | Proposed maximum | |
| Title of each class of | Amount to be | offering price per | aggregate offering | Amount of |
| securities to be registered | registered(1) | unit(2) | price(2) | registration fee |
|-------------------------------- |--------------------|------------------------|-----------------------|------------------------|
| Common stock, $0.01 par value | 760,000 | $16.84 | $12,798,400 | $3,878.30 |
|-------------------------------- |--------------------|------------------------|-----------------------|------------------------|
| Preferred Share Purchase Rights | (3) | (4) | (4) | (4) |
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(1) Based upon the assumed maximum number of shares of common stock of the
Registrant issuable to holders of common stock of L&B Financial, Inc., a
Texas Corporation ("L&B"), in the proposed merger of L&B into Jefferson
Savings AcquisitionCo, Inc., a Missouri corporation and wholly owned
subsidiary of the Registrant ("AcquisitionCo").
(2) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f)(1), as of December _, 1996 (being within five
days of the date of filing of this Registration Statement).
(3) Each share of common stock includes one preferred share purchase right.
(4) Not applicable.
_____________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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L&B FINANCIAL, INC.
PROXY STATEMENT
________________
JEFFERSON SAVINGS BANCORP, INC.
PROSPECTUS
This Proxy Statement/Prospectus ("Proxy Statement/Prospectus") is being
furnished to the shareholders of L&B Financial, Inc., a Texas corporation
("L&B"), in connection with the solicitation of proxies by the Board of
Directors of L&B for use at the special meeting of shareholders of L&B (the
"Special Meeting") to be held at _______ __.m., local time, on _______________,
199__, at the Hopkins County Civic Center, 1200 Houston Street, Sulphur Springs,
Texas, and any adjournments or postponements thereof.
At the Special Meeting, shareholders of L&B will consider and vote upon the
Agreement and Plan of Merger, dated September 25, 1996, (the "Merger
Agreement"), by and among L&B, Jefferson Savings Bancorp, Inc., a Delaware
corporation ("Jefferson"), and Jefferson Savings AcquisitionCo, Inc., a Missouri
corporation and wholly owned subsidiary of Jefferson ("AcquisitionCo"), which
provides for, among other matters, the merger of L&B with and into AcquisitionCo
(the "Merger"). Upon consummation of the Merger, each issued and outstanding
share of common stock of L&B, par value $0.01 per share ("L&B Common"), (other
than shares held by any shareholder properly exercising dissenters' rights) will
be converted into the right to receive a combination of cash and shares of
common stock of Jefferson, par value $0.01 per share, and any attached rights
("Jefferson Common") calculated in accordance with the formula set forth in the
Merger Agreement and described in this Proxy Statement/Prospectus.
This Proxy Statement/Prospectus also constitutes a prospectus of Jefferson
with respect to up to ___________ shares of Jefferson Common issuable in the
Merger to holders of L&B Common and to certain other individuals entitled to
receive the combination of cash and shares of Jefferson Common pursuant to the
terms of the Merger Agreement and described in this Proxy Statement/Prospectus.
The outstanding shares of Jefferson Common are, and the shares of Jefferson
Common to be issued in the Merger will be, included for quotation on the Nasdaq
National Market tier of the Nasdaq Stock Market ("Nasdaq"). The last reported
sale price of Jefferson Common on Nasdaq on __________________, 199__, was
$_________.
This Proxy Statement/Prospectus and the accompanying form of proxy are
first being mailed to shareholders of L&B on or about _________________, 199__
(the "Mailing Date").
Any proxy given pursuant to this solicitation may be revoked by the grantor
at any time prior to the voting thereof at the Special Meeting. Holders of L&B
Common will be entitled to appraisal rights in connection with the Merger as
described herein.
This Proxy Statement/Prospectus does not cover any resales of the Jefferson
Common offered hereby to be received by the stockholders deemed to be
"affiliates" of Jefferson or L&B upon consummation of the Merger. No person is
authorized to make use of this Proxy Statement/Prospectus in connection with
such resales.
THE SHARES OF JEFFERSON COMMON ISSUABLE IN THE MERGER
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
___________________________________
THE SHARES OF JEFFERSON COMMON OFFERED HEREBY ARE NOT
SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE
FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
___________________________________
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS _________________, 199__
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TABLE OF CONTENTS
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AVAILABLE INFORMATION....................................................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................................. 1
SUMMARY INFORMATION......................................................................... 3
Introduction............................................................................. 3
The Parties.............................................................................. 3
Jefferson........................................................................... 3
AcquisitionCo....................................................................... 4
L&B................................................................................. 4
Recent Developments...................................................................... 4
The Special Meeting...................................................................... 4
Date, Time and Place of the Special Meeting......................................... 4
Matters to be Considered at the Special Meeting..................................... 5
Record Date for the Special Meeting................................................. 5
Vote Required to Approve Merger Agreement........................................... 5
Certain Holders of L&B Common....................................................... 5
Revocation of Proxies............................................................... 5
The Merger............................................................................... 5
Basic Merger Consideration.......................................................... 5
Reasons for the Merger and Recommendation of the Boards of Directors................ 7
Opinion of Financial Advisor........................................................ 7
Conduct of Business Pending the Merger; Dividends................................... 7
Conditions to the Merger; Regulatory Approvals...................................... 7
Effective Time of the Merger........................................................ 8
Federal Income Tax Consequences..................................................... 8
Accounting Treatment................................................................ 9
Conversion of Awards and Options.................................................... 9
Interests of Certain Persons in the Merger and Subsidiary Merger.................... 9
Termination of the Merger Agreement................................................. 9
Payment Upon Occurrence of Certain Triggering Events................................ 10
Dissenters' Rights.................................................................. 10
Management and Operations After the Merger............................................... 10
Comparison of Shareholder Rights......................................................... 11
COMPARATIVE STOCK PRICES.................................................................... 12
SELECTED COMPARATIVE PER SHARE DATA......................................................... 13
SELECTED FINANCIAL DATA..................................................................... 14
THE SPECIAL MEETING......................................................................... 17
Date, Time and Place of the Special Meeting.............................................. 17
Matters to be Considered at the Special Meeting.......................................... 17
Record Date for the Special Meeting...................................................... 17
Vote Required to Approve the Merger Agreement............................................ 17
Voting and Revocation of Proxies for the Special Meeting................................. 18
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Solicitation of Proxies for the Special Meeting............................ 18
Expenses for Preparation of Proxy Statement/Prospectus..................... 18
Mailing Date of Proxy Statement/Prospectus................................. 19
THE PARTIES................................................................... 19
Jefferson.................................................................. 19
General............................................................... 19
Pending Acquisition................................................... 19
AcquisitionCo.............................................................. 20
L&B........................................................................ 20
THE MERGER.................................................................... 20
General.................................................................... 20
Background of the Merger................................................... 21
Reasons for the Merger..................................................... 21
Opinion of Financial Advisor............................................... 21
Recommendation of the Board of Directors................................... 24
Basic Merger Consideration................................................. 24
Conversion of Options and Awards........................................... 26
Awards................................................................ 26
Options............................................................... 26
Fractional Shares.......................................................... 27
Share Adjustments.......................................................... 27
Form of the Merger......................................................... 27
Closing Date; Effective Time............................................... 27
Conduct of Business Pending the Merger; Dividends.......................... 27
Regulatory Approvals....................................................... 28
Conditions to Consummation of the Merger................................... 29
Termination or Abandonment................................................. 30
Payment Upon Occurrence of Certain Triggering Events....................... 30
Dissenters' Rights......................................................... 31
Exchange of L&B Stock Certificates; Fractional Shares...................... 32
Representations and Warranties of L&B, Jefferson and AcquisitionCo......... 33
Certain Other Agreements................................................... 34
Business of L&B in Ordinary Course.................................... 34
Additional L&B Reserves, Accruals, Charges and Expenses............... 35
Environmental Inspections............................................. 35
Other L&B Agreements.................................................. 36
Jefferson's Agreements................................................ 36
No Solicitation............................................................ 37
Waiver and Amendment....................................................... 37
Expenses and Fees.......................................................... 37
Federal Income Tax Consequences............................................ 37
Resale of Jefferson Common................................................. 38
Interests of Certain Persons in the Merger................................. 39
Insurance; Indemnification............................................ 39
Employee Benefits..................................................... 39
Employment Agreement.................................................. 39
Accounting Treatment....................................................... 39
Management and Operations After the Merger................................. 40
Effect on Employee Benefit Plans........................................... 40
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Jefferson's Dividend Reinvestment and Stock Purchase Plan.................. 40
PRO FORMA FINANCIAL DATA........................................................... 41
DESCRIPTION OF JEFFERSON CAPITAL STOCK............................................. 46
Jefferson Common........................................................... 46
Serial Preferred Stock..................................................... 47
COMPARISON OF SHAREHOLDER RIGHTS................................................... 47
Shareholder Vote Required for Certain Transactions......................... 47
Business Combinations................................................. 47
Removal of Directors.................................................. 49
Amendments to Certificate of Incorporation............................ 49
Amendments to Bylaws.................................................. 50
Voting Rights.............................................................. 50
Special Meetings of Shareholders; Shareholder Action by Written Consent.... 51
Notice of Shareholder Nominations of Directors and Proposals............... 52
Shareholder Rights Plan.................................................... 52
Dissenters' Rights......................................................... 55
Takeover Statutes.......................................................... 56
Indemnification............................................................ 56
Limitation on Directors' Liability......................................... 58
Consideration of Non-Shareholder Interests................................. 58
INFORMATION ABOUT L&B.............................................................. 59
Business of L&B............................................................ 59
Security Ownership of Certain Beneficial Owners............................ 60
Security Ownership of Management........................................... 61
Family Relationships....................................................... 62
LEGAL OPINION...................................................................... 63
EXPERTS............................................................................ 63
Independent Auditors for Jefferson......................................... 63
Independent Auditors for L&B............................................... 63
Presence at Special Meeting................................................ 63
SHAREHOLDER PROPOSALS.............................................................. 63
APPENDICES
Merger Agreement........................................................... A-1
Fairness Opinion........................................................... B-1
Excerpts of The Texas Business Corporation Act (Dissenters' Rights)........ C-1
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN AND ANY SUCH INFORMATION OR REPRESENTATION,
IF GIVEN OR MADE, MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY JEFFERSON
OR L&B. THIS PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE A SOLICITATION OR
AN OFFERING OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES OR IN ANY JURISDICTION TO ANY PERSON TO WHOM IT WOULD BE UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS
PROXY STATEMENT/PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT ANY INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
Jefferson and L&B are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "S.E.C."). The reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the S.E.C., Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the New York Regional Office of the
S.E.C. located at Suite 1300, 7 World Trade Center, New York, New York 10048,
and at the Chicago Regional Office of the S.E.C., Suite 1400, Citicorp Center,
500 West Madison Street, Chicago, Illinois 60661, and copies of such materials
can be obtained from the Public Reference Section of the S.E.C. at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
S.E.C. maintains an Internet web site that contains reports, proxy and
information statements and other information regarding issuers who file
electronically with the S.E.C. The address of that site is http://www.sec.gov.
In addition, reports, proxy statements and other information concerning
Jefferson and L&B may be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
Jefferson has filed with the S.E.C. a Registration Statement on Form S-4
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Jefferson Common to be issued pursuant to the Merger described herein.
This Proxy Statement/Prospectus does not contain all the information set forth
in the Registration Statement and the exhibits thereto. Such additional
information may be obtained from the S.E.C.'s principal office in Washington,
D.C. Statements contained in this Proxy Statement/Prospectus or in any document
incorporated in this Proxy Statement/Prospectus by reference as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete, and in each instance where reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement or such other document, each such statement is qualified in all
respects by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the S.E.C. by Jefferson (File No. 0-
21466) and L&B (File No. 0-27142) pursuant to the Exchange Act are incorporated
by reference in this Proxy Statement/Prospectus:
1. Jefferson's Annual Report on Form 10-K for the year ended December 31,
1995;
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2. Jefferson's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1996, June 30, 1996 and September 30, 1996;
3. The description of the common stock of Jefferson contained in
Jefferson's Registration Statement on Form 8-A under the Exchange Act,
filed March 30, 1993, and the description of the preferred share
purchase rights contained in Jefferson's Registration Statement on Form
8-A under the Exchange Act, filed August 19, 1994;
4. Jefferson's Current Report on Form 8-K, dated October 25, 1996;
5. L&B's Annual Report on Form 10-K for the year ended June 30, 1996; and
6. L&B's Quarterly Report on Form 10-Q for the quarter ended September 30,
1996.
All documents and reports filed by Jefferson and L&B pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act on or after the date of this Proxy
Statement/Prospectus and prior to the date of the Special Meeting shall be
deemed to be incorporated by reference in this Proxy Statement/Prospectus and to
be a part hereof from the dates of filing of such documents or reports. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Proxy Statement/Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy Statement/Prospectus.
THIS PROXY STATEMENT/PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS RELATING
TO JEFFERSON AND L&B WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH.
THESE DOCUMENTS (EXCLUDING EXHIBITS THAT ARE NOT INCORPORATED BY REFERENCE) ARE
AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO
WHOM THIS PROXY STATEMENT/PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST
TO MR. GARY G. HONERKAMP, SENIOR VICE PRESIDENT AND SECRETARY, JEFFERSON SAVINGS
BANCORP, INC., 14915 MANCHESTER ROAD, BALLWIN, MISSOURI 63011 (TELEPHONE NUMBER
(314) 227-3000). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY ___________________, 1996.
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SUMMARY INFORMATION
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement/Prospectus. Although the following summary addresses
material information regarding the Merger, it is not intended to be complete and
is qualified in all respects by the information appearing elsewhere herein or
incorporated by reference into this Proxy Statement/Prospectus, the Appendices
hereto and the documents referred to herein. All information contained in this
Proxy Statement/Prospectus relating to Jefferson and its subsidiaries has been
supplied by Jefferson and all information relating to L&B and its subsidiary has
been supplied by L&B. Shareholders are urged to read this Proxy
Statement/Prospectus and the Appendices hereto in their entirety.
INTRODUCTION
This Proxy Statement/Prospectus relates to an Agreement and Plan of Merger
dated September 25, 1996 (the "Merger Agreement"), by and among L&B Financial,
Inc., a Texas corporation ("L&B"), Jefferson Savings Bancorp, Inc., a Delaware
corporation ("Jefferson"), and Jefferson Savings AcquisitionCo, Inc., a Missouri
corporation and wholly owned subsidiary of Jefferson ("AcquisitionCo"), which
provides for, among other matters, the merger of L&B with and into AcquisitionCo
(the "Merger"). As a result of the Merger, Jefferson will retain beneficial
ownership of all of the issued and outstanding stock of AcquisitionCo, and the
separate corporate existence of L&B will cease.
In connection with the Merger, Jefferson has caused First Federal Savings
Bank of North Texas, a federal savings bank and wholly owned subsidiary of
Jefferson ("First Federal"), and L&B has caused Loan and Building State Savings
Bank, a Texas state savings bank and wholly owned subsidiary of L&B ("Savings
Bank"), to enter into an Agreement to Merge, dated _______________, 199_ (the
"Subsidiary Merger Agreement"), which provides for, among other matters, the
merger of Savings Bank with and into First Federal (the "Subsidiary Merger"). As
a result of the Subsidiary Merger, Jefferson will retain beneficial ownership of
all of the issued and outstanding capital stock of First Federal, and the
separate existence of Savings Bank would cease. A description of the Subsidiary
Merger is set forth herein. See "SUMMARY INFORMATION -- Subsidiary Merger."
Completion of the Subsidiary Merger is conditioned upon consummation of the
Merger, and it is anticipated that the Subsidiary Merger would be consummated
contemporaneously with, or shortly after, consummation of the Merger.
The summary set forth in this Proxy Statement/Prospectus of certain
provisions of the Merger Agreement is qualified in its entirety by reference to
the full text of the Merger Agreement, which is incorporated by reference herein
and attached as Appendix A to this Proxy Statement/Prospectus.
THE PARTIES
JEFFERSON
Jefferson is a savings and loan holding company headquartered in Ballwin,
Missouri, a suburb of St. Louis, Missouri. Jefferson owns all of the capital
stock of each of Jefferson Savings and Loan Association, F.A., a federal savings
and loan association ("Jefferson Savings and Loan"), and First Federal. At
September 30, 1996, Jefferson had consolidated assets of approximately $1.1
billion and stockholders' equity of approximately $81.7 million.
Jefferson's thrift subsidiaries operate from 10 locations in Missouri and 12
locations in Texas. Through these subsidiaries, Jefferson is principally
engaged in the business of accepting deposits from the
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general public and originating permanent loans which are secured by first
mortgages on one- to four-family residential properties located in its market
areas. It also maintains a substantial investment portfolio and, to a lesser
extent, originates consumer and other loans secured by various types of
collateral in its market areas. The deposits of Jefferson Savings and Loan and
First Federal are insured by the Savings Association Insurance Fund (the
"S.A.I.F.") of the Federal Deposit Insurance Corporation (the "F.D.I.C."). The
principal executive offices of Jefferson are at 14915 Manchester Road, Ballwin,
Missouri 63011 (telephone number (314) 227-3000).
ACQUISITIONCO
AcquisitionCo, a Missouri corporation, was organized as a wholly owned
subsidiary of Jefferson solely to effectuate the Merger and has not engaged in
any significant business activity.
L&B
L&B, a Texas corporation headquartered in Sulphur Springs, Texas, was
organized in 1995 as a savings and loan holding company for Savings Bank. The
business of L&B consists primarily of the ownership, supervision and control of
Savings Bank. L&B is regulated and examined by the Office of Thrift Supervisor
("O.T.S.") and the Texas Savings and Loan Department (the "Texas S&L
Department"), and Savings Bank is regulated by the Texas S&L Department. The
deposits of Savings Bank are insured by the S.A.I.F. At September 30, 1996, L&B
had consolidated assets of approximately $144.6 million and stockholders' equity
of approximately $24.6 million. The principal executive offices of L&B are at
306 North Davis, Sulphur Springs, Texas (telephone number (903) 885-2121).
RECENT DEVELOPMENTS
Effective September 30, 1996, legislation was signed by President Clinton
that, among other things, recapitalizes the S.A.I.F. by instituting a one-time
assessment on all deposits insured by the S.A.I.F. The special assessment was
computed at 0.657% of all such deposits held by affected institutions as of
March 31, 1995, including deposits held by Jefferson's thrift subsidiaries and
L&B's thrift subsidiary, and must be paid by November 29, 1996. Following the
special assessment, the assessment rate for deposits insured by the S.A.I.F.
will be reduced from 0.23% to 0.0648% of such deposits for institutions in the
lowest risk category under the F.D.I.C.'s risk-based assessment system,
effective January 1, 1997.
The one-time S.A.I.F. assessment on the deposits held by Jefferson's thrift
subsidiaries, which was recognized as of September 30, 1996, was approximately
$5.6 million pre-tax. The one-time S.A.I.F. assessment on the deposits held by
L&B's thrift subsidiary, which was recognized as of September 30, 1996, was
approximately 640,000 pre-tax. The financial impact of the special assessment is
expected to be offset over the next few years as a result of the reduction of
F.D.I.C. deposit premiums beginning January 1, 1997. Additional information
regarding the financial impact of the one-time S.A.I.F. assessment on the third
quarter results is set forth herein. See "SELECTED FINANCIAL DATA."
THE SPECIAL MEETING
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The special meeting of shareholders of L&B (the "Special Meeting") will be
held at the offices of Savings Bank, 306 North Davis, Sulphur Springs, Texas, on
_______________, 199__, at ______ ___.m., local time.
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MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of common stock, par value $0.01 per share,
of L&B ("L&B Common") will consider and vote upon the approval of the Merger
Agreement providing for, among other matters, the Merger of L&B with and into
AcquisitionCo. In addition, the holders of L&B Common may be asked to vote on a
proposal to adjourn or postpone the Special Meeting, which adjournment or
postponement could be used for the purpose, among others, of allowing time for
the solicitation of additional votes to approve the Merger Agreement.
RECORD DATE FOR THE SPECIAL MEETING
The record date for the Special Meeting is ____________________, 199___.
VOTE REQUIRED TO APPROVE MERGER AGREEMENT
The presence, in person or by proxy, of a majority of the outstanding
shares of L&B Common entitled to vote on the record date is necessary to
constitute a quorum at the Special Meeting. Approval of the Merger Agreement
will require the affirmative vote of two-thirds (2/3) of the outstanding shares
of L&B Common entitled to vote thereon. Holders of L&B Common will be entitled
to one vote per share. The failure to submit a proxy card (or to vote in person)
at the Special Meeting, the abstention from voting at the Special Meeting and,
in the case of shares held in street name, the failure of the beneficial owner
thereof to give specific voting instructions to the broker holding such shares
(broker non-votes) will have the same effect as a vote against approval of the
Merger Agreement.
CERTAIN HOLDERS OF L&B COMMON
As of the record date, the executive officers and directors of L&B and
their affiliates owned beneficially ____________ shares (approximately ______%)
of L&B Common, all of which are expected by management of L&B to be voted in
favor of the Merger Agreement. See "INFORMATION ABOUT L&B -- Security Ownership
of Certain Beneficial Owners and Management."
REVOCATION OF PROXIES
Proxies for use at the Special Meeting accompany this Proxy Statement/
Prospectus. Any proxy given pursuant to this solicitation may be revoked by the
grantor at any time prior to the voting thereof on the Merger Agreement by
filing with the Secretary of L&B a written revocation or a duly executed proxy
bearing a later date. A holder of L&B Common may withdraw his or her proxy at
the Special Meeting at any time before it is exercised by electing to vote in
person; however, attendance at the Special Meeting will not in and of itself
constitute a revocation of the proxy.
THE MERGER
The following summary is qualified in its entirety by reference to the full
text of the Merger Agreement, which is attached as Appendix A hereto and
incorporated by reference.
BASIC MERGER CONSIDERATION
At the time the Merger is consummated (the "Effective Time"), L&B will
merge into AcquisitionCo and, as a result thereof, each share of L&B Common
issued and outstanding as of the Effective Time, other than shares of L&B Common
held for the Sulphur Springs Loan and Building Association Recognition and
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Retention Plan and Trust Agreement and any shares the holders of which have duly
exercised and perfected their dissenters' rights under the Texas Business
Corporation Act (the "Texas Act"), will be converted into the right to receive a
combination of cash and shares of common stock of Jefferson, par value $0.01 per
share ("Jefferson Common"), (together with any rights attached thereto under or
by virtue of the Rights Agreement dated August 17, 1994, between Jefferson and
Boatmen's Trust Company, as Rights Agent) having an aggregate value equal to the
sum of $18.50 plus an amount, on a per share basis, equal to (i) L&B's earnings
for the period commencing on April 1, 1996 and ending on the last day of the
calendar month next preceding the calendar month in which the Effective Time
occurs (such period is referred to herein as the "Earnings Period"), less (ii)
the aggregate amount of any cash dividends paid and/or declared on the L&B
Common during the Earnings Period. (The aggregate amount of cash and shares of
Jefferson Common, as described herein, is referred to herein as the "Basic
Merger Consideration"). For a description of the Rights Agreement, see
"COMPARISON OF SHAREHOLDER RIGHTS-- Shareholder Rights Plan."
One half of the value of the Basic Merger Consideration shall be payable in
cash (the "Cash Component"), and one half of the aggregate value of the Basic
Merger Consideration shall be payable in shares of Jefferson Common (the "Stock
Component"). The number of shares of Jefferson Common constituting the Stock
Component will be calculated by dividing one-half of the aggregate value of the
Basic Merger Consideration by the average per share closing price of Jefferson
Common, as reported on the Nasdaq National Market tier of the Nasdaq Stock
Market ("Nasdaq"), for the twenty (20) business days immediately preceding the
5th calendar day prior to the Effective Time, but which such average shall not
be more than $33.60 per share and not less than $20.00 per share (the "Jefferson
Average Price").
No fractional shares of Jefferson Common will be issued in connection with
the Merger and, in lieu thereof, holders of shares of L&B Common who would
otherwise be entitled to a fractional share interest in Jefferson Common (after
taking into account all shares of L&B Common held by such holder) will be paid
an amount in cash equal to the product of such fractional share interest and the
closing price of a share of Jefferson Common on Nasdaq on the business day
immediately preceding the date on which the Effective Time occurs. The number of
whole shares of Jefferson Common issued pursuant to the Merger Agreement will be
increased, as necessary, and the amount of cash payable to such persons will be
decreased, as necessary, such that the aggregate value of such shares of
Jefferson Common determined as of the date on which the Merger is consummated
(the "Closing Date"), will be not less than fifty percent (50%) of the aggregate
consideration paid pursuant to the Merger Agreement.
Based on the earnings (less dividends) of L&B from April 1 through
September 30, 1996, calculated in accordance with the terms of the Merger
Agreement as described above, the Basic Merger Consideration had an approximate
per share value of $18.45 and an approximate total value of $29.1 million to
holders of L&B Common at September 30, 1996. The value of the Merger
Consideration estimated above may increase or decrease depending on L&B's
earnings and the amount of dividends paid during the Earnings Period.
The actual value of the Basic Merger Consideration to be received by
shareholders of L&B, including the number of shares of Jefferson Common
constituting the Stock Component and the value of the Cash Component, cannot be
calculated as of the date of this Proxy Statement/Prospectus and will not be
known until five calendar days prior to the Effective Time.
6
<PAGE>
REASONS FOR THE MERGER AND RECOMMENDATION OF THE BOARDS OF DIRECTORS
L&B
The Board of Directors of L&B has determined that the Merger and the Merger
Agreement, including the Basic Merger Consideration, are fair to, and in the
best interests of, L&B and its shareholders. The Board believes that a business
combination with a larger and more geographically diversified savings and loan
holding company would, in addition to providing significant value to all
shareholders, enable L&B to compete more effectively in its market area and
participate in the expanded opportunities for growth that the Merger will make
possible. ACCORDINGLY, THE BOARD RECOMMENDS THAT SHAREHOLDERS OF L&B VOTE FOR
THE MERGER AND APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Certain members of the management and Board of Directors of L&B have
interests in the Merger that are in addition to the interests of shareholders of
L&B generally. See "THE MERGER -- Interests of Certain Persons in the Merger."
Jefferson
The Board of Directors of Jefferson believes the acquisition of L&B and its
subsidiary, Savings Bank, would be a natural and desirable addition to
Jefferson's franchise in East and North Central Texas. It is also expected to
create operating synergies that will permit financial services to be delivered
more efficiently in the markets served by Jefferson.
OPINION OF FINANCIAL ADVISOR
L&B's advisor with respect to the financial aspects of the Merger, The Bank
Advisory Group, Inc., has rendered its opinion to the Board of Directors of L&B
that the terms of the Merger are fair and equitable, from a financial
perspective, to L&B and its shareholders. The opinion of The Bank Advisory
Group, Inc., attached as Appendix B to this Proxy Statement/Prospectus, sets
forth the matters considered in rendering such opinion and should be read by the
L&B shareholders in its entirety.
CONDUCT OF BUSINESS PENDING THE MERGER; DIVIDENDS
Pursuant to the Merger Agreement, L&B has agreed to carry on its business
in the usual, regular and ordinary course in substantially the same manner as
conducted prior to the execution of the Merger Agreement. The Merger Agreement
provides that, after the date of the Merger Agreement and prior to the Effective
Time or the earlier termination of the Merger Agreement, L&B may not declare
and/or pay any dividend or make any other distribution to shareholders, whether
in cash, stock or other property, except that L&B may, upon notifying Jefferson
in writing, declare and/or pay regular quarterly cash dividends in such amounts
and at such times as are consistent with L&B's historical practices.
CONDITIONS TO THE MERGER; REGULATORY APPROVALS
The Merger is subject to various conditions including, among other things:
(i) approval of the Merger Agreement by the requisite two-thirds vote of the
shareholders of L&B; (ii) receipt of regulatory approval from the O.T.S. and the
Texas S&L Department with respect to the Merger; (iii) receipt of an opinion of
counsel to Jefferson on certain tax aspects of the Merger; and (iv) the
occurrence of no material adverse changes in the businesses of Jefferson or L&B.
The conditions described in items (i) and (ii) above (the receipt of shareholder
and regulatory approvals) may not be waived by any party. Although the
remaining conditions to effect the Merger may be waived by any party entitled to
the benefit thereof, neither
7
<PAGE>
Jefferson nor L&B intend to waive any such conditions except in those
circumstances where the Board of Directors of either Jefferson or L&B, as the
case may be, deems such waiver to be in the best interests of Jefferson or L&B,
as the case may be, and its respective shareholders. There can be no assurances
as to when and if such conditions will be satisfied (or, where permissible,
waived) or that the Merger will be consummated.
The Merger may not be consummated until the 30th day after the date of
O.T.S. approval; provided, however, that the Merger may be consummated after the
15th day following the date of O.T.S. approval if the O.T.S. has not received
any adverse comments from the United States Department of Justice relating to
the competitive aspects of the transaction, and the Department of Justice has
consented to such shorter waiting period. Applications for the required
regulatory approval of the Merger from the O.T.S. and the Texas S&L Department
have been filed and are pending. It is anticipated that O.T.S. approval will be
received on or about _____________, 199 , and that approval of Texas S&L
Department will be received on or about _________________, 199 , but no
assurance can be given that this timetable will be met.
EFFECTIVE TIME OF THE MERGER
The Merger Agreement provides that the Merger will become effective upon
the filing of Articles of Merger with the Secretary of State of the State of
Missouri and the Secretary of State of the State of Texas. It is presently
anticipated that the Merger will be consummated during the first quarter of
1997, but no assurance can be given that such timetable will be met.
FEDERAL INCOME TAX CONSEQUENCES
The Merger has been structured to qualify as a tax-free reorganization so
that no gain would be recognized by Jefferson or L&B, and no gain or dividend
income would be recognized by L&B shareholders, except in respect of cash
received in connection with the Cash Component of the Merger Consideration and
except for any cash payments which might be received by such shareholders
properly exercising their dissenters' rights. Consummation of the Merger is
conditioned upon receipt by Jefferson and L&B of an opinion of Lewis, Rice &
Fingersh, L.C., counsel to Jefferson, that the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and that, accordingly, for federal income tax purposes (i)
gain will be realized by each holder of shares of L&B Common who receives both
Jefferson Common and cash in exchange for his or her shares of L&B Common and
will be recognized, but not in excess of the amount of cash received, (ii) the
aggregate tax basis of Jefferson Common received by a shareholder of L&B will be
the same as the aggregate basis of the shares of L&B Common surrendered in
exchange therefor decreased by the amount of cash received by the shareholder
and increased by the amount, if any, treated as a dividend and the amount, if
any, of gain recognized by the shareholder in the exchange, and (iii) the
holding period of Jefferson Common to be received by each L&B shareholder will
include, in each instance, the period in which the shareholder held the L&B
Common surrendered in exchange therefor provided that the L&B Common is held as
a capital asset on the date of exchange.
THE FOREGOING IS A GENERAL SUMMARY OF ALL OF THE MATERIAL FEDERAL INCOME
TAX CONSEQUENCES OF THE MERGER TO L&B SHAREHOLDERS, WITHOUT REGARD TO THE
PARTICULAR FACTS AND CIRCUMSTANCES OF EACH SHAREHOLDER'S TAX SITUATION AND
STATUS. EACH L&B SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING
ANY SUCH SPECIFIC TAX SITUATION AND STATUS, INCLUDING THE APPLICATION AND EFFECT
OF FEDERAL, STATE, LOCAL AND FOREIGN LAWS AND THE POSSIBLE EFFECT OF CHANGES IN
FEDERAL AND OTHER TAX LAWS.
8
<PAGE>
ACCOUNTING TREATMENT
The Merger will be accounted for by Jefferson under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations," as amended. Under this method of accounting, the
purchase price will be allocated to assets acquired and liabilities assumed
based on their estimated fair values at the Effective Time. Income of the
combined company will not include results of operations of L&B prior to the
Effective Time.
CONVERSION OF AWARDS AND OPTIONS
The Merger Agreement provides that the options for shares of L&B Common
outstanding at the Effective Time under the Sulphur Springs Loan and Building
Association 1995 Stock Option Plan and all awards of shares of L&B Common
outstanding at the Effective Time under the Sulphur Springs Loan and Building
Association Recognition and Retention Plan and Trust Agreement be converted
into cash and shares of Jefferson Common, on a per share basis equal to the Per
Share Basic Merger Consideration; PROVIDED, HOWEVER, that the maximum amount
payable for all options is $1,270,000 and the maximum amount payable for all
awards is $667,400.
INTERESTS OF CERTAIN PERSONS IN THE MERGER AND SUBSIDIARY MERGER
Certain members of L&B's management and Board of Directors have interests
in the Merger that are in addition to, and separate from, the interests of
shareholders of L&B generally. These include, among others, provisions in the
Merger Agreement relating to director and officer indemnification and employee
benefits after the Merger. In addition, as described herein, C. Glynn Lowe,
President and Chief Executive Officer of L&B, will continue as an executive
officer of First Federal following the Subsidiary Merger.
For information about the percentage of L&B Common owned by the directors
and executive officers of L&B, see "INFORMATION ABOUT L&B -- Security Ownership
of Certain Beneficial Owners and Management." None of the directors or executive
officers of L&B would own, on a pro forma basis giving effect to the Merger,
more than ___% of the issued and outstanding shares of Jefferson Common.
TERMINATION OF THE MERGER AGREEMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by any party if the Merger is not consummated prior to July 25, 1997
(such date being 30 days after the expiration of 9 months from the date of the
Merger Agreement); (ii) by mutual written agreement of the parties; (iii) by any
party in the event of a material breach by the other of any of its
representations and warranties or agreements under the Merger Agreement not
cured within 30 days after notice of such breach is given by the non-breaching
party; (iv) by any party in the event all the conditions to its obligations are
not satisfied or waived (and not cured within any applicable cure period); (v)
by Jefferson or AcquisitionCo in the event that L&B or Savings Bank become a
party or subject to any new or amended written agreement, memorandum of
understanding, cease and desist order, imposition of civil money penalties or
other regulatory enforcement action or proceeding with any federal or state
agency charged with the supervision or regulation of thrifts or thrift holding
companies after the date of the Merger Agreement; (vi) if any regulatory
application filed in connection with the Merger should be finally denied or
disapproved by the respective regulatory authority or, or if any regulatory
application should not be finally approved by June 25, 1997 (such date being 9
months from the date of the Merger Agreement); (vii) by any party if the Merger
Agreement and the Merger are not approved by the requisite vote of the
shareholders of L&B; and (viii) by any party if the Jefferson Average Price is
greater than $33.60 per share or less than $20.00 per share.
9
<PAGE>
The Merger Agreement may also be terminated by Jefferson if certain reports
of environmental inspection on the real properties of L&B to be obtained
pursuant to the Merger Agreement should disclose any contamination or presence
of hazardous wastes, the remediation cost of which exceeds $100,000.
PAYMENT UPON OCCURRENCE OF CERTAIN TRIGGERING EVENTS
The Merger Agreement provides that L&B shall pay to Jefferson the sum of
$250,000 upon termination of the Merger Agreement (i) by Jefferson or
AcquisitionCo upon a material breach thereof by L&B not cured within 30 days
after written notice of such breach is given by Jefferson or AcquisitionCo to
L&B, or (ii) as a result of the failure of L&B's shareholders to approve the
Merger Agreement and the Merger at the Special Meeting (other than as a result
of a material breach of the Merger Agreement by Jefferson or AcquisitionCo),
provided that, in either case, one or more Triggering Events (as defined below)
shall have occurred within 24 months of the occurrence of either of the
foregoing events. As used in the Merger Agreement, the term "Triggering Event"
means any of the following events: (a) any person or group of persons (other
than Jefferson and/or its affiliates) acquires, or has the right to acquire,
more than 50% of the outstanding shares of L&B Common; (b) the expiration date
of a tender or exchange offer by any person or group of persons (other than
Jefferson and/or its affiliates) to purchase or acquire securities of L&B or a
subsidiary of L&B if upon consummation of such offer, such person or group of
persons would own, control or have the right to acquire more than 50% of the
outstanding shares of L&B Common or other capital stock of L&B or any subsidiary
thereof; or (c) the entry by L&B or a subsidiary of L&B into a definitive
agreement or other understanding with a person or group of persons (other than
Jefferson and/or its affiliates) for such person or group of persons to acquire,
merge or consolidate with L&B or a subsidiary of L&B or to acquire all or
substantially all of the assets of L&B or a subsidiary of L&B or more than 50%
of the outstanding shares of L&B Common or other capital stock of L&B or any
subsidiary thereof.
In addition, the Merger Agreement provides that Jefferson shall pay to L&B
the sum of $250,000 should the Merger Agreement be terminated by L&B on account
of a material breach of the Merger Agreement by Jefferson and/or AcquisitionCo
that is not cured by Jefferson and/or AcquisitionCo within 30 days after notice
of such breach is given to Jefferson by L&B.
DISSENTERS' RIGHTS
The rights of dissenting shareholders of L&B are governed by the Texas Act,
which provides, in certain situations, that a shareholder will be entitled to
receive the fair value of his or her shares of L&B Common held immediately
before the Merger is consummated if such shareholder: (i) files a written
objection to the proposed Merger prior to the Special Meeting; (ii) does not
vote his or her shares in favor of approving the Merger Agreement; (iii) makes
written demand on L&B for payment of the fair value of his or her shares within
10 days after Jefferson mails or delivers notice of the consummation of the
Merger; (iv) submits his or her certificates to Jefferson within 20 days of
demanding payment for his or her shares for notation thereon that such demand
has been made; and (v) either gives notice within 60 days of Jefferson's offer
to accept that offer or, within 120 days from the date of the Merger, files a
petition with the appropriate court for an appraisal. See "THE MERGER --
Dissenters' Rights" and Appendix C hereto.
MANAGEMENT AND OPERATIONS AFTER THE MERGER AND SUBSIDIARY MERGER
First Federal will be the surviving bank in the Subsidiary Merger.
Following consummation of the Subsidiary Merger, the present offices of Savings
Bank will operate as branch offices of First Federal. It is not anticipated that
the Board of Directors of Jefferson will be affected as a result of the Merger.
10
<PAGE>
It is presently anticipated that C. Glynn Lowe, President and Chief
Executive Officer of L&B, will continue as an executive officer of First Federal
and will serve on a legal board following the Subsidiary Merger. On the date
upon which the Merger becomes effective (the "Effective Date"), Mr. Lowe will
enter into an Employment Agreement with Jefferson and First Federal, the form of
which is attached as an exhibit to the Merger Agreement attached hereto as
Appendix A.
The Employment Agreement provides that First Federal will employ Mr. Lowe
as President and Chief Operating Officer of the Sulphur Springs, Texas region of
First Federal for an initial period of two years, subject to renewals for
additional one year periods thereafter. Pursuant to the terms of the Employment
Agreement, Mr. Lowe will receive an initial annual salary of $110,000 and will
be eligible to participate in Jefferson's executive bonus plan. The annual
salary may be increased from time to time as established by the Board of
Directors of First Federal. In addition, Mr. Lowe will be entitled to
participate in all employee welfare, benefit, retirement and medical plans of
First Federal, will receive at least four weeks of paid vacation, and will be
provided an automobile allowance.
The Employment Agreement provides that, in the event that his employment
with First Federal is lawfully terminated for cause or resignation, Mr. Lowe
will not compete, for a period of two years following such termination, with
First Federal in First Federal's Community Reinvestment Act service area, which
includes the following counties in Texas: Hopkins County, Franklin County, Titus
County, Morris County, Camp County, Delta County, and Bowie County.
COMPARISON OF SHAREHOLDER RIGHTS
The rights of the shareholders of L&B Common and Jefferson Common differ in
certain respects. The rights of the shareholders of L&B who receive shares of
Jefferson Common in the Merger will be governed by the corporate law of
Delaware, the state in which Jefferson is incorporated, and by Jefferson's
Certificate of Incorporation, Bylaws and other corporate documents. The
governing law and documents of Jefferson differ from those which apply to L&B,
which is a Texas corporation, in several respects. The material differences
between L&B Common and Jefferson Common from the perspective of shareholders, as
described in more detail under "COMPARISON OF SHAREHOLDER RIGHTS," are the
shareholder votes required for certain business combinations; the procedures for
shareholders to make proposals for consideration at meetings of shareholders;
the ability of shareholders to nominate and remove directors and to amend the
Articles or Certificate of Incorporation; certain rights pursuant to Jefferson's
shareholder rights plan; and rights of Jefferson and its shareholders pursuant
to certain corporate takeover statutes. See "COMPARISON OF SHAREHOLDER RIGHTS."
11
<PAGE>
COMPARATIVE STOCK PRICES
Shares of Jefferson Common are traded on Nasdaq under the symbol JSBA.
Shares of L&B Common are traded on Nasdaq's Small Cap Market System under the
symbol LBFI. The following table sets forth the high and low last sale prices of
Jefferson Common and L&B Common for the periods indicated, as reported on
Nasdaq.
<TABLE>
<CAPTION>
Jefferson L&B
Common Stock Common Stock
------------------- -------------------
Calendar Year
------------- High Low High Low
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1994 First Quarter......... $16.87 $16.00 N/A N/A
Second Quarter........ 18.12 16.62 N/A N/A
Third Quarter......... 19.00 16.25 N/A N/A
Fourth Quarter........ 16.75 15.00 $ 9.87 $ 9.25
1995 First Quarter......... 16.75 16.00 11.00 9.25
Second Quarter........ 18.87 16.25 12.25 10.06
Third Quarter......... 24.25 18.00 14.75 11.50
Fourth Quarter........ 28.50 23.00 14.75 13.75
1996 First Quarter......... 31.00 24.12 14.75 14.00
Second Quarter........ 31.75 25.25 17.00 14.38
Third Quarter......... 26.25 22.25 17.62 16.00
Fourth Quarter........ _____ _____ ____ ____
(through ____________)
- ----------------------------------------------------------------
</TABLE>
On September 25, 1996, the last trading day before the announcement of the
proposed Merger, the closing sale price of Jefferson Common, as reported on
Nasdaq, was $22.50 per share, and the closing sale price of L&B Common, as
reported on Nasdaq, was $17.28. On such date, the per share price for L&B
Common, calculated on the basis of the Per Share Basic Merger Consideration, was
approximately $18.45.
On ________________, 199 , the closing sale price of Jefferson Common as
reported on Nasdaq was $_______ per share, the closing sale price of L&B Common
as reported on Nasdaq was $_____, and the equivalent per share price for L&B
Common, calculated on the basis of the Merger Consideration, was $_______. On
such date, there were approximately _____ and _____ holders of record of
Jefferson Common and L&B Common, respectively.
12
<PAGE>
SELECTED COMPARATIVE PER SHARE DATA
The following summary presents comparative historical, pro forma and pro
forma equivalent per share data for Jefferson and L&B. The pro forma amounts
assume the Merger had been effective during the period presented and has been
accounted for under the purchase method of accounting. For a description of the
purchase method of accounting with respect to the Merger, see "THE MERGER--
Accounting Treatment."
The amounts designated "Pro Forma Combined Per Jefferson Share" represent
the pro forma results of the Merger, the amounts designated "Equivalent Pro
Forma Per L&B Share" are computed by multiplying the Pro Forma Combined Per
Jefferson Share amounts by a factor of .8202 to reflect the Merger Consideration
(which is assumed to equal $9.23 in cash plus 0.4101 shares of Jefferson Common
for each share of L&B Common). See "THE MERGER -- Merger Consideration."
The data presented should be read in conjunction with the more detailed
information and financial statements included herein or incorporated by
reference in this Proxy Statement/Prospectus and with the unaudited pro forma
financial statements included elsewhere in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE," "PRO FORMA FINANCIAL DATA"
and "FINANCIAL STATEMENTS OF L&B."
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
-------------------- --------------------
<S> <C> <C>
NET INCOME PER COMMON SHARE:
Historical:
Jefferson................................ $ .19 $ 1.60
L&B...................................... .23 .93
Pro forma combined per Jefferson share....... .13 1.49
Equivalent pro forma per L&B share........... .11 1.22
DIVIDENDS PER COMMON SHARE:
Historical
Jefferson................................ $ .24 $ .00
L&B...................................... .30 .65
Pro forma combined per Jefferson share/(1)/.. .24 .00
Equivalent pro forma per L&B share/(2)/...... .20 .00
BOOK VALUE PER COMMON SHARE (PERIOD END):
Historical
Jefferson................................ $21.59 $21.49
L&B...................................... 15.51 15.43
Pro forma combined per Jefferson share....... 21.78 21.49
Equivalent pro forma per L&B share........... 17.86 17.63
</TABLE>
____________________________________
/(1)/ Jefferson's pro forma dividends per share represent historical dividends
per share paid by Jefferson.
/(2)/ Represents historical dividends per share paid by Jefferson calculated on
the basis of the Merger Consideration.
13
<PAGE>
SELECTED FINANCIAL DATA
The following tables present selected consolidated historical financial
data for Jefferson, selected historical financial data for L&B and pro forma
combined amounts reflecting the Merger. The pro forma amounts assume that the
Merger had been effective during the periods presented. The data presented are
derived from the consolidated financial statements of Jefferson and the
consolidated financial statements of L&B and should be read in conjunction with
the more detailed information and financial statements included herein or
incorporated by reference in this Proxy Statement/Prospectus. The data should
also be read in conjunction with the unaudited pro forma financial statements
included elsewhere in this Proxy Statement/Prospectus. See "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE," "PRO FORMA FINANCIAL DATA" and "FINANCIAL
STATEMENTS OF L&B."
JEFFERSON SAVINGS BANCORP, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Year Ended December 31,
------------------------- -----------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
------------ ----------- ----------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
(in thousands, except per share data)
Summarized Income Statement:
- ---------------------------
Net Interest Income......................... $ 21,796 $ 15,889 $ 22,746 $ 17,521 $ 14,016 $ 13,693 $ 12,406
Provision for Loan Losses................... 495 267 367 300 240 785 966
Noninterest Income.......................... 837 1,677 2,482 1,425 1,887 1,486 1,278
Noninterest Expense......................... 20,419(3) 10,114 14,955 10,012 8,264 7,028 7,847
Income Tax Expense.......................... 949 2,643 3,536 3,272 2,639 2,961 1,628
Net Income.................................. 770 4,542 6,370 5,362 4,760 4,405 3,243
Per Common Share Data:
- ---------------------
Net Income.................................. $ .19(3)$ 1.14 $ 1.60 $ 1.32 $ 0.77 n/a n/a
Cash Dividends Paid......................... .24 0.00 0.00 0.00 0.00 n/a n/a
Stockholders' Equity (period end)........... 21.59 21.05 21.49 18.70 18.17 n/a n/a
Financial Position at Period End:
- --------------------------------
Total Assets................................ $1,128,339 $1,176,629 $1,142,929 $860,581 $566,685 $418,217 $454,643
Loans, Net.................................. 820,130 799,492 788,085 584,990 313,518 285,104 346,418
Deposits.................................... 876,636 870,601 870,179 511,936 341,386 379,190 418,486
Borrowed Money.............................. 143,901 207,388 174,962 261,960 145,694 0 0
Stockholders' Equity........................ 81,681 78,389 80,251 72,739 71,708 32,648 28,243
Selected Financial Ratios:
- -------------------------
Return on Average Assets.................... .09%(3) .60% 0.61% 0.73% 1.02% 1.01% 0.72%
Return on Average Total Equity.............. 1.26 (3) 7.95 8.28 7.41 7.92 14.37 12.15
Nonperforming Assets as % of Net Loans and
Foreclosed Property/(1)/................... 1.02 .56 0.85 0.50 2.46 3.95 3.28
Nonperforming Loans as % of Net Loans/(1)/.. .39 .19 0.38 0.05 0.09 1.34 3.04
Loan Reserve as % of Net Loans.............. .68 .64 0.65 0.59 1.02 1.04 0.64
Net Charge-Offs as % of Average Loans....... .00 .01 0.02 0.01 0.01 0.01 0.41
Total Equity to Assets...................... 7.24 6.66 7.02 8.45 12.65 7.81 6.21
Tangible Equity to Assets/(2)(4)/........... 5.82 5.32 5.83 8.45 12.65 7.81 6.21
Tier 1 Risk-Based Capital/(4)/.............. 10.05 10.22 10.50 14.41 20.60 13.50 11.05
Total Risk-Based Capital/(4)/............... 10.91 11.03 11.33 15.25 21.80 14.58 11.33
- ---------------------------
</TABLE>
/(1)/ For periods prior to 1993, nonperforming assets consisted of restructured
and nonaccruing loans and foreclosed assets. During 1993, management
determined that a $3.1 million loan which was restructured during 1991 was
not considered a nonperforming loan or a nonperforming asset because the
borrower has been current in meeting restructured terms since the date of
restructuring, the restructured loan provides for principal amortization,
and the loan has an interest rate and other features that are at least
equivalent to market terms.
/(2)/ Tangible equity to assets is defined as total equity less all intangibles
as a percentage of total tangible assets.
/(3)/ Includes the effect of one-time SAIF special assessment of $5.6 million.
/(4)/ Calculated on basis of Thrift subsidiary financial statements only.
14
<PAGE>
L&B FINANCIAL, INC.
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Three Months Ended
September 30, Year Ended June 30,
------------------------ ------------------------------------------------------------------
1996 1995 1996 1995 1994 1993 1992
------------ ----------- ------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
(in thousands, except per share data)
Summarized Income Statement:
- ---------------------------
Net Interest Income................. $ 1,179 $ 1,362 $ 4,888 $ 4,918 $ 4,419 $ 4,384 $ 3,525
Provision for Loan Losses............ 0 0 (100) 5 204 346 78
Noninterest Income................... 76 40 329 146 133 854 395
Noninterest Expense.................. 1,495 (3) 875 3,353 3,128 2,768 2,629 2,206
Income Tax Expense................... (86) 160 514 549 552 879 407
Net Incomes (loss)................... (154) 367 1,450 1,382 1,028 1,384 1,229
Per Common Share Data:
- ---------------------
Net Income (loss).................... ($0.10)(3) $ 0.23 $ 0.93 $ 0.63 n/a n/a n/a
Cash Dividends Paid.................. 0.10 $ 0.10 $ 0.40 $ 0.55 n/a n/a n/a
Stockholders' Equity................. 15.51 $ 15.51 $ 15.64 $ 16.38 n/a n/a n/a
Financial Position at Period End:
- --------------------------------
Total Assets......................... 144,604 140,646 144,130 133,783 117,263 115,999 117,874
Loans, Net........................... 69,042 60,137 66,352 59,382 53,177 54,852 59,701
Total Deposits....................... 104,242 102,013 104,565 100,933 106,162 106,011 109,460
Total Stockholders' Equity........... 24,567 25,865 24,783 25,654 10,011 8,996 7,590
Selected Financial Ratios:
- -------------------------
Return on Average Assets............ (.44)%(3) 1.03% 1.02% 1.10% .88% 1.18% 1.07%
Return on Average Total Equity....... (2.48)(3) 5.79 5.70 7.75 10.80 16.72 17.64
Non-Performing Assets as % of Net
Loans and Foreclosed Property/(1)/.. .71 .82 .70 .82 1.12 1.30 2.19
Nonperforming Loans as % of
Net Loans........................... 1.07 .32 .92 1.02 1.34 .71 2.19
Loan Loss Reserve as % of Net Loans.. 1.09 1.43 1.14 1.44 1.65 1.31 1.30
Net Charge-Offs as % of
Average Loans....................... .00 .04 .00 .04 .08 .09 .01
Total Equity to Total Assets......... 16.98 18.39 17.96 17.35 8.15 7.08 6.43
Tangible Equity to Assets/(2)//(4)/.. 16.98 18.39 17.96 17.35 8.15 7.08 6.43
Tier 1 Risk-Based Capital/(4)/....... 29.21 18.17 22.45 18.92 7.60 7.55 6.18
Total Risk-Based Capital/(4)/........ 30.28 46.04 23.34 19.46 18.60 8.15 6.62
====================================================================================================================================
</TABLE>
- ---------------------------
/(1)/ Nonperforming assets include nonaccrual, restructured and impaired loans,
loans past due 90 days or more, and foreclosed property.
/(2)/ Tangible equity to assets is defined as total equity less all intangibles
as a percentage of total tangible assets.
/(3)/ Includes the effect of one-time SAIf special assessment of $640,000.
/(4)/ Calculated on basis of Thrift subsidiary financial statements only.
15
<PAGE>
JEFFERSON SAVINGS BANCORP, INC.
AND
L&B FINANCIAL, INC.
PRO FORMA COMBINED SELECTED FINANCIAL DATA/(1)/
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
-------------------- -----------------------
<S> <C> <C>
(amounts in thousands, except per share data)
Summarized Income Statement:
- ---------------------------
Net Interest Income......................... $ 26,756 $ 29,495
Provision for Loan Losses................... 447 450
Noninterest Income.......................... 1,650 3,065
Noninterest Expense......................... 26,158/(5)/ 20,891
Income Tax Expense.......................... 1,159 4,050
Net Income/(2)/............................. 642 7,169
Per Common Share Data:
- ---------------------
Net Income/(2)/............................. $ .13/(5)/ $ 1.49
Cash Dividends Paid......................... .24 0
Stockholders' Equity (period end)........... 21.78 21.49
Financial Position at Period End:
- --------------------------------
Total Assets................................ $1,335,301 $1,340,821
Loans, Net.................................. 943,056 897,703
Deposits.................................... 1,041,623 1,025,535
Borrowed Money.............................. 162,828 196,666
Stockholders' Equity........................ 100,374 97,982
Selected Financial Ratios:
- -------------------------
Return on Average Assets.................... 0.06%/(5)/ 0.53%
Return on Average Total Equity.............. 0.85/(5)/ 7.32
Nonperforming Assets as % of Net Loans and
Foreclosed Property/(3)/................... 0.99 1.03
Nonperforming Loans as % of Net Loans....... 0.41 .48
Loan Reserve as % of Net Loans.............. 0.74 .73
Net Charge-Offs as % of Average Loans....... 0.00 .02
Total Equity to Assets...................... 7.52 7.31
Tangible Equity to Assets/(4)/(6)/.......... 5.75 5.77
Tier 1 Risk-Based Capital/(6)/.............. 10.09 10.23
Total Risk-Based Capital/(6)/............... 10.95 11.13
- ---------------------------
</TABLE>
/(1)/ The information set forth in this table gives effect to Jefferson's
pending acquisition of Texas Heritage Savings Association/Banc, which
acquisition is not material. See "THE PARTIES -- Jefferson -- Pending
Acquisition" and "PRO FORMA FINANCIAL DATA."
/(2)/ Net income includes amortization of existing goodwill and goodwill which
would result from the acquisition of Texas Heritage Savings
Association/Banc and L&B as if the goodwill existed as of the earliest
period presented. Goodwill will approximate $25.0 million to be amortized
over 15 years.
/(3)/ Nonperforming assets include nonaccrual loans, certain restructured loans,
loans past due 90 days or more and foreclosed property.
/(4)/ Tangible equity to assets is defined as total equity less all intangibles
as a percentage of total tangible assets.
/(5)/ Includes effect of one-time SAIF special assessment totaling $6.5 million.
/(6)/ Calculated on basis of Thrift subsidiary financial statements only.
16
<PAGE>
THE SPECIAL MEETING
DATE, TIME AND PLACE OF THE SPECIAL MEETING
This Proxy Statement/Prospectus is being furnished to shareholders of L&B
Financial, Inc., a Texas corporation ("L&B"), in connection with the
solicitation of proxies by the Board of Directors of L&B for use at the special
meeting of shareholders (the "Special Meeting") to be held at the Hopkins County
Civic Center, 1200 Houston Street, Sulphur Springs, Texas 75482 on __________,
199___, at _____ p.m., local time, and at any adjournment or postponement
thereof.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, the holders of common stock, par value $0.01 per
share, of L&B ("L&B Common") will be asked to approve the Agreement and Plan of
Merger, dated September 25, 1996, (the "Merger Agreement"), by and among L&B,
Jefferson Savings Bancorp, Inc., a Delaware corporation ("Jefferson"), and
Jefferson Savings AcquisitionCo, Inc., a Missouri corporation and wholly owned
subsidiary of Jefferson ("AcquisitionCo"), providing for, among other matters,
the merger of L&B with and into AcquisitionCo. In addition, the holders of L&B
Common may be asked to vote on a proposal to adjourn or postpone the Special
Meeting, which adjournment or postponement could be used for the purpose, among
others, of allowing time for the solicitation of additional votes to approve the
Merger Agreement.
RECORD DATE FOR THE SPECIAL MEETING
The Board of Directors of L&B has fixed the close of business on
_________________, 199__, as the record date (the "Record Date") for the
determination of holders of shares of L&B Common to receive notice of and to
vote at the Special Meeting. On the Record Date, there were ________ shares of
L&B Common outstanding. Only holders of shares of L&B Common of record on the
Record Date are entitled to vote at the Special Meeting. No shares of L&B
Common can be voted at the Special Meeting unless the record holder is present
in person or represented by proxy.
VOTE REQUIRED TO APPROVE THE MERGER AGREEMENT
The presence in person or by proxy of a majority of the outstanding shares of
L&B Common entitled to vote on the Record Date is necessary to constitute a
quorum at the Special Meeting. The affirmative vote of two-thirds of the
outstanding shares of L&B Common entitled to vote thereon is required to approve
the Merger Agreement and the transactions contemplated thereby, including the
Merger. Each holder of L&B Common is entitled to one vote per share of L&B
Common held by him or her on the Record Date. Proxies marked as abstentions and
shares held in street name, which have been designated by brokers on proxy cards
as not voted, will not be counted as votes cast and, as a result, will have the
same effect as a vote against the Merger and the Merger Agreement. Proxies
marked as abstentions or as broker non-votes, however, will be treated as shares
present for purposes of determining whether a quorum is present.
As of the Record Date, the executive officers and directors of L&B and their
affiliates have the power to vote __________ shares (approximately ____% of the
shares outstanding) of L&B Common, all of which
17
<PAGE>
are expected by management of L&B to be voted in favor of the Merger Agreement.
For information regarding the shares of L&B Common beneficially owned, directly
or indirectly, by certain shareholders, by each director and executive officer
of L&B, and by all directors and officers of L&B as a group, see "INFORMATION
ABOUT L&B -- Security Ownership of Certain Beneficial Owners and Management."
As of the Record Date, the subsidiaries of Jefferson, and the directors and
executive officers of Jefferson, did not own beneficially any shares of L&B
Common.
VOTING AND REVOCATION OF PROXIES FOR THE SPECIAL MEETING
Proxies for use at the Special Meeting accompany this Proxy Statement/
Prospectus. A shareholder may use his or her proxy if he or she is unable to
attend the Special Meeting in person or wishes to have his or her shares voted
by proxy even if he or she does attend the Special Meeting. Shares of L&B Common
represented by a proxy properly signed and returned to L&B at, or prior to, the
Special Meeting, unless subsequently revoked, will be voted at the Special
Meeting in accordance with instructions thereon. If a proxy is properly signed
and returned and the manner of voting is not indicated on the proxy, all shares
of L&B Common represented by such proxy will be voted FOR the Merger Agreement
and the transactions contemplated thereby, including the Merger, and FOR any
proposal regarding adjournment or postponement, if such a proposal is made. The
failure to submit a proxy card (or to vote in person) at the Special Meeting,
the abstention from voting at the Special Meeting and, in the case of shares
held in street name, the failure of the beneficial owner thereof to timely give
specific voting instructions to the broker holding such shares (broker non-
votes), will have the same effect as a vote against approval of the Merger
Agreement.
Any proxy given pursuant to this solicitation may be revoked by the grantor
at any time prior to the voting thereof on the Merger Agreement by filing with
the Secretary of L&B a written revocation or a duly executed proxy bearing a
later date. A holder of L&B Common who previously signed and returned a proxy
and who elects to attend the Special Meeting and vote in person may withdraw his
or her proxy at any time before it is exercised by giving notice of such
revocation to the Secretary of L&B at the Special Meeting and voting in person
by ballot at the Special Meeting; however, attendance at the Special Meeting
will not in and of itself constitute a revocation of the proxy.
SOLICITATION OF PROXIES FOR THE SPECIAL MEETING
In addition to solicitation of proxies from shareholders of L&B Common by use
of the mail, proxies also may be solicited by personal interview, telephone and
wire by directors, officers and employees of L&B, who will not be specifically
compensated for such services. It is expected that banks, brokerage houses and
others will be requested to forward soliciting material to their principals and
obtain authorization for the execution of proxies. Except as set forth herein,
all costs of soliciting proxies, assembling and mailing this Proxy
Statement/Prospectus and all papers which now accompany or hereafter may
supplement the same will be borne by L&B.
EXPENSES FOR PREPARATION OF PROXY STATEMENT/PROSPECTUS
Jefferson and L&B have agreed to share in the expense of preparing this Proxy
Statement/Prospectus, and Jefferson will bear the entire cost of printing this
Proxy Statement/Prospectus and all Securities and Exchange Commission ("S.E.C.")
and other regulatory filing fees incurred in connection therewith.
18
<PAGE>
MAILING DATE OF PROXY STATEMENT/PROSPECTUS
This Proxy Statement/Prospectus, the attached notice of Special Meeting and
the enclosed proxy card are first being sent to shareholders of L&B on or about
_______________, 199_ (the "Mailing Date").
THE PARTIES
JEFFERSON
General.
--------
Jefferson, a Delaware corporation organized in 1992, is a savings and loan
holding company headquartered in Ballwin, Missouri, a suburb of St. Louis,
Missouri. Jefferson owns all of the capital stock of two subsidiary financial
institutions: Jefferson Savings and Loan Association, F.A., a federal savings
and loan association ("Jefferson Savings and Loan"), and First Federal Savings
Bank of North Texas ("First Federal"). Jefferson Savings and Loan was
originally chartered as a mutual savings and loan association by the State of
Missouri in 1927 and presently serves the St. Louis metropolitan area. First
Federal is a federal savings bank resulting from Jefferson's acquisitions of
three institutions located in Texas, which acquisitions (and related mergers
into First Federal) were completed in 1995. At September 30, 1996, Jefferson
had consolidated assets of approximately $1.1 billion and stockholders' equity
of approximately $81.7 million.
Jefferson's thrift subsidiaries operate from 10 locations in Missouri and 12
locations in Texas. Through these subsidiaries, Jefferson is principally
engaged in the business of accepting deposits from the general public and
originating permanent loans which are secured by first mortgages on one- to
four-family residential properties located in its market areas. It also
maintains a substantial investment portfolio and, to a lesser extent, originates
consumer and other loans secured by various types of collateral in its market
areas. The principal executive offices of Jefferson are at 14915 Manchester
Road, Ballwin, Missouri 63011 (telephone number (314) 227-3000).
Pending Acquisition.
--------------------
On May 31, 1996, Jefferson entered into an Agreement and Plan of Merger with
Texas Heritage Savings Association/Banc ("Texas Heritage"), a Texas savings
association located in Rowlett, Texas, to acquire all of the outstanding capital
stock of Texas Heritage. Pursuant to the terms of the Agreement and Plan of
Merger, the shares of Texas Heritage common stock would be exchanged for a
combination of cash and shares of Jefferson Common with an aggregate per share
value equal to twice the per share book value of Texas Heritage determined as of
the last day of the month immediately preceding the month in which the merger is
completed, with certain adjustments, and Texas Heritage would be merged into
First Federal.
Organized in 1984, Texas Heritage is a Texas savings association
headquartered in Rowlett, Texas, a suburb of Dallas/Fort Worth, Texas. Texas
Heritage offers complete banking services to the commercial and residential
areas that it serves, and focuses its activity on construction lending. Texas
Heritage operates from four full-service offices located in Rowlett, Garland,
Rockwall and Bedford, Texas. Texas Heritage had assets of approximately $69.3
million, deposits of approximately $60.9 million and stockholder's equity of
approximately $4.9 million at September 30, 1996.
19
<PAGE>
The shares of Jefferson Common to be issued in connection with the
acquisition of Texas Heritage would constitute approximately 4% of the
outstanding shares of Jefferson Common, assuming consummation of such
acquisition. The acquisition of Texas Heritage was approved by its shareholders
on December 2, 1996, and regulatory approvals are expected to be received on or
prior to December 15, 1996. It is anticipated that this transaction will be
completed prior to December 31, 1996. The Merger is not conditioned upon
consummation of the acquisition of Texas Heritage.
Additional information regarding Jefferson and its subsidiaries is set forth
in the Jefferson's documents incorporated by reference herein. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
ACQUISITIONCO
AcquisitionCo was organized as a wholly owned subsidiary of Jefferson solely
to effectuate the Merger and has not engaged in any significant business
activity.
L&B
L&B, a Texas corporation, was organized in 1995 as a savings and loan holding
company for Savings Bank and is headquartered in Sulphur Springs, Texas. The
business of L&B consists primarily of the ownership, supervision and control of
Savings Bank. L&B is regulated and examined by the Office of Thrift Supervision
(the "O.T.S.") and the Texas Savings and Loan Department (the "Texas S&L
Department"). The deposits of Savings Bank are insured by the S.A.I.F. At
September 30, 1996, L&B had consolidated assets of approximately $144.6 million
and stockholders' equity of approximately $24.6 million. The principal
executive offices of L&B are at 306 North Davis, Sulphur Springs, Texas
(telephone number (903) 885-2121).
Additional information regarding L&B is set forth in L&B's documents
incorporated by reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
THE MERGER
GENERAL
This section of the Proxy Statement/Prospectus describes certain aspects of
the Merger, including the principal provisions of the Merger Agreement. The
following information relating to the Merger is qualified in its entirety by
reference to the other information contained elsewhere in this Proxy
Statement/Prospectus, including the Appendices hereto and the documents
incorporated herein by reference. A copy of the Merger Agreement is attached
hereto as Appendix A and is incorporated by reference herein. Reference is made
thereto for a complete description of the terms of the Merger. ALL SHAREHOLDERS
OF L&B ARE URGED TO READ THE MERGER AGREEMENT IN ITS ENTIRETY.
20
<PAGE>
BACKGROUND OF THE MERGER
Over the last year the Board of Directors of L&B became aware of the
increasing presence in its northeast Texas trade area of larger financial
institutions with greater financial resources, depth of management and variety
of service than were available to L&B. It also was recognized that this change
in the market had occurred in part from the desire of several regional financial
institutions to expand their existing markets through the acquisition of smaller
but sound and well established local financial institutions such as L&B. It was
determined that the Board of Directors would entertain an offer for acquisition
of L&B provided a buyer could be found which would meet the following
objectives:
(a) A purchase price which would provide to L&B shareholders a return
consistent with that being paid for other financial institutions and
in excess of the near term prospects for L&B as an independent
financial institution.
(b) Payment in cash of approximately 50% of the purchase price.
(c) Deferral of federal income tax on the stock portion of the purchase
price.
Representatives of L&B were approached by representatives of Jefferson in
the Spring of 1996 and under the direction of the Board of Directors
negotiations were pursued which resulted in the preparation of a merger
agreement calling for the merger of L&B with a subsidiary of Jefferson. That
merger agreement was approved by the Board of Directors and was executed on
September 25, 1996, subject to approval by the shareholders of L&B at a special
meeting to be held for that purpose.
REASONS FOR THE MERGER
L&B.
The Board of Directors of L&B has determined that the Merger and the Merger
Agreement, including the Basic Merger Consideration (as defined herein), are in
the best interests of, L&B and its shareholders. Accordingly, the Board
recommends that shareholders of L&B vote FOR approval and adoption of the Merger
Agreement.
Certain members of the management and Board of Directors of L&B have
interests in the Merger that are in addition to the interests of shareholders
generally. See "THE MERGER -- Interests of Certain Persons in the Merger."
Jefferson.
As part of its ongoing operations, Jefferson continually is presented with
and seeks out acquisition opportunities to enhance its banking franchise. A
component of Jefferson's acquisition strategy is to increase its presence in
Texas. The Board of Directors of Jefferson believes the acquisition of L&B would
be a natural and desirable addition to Jefferson's existing banking franchise in
East and North Central Texas.
OPINION OF FINANCIAL ADVISOR
The Bank Advisory Group, Inc. ("Advisory") is a recognized investment banking
firm regularly engaged in the valuation of financial institutions and their
securities in connection with mergers and acquisitions, and in valuations for
estate, corporate and other purposes. In connection with L&B's proposed merger
with Acquisition Co., L&B selected Advisory to act as an independent financial
analyst and advisor to the common shareholders of L&B, and its wholly-owned
subsidiary, Savings Bank, on the basis of Advisory's reputation and
qualifications in evaluating financial institutions. Advisory was asked to
render advice and analysis in connection with the Merger as to the fairness,
from the perspective of the common shareholders of L&B, of the financial terms
of the Merger.
Advisory has rendered a separate written opinion (the "Opinion") to the Board
of Directors of L&B to the effect that the terms of the Merger are fair from a
financial point of view to the shareholders of L&B as of the date of the
Opinion. A copy of the Opinion is attached as Appendix B to this Proxy
Statement/Prospectus and should be read in its entirety by L&B's shareholders.
Advisory's Opinion does not constitute an endorsement of the Merger or a
recommendation to any L&B shareholder as to how such shareholder should vote
regarding the Merger.
Regarding L&B, Advisory based its Opinion upon, among other things, a review
of: 1) audited consolidated financial statements for the years ended June 30,
1996, 1995 and 1994; 2) audited financial statements for Savings Bank for the
years ended June 30, 1995 and 1994; 3) reports of condition and income for
Savings Bank for the year ended December 31, 1995 and the nine month period
ended September 30, 1996, as filed with Federal bank regulatory agencies; 4)
thrift financial report for each calendar quarter
21
<PAGE>
during 1994, and for the calendar quarters ended September 30, June 30 and March
31, 1995, as filed with the Office of Thrift Supervision; 5) the economy in
general and, in particular, the local economies in which Savings Bank operates;
6) certain internal financial analyses and forecasts for Savings Bank prepared
by the management of Savings Bank, including projections of future performance;
7) certain other summary materials and analyses with respect to Savings Bank's
loan portfolio, securities portfolio, deposit base, fixed assets, and operations
including, but not limited to: (i) schedules of loans and other assets
identified by management as deserving special attention or monitoring given the
characteristics of the loan/asset and the local economy, (ii) analyses
concerning the adequacy of the loan loss reserve, (iii) schedules of "other real
estate owned," including current carrying values and recent appraisals, and (iv)
schedules of securities, detailing book values, market values and lengths to
maturity; and 8) such other information -- including financial studies,
analyses, investigations, and economic and market criteria -- that Advisory
deemed relevant to its assignment.
Regarding Jefferson, Advisory based its Opinion upon, among other things, a
review of: 1) audited consolidated financial statements, contained in Annual
Reports and Form 10-Ks, for the years ended December 31, 1995, 1994, and 1993;
2) quarterly financial statements for Jefferson, in both "press release" and
quarterly report formats, for the 1995 calendar quarters and the calendar
quarter ended September 30, June 30 and March 31, 1996; 3) thrift financial
reports for each of Jefferson's subsidiary thrift institutions for each calendar
quarter during 1995, and for the calendar quarters ended September 30, June 30
and March 31, 1996, as filed with the Office of Thrift Supervision; 4) equity
research reports regarding Jefferson prepared by stock analysts who cover the
financial institutions sector; 5) the condition of the financial institution
industry, as indicated in the financial reports filed by all federally-insured
financial institutions with various Federal bank regulatory authorities; 6) the
economy in general and, in particular, the major trade areas in which Jefferson
and its subsidiaries operate; and 7) such other information -- including
financial studies, analyses, investigations, and economic and market criteria --
that Advisory deemed relevant to its assignment.
Additionally, Advisory based its Opinion upon, among other things, a review
of: 1) the Agreement, and any amendments thereto, that sets forth, among other
items, the terms, conditions to closing, pending litigation against both L&B and
Jefferson, and representations and warranties of L&B and Jefferson with respect
to the proposed Merger; 2) this Proxy Statement/Prospectus, to which the Opinion
is appended, that is being furnished to the shareholders of L&B in connection
with the proposed Merger; 3) the financial terms and price levels for profitable
United States thrift organizations having total assets of between $75 million
and $250 million, together with the financial performance and condition of such
thrift organizations; 4) the financial terms and stated price levels of other
financial institutions, the proposed acquisition of which has been publicly
announced by Jefferson subsequent to January 1, 1994, and prior to the date of
the Opinion; 5) the price-to-equity and price-to-earnings multiples of the
stocks of financial institutions based in the midwestern United States which
have publicly-traded common stocks, together with the financial performance and
conditions of such financial institutions; and 6) such other information --
including financial studies, analyses, investigations, and economic and market
criteria -- that Advisory deemed relevant to its assignment.
Advisory has access to a sizable database of information pertaining to the
prices paid for banks and thrifts in the United States. The database includes
transactions involving financial institutions in Texas and the Southwest region
of the United States, and provides comparable pricing and financial performance
data for financial institutions acquired in the United States. Advisory has the
capability of accessing this database to yield transactions involving similar
thrift organizations. Such similarities might include thrift organizations
within a specific assets size range, thrifts that generate a return on average
assets (ROA) within a specified range, thrifts that have an equity-to-assets
ratio within a certain range, or thrifts that sold for a
22
<PAGE>
specific form of consideration (e.g., cash and/or stock). The ability to produce
specific groups of comparable thrifts facilitates making a valid comparative
purchase price analysis.
As noted, Advisory considered the transaction values for profitable thrift
organizations with assets between $75 million and $250 million recently acquired
in the United States, irrespective of the form of consideration paid. Advisory
compared those transaction values, and the corresponding financial
characteristics for the relevant thrifts, in relation to the transaction value
computed for Jefferson's acquisition of L&B. The comparative analysis revealed
that the merger of L&B into Jefferson's acquisition subsidiary yields a
transaction value that results in a price-equity index (purchase price as a
percent of total assets) of 21.00 and a price-earning index (purchase price as a
percent of average assets) of 21.28, versus averages of 15.46 and 15.71,
respectively, for the comparable thrifts in the United States. This analysis
suggests that the transaction value for L&B, as measured by the price indices
described above, compares favorably with, and exceeds, the average price indices
paid for recently-acquired U.S. thrifts with assets between $75 million and $250
million, irrespective of the form of consideration paid. The table set forth
below summarizes this comparative analysis, and highlights the L&B transaction.
<TABLE>
<CAPTION> ------------------------------------
| PRICE MULTIPLES | PRICE INDICES |
------------------------------------
<S> <C> <C> <C> <C> <C> <C> | <C> <C> |<C> <C> |
# OF AVERAGE EQUITY- ROA ROE TOTAL PRICE | EQUITY EARNINGS |EQUITY EARNINGS|
THRIFTS ASSETS TO- $(000) | | |
$ (000) ASSETS | | |
U.S. Transactions 22 $133,227 11.34% 0.80% 6.96% $20,600 1.36x 19.74x 15.46 $15.71
L&B 1 $144,433 17.01% 0.79% 4.46% $30,334 1.23x 26.99x 21.00 21.28
</TABLE>
As previously noted, Advisory also considered the transaction values for
thrift organizations acquired by Jefferson, the announcements of which occurred
subsequent to January 1, 1994 and prior to the date of Advisory's Opinion. For
Jefferson's Texas acquisitions, Advisory compared the transaction values, and
the corresponding financial characteristics for the Texas thrifts, in relation
to the transaction value computed for L&B's merger with Jefferson. The
comparative analysis revealed that the merger of L&B with Jefferson yields a
transaction value that results in a price-equity index (purchase price as a
percent of total assets) of 21.00 and a price-earnings index (purchase price as
a percent of average assets) of 21.28, versus averages of 13.71 and 13.62,
respectively, for the Texas transactions announced by Jefferson. This analysis
suggests that the transaction value for L&B, as measured by the price indices
described above, compares favorably with, and exceeds, the average price indices
paid by Jefferson for its recent Texas acquisitions.
Since L&B's merger with Jefferson includes Jefferson Common as part of the
consideration for shares of L&B Common, Advisory evaluated the financial
condition and performance of Jefferson, as noted above. Advisory conducted its
own independent financial analysis of Jefferson based on the above-mentioned
information provided to or obtained by Advisory. Advisory also reviewed and
considered financial analyses and earnings forecasts produced by financial
analysts affiliated with a brokerage firm that covers the financial institutions
industry, and Jefferson in particular. The intent of this financial analysis is
to ascertain the current financial condition and future earnings prospects of
Jefferson, given that the current shareholders of L&B will have an ownership
stake in Jefferson on a post-transaction basis. Advisory is satisfied with the
findings obtained from its financial analyses regarding the financial condition
and future earnings prospects of Jefferson, and believes that a sufficient
foundation exists in this regard to support Advisory's conclusion regarding the
financial fairness of the proposed transaction.
23
<PAGE>
Advisory is of the belief that its review of, among other things, the
aforementioned items, provides a reasonable basis for the issuance of its
Opinion, recognizing that Advisory is issuing an informed professional opinion
- --not a certification of value.
No limitations were imposed on the scope of Advisory's investigation by
either L&B or Jefferson.
Advisory, as part of its line of professional services, specializes in
rendering valuation opinions of banks and bank holding companies in connection
with mergers and acquisitions nationwide. Prior to its retention for this
assignment, Advisory had not provided financial advisory services to L&B,
Savings Bank or Jefferson.
Advisory has relied upon the information provided by the management of L&B
and Jefferson, or otherwise reviewed by Advisory, as being complete and accurate
in all material respects. Advisory has not verified through independent
inspection or examination the specific assets or liabilities of L&B, Jefferson
or their subsidiary banks. Advisory has assumed that there has been no material
changes in the assets, financial condition, results of operations, or business
prospects of L&B and Jefferson since the date of the last financial statements
made available to Advisory. Advisory met with the management of L&B for the
purpose of discussing the relevant information that has been provided to
Advisory.
Based on all factors that Advisory deemed relevant and assuming the accuracy
and completeness of the information and data provided, Advisory concluded that
the financial provisions of the proposed Merger, as outlined herein, are fair,
from a financial standpoint, to the common shareholders of L&B. For its services
as an independent financial analyst and advisor to L&B in connection with the
Merger, L&B has agreed to pay Advisory aggregate professional fees of $66,000.
Additionally, L&B also has agreed to reimburse Advisory for reasonable out-of-
pocket expenses.
RECOMMENDATION OF THE BOARD OF DIRECTORS
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF L&B RECOMMENDS
THAT THE HOLDERS OF L&B COMMON VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE MERGER.
BASIC MERGER CONSIDERATION
As a result of the Merger, each share of L&B Common issued and outstanding
immediately prior to the Effective Time, other than shares held by any
shareholder properly exercising their dissenters' rights under the Texas Act, by
virtue of the Merger and without any action on the part of Jefferson, L&B,
AcquisitionCo or their respective shareholders, will be converted into the right
to receive a combination of cash and shares of Jefferson Common, including any
attached rights thereto under or by virtue of the Rights Agreement, dated August
17, 1994, between Jefferson and Boatmen's Trust Company, as Rights Agent, in the
proportion described below.
In the Merger, the shares of L&B Common will be converted into a combination
of cash and Jefferson Common having an aggregate value equal to the sum of (A)
plus (B) where
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(A) is the product of (i) $18.50 multiplied by (ii) the number of
"Issued and Outstanding L&B Shares" as of the Effective Time, and
(B) is the amount equal to (i) L&B's consolidated earnings for the
"Earnings Period", less (ii) the aggregate amount of cash
dividends declared or paid on L&B Common during the "Earnings
Period".
As used herein, the term "Issued and Outstanding L&B Shares" means the number of
shares of L&B Common issued and outstanding immediately prior to the Effective
Time, other than shares of L&B common held for the Sulphur Springs Loan and
Building Association Recognition and Retention Plan and Trust Agreement; and the
term "Earnings Period" means the period commencing on April 1, 1996 and ending
on the last day of the calendar month immediately preceding the calendar month
in which the Effective Time occurs. The aggregate amount of cash and shares of
Jefferson Common described in the formula above is hereafter referred to as the
"Basic Merger Consideration".
By virtue of the Merger, each Issued and Outstanding L&B Share, other than
shares held by any shareholder properly exercising their dissenters' rights
under the Texas Act, without any action on the part of the holders will be
converted into the right to receive an amount equal to the quotient of the Basic
Merger Consideration divided by the number of Issued and Outstanding Shares (the
"Per Share Basic Merger Consideration").
One-half of the aggregate value of the Basic Merger Consideration received by
all shareholders of L&B will be payable in cash (the "Cash Component"), and the
remaining half in shares of Jefferson Common (the "Stock Component"). The number
of shares of Jefferson Common constituting the Stock Component will be
calculated as follows:
Basic Merger Consideration / Jefferson Average Price
----------------------------------------------------
2
As used herein, the term "Jefferson Average Price" means the average per share
closing price of Jefferson Common, as reported on Nasdaq for the twenty (20)
business days preceding the fifth calendar day prior to the Effective Time
(provided that if such average per share closing price is more than $33.60 per
share or less than $20.00 per share either Jefferson or L&B may elect not to
proceed with the Merger). The Stock Component issuable pursuant to the Merger
Agreement will be increased, as necessary, and the amount of the Cash Component
payable will be decreased, as necessary, such that the aggregate value of the
shares of Jefferson Common actually issuable in the Merger, determined as of the
Closing Date, will not be less than fifty percent (50%) of the Basic Merger
Consideration.
Since L&B's consolidated earnings will be based on the Earnings Period and
the Jefferson Average Price will be calculated based on the closing price of
Jefferson Common for the twenty business days preceding the fifth calendar day
prior to the Closing Date, it is not possible, as of the date of this
Prospectus/Proxy Statement, to determine the actual Basic Merger Consideration
or the dollar amounts of the Cash Component or the Stock Component. Assuming,
however, for purposes of illustration, that the Closing Date would have occurred
on September 30, 1996, and that there were 1,579,625 Issued and Outstanding L&B
Shares, then the Basic Merger Consideration would have been $29.1 million and
the Per Share Basic Merger Consideration would have been $18.45. (At September
30, 1996, L&B had paid
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dividends of $317,000 during the period April 1, 1996, through September 30,
1996 which exceed its earnings for such period of $243,000.)
The Basic Merger Consideration was determined through negotiations between
Jefferson and L&B, taking into account the value of Jefferson Common relative to
the value of the operations and business of L&B.
CONVERSION OF OPTIONS AND AWARDS
Awards At the Effective Time, each person who would otherwise have been
entitled to receive, but for the Merger, shares of L&B Common by reason of
awards totalling 35,500 shares of L&B Common ("Awards") that have been or would
have been made as of February 28, 1997 under the Sulphur Springs Loan and
Building Association Recognition and Retention Plan and Trust Agreement
(regardless of whether shares of L&B Common would have then been earned under
such Awards) shall be entitled to receive an amount equal to the product of the
number of shares of L&B Common covered by such Awards multiplied by the Per
Share Basic Merger Consideration; provided, however that the aggregate amount
payable for all Awards shall not exceed $667,400 and, in the event such maximum
amount would otherwise be exceeded, the amount payable for each Award shall be
proportionately decreased so that such limitation is not exceeded. (Based on Per
Share Basic Merger Consideration of $18.45 calculated if the merger had occurred
on September 30, 1996, the aggregate amount payable for all Awards would be
$654,975). The amount payable to each person on conversion of Awards shall be
paid one-half in cash and one-half in shares of Jefferson Common in the same
manner that the Basic Merger Consideration is payable, and the number of shares
of Jefferson Common will be increased, as necessary, and the amount of cash
payable will be decreased, as necessary, so that the aggregate value of the
shares of Jefferson Common actually issuable on conversion of all Awards,
determined as of the Closing Date, will not be less than fifty percent (50%) of
the total amount payable.
Options. At the Effective Time, each person for whom options ("Options") to
purchase a total of 154,513 shares of L&B Common have been or would have been
granted as of February 28, 1997 under the Sulphur Springs Loan and Building
Association 1995 Stock Option Plan (regardless of whether such Options are or
would then be vested or exercisable, but exclusive of Options which have in fact
been exercised prior to the Effective Time) shall be entitled to receive an
amount equal to the product of the number of shares of L&B Common issuable upon
the exercise of such Options multiplied by the difference obtained by
subtracting (i) the per share exercise prices for such Options from (ii) an
amount equal to the Per Share Basic Merger Consideration; provided, however,
that the aggregate amount payable for all Option conversions shall not exceed
$1,270,000 and, in the event such maximum amount would otherwise be exceeded,
the amount payable for such Option shall be proportionately decreased so that
such limitation is not exceeded. The per share exercise price for all Options
which are or would have been granted during calendar year 1997 shall be deemed
to be $10.50. (Based on the Per Share Basic Merger Consideration of $18.45
calculated as if the merger had occurred on September 30, 1996, and applicable
exercise prices, the aggregate amount payable for all Options would be
$1,215,821). The amount payable to each person on conversion of Options shall be
paid one-half in cash and one-half in shares of Jefferson Common in the same
manner that the Basic Merger Consideration is payable, and the number of shares
of Jefferson Common will be increased, as necessary, and the amount of cash
payable will be decreased, as necessary, so that the aggregate value of the
shares of Jefferson Common actually issuable on conversion of all Options,
determined as of the Closing Date, will not be less than fifty percent (50%) of
the total amount payable.
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FRACTIONAL SHARES
No fractional shares of Jefferson Common will be issued and, in lieu thereof,
holders of L&B Common who would otherwise be entitled to a fractional share
interest of Jefferson Common (after taking into account all shares of L&B Common
held by such holder) will be paid an amount in cash (which will be added to, and
considered a part of, the Cash Component) in an amount equal to the product of
such fractional share interest and the closing price of a share of Jefferson
Common on Nasdaq on the last business day immediately preceding the date on
which the Effective Time occurs.
SHARE ADJUSTMENTS
If, prior to the Effective Time, a share of Jefferson Common would be changed
into a different number of shares of Jefferson Common or a different class of
shares (a "Share Adjustment"), by reason of reclassification, recapitalization,
splitup, exchange of shares or readjustment, or if a stock dividend thereon
should be declared with a record date prior to the Effective Time, then the
number of shares of Jefferson Common into which a share of L&B Common would be
converted pursuant to the Merger Agreement will be appropriately and
proportionately adjusted so that each shareholder of L&B will be entitled to
receive such number of shares of Jefferson Common as such shareholder would have
received pursuant to such Share Adjustment had the record date thereof been
immediately following the Effective Time.
FORM OF THE MERGER
The Merger Agreement provides that, subject to the satisfaction or waiver
(where permissible) of the conditions set forth therein, at the Effective Time,
L&B will merge into AcquisitionCo, and AcquisitionCo will be the surviving
corporation in the Merger. Upon consummation of the Merger, AcquisitionCo will
continue to be a wholly owned subsidiary of Jefferson, and the separate
corporate existence of L&B will terminate.
CLOSING DATE; EFFECTIVE TIME
The Merger Agreement provides that the Closing of the Merger will take place
at the close of business on the last business day of the month during which all
of the conditions to the Merger are satisfied or waived (where permissible), or
on such other date thereafter as Jefferson and L&B may agree. The Merger
Agreement provides that the Merger will become effective upon the filing of
Articles of Merger with the Secretary of State of the State of Missouri and the
Secretary of State of the State of Texas. Assuming that the Merger is approved
by the requisite vote of the shareholders of L&B and that the other conditions
to the Merger are satisfied or waived (where permissible), it is presently
anticipated that the Merger will be consummated during the first quarter of
1997, but no assurance can be given that such timetable will be met.
CONDUCT OF BUSINESS PENDING THE MERGER; DIVIDENDS
Pursuant to the Merger Agreement, L&B has agreed to carry on its business in
the usual, regular and ordinary course in substantially the same manner as
conducted prior to the execution of the Merger Agreement. The Merger Agreement
provides that L&B may declare and pay regular dividends in such
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amounts and at such times as are consistent with L&B's historical practices, but
may not make any other distribution to shareholders, whether in cash, stock or
other property.
REGULATORY APPROVALS
The Merger and Subsidiary Merger are subject to the prior approval of the
O.T.S. and the Texas S&L Department. The Home Owners Loan Act (the "H.O.L.A.")
and the Federal Deposit Insurance Act (the "F.D.I.A.") require that the O.T.S.
take into consideration the financial and managerial resources and future
prospects of the existing and proposed institutions and the convenience and
needs of the communities to be served. The H.O.L.A. and the F.D.I.A. also
prohibit the O.T.S. from approving the Merger or Subsidiary Merger if it would
result in a monopoly or be in furtherance of any combination or conspiracy to
monopolize or to attempt to monopolize the business of banking in any part of
the United States, or its effect in any section of the country may be
substantially to lessen competition or to tend to create a monopoly, or if it
would in any other manner be a restraint of trade, unless the O.T.S. finds that
the anticompetitive effects are clearly outweighed in the public interest by the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served. The O.T.S. also has the authority to deny an
application if it concludes that the combined organization would have an
inadequate capital position.
Under the F.D.I.A., the Merger may not be consummated until the 30th day
following the date of O.T.S. approval, during which time the United States
Department of Justice may challenge the Merger on antitrust grounds; provided,
however, that the Merger may be consummated after the 15th day following the
date of O.T.S. approval if the O.T.S. has not received any adverse comments from
the United States Department of Justice relating to the competitive aspects of
the transaction, and the Department of Justice has consented to such shorter
waiting period. The commencement of an antitrust action would stay the
effectiveness of O.T.S. approval unless a court specifically orders otherwise.
Under the Texas Savings and Bank Act, the Commissioner of the Texas S&L
Department would be required to deny the Merger or Subsidiary Merger if the
Commissioner finds that (i) the Merger or Subsidiary Merger would substantially
lessen competition or be in restraint of trade and would result in a monopoly or
be in furtherance of a combination or conspiracy to monopolize or attempt to
monopolize the savings and loan industry in any part of the state, unless the
anticompetitive effects of the proposed reorganization, consolidation, or merger
are clearly outweighed in the public interest by the probable effect of the
reorganization, merger, or consolidation in meeting the convenience and needs of
the community to be served and the proposed acquisition is not in violation of
Texas or federal law; (ii) the financial stability of either First Federal or
the Savings Bank would be jeopardized by the Merger or Subsidiary Merger; (iii)
the Merger or Subsidiary Merger would not be in the best interest of First
Federal or the Savings Bank; (iv) the experience, ability, standing, competence,
trustworthiness, or integrity of the management of Jefferson, First Federal or
the Savings Bank is such that the Merger or Subsidiary Merger would not be in
the best interest of First Federal or the Savings Bank; (v) after the Merger and
Subsidiary Merger, the surviving entity would not be solvent, have adequate
capital structure, or be in compliance with Texas laws; (vi) First Federal and
the Savings Bank have not furnished all of the information pertinent to the
application reasonably requested by the Commissioner; or (vii) First Federal and
the Savings Bank are not acting in good faith.
Both the F.D.I.A. and the Texas Savings and Bank Act provide for the
publication of notice and public comment on the applications.
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Applications for the required regulatory approvals from the O.T.S. and the
Texas S&L Department have been filed and are pending.
CONDITIONS TO CONSUMMATION OF THE MERGER
The Merger is subject to various conditions. Specifically, as set forth in
the Merger Agreement, the obligations of each party to effect the Merger are
subject to the fulfillment or waiver (where permissible) by each of the parties,
at or prior to the Closing Date, of the following conditions: (i) the
representations and warranties of the respective parties to the Merger Agreement
as set forth therein will be true and correct in all material respects on and as
of the Closing Date; (ii) each of the respective parties to the Merger Agreement
will have performed and complied in all material respects with all of its
obligations and agreements required to be performed prior to the Closing Date;
(iii) no party to the Merger Agreement will be subject to any order, decree or
injunction of a court or agency of competent jurisdiction which enjoins or
prohibits the consummation of the Merger; (iv) all necessary regulatory
approvals and consents required to consummate the Merger, including the approval
of the shareholders of L&B, will have been obtained and all waiting periods in
respect thereof will have expired; (v) each party will have received all
required documents from the other party; (vi) the Registration Statement
relating to the Jefferson Common to be issued pursuant to the Merger will have
become effective, and no stop order suspending the effectiveness of the
Registration Statement will have been issued and no proceedings for that purpose
will have been initiated or threatened by the S.E.C.; and (vii) Jefferson will
have received an opinion of Lewis, Rice & Fingersh, L.C., counsel to Jefferson,
and L&B will have received a copy of such opinion, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and that, accordingly,
for federal tax purposes (a) gain will be realized by each holder of shares of
L&B Common who receives both Jefferson Common and cash in exchange for his or
her shares of L&B Common and will be recognized, but not in excess of the amount
of cash received, (b) the aggregate tax basis of Jefferson Common received by a
shareholder of L&B will be the same as the aggregate basis of the shares of L&B
Common surrendered in exchange therefor decreased by the amount of cash received
by the shareholder and increased by the amount, if any, treated as a dividend
and the amount, if any, of gain recognized by the shareholder in the exchange,
and (c) the holding period of Jefferson Common to be received by each L&B
shareholder will include, in each instance, the period in which the shareholder
held the L&B Common surrendered in exchange therefor provided that the L&B
Common is held as a capital asset on the date of exchange.
The obligations of Jefferson and AcquisitionCo to effect the Merger are
further subject to the condition that, prior to the Closing Date, Jefferson and
AcquisitionCo have received certain environmental inspection reports required to
be obtained on L&B's real properties and Jefferson will not have elected to
exercise its termination rights in connection therewith. See "THE MERGER --
Termination or Abandonment" and "THE MERGER -- Certain Other Agreements --
Environmental Inspections."
The conditions described in item (iv) above (the receipt of shareholder and
regulatory approvals) may not be waived by any party. Although the remaining
conditions to effect the Merger may be waived by the party entitled to the
benefit thereof, neither Jefferson, AcquisitionCo nor L&B intend to waive any
such conditions except in those circumstances where the Board of Directors of
either Jefferson, AcquisitionCo or L&B, as the case may be, deems such waiver to
be in the best interests of Jefferson, AcquisitionCo or L&B, as the case may be,
and their respective shareholders.
Applications for the required regulatory approvals of the Merger and the
Subsidiary Bank Merger have been filed with the O.T.S. and the Texas S&L
Department and are pending. It is anticipated that O.T.S. approval will be
received on or about __________, 199_, and that approval of the Texas Savings
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& Loan Department will be received on or about ___________, 199_, but no
assurances can be given that this timetable will be met.
No assurance can be provided as to if or when all of the foregoing conditions
precedent to the Merger will be satisfied or waived (where permissible) by the
party permitted to do so. If the Merger is not effected by July 25, 1997, the
Merger Agreement may be terminated by Jefferson, AcquisitionCo or L&B. See "THE
MERGER -- Termination or Abandonment."
TERMINATION OR ABANDONMENT
The Merger Agreement may be terminated at any time prior to the Effective
Time: (i) by any party if the Merger is not consummated on or prior July 25,
1997; (ii) by mutual written agreement of the parties; (iii) by any party in the
event of a material breach by the other of any of its representations and
warranties or agreements under the Merger Agreement not cured within 30 days
after notice of such breach is given by the non-breaching party; (iv) by any
party in the event all the conditions to its obligations are not satisfied or
waived (and not cured within any applicable cure period); (v) by any party in
the event that the other becomes a party or subject to any new or amended
written agreement, memorandum of understanding, cease and desist order,
imposition of civil money penalties or other regulatory enforcement action or
proceeding with any federal or state agency charged with the supervision or
regulation of thrifts or banks after the date of the Merger Agreement; (vi) by
any party if any regulatory application filed in connection with the Merger
should be finally denied or disapproved by the applicable regulatory authority
or if Jefferson fails to obtain any regulatory approvals required to consummate
the Merger on or before June 25, 1997; (vii) by any party if the Jefferson
Average Price is greater than $33.60 or less than $20.00; and (viii) by any
party if the shareholders of L&B do not approve the Merger.
PAYMENT UPON OCCURRENCE OF CERTAIN TRIGGERING EVENTS
The Merger Agreement provides that Jefferson shall pay to L&B the sum of
$250,000 upon termination of the Merger Agreement by L&B due to a material
breach thereof by Jefferson not cured within 30 days after written notice of
such breach is given by L&B to Jefferson.
In addition, the Merger Agreement provides that L&B shall pay to Jefferson
the sum of $250,000 upon termination of the Merger Agreement (i) by Jefferson
upon a material breach thereof by L&B not cured within 30 days after written
notice of such breach is given by Jefferson to L&B, or (ii) as a result of the
failure of L&B's shareholders to approve the Merger Agreement at the Special
Meeting (other than as a result of a material breach of the Merger Agreement by
Jefferson), provided that, in either case, one or more Triggering Events (as
defined below) shall have occurred within 24 months of the occurrence of either
of the foregoing events. As used in the Merger Agreement, the term "Triggering
Event" means any of the following events: (a) any person or group of persons
(other than Jefferson and/or its affiliates) acquires, or has the right to
acquire, more than 50% of the outstanding shares of L&B Common; (b) the
expiration date of a tender or exchange offer by any person or group of persons
(other than Jefferson and/or its affiliates) to purchase or acquire securities
of L&B if upon consummation of such offer, such person or group of persons would
own, control or acquire the right to acquire more than 50% of the outstanding
shares of L&B Common; or (c) the entry by L&B into a definitive agreement with a
person or group of persons (other than Jefferson and/or its affiliates) for such
person or group of persons to acquire, merge or consolidate with L&B or to
acquire all or substantially all of L&B's assets or more than 50% of the
outstanding shares of L&B Common.
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DISSENTERS' RIGHTS
The following summary of the rights of L&B shareholders who choose to dissent
and demand payment for their shares of L&B Common does not purport to be a
complete statement of the Texas Act relating to their rights, and is qualified
by reference to the excerpts of the Texas Act that have been set forth as
Appendix C to this Proxy Statement/Prospectus. Each shareholder of L&B who
chooses to dissent from the Merger Agreement should consult with his or her own
legal counsel concerning his or her rights and the specific procedures and
available remedies under the Texas Act.
ANY FAILURE TO FOLLOW THE DETAILED PROCEDURES SET FORTH IN THE TEXAS ACT MAY
RESULT IN A SHAREHOLDER OF L&B LOSING ANY RIGHT HE OR SHE MAY HAVE TO DISSENT
FROM THE MERGER AGREEMENT AND DEMAND AN APPRAISAL FOR THE VALUE FOR HIS OR HER
SHARES OF L&B COMMON.
The rights of L&B shareholders who choose to dissent from the Merger are
governed by provisions of the Texas Act. An excerpt of the Texas Act (Sections
5.11-5.13) is attached as Appendix C to this Proxy Statement/Prospectus. Under
the Texas Act, a shareholder of a Texas corporation who wishes to assert
dissenters' rights with respect to a merger must file with the corporation,
prior to the shareholders' meeting at which the merger is to be voted upon, a
written objection stating that the shareholder's right to dissent will be
exercised if the merger is effected and giving the shareholder's mailing address
for receiving notice of the merger if it becomes effective.
In addition, in order to dissent, the shareholder must not vote in favor of
the merger. It is not necessary that a shareholder vote against the merger in
order to dissent, so long as the shareholder files a written objection in
advance of the proposed action. However, merely voting against the merger,
either by proxy or at the shareholders' meeting, will not take the place of
filing the required written objection.
If the merger is effected and the dissenters' rights provisions of the Texas
Act are applicable to such merger, the surviving corporation of such merger
must, within 10 days thereafter, mail or deliver notice thereof to each
shareholder who has filed a written objection and who has not voted in favor of
the merger. Shareholders who have not voted in favor of the merger and who have
filed objections must make written demand for the payment of the fair value of
his or her shares within 10 days of the date the surviving corporation mailed or
delivered the notice in accordance with the provisions of Article 5.12 of the
Texas Act (a copy of which is included in Appendix C). Such written demand must
state the number and class of the shares owned by the shareholder and the
shareholder's estimate of the fair value of such shares. Also, within 20 days
after demanding payment, the shareholder must submit the certificates
representing his or her shares to the surviving corporation for notation on the
certificate that such demand has been made in accordance with the provisions of
Article 5.13 of the Texas Act (a copy of which is included in Appendix C).
A shareholder who votes for the merger, or does not file a written objection
stating an intent to assert dissenters' rights prior to the shareholder's
meeting at which the merger is voted upon, or does not demand payment within 10
days after receiving notice of the effectiveness of the merger, will be deemed
to have waived his or her right to dissent and will be bound by the terms of the
merger. A shareholder who fails to submit his or her certificate for notation of
demand for payment will, at the option of the surviving corporation, terminate
his or her right to dissent unless a court for good and sufficient cause directs
otherwise.
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Within 20 days after receiving demand for payment from a dissenting
shareholder, the surviving corporation must (i) notify the shareholder that it
agrees to the amount claimed as the fair value of the shares, or (ii) set forth
the surviving corporation's estimate of the fair value of the shares. If the
surviving corporation and the shareholder agree on a value within 60 days after
the merger, the surviving corporation must pay that value for the shares within
90 days after the merger. If the surviving corporation and the dissenting
shareholder do not so agree, either the surviving corporation or such
shareholder may file a petition in a court of competent jurisdiction in the
appropriate Texas State district court within 120 days after the merger asking
for a finding and determination of the fair value of the shares owned by the
dissenting shareholder.
All shareholders who properly dissent from a proposed merger involving a
Texas corporation in accordance with the Texas Act will lose all rights with
respect to their shares except the right to receive payment for the shares and
the right to maintain an appropriate action to obtain relief on the grounds that
the merger would be or was fraudulent. A shareholder may withdraw his or her
demand before payment is made for the shares or before a petition has been filed
asking for a finding and determination of the fair value of such shares, but no
demand may be withdrawn after such payment has been made, or, unless the
surviving corporation consents, after any such petition has been filed.
If a shareholder withdraws his or her demand, or if neither party timely
files a petition asking for a determination of fair value of the shares, such
shareholder shall be bound by the terms of the merger and restored to the status
of shareholder.
The dissenters' rights provisions of the Texas Act described herein are
applicable to all proposed mergers involving Texas corporations, except in those
instances where (i) the shares of such corporation are listed on a national
securities exchange or (ii) such shares are held of record by 2,000 holders or
more. L&B Common shares are not listed on a national securities exchange, and
L&B has fewer than 2,000 record shareholders (____ as of the record date for the
Special Meeting). Therefore, L&B shareholders are entitled to assert dissenters'
rights under the Texas Act in connection with the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF SHAREHOLDERS TO DISSENT AND DEMAND
PAYMENT FOR THEIR SHARES DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE
TEXAS ACT RELATING TO THE RIGHTS OF DISSENTING SHAREHOLDERS OF L&B, AND IS
QUALIFIED BY REFERENCE TO THE EXCERPTS OF THE TEXAS ACT WHICH HAVE BEEN SET
FORTH IN FULL AS APPENDIX C TO THIS PROXY STATEMENT/PROSPECTUS.
EXCHANGE OF L&B STOCK CERTIFICATES; FRACTIONAL SHARES
The conversion of L&B Common into the Basic Merger Consideration (other than
any shares as to which dissenters' rights are properly exercised) will occur by
operation of law at the Effective Time. After the Effective Time, certificates
theretofore evidencing shares of L&B Common (such certificates, other than
certificates held by shareholders exercising their dissenters' rights, being
collectively referred to herein as the "L&B Certificates") which may be
exchanged for the Merger Consideration will be deemed, for all corporate
purposes other than the payment of dividends and other distributions on shares
of Jefferson Common, to evidence ownership of and entitlement to receive such
Merger Consideration.
As soon as reasonably practicable after the Effective Time, Boatmen's Trust
Company (the "Exchange Agent") will mail a transmittal letter and instructions
to each record holder of a L&B Certificate
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advising such holder of the amount of cash and number of shares of Jefferson
Common such holder is entitled to receive pursuant to the Merger, and of the
procedures for surrendering such L&B Certificates in exchange for a certificate
for the number of whole shares of Jefferson Common constituting the Stock
Component, and a check for the cash amount such holder is entitled to receive
for the Cash Component. The letter of transmittal will also specify that
delivery will be effected, and risk of loss and title to the L&B Certificates
will pass, only upon proper delivery of the L&B Certificates to the Exchange
Agent and will be in such form and have such other provisions as Jefferson may
reasonably specify. SHAREHOLDERS OF L&B ARE REQUESTED NOT TO SURRENDER THEIR L&B
CERTIFICATES FOR EXCHANGE UNTIL SUCH LETTER OF TRANSMITTAL AND INSTRUCTIONS ARE
RECEIVED. The shares of Jefferson Common constituting the Stock Component of the
Per Share Basic Merger Consideration into which L&B Common will be converted in
the Merger will be deemed to have been issued at the Effective Time. Unless and
until the L&B Certificates are surrendered, along with a duly executed letter of
transmittal, any other required documents and notification of the holder's
federal taxpayer identification number, dividends on the shares of Jefferson
Common constituting the Stock Component of the Per Share Basic Merger
Consideration issuable with respect to such L&B Common, which would otherwise be
payable, will not be paid to the holders of such L&B Certificates and, in such
case, upon surrender of the L&B Certificates and a duly executed Letter of
Transmittal, any other required documents and notification of taxpayer
identification number, there will be paid any dividends on such shares of
Jefferson Common which became payable between the Effective Time and the time of
such surrender and notification. No interest on any such dividends will accrue
or be paid.
REPRESENTATIONS AND WARRANTIES OF L&B, JEFFERSON AND ACQUISITIONCO
The Merger Agreement contains various representations and warranties of the
parties thereto. These include, among other things, representations and
warranties by L&B, except as otherwise disclosed to Jefferson, as to: (i) its
organization and good standing; (ii) its capitalization; (iii) the due
authorization and execution of the Merger Agreement by L&B; (iv) subsidiaries,
partnerships and joint ventures; (v) the accuracy of the financial statements of
L&B; (vi) the absence of material adverse changes in the financial condition,
results of operations, business or prospects of L&B; (vii) the absence of
certain orders, agreements or memoranda of understanding between L&B and any
federal or state agency charged with the supervision or regulation of thrifts;
(viii) the filing of tax returns and payment of taxes; (ix) the absence of
pending or threatened litigation or other such actions; (x) agreements with
employees, including employment agreements; (xi) certain reports required to be
filed with various regulatory agencies; (xii) its investment portfolio; (xiii)
its loan portfolio; (xiv) employee matters and ERISA; (xv) title to its
properties, the absence of liens (except as specified) and insurance matters;
(xvi) environmental matters; (xvii) compliance with applicable laws and
regulations; (xviii) the absence of undisclosed liabilities; (xix) brokerage
commissions or similar finder's fees in connection with the Merger; and (xx) the
accuracy of information supplied by L&B in connection with the Registration
Statement, this Proxy Statement/Prospectus and any other documents to be filed
with the S.E.C. or any banking or other regulatory authority in connection with
the transactions contemplated by the Merger Agreement.
Jefferson's and AcquisitionCo's representations and warranties include, among
other things, those as to (i) their organization and good standing; (ii) their
capitalization; (iii) the due authorization and execution of the Merger
Agreement by each of Jefferson and AcquisitionCo, and the absence of the need
(except as specified) for governmental or third party consents to the Merger;
(iv) subsidiaries of Jefferson; (v) the accuracy of Jefferson's financial
statements and filings with the S.E.C.; (vi) the absence of material adverse
changes in the financial condition, results of operations, business or prospects
of Jefferson on a consolidated basis; (vii) the absence of material pending or
threatened litigation or other such actions; (viii) certain reports required to
be filed with various regulatory agencies; (ix) compliance with applicable
33
<PAGE>
laws and regulations; (x) the accuracy of information supplied by Jefferson and
AcquisitionCo in connection with the Registration Statement, this Proxy
Statement/Prospectus and any other documents to be filed with the S.E.C. or any
banking or other regulatory authority in connection with the transactions
contemplated by the Merger Agreement; (xi) the absence of brokerage commissions
or similar finder's fees in connection with the Merger; (xii) the absence of
certain orders, agreements or memoranda of understanding between Jefferson or
AcquisitionCo and any federal or state agency charged with the supervision or
regulation of thrifts or thrift holding companies; (xiii) the filing of tax
returns and payment of taxes; (xiv) the absence of undisclosed liabilities; and
(xv) the availability of adequate current public information on affiliates.
CERTAIN OTHER AGREEMENTS
Business of L&B in Ordinary Course. Pursuant to the Merger Agreement, L&B has
agreed, among other things, that it will conduct its business and engage in
transactions only in the usual, regular and ordinary course as previously
conducted, and that it will not, without the prior written consent of Jefferson
(which consent shall not be unreasonably withheld): (i) issue additional shares
of L&B Common or other capital stock, options, warrants or other rights to
subscribe for or purchase shares of L&B Common, or any other capital stock or
any other securities convertible into or exchangeable for any capital stock of
L&B; (ii) directly or indirectly redeem, purchase or otherwise acquire L&B
Common or any other capital stock of L&B (however, L&B has agreed to transfer to
its treasury 4,500 shares of L&B Common now held by the Sulphur Springs Loan and
Building Association Recognition Plan and Trust Agreement and held for award
under such plan); (iii) effect a reclassification, recapitalization, splitup,
exchange of shares, readjustment or other similar change in any capital stock or
otherwise reorganize or recapitalize; (iv) change its charter or articles of
incorporation or association, as the case may be, or bylaws; (v) grant any
increase (other than ordinary and normal increases consistent with past
practices except as contemplated by written agreements in existence on June 25,
1996) in the compensation payable or to become payable to directors, officers or
salaried employees, grant any stock options or, except as required by law, adopt
or change any bonus, insurance, pension, or other employee plan, payment or
arrangement made to, for or with any such directors, officers or employees; (vi)
borrow or agree to borrow any amount of funds or directly or indirectly
guarantee or agree to guarantee any obligations of others except for borrowing
in the ordinary course of business from the Federal Home Loan Bank of Dallas and
sales of mortgage loans into the secondary market made in the ordinary course of
business and with recourse or obligation to repurchase; (vii) make or commit to
make any new loan or letter of credit or any new or additional discretionary
advance under any existing line of credit, in excess of $500,000, or that would
increase the aggregate credit outstanding to any one borrower or group of
affiliated borrowers to more than $500,000; (viii) purchase or otherwise acquire
any investment security for its own account having an average remaining maturity
greater than five years or any asset-backed securities other than those issued
or guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation;
(ix) increase or decrease the rate of interest paid on time deposits or
certificates of deposit except in accordance with past practices; (x) enter into
any agreement, contract or commitment out of the ordinary course of business
having a term in excess of three months other than letters of credit, loan
agreements, and other lending, credit and deposit agreements and documents made
in the ordinary course of business; (xi) mortgage, pledge, subject to lien or
charge or otherwise encumber any of its assets or properties except in the
ordinary course of business; and except to secure borrowing in the ordinary
course of business from the Federal Home Loan Bank of Dallas and sales of
mortgage loans into the secondary market made in the ordinary course of business
and with recourse or obligation to repurchase; (xii) cancel, accelerate or waive
any material indebtedness, claims or rights owing to L&B except in the ordinary
course of business; (xiii) sell or otherwise dispose of any real property or
personal property having a book value of greater than $25,000 other than
properties acquired in foreclosure or otherwise in the ordinary collection
34
<PAGE>
of indebtedness, except that upon receipt of the signed agreements terminating
the Deferred Compensation Agreements (as defined below in "Other L&B
Agreements"), may transfer to C. Glynn Low and Daniel Phillips, respectively,
their life insurance policies; (xiv) foreclose or otherwise take title to or
possess any real property, other than single family, non-agricultural
residential property of one acre or less, without first obtaining a phase one
environmental report which does not reflect the need for further environmental
assessment; (xv) commit any act or fail to do any act which will result in a
material breach of any agreement, contract or commitment which will materially
adversely affect the business, financial condition or earnings of L&B; (xvi)
violate any law, statute, rule, governmental regulation or order which will
materially adversely affect the business, financial condition or earnings of
L&B; (xvii) purchase any real or personal property or make any capital
expenditure in excess of $50,000; (xviii) prepay any outstanding principal
amount under any loan agreement relative to the L&B ESOP; (xix) amend, modify or
supplement any Employee Plans or distribute to employees of L&B and its
subsidiaries any revised summary plan descriptions or supplements to summary
plan descriptions relative to any Employee Plans; or (xx) engage in any
transaction or take any action that would render untrue, in any material
respect, any of the representations and warranties made by L&B in the Merger
Agreement, if such representations or warranties were given as of the date of
such transaction or action.
Environmental Inspections. L&B has provided Jefferson reports of phase one
environmental investigations on certain real property owned or leased by L&B. In
addition, Jefferson has the right to obtain similar reports of a phase one
environmental investigation on all other real properties owned, leased or
operated by L&B (not including leased space in retail and similar establishments
and space leased for automatic teller machines). If required by the phase one
reports in Jefferson's reasonable opinion, Jefferson shall have the right to
obtain a report of a phase two environmental investigation on all properties
requiring additional study. Should the cost of obtaining such phase two reports
and the cost of taking all remedial and corrective measures required by
applicable law, recommended or suggested by such report or reports, or prudent
in light of serious life, health or safety concerns exceed $100,000 as
reasonably estimated by an environmental expert retained for such purpose by
Jefferson and reasonably acceptable to L&B (or cannot be so estimated to be
$100,000 or less), then Jefferson will have the right for a period of 10
business days to terminate the Merger Agreement by giving written notice to L&B,
which shall be Jefferson's sole remedy in such event.
Environmental investigations routinely are conducted by Jefferson in
connection with transactions involving the acquisition of real property, whether
pursuant to the acquisition of a financial institution or other business or in
its ongoing business operations. These investigations are intended to identify
and quantify potential environmental risks of ownership, such as contamination,
which could lead to liability for clean-up costs under the federal Comprehensive
Environmental Response, Compensation and Liability Act
35
<PAGE>
of 1980, as amended, and other applicable laws. A "phase one" investigation is
an initial environmental inquiry intended to identify areas of concern which
might require more in-depth assessment. The scope of a phase one investigation
varies depending on the environmental consultant utilized and the property
assessed, but will typically include (i) visual inspection of the property; (ii)
review of governmental records to ascertain the presence of such things as
"Superfund" sites, underground storage tanks or landfills, etc. on or near the
site; (iii) review of all relevant site records such as air or water discharge
permits and hazardous waste manifests; and (iv) research regarding previous
owners and uses of the property as well as those of surrounding properties. In
financial institution or other business acquisition transactions, Jefferson's
policy is to obtain phase one environmental investigations of real property to
ensure that environmental problems do not exist which could result in
unacceptably high or unquantifiable risk to Jefferson and its shareholders.
Other L&B Agreements. In addition, L&B has agreed to: (i) give Jefferson
prompt written notice of any occurrence, or impending or threatened occurrence,
of any event or condition which would cause or constitute a failure of any
condition precedent to any party's obligation to effect the Merger or breach of
any of L&B's representations or agreements in the Merger Agreement, or of the
occurrence of any matter or event known to and directly involving L&B (not
including changes in conditions that affect the thrift industry generally) that
is materially adverse to the business, operations, properties, assets or
condition (financial or otherwise) of L&B; (ii) use its best efforts to obtain
all necessary consents with respect to any material leases, licenses, contracts,
instruments and rights which require the consent of another person for their
transfer or assumption pursuant to the Merger; (iii) use its best efforts to
perform and fulfill all conditions and obligations to be performed or fulfilled
under the Merger Agreement and to effect the Merger; (iv) permit Jefferson
reasonable access to L&B's properties and to disclose and make available all
books, documents, papers and records relating to assets, stock ownership,
properties, operations, obligations and liabilities in which Jefferson may have
a reasonable and legitimate interest in furtherance of the transactions
contemplated by the Merger Agreement; (v) maintain and keep all of its benefit
plans fully funded and, to the extent any such benefit plan may not be fully
funded, to timely make such contributions as are required to fully fund such
unfunded plan; (vi) cause the Savings Bank to enter into a merger agreement with
First Federal; (vii) obtain and deliver to Jefferson prior to the Closing Date
the signed agreements of Messrs C. Glynn Lowe and Daniel M. Phillips regarding
termination of the Deferred Compensation Agreements, each dated November 17,
1987, between Sulphur Springs Loan and Building Association and each such
person, and the release of all liabilities and obligations thereunder; (viii)
obtain and deliver to Jefferson prior to the Closing Date a copy of a lease
agreement, satisfactory to Jefferson, or satisfactory evidence of ownership of a
certain parking lot located immediately adjacent to the Savings Bank's home
office; and (ix) deliver to Jefferson prior to the Closing Date a copy of a
lease, on term satisfactory to Jefferson, with respect to the Savings Bank's
branch located at 101 Kaufman, Mt. Vernon, Texas.
Jefferson's Agreements. Pursuant to the Merger Agreement, Jefferson and
AcquisitionCo have agreed, as applicable, among other things, to: (i) file all
regulatory applications required in order to consummate the Merger and to keep
L&B reasonably informed as to the status of such applications; (ii) file the
Registration Statement with the S.E.C. and use its best efforts to cause the
Registration Statement to become effective; (iii) timely file all documents
required to obtain all necessary permits and approvals under applicable state
securities laws; (iv) prepare and file any other filings required under the
Securities Exchange Act of 1934, as amended, relating to the Merger and related
transactions; (v) promptly notify L&B in writing should Jefferson or
AcquisitionCo have knowledge of any event or condition which would cause or
constitute a breach of any of its representations or agreements contained in the
Merger Agreement; (vi) use their respective best efforts to perform and fulfill
all conditions and obligations to be performed or fulfilled under the Merger
Agreement and to effect the Merger; and (vii) permit L&B reasonable access to
their
36
<PAGE>
properties and to disclose and make available all books, documents, papers and
records relating to the assets, stock ownership, properties, operations,
obligations and liabilities of Jefferson in which L&B may have a reasonable and
legitimate interest in furtherance of the transactions contemplated in the
Merger Agreement. In addition, the Merger Agreement states that Jefferson shall
provide certain employee benefit plans and programs to the employees of L&B who
continue their employment after the Effective Time.
NO SOLICITATION
The Merger Agreement provides that, unless and until the Merger Agreement has
been terminated, L&B will not solicit, encourage or initiate any inquiries with
respect to, or, without prior written notice to Jefferson, participate in
negotiations with, or provide information to, any person in connection with any
proposal from any person relating to the acquisition of all or a substantial
portion of the business, assets or stock of L&B. L&B is required to promptly
advise Jefferson of its receipt of, and the substance of, any such proposal or
inquiry.
WAIVER AND AMENDMENT
Prior to or at the Effective Time, any provision of the Merger Agreement,
including, without limitation, the conditions to consummation of the Merger, may
be (i) waived, to the extent permitted under law, in writing by the party which
is entitled to the benefits thereof; or (ii) amended at any time by written
agreement of the parties, whether before or after approval of the Merger
Agreement by the shareholders of L&B at the Special Meeting provided, however,
that no amendment or modification will alter the amount or change the form of
the Basic Merger Consideration to be received by shareholders of L&B or alter or
change any of the terms of the Agreement if the amendment would adversely affect
shareholders of L&B. It is anticipated that any given condition to the
obligations of L&B and Jefferson to consummate the Merger would be waived only
in those circumstances where the Board of Directors of L&B or Jefferson, as the
case may be, deems such waiver to be in the best interests of such company and
its shareholders.
EXPENSES AND FEES
In the event the Merger Agreement is terminated or the Merger is abandoned,
all costs and expenses incurred in connection with the Merger Agreement will be
paid by the party incurring such costs and expenses, and no party shall have any
liability to the other party for costs, expenses, damages or otherwise, except
that: (i) in the event the Merger Agreement is terminated on account of a
willful breach of any of the representations or warranties therein or any breach
of the agreements set forth therein, the non-breaching party is entitled to seek
damages against the breaching party; and (ii) in certain events, a fee of
$250,000 will be required to be paid to L&B or Jefferson by the other party. See
"THE MERGER -- Payment Upon Occurrence of Certain Triggering Events."
FEDERAL INCOME TAX CONSEQUENCES
The Merger has been structured to qualify as a reorganization under Section
368(a) of the Code. Except for shareholders perfecting their dissenters' rights,
and cash received constituting the Cash Component of the Merger Consideration,
holders of shares of L&B Common will recognize no gain or dividend income on the
receipt of Jefferson Common in the Merger. Additionally, their aggregate basis
in
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<PAGE>
the shares of Jefferson Common received in the Merger will be the same as their
aggregate basis in their shares of L&B Common converted in the Merger decreased
by the amount of cash received by the shareholder and increased by the amount,
if any, treated as a dividend and the amount of gain recognized by the
shareholder on the exchange. Provided the shares surrendered are held as capital
assets, the holding period of the shares of Jefferson Common received by them
will include the holding period of their shares of L&B Common exchanged
therefor. Cash received as the Cash Component of the Merger Consideration and
cash received by shareholders exercising their dissenters' rights will be
treated as a distribution in full payment of such interests, or shares
surrendered in exercise of dissenters' rights, resulting in capital gain or
ordinary income, as the case may be, depending upon each shareholder's
particular situation. Jefferson, L&B and AcquisitionCo will each be a "party to
a reorganization" within the meaning of Section 368(b) of the Code and no gain
will be recognized by Jefferson, L&B or AcquisitionCo by reason of the Merger.
Consummation of the Merger is conditioned upon receipt by Jefferson and L&B
of an opinion of Lewis, Rice & Fingersh, L.C., counsel to Jefferson, to the
effect that if the Merger is consummated in accordance with the terms set forth
in the Merger Agreement: (i) the Merger will constitute a reorganization within
the meaning of Section 368(a) of the Code; (ii) gain or income will be realized
by each holder of shares of L&B Common who receives both Jefferson Common and
cash in exchange for his or her shares of L&B Common, and will be recognized,
but not in excess of the amount of cash received; (iii) the basis of shares of
Jefferson Common received by a shareholder of L&B will be the same as the basis
of his or her shares of L&B Common exchanged therefor decreased by the amount of
cash received by the shareholder and increased by the amount, if any, treated as
a dividend and the amount of gain recognized by the shareholder in the exchange;
and (iv) the holding period of the shares of Jefferson Common received by such
shareholders will include, in each instance, the holding period of the shares of
L&B Common exchanged therefor, provided such shares were held as capital assets
as of the Effective Time.
THE FOREGOING IS A GENERAL SUMMARY OF ALL OF THE MATERIAL FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER TO L&B SHAREHOLDERS, WITHOUT REGARD TO THE PARTICULAR
FACTS AND CIRCUMSTANCES OF EACH SHAREHOLDER'S TAX SITUATION AND STATUS. EACH L&B
SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR REGARDING ANY SUCH
SPECIFIC TAX SITUATION AND STATUS, INCLUDING THE APPLICATION AND EFFECT OF
FEDERAL, STATE, LOCAL AND FOREIGN LAWS AND THE POSSIBLE EFFECT OF CHANGES IN
FEDERAL AND OTHER TAX LAWS.
RESALE OF JEFFERSON COMMON
The shares of Jefferson Common issued pursuant to the Merger will be freely
transferable under the Securities Act of 1933, as amended (the "Securities
Act"), except for shares issued to any L&B shareholder who may be deemed to be
an "affiliate" of L&B or Jefferson for purposes of Rule 145 under the Securities
Act. The Merger Agreement provides that each such affiliate will enter into an
agreement with Jefferson providing that such affiliate will not transfer any
shares of Jefferson Common received in the Merger except in compliance with the
Securities Act. This Proxy Statement/Prospectus does not cover resales of shares
of Jefferson Common received by any person who may be deemed to be an affiliate
of L&B. Persons who may be deemed to be affiliates of L&B generally include
individuals who, or entities which, control, are controlled by or are under
common control with L&B and will include directors and certain executive
officers of L&B and may include principal shareholders of L&B.
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INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain members of management and the Board of Directors of L&B may be deemed
to have interests in the Merger in addition to their interests as shareholders
of L&B generally. For information about the percentage of L&B Common owned by
the directors and executive officers of L&B, see "INFORMATION ABOUT L&B --
Security Ownership of Certain Beneficial Owners and Management." None of the
directors or executive officers of L&B would own, on a pro forma basis giving
effect to the Merger, more than ____% of the issued and outstanding shares of
Jefferson Common.
Insurance; Indemnification. The Merger Agreement provides that following the
Effective Time, Jefferson shall provide the present and former directors and
officers of L&B with the same director and officer liability insurance coverage
that Jefferson provides for the benefit of its directors and officers to the
extent that such coverage is obtainable for an aggregate premium not to exceed
the annual premium presently being paid by L&B. If the premium exceeds such
maximum amount, Jefferson will use its best efforts to procure such level of
insurance as can be obtained for a premium equal to the maximum amount. The
Merger Agreement also provides that for a period of six years after the
Effective Time, Jefferson and AcquisitionCo will indemnify the present
directors, officers, employees and agents of L&B against any liability arising
out of actions occurring prior to the Effective Time, to the maximum extent such
indemnification is permitted under federal law and regulations applicable to
federally chartered thrifts, including provisions relating to advances of
expenses incurred in the defense of any action or suit.
Employee Benefits. The Merger Agreement contains certain provisions regarding
employee benefits which are described below under "THE MERGER -- Effect on
Employee Benefit Plans."
Employment Agreement. It is presently anticipated that C. Glynn Lowe
President and Chief Executive Officer of L&B, will continue as an executive
officer following consummation of the Subsidiary Merger. On the date upon which
the Merger becomes effective (the "Effective Date"), Mr. Lowe will enter into an
Employment Agreement with Jefferson and First Federal, the form of which is
attached as an exhibit to the Merger Agreement attached hereto as Appendix A.
The Employment Agreement provides that First Federal will employ Mr. Lowe as
Regional President and Chief Operating Officer of the Dallas/Fort Worth, Texas
division of First Federal for a period of two years commencing on the closing
date of the Subsidiary Merger, subject to renewals for additional one year
periods thereafter. Pursuant to the terms of the Employment Agreement, Mr. Lowe
will receive an initial annual salary of $110,000 and will be eligible to
participate in Jefferson's executive bonus plan. The annual salary may be
increased from time to time as established by the Board of Directors of First
Federal. In addition, Mr. Lowe will be entitled to participate in all employee
welfare, benefit, retirement and medical plans of First Federal, will receive at
least four weeks of paid vacation, and will be provided an automobile allowance
for use in the performance of his duties as an officer of First Federal.
The Employment Agreement provides that, in the event that his employment with
First Federal is lawfully terminated for cause or resignation, Mr. Lowe will not
compete with First Federal, in Dallas, Texas, for a period of two years
following such termination.
ACCOUNTING TREATMENT
The Merger will be accounted for by Jefferson under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16,
"Business Combinations", as amended.
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Under this method of accounting, the purchase price will be allocated to assets
acquired and liabilities assumed based on their estimated fair values at the
Effective Time. Income of the combined company will not include results of
operations of L&B prior to the Effective Time. See "PRO FORMA FINANCIAL DATA."
MANAGEMENT AND OPERATIONS AFTER THE MERGER
First Federal will be the surviving association in the Subsidiary Merger.
Following consummation of the Subsidiary Merger, the present offices of Savings
Bank will be operated as branch offices of First Federal. It is not anticipated
that the Board of Directors of Jefferson will be affected as a result of the
Merger. It is presently anticipated that the executive officers of Savings Bank
will continue as officers of First Federal following the Merger.
Mr. C. Glynn Lowe President of L&B, will enter into a two-year Employment
Agreement with Jefferson and First Federal to be executed on the Closing Date.
See "THE MERGER -- Interests of Certain Persons in the Merger -- Employment
Agreement." A copy of the form of Mr. Lowe's Employment Agreement is attached as
an exhibit to the Merger Agreement attached hereto as Appendix A. There are no
other employment agreements between Jefferson, First Federal and any other
officers of L&B.
EFFECT ON EMPLOYEE BENEFIT PLANS
The Merger Agreement provides that each employee of L&B who continues as an
employee of First Federal following the Effective Time will be entitled, as a
continued employee of a subsidiary of Jefferson, to participate in certain
employee benefit and stock plans that may be in effect for employees of all of
Jefferson subsidiaries, from time to time, on the same basis as similarly
situated employees of other Jefferson subsidiaries, subject to the right of
Jefferson to amend, modify or terminate any such plans or programs in its sole
discretion. Jefferson will, for purposes of measuring periods of time for
vesting and any age or period of service requirements for commencement of
participation with respect to any employee benefit plans in which former
employees of L&B may participate, credit each such employee with his or her term
of service with L&B.
JEFFERSON'S DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Jefferson has an automatic Dividend Reinvestment and Stock Purchase Plan (the
"Jefferson DRP") which provides, in substance, for those shareholders of
Jefferson who elect to participate, that dividends on shares of Jefferson Common
and optional cash payments of not less than $100 per payment, up to a maximum of
$10,000 for each quarter, will be invested in shares of Jefferson Common. Shares
of Jefferson Common will be purchased either in the market, in private
transactions or directly from Jefferson. The purchase price for Jefferson Common
purchased in the market or in private transactions will be the actual purchase
price, exclusive of brokerage commissions and expenses. The purchase price of
shares of Jefferson Common purchased directly from Jefferson will equal the
average of the high and low price of Jefferson Common on the dividend payment
date, as reported on Nasdaq, reduced by a discount of at least 2%. After the
Effective Time, shareholders of L&B who receive Jefferson Common in the Merger
will have the right to participate in the Jefferson DRP.
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PRO FORMA FINANCIAL DATA
The following pro forma combined condensed balance sheet as of
September 30, 1996, and the pro forma combined condensed statements of income
for the nine month period ended September 30, 1996 and the year ended December
31, 1995, give effect to the Merger based on the historical consolidated
financial statements of Jefferson and its subsidiaries and the historical
consolidated financial statements of L&B under the assumptions and adjustments
set forth in the accompanying notes to the pro forma financial statements.
The pro forma financial statements have been prepared by the management of
Jefferson and L&B based upon their respective financial statements. The
following pro forma combined condensed balance sheet and condensed statements of
income include:
(a) Jefferson's historical consolidated financial information, which has
been designated herein as "Jefferson."
(b) L&B's historical consolidated financial information, which has been
designated herein as "L&B." The information for L&B, the fiscal year end
of which is June 30, has been restated to conform with Jefferson's
fiscal year end of December 31 by adding the results of L&B for the six
month period ended December 31, 1995 to the six month period ended June
30, 1995.
(c) The combined statements of Jefferson and L&B which have been designated
herein as "Pro Forma."
These pro forma statements assume the Merger was consummated at the beginning
of each period presented. The pro forma statements may not be indicative of the
results that actually would have occurred if the Merger had been in effect on
the dates indicated or which may be obtained in the future. The pro forma
financial statements should be read in conjunction with the historical
consolidated financial statements and notes thereto of Jefferson and L&B
incorporated by reference herein in this Proxy Statement/Prospectus. See
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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PRO FORMA COMBINED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
L&B Jefferson & Texas
Financial L&B Heritage
L&B Pro Forma Financial Texas Pro Forma All Entities
Jefferson Financial Adjustments Pro Forma Heritage Adjustments Pro Forma
----------- --------- ----------- ------------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash $ 6,252 1,463 7,715 441 8,156
Interest-bearing deposits 8,868 9,696 (739)a 17,825 2,059 3,000 c 17,684
(5,005)e
(195)d
Federal funds sold 25 0 25 1,170 1,195
Investment securities:
Available for sale, at
fair value 83,275 317 (10,000)a 73,592 0 73,592
Held to maturity, at cost 0 109 109 1,168 (4)g 1,273
Mortgage-backed securities
net:
Available for sale, at
fair value 155,578 20,960 (4,428)a 172,110 0 172,110
Held to maturity, at cost 0 38,110 54 g 38,164 7,259 (113)g 45,310
Loans receivable, net 820,130 69,042 889,172 53,878 943,050
Real estate required through
foreclosure, net 5,215 293 5,508 786 6,294
Stock in Federal Home Loan
Bank 15,071 762 15,833 659 16,492
Office properties and
equipment, net 8,533 2,300 10,833 1,103 11,936
Deferred tax asset 1,008 0 1,008 77 1,085
Excess of cost over fair
value of assets acquired 14,370 0 4,735 i 19,105 0 5,945 i 25,050
Accrued income and other
assets 10,014 1,552 28,856 a 11,566 680 10,010 e 12,246
(28,856)b (10,010)f
---------- ------- ------- --------- ------- ------- ---------
$1,128,339 144,604 (10,378) 1,262,565 69,280 3,628 1,335,473
---------- ------- ------- --------- ------- ------- ---------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Savings deposits $ 876,636 104,242 980,878 60,917 1,041,795
Borrowed money 143,902 13,500 157,402 2,426 3,000 c 162,828
Advance payments by
borrowers for taxes
and insurance 10,659 1,110 11,769 519 12,288
Accrued expenses and other
liabilities 15,462 1,185 500 h 17,147 541 500 h 18,188
---------- ------- ------- --------- ------- ------- ---------
Total liabilities 1,046,659 120,037 500 1,167,196 64,403 3,500 1,235,099
---------- ------- ------- --------- ------- ------- ---------
Stockholders' equity:
Preferred stock 0 0 0 39 (39)d 0
Common stock 45 17 5 a 50 1,402 (1,402)f 50
(17)b
Additional paid-in capital 44,022 15,165 13,491 a 57,513 1,616 2,074 e 59,587
(15,165)b (156)d
(1,460)f
Retained earnings, subject
to certain restriction 49,012 10,549 (10,549)b 49,012 1,820 (1,820)f 49,012
Unrealized gain (loss) on
assets available for sale (864) (76) 76 b (864) 0 (864)
Unamortized restricted
stock awards (387) (287) 287 b (387) 0 (387)
Unamortized ESOP shares (5,546) (800) (1,478)a (7,024) 0 (7,024)
800 b
Treasury stock at cost (4,602) (1) 1,671 a (2,931) 0 2,931 e 0
1 b
---------- ------- ------- --------- ------- ------- ---------
Total stockholders'
equity 81,680 24,567 (10,878) 95,369 4,877 128 100,374
---------- ------- ------- --------- ------- ------- ---------
$1,128,339 144,604 (10,378) 1,262,565 69,280 3,628 1,335,473
========== ======= ======= ========= ======= ======= =========
</TABLE>
See Notes to Pro Forma Combined Condensed Balance Sheet
42
<PAGE>
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET
The accompanying pro forma combined condensed balance sheet was derived from the
historical financial records of Jefferson and L&B Financial and should be read
in conjunction with the historical financial statements of Jefferson and L&B
Financial incorporated herein by reference.
(a) Purchase of L&B Financial with assumed consideration of $15,167,000 in
cash and 674,089 shares of Jefferson stock at a price of $22.50 per
share, which was the closing sale price as reported on Nasdaq on
September 25, 1996. The actual price used to calculate the merger
consideration will be the average per share closing price of Jefferson
Common, as reported on Nasdaq for the twenty (20) business days
preceding the fifth calendar day prior to the Effective Time. Treasury
shares will be utilized to the extent available and additional shares
will be issued as needed. Unearned ESOP shares at L&B Financial will
also be exchanged for the per share basic merger consideration, and L&B
Financial's ESOP will then be merged into Jefferson's ESOP. Jefferson
plans to sell securities to obtain cash for the transaction.
(b) Elimination of Jefferson's investment in L&B Financial.
(c) In connection with the proposed acquisition of Texas Heritage, Jefferson
plans to borrow through one year advances from the Federal Home Loan
Bank of Dallas.
(d) Preferred stock of Texas Heritage will be redeemed at an assumed price
of $5.00 per share.
(e) Purchase of Texas Heritage with assumed consideration of twice book
value, as adjusted per the Agreement, after redemption of preferred
stock, paid in $5,005,000 cash and 183,670 treasury shares of Jefferson
stock at a price of $27.25 per share, which was the closing sale price
as reported on Nasdaq on May 31, 1996.
(f) Elimination of Jefferson's investment in Texas Heritage.
(g) Adjustment of Texas Heritage's and L&B Financial's investment securities
and mortgage backed securities portfolios to market value based upon
estimated market prices as of September 30, 1996. Remaining mark-to-
market adjustments were not deemed material.
(h) Estimate of costs to be incurred for anticipated reorganization and
restructuring expenses related to the acquisitions of L&B Financial and
Texas Heritage.
(i) The pro forma excess of cost over fair market value of net assets
acquired (goodwill) is $4,735,000 and $5,945,000 as of September 30,
1996 for L&B Financial and Texas Heritage, respectively.
43
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
L&B Jefferson & Texas
Financial L&B Heritage
L&B Pro Forma Financial Texas Pro Forma All Entities
Jefferson Financial Adjustments Pro Forma Heritage Adjustments Pro Forma
---------- --------- ----------- ------------- -------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and dividend income $ 61,435 7,773 (739) a 68,461 5,068 (95) a 73,452
(8) b 18 b
Interest expense 39,639 4,409 44,048 2,513 135 c 46,696
---------- --------- ---- --------- ------- ---- ---------
Net interest income 21,796 3,364 (747) 24,413 2,555 (212) 26,756
Provision for loan losses 495 (100) 395 52 447
---------- --------- ---- --------- ------- ---- ---------
Net interest income after
provision for loan losses 21,301 3,464 (747) 24,018 2,503 (212) 26,309
Noninterest income 837 207 1,044 606 1,650
Noninterest expense 20,419 3,090 237 d 23,746 2,115 297 d 26,158
---------- --------- ---- --------- ------- ---- ---------
Income before income taxes 1,719 581 (984) 1,316 994 (509) 1,801
Income tax expense 949 219 (269) e 899 336 (76) e 1,159
---------- --------- ---- --------- ------- ---- ---------
Net income $ 770 362 (715) 417 658 (433) 642
========== ========= ==== ========= ======= ==== =========
Net income available to
common shareholders $ 770 362 417 658 642
========== ========= ========= ======= =========
Net income per common share $ 0.19 0.23 0.09 1.17 0.13
========== ========= ========= ======= =========
Average shares outstanding 3,970,548 1,556,720 4,611,792 561,000 4,795,462
========== ========= ========= ======= =========
</TABLE>
See Notes to Pro Forma Combined Condensed Statements of Income.
44
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
L&B Jefferson & Texas
Financial L&B Heritage
L&B Pro Forma Financial Texas Pro Forma All Entities
Jefferson Financial Adjustments Pro Forma Heritage Adjustments Pro Forma
----------- --------- ----------- ----------- -------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest and dividend income $ 73,044 10,173 (985) a 82,221 5,805 (127) a 87,923
(11) b 24 b
Interest expense 50,298 4,991 55,289 2,959 180 c 58,428
--------- --------- ----------- --------- ------- ---------- ---------
Net interest income 22,746 5,182 (996) 26,932 2,846 (283) 29,495
Provision for loan losses 367 0 367 83 450
--------- --------- ----------- --------- ------- ---------- ---------
Net interest income after
provision for loan losses 22,379 5,182 (996) 26,565 2,763 (283) 29,045
Noninterest income 2,482 (14) 2,468 597 3,065
Noninterest expense 14,955 3,189 316 d 18,460 2,035 396 d 20,891
--------- --------- ----------- --------- ------- ---------- ---------
Income before income taxes 9,906 1,979 (1,312) 10,573 1,325 (679) 11,219
Income tax expense 3,536 508 (359) e 3,685 467 (102) e 4,050
--------- --------- ----------- --------- ------- ---------- ---------
Net income $ 6,370 1,471 (953) 6,888 858 (577) 7,169
========= ========= =========== ========= ======= ========== =========
Net income available to
common shareholders $ 6,370 1,471 6,888 858 7,169
========= ========= ========= ======= =========
Net income per common share $ 1.60 0.93 1.49 1.53 1.49
========= ========= ========= ======= =========
Average shares outstanding 3,983,317 1,582,540 4,624,561 561,000 4,808,231
========= ========= ========= ======= =========
</TABLE>
NOTES TO PRO FORMA COMBINED CONDENSED STATEMENTS OF INCOME
(a) Interest income lost at an assumed rate of 5.75% on interest earning assets,
6.20% on investment securities, available for sale, and 7.30% on mortgage-
backed securities, available for sale as a result of the cash used for
acquisitions.
(b) Amortization of purchase accounting adjustments on investment and mortgage-
backed securities portfolios under the straight line method over a period of
5 years.
(c) Interest expense on Federal Home Loan Bank advances at an assumed rate of
6.00%.
(d) Amortization of goodwill under the straight line method over a period of 15
years.
(e) Tax effect of pro forma adjustments at an assumed effective tax rate 36%
(goodwill is considered non-deductible).
45
<PAGE>
DESCRIPTION OF JEFFERSON CAPITAL STOCK
The Certificate of Incorporation of Jefferson currently authorizes the
issuance of 20,000,000 shares of common stock, par value $0.01 per share
(previously defined herein as the "Jefferson Common"), and 5,000,000 shares of
preferred stock, par value $0.01 per share, of which 50,000 shares of serial
preferred stock are designated "Junior Participating Preferred Stock, Series E",
stated value $6,000 per share (the "Jefferson Series E Preferred Stock").
As of September 30, 1996, 4,181,795 shares of Jefferson Common were issued
and outstanding, and 50,000 shares of Jefferson Series E Preferred Stock were
reserved for issuance with no shares outstanding.
With respect to the remaining authorized but unissued preferred shares,
Jefferson's Certificate of Incorporation provides that its Board of Directors
may, by resolution, cause such serial preferred shares to be issued from time to
time, in series, and fix the powers, designations, preferences and relative,
participating, optional and other rights and qualifications, limitations and
restrictions of such shares.
The following is a brief description of the terms of the Jefferson Common.
For a discussion of the terms of the Jefferson Series E Preferred Stock, see
"COMPARISON OF SHAREHOLDER RIGHTS--Shareholder Rights Plan."
JEFFERSON COMMON
Dividend Rights. Jefferson may, from time to time, declare dividends to the
holders of Jefferson Common, who will be entitled to share equally in any such
dividends.
Voting Rights. Each share of Jefferson Common has the same relative rights
and is identical in all respects with every other share of Jefferson Common.
The holders of Jefferson Common possess exclusive voting rights in Jefferson,
except to the extent that shares of serial preferred stock issued in the future
may have voting rights, if any. Each holder of shares of Jefferson Common is
entitled to one vote for each share held of record on all matters submitted to a
vote of holders of shares of Jefferson Common.
Preemptive Rights. Holders of Jefferson Common do not have preemptive rights
with respect to any additional shares of Jefferson Common which may be issued.
Liquidation Rights. In the event of a liquidation, dissolution or winding up
of Jefferson, each holder of shares of Jefferson Common would be entitled to
receive, after payment of all debts and liabilities of Jefferson, a pro rata
portion of all assets of Jefferson available for distribution to holders of
Jefferson Common. If any serial preferred stock is issued, the holders thereof
may have a priority in liquidation or dissolution over the holders of Jefferson
Common.
Assessment and Redemption. Shares of Jefferson Common will be, when issued,
fully paid and nonassessable. Except with respect to the attached preferred
share purchase rights, such shares of Jefferson Common do not have any
redemption provisions. See "COMPARISON OF SHAREHOLDER RIGHTS--Shareholder
Rights Plan."
Transfer Agent and Registrar. Boatmen's Trust Company, St. Louis, Missouri,
is the transfer agent and registrar for the Jefferson Common.
46
<PAGE>
SERIAL PREFERRED STOCK
The Board of Directors of Jefferson is authorized to issue serial preferred
stock and to fix and state voting powers, designations, preferences or other
special rights of such shares and the qualifications, limitations and
restrictions thereof. The serial preferred stock may rank prior to the
Jefferson Common as to dividend rights or liquidation preferences, or both, and
may have full or limited voting rights. The Board of Directors of Jefferson has
no present intention to issue any of the serial preferred stock.
COMPARISON OF SHAREHOLDER RIGHTS
The rights of holders of shares of Jefferson Common are governed by the
General Business Corporation Law of Delaware (the "Delaware Law"), the state of
Jefferson's incorporation, and by Jefferson's Certificate of Incorporation,
Bylaws and other corporate documents of Jefferson. The rights of holders of
shares of L&B Common are governed by the Texas Act and by L&B's Articles of
Incorporation, Bylaws and other corporate documents. The rights of holders of
shares of L&B Common differ in certain respects from the rights which such
holders would have as shareholders of Jefferson. A summary of the material
differences between the respective rights of holders of L&B Common and Jefferson
Common is set forth herein.
SHAREHOLDER VOTE REQUIRED FOR CERTAIN TRANSACTIONS
Business Combinations. The Delaware Law generally provides that a merger or
consolidation of domestic corporations requires the approval of holders of a
majority of the outstanding stock of the corporation entitled to vote thereon.
Jefferson's Certificate of Incorporation provides that any "Business
Combination" (as defined herein) will require the affirmative vote of the
holders of at least 80% of the outstanding shares entitled to vote and at least
a majority of the outstanding shares entitled to vote not including shares
deemed beneficially owned by a Related Person. Under Jefferson's Certificate of
Incorporation, the term "Business Combination" means: (i) any merger or
consolidation of, with or into a Related Person (as defined herein); (ii) any
sale, lease, exchange, transfer or other disposition, including without
limitation, a mortgage, or any other capital device, of all or any Substantial
Part (as defined herein) of the assets of Jefferson (including without
limitation any voting securities of a subsidiary) or of a subsidiary, to a
Related Person; (iii) any merger or consolidation of a Related Person with or
into Jefferson or a subsidiary of Jefferson; (iv) any sale, lease, exchange,
transfer or other disposition of all or any Substantial Part of the assets of a
Related Person to Jefferson or a subsidiary of Jefferson; (v) the issuance of
any securities of Jefferson or a subsidiary of Jefferson to a Related Person;
(vi) the acquisition by Jefferson or a subsidiary of Jefferson of any securities
of a Related Person; (vii) any reclassification of Jefferson Common or any
recapitalization involving Jefferson Common; and (viii) any agreement, contract
or other arrangement providing for any of the transactions described in Article
XV of the Certificate of Incorporation. The term "Related Person" means and
includes: (i) any individual, corporation, partnership or other person or entity
which together with its affiliates beneficially owns in the aggregate 10% or
more of the outstanding shares of Jefferson Common; and (ii) any affiliate of
any such individual, corporation, partnership or other person or entity.
Without limitation, any shares of Jefferson Common which any Related Person has
the right to acquire pursuant to any agreement, or upon exercise or conversion
rights, warrants or options, or otherwise, shall be deemed beneficially owned by
such Related Person. The Term "Substantial Part" means more than 25% of the
total assets of Jefferson, as of the end of its most recent fiscal year ending
prior to the time the determination is made.
47
<PAGE>
The Texas Act provides that any merger or consolidation must be approved by
the affirmative vote of holders of at least two-thirds of the outstanding shares
of each corporation entitled to vote thereon, unless the board of directors
requires a greater vote or vote by class or by series. Notwithstanding the
foregoing, the Texas Act permits the articles of incorporation or bylaws to
specifically provide that the act of the shareholders on matters with respect to
which an affirmative vote of holders of a specified portion of the shares
entitled to vote is required shall be the affirmative vote of holders of a
specified portion, but not less than a majority of the shares entitled to vote
on that matter.
L&B's Articles of Incorporation provide three mechanisms to approve a
"Business Combination" (as defined herein). First, a Business Combination may
be approved by the affirmative vote of not less than 80% of the outstanding
voting shares, voting separately as a class, and an independent majority of
shareholders. Second, if a Business Combination satisfies the following
requirements, it may be approved by the affirmative vote of at least two-thirds
of the outstanding voting shares: (i) the economic benefit received from the
Business Combination by each common and preferred shareholder relative to the
market price of the shares before the combination is equal to or greater than
the price paid for the shares by the Related Person (as defined herein) relative
to the market price for the stock immediately prior to the Related Person's
acquisition of the stock; (ii) the economic per share benefit received by common
and preferred shareholders is equal to or greater than the highest price paid by
the Related Person; (iii) all shareholders, including any Related Persons,
receive the same consideration; (iv) after the time a party becomes a Related
Person and prior to the consummation of the Business Combination, (a) such
Related Person has voted his shares in such a manner to cause the Board of
Directors to have a proportion of directors who are Related Person equal to the
proportion of outstanding shares held by Related Persons, (b) such Related
Person has not acquired, directly or indirectly, from L&B any shares except
under limited circumstances, and (c) such Related Person has not received the
benefit of any loans, advances, guarantees, pledges, or other financial
assistance or tax credits provided by L&B or made any major change in L&B's
business or equity capital structure; and (iv) each shareholder receives a
detailed proxy statement. Third, a Business Combination may be approved by two-
thirds of the "Whole Board of Directors" (as defined herein) if the approval is
prior to the acquisition of 10% or more of L&B's outstanding voting shares by
the Related Person or by the affirmative vote of two-thirds of the Whole Board
of Directors and a majority of the Continuing Directors (as defined herein)
after such acquisition.
Under L&B's Articles of Incorporation, the term "Business Combination"
means: (i) any sale, lease, exchange, or other disposition of all or
substantially all of its assets or business to or with a Related Person by L&B
or its subsidiaries; (ii) any purchase, exchange, lease or other disposition of
all or any Substantial Part of the assets of a Related Person to L&B or a
subsidiary of L&B; (iii) any merger or consolidation, with or into a Related
Person; (iv) any reclassification of securities or any recapitalization which
indirectly or directly has the effect of increasing the proportionate voting
shares of L&B; and (v) the acquisition by L&B or a subsidiary of L&B of any
securities of a Related Person. The term "Related Person" means and includes
(i) any individual, corporation, partnership or other person or entity which
together with its affiliates beneficially owns in the aggregate 10% or more of
the outstanding shares of L&B; and (ii) any affiliate of any such individual,
corporation, partnership or other person or entity. Without limitation, any
shares of L&B which any Related Person has the right to acquire pursuant to any
agreement, or upon exercise or conversion rights, warrants or options, or
otherwise, shall be deemed beneficially owned by such Related Person. The term
"Whole Board of Directors" means the total number of directors which L&B would
have if there were no vacancies. The term "Continuing Director" includes (i)
each of the present directors of L&B, whether or not such person is a Related
Person, (ii) individuals unaffiliated with a Related Person who was a member of
the Board of Directors prior to the time that a Related Person acquired 10% or
more of the outstanding voting shares, and (iii) individuals unaffiliated with a
Related
48
<PAGE>
Person and who is designated before his initial election as a Continuing
Director by a majority of the then Continuing Directors.
Because of the differences between Jefferson's Certificate of Incorporation
and L&B's Articles of Incorporation, it may be more difficult for Jefferson's
shareholders to cast sufficient votes to approve certain business combinations
than it is for shareholders of L&B.
Removal of Directors. The Certificate of Incorporation of Jefferson
provides that any director or the entire board of directors of Jefferson may be
removed, at any time, but only for cause and only by the affirmative vote of the
holders of at least 80% of the outstanding shares of capital stock of Jefferson
entitled to vote generally in the election of directors cast at a meeting of the
stockholders called for that purpose. Notwithstanding the foregoing, whenever
the holders of any one or more series of preferred stock of Jefferson shall have
the right, voting separately as a class, to elect one or more directors of
Jefferson, the removal provisions described above do not apply with respect to
the directors elected by such holders of preferred stock.
The Texas Act permits the removal of directors only by specific provision
in the articles of incorporation or bylaws at a meeting specifically called for
that purpose, which such removal is approved by not less than a majority of
shareholders then entitled to vote at any election of directors.
L&B's Articles of Incorporation and Bylaws provide that any director may be
removed from office only for cause by an affirmative vote of two-thirds of the
outstanding shares of capital stock entitled to vote generally in the election
of directors cast at a meeting of the stockholders called for that purpose.
Notwithstanding the foregoing, whenever the holders of class or series of stock
are entitled to elect one or more directors, only the holders of shares of that
class or series of stock shall be entitled to vote for or against the removal of
any director elected by the holders of the shares of that class or series.
Because of the differences between the Jefferson's Certificate of
Incorporation and L&B's Articles of Incorporation, it may be more difficult for
a stockholder of Jefferson to remove a director for cause than it is for a
shareholder of L&B.
Amendments to Certificate of Incorporation. The Delaware Law provides that
the certificate of incorporation of a Delaware corporation may be amended only
if first approved by the corporation's board of directors and thereafter by a
majority of the outstanding stock entitled to vote thereon. The Delaware Law
also provides that if a greater vote is specified in the certificate of
incorporation, then amending such provision in the certificate of incorporation
likewise requires such a greater than majority shareholder vote.
The Certificate of Incorporation of Jefferson provides that the Corporation
reserves the right to repeal, alter, amend or rescind any provision contained in
its Certificate of Incorporation in the manner now or hereafter prescribed by
law, and all rights conferred on stockholders therein are granted subject to
this reservation. The Certificate of Incorporation of Jefferson further provides
that the affirmative vote of the holders of not less than 80% of the outstanding
shares of capital stock of Jefferson entitled to vote generally in the election
of directors shall be required to amend or repeal certain provisions of
Jefferson's Certificate generally related to business combinations and anti-
takeover protections.
Under the Texas Act, an amendment to the articles of incorporation of a
Texas corporation is adopted upon receiving the affirmative vote of the holders
of at least two-thirds of the outstanding shares entitled to vote thereon,
unless any class or series of shares is entitled to vote thereon as a class, in
which event, the proposed amendment shall be adopted upon receiving the
affirmative vote of the holders of at
49
<PAGE>
least two-thirds of the shares within each class or series of outstanding shares
entitled to vote thereon as a class and of at least two-thirds of the total
outstanding shares entitled to vote thereon. In addition, the Texas Act provides
that the holders of outstanding shares of a class or series, whether or not
entitled to vote as a class or series thereon by provision of the articles of
incorporation, may do so if the amendment directly affects their class or series
of stock.
L&B's Articles of Incorporation provide that L&B reserves the right to
repeal, alter, amend or change any provision contained in its Articles in the
manner now or hereafter prescribed by law, and all rights conferred on
stockholders therein are granted subject to this reservation. The Articles of
Incorporation further provide that a majority of the directors then in office
must first approve the amendment and then an affirmative vote of a majority of
the shares of the Corporation entitled to vote generally in an election of
directors (voting together as a single class, unless any class or series of
shares is entitled to vote as a class, in which event the proposed amendment
requires the affirmative vote of the majority of the shares within each class
entitled to vote) is required to approve the amendment. However, to amend,
adopt, alter, change or repeal any provision inconsistent with Articles VI, VII,
VIII, IX, and XI, requires an affirmative vote of at least two-thirds of shares
entitled to vote generally in an election of directors (voting together as a
single class, unless any class or series of shares is entitled to vote as a
class, in which event the proposed amendment requires the affirmative vote of
the majority of the shares within each class entitled to vote). To amend, alter,
change or repeal Article X, requires an affirmative vote of the holders of at
least two-thirds of the outstanding voting shares, voting separately as a class,
and an independent majority of stockholders unless at least two-thirds of the
Whole Board of Directors, including a majority of the Continuing Directors
approve the amendment.
The Delaware Law and provisions of Jefferson's Certificate of Incorporation
make it more difficult for the shareholders of Jefferson to amend certain
provisions of its Certificate of Incorporation than it is for the shareholders
of L&B to amend similar provisions of its Articles of Incorporation.
Amendments to Bylaws. Jefferson's Certificate of Incorporation provides
that the Board of Directors of Jefferson is expressly authorized to adopt,
repeal, alter, amend and rescind the Bylaws of Jefferson by a vote of two-thirds
of the Board of Directors. In addition, the Bylaws may be repealed, altered,
amended or rescinded by the vote of the holders of not less than 80% of the
outstanding shares of capital stock of Jefferson entitled to vote generally in
the election of directors (considered for this purpose as one class) cast at a
meeting of the stockholders called for that purpose (provided that notice of
such proposed adoption, repeal, alteration, amendment or rescission is included
in the notice of such meeting).
L&B's Bylaws and Articles of Incorporation provide that the Board of
Directors may adopt, alter, amend or repeal the Bylaws with an affirmative vote
of a majority of the directors then in office at any regular or special meeting
of the Board of Directors.
Because of the differences between Jefferson's Certificate of Incorporation
and L&B's Bylaws and Articles of Incorporation, it is more difficult for
shareholders of Jefferson to affect an amendment to its Bylaws.
VOTING RIGHTS
In accordance with the Delaware law, and as provided in Jefferson's Bylaws,
each outstanding share of Jefferson is entitled to one vote on each matter voted
on at a meeting of shareholders. A shareholder of Jefferson may vote in person
or by proxy. Directors of Jefferson are elected by a plurality of the votes
cast, and shareholders of Jefferson are not entitled to cumulative voting in the
election of directors. All
50
<PAGE>
other matters voted on by stockholders are determined by a majority of the
stockholder votes cast, except with respect to those matters specifically
requiring a greater than majority vote pursuant to the Delaware Law or
Jefferson's Certificate of Incorporation.
Under the Texas Act, each outstanding share, regardless of class, is
entitled to one vote on each matter submitted to a vote at a meeting of
shareholders, except to the extent provided by the articles of incorporation or
as otherwise provided in the Texas Act. The Texas Act does provide, however, for
cumulative voting for the election of directors unless expressly prohibited by
the articles of incorporation.
L&B's Bylaws provide that each outstanding share of stock is entitled to
one vote on each matter voted on at a meeting of shareholders. A shareholder of
L&B may vote in person or by proxy. Directors of L&B are elected by a plurality
of the votes cast. L&B's Articles of Incorporation expressly prohibit cumulative
voting in the election of directors. All other matters voted on by shareholders
are determined by a majority of the shareholder votes cast, except those matters
specifically requiring a greater vote pursuant to L&B's Bylaws and Articles of
Incorporation.
The rights of shareholders of Jefferson and those of L&B are not materially
different in these respects.
SPECIAL MEETINGS OF SHAREHOLDERS; SHAREHOLDER ACTION BY WRITTEN CONSENT
Jefferson's Certificate of Incorporation provides that special meetings of
shareholders for any purposes may be called at any time by the Board of
Directors of Jefferson or by a committee of the Board of Directors which has
been duly designated by the Board of Directors and whose powers and authorities,
as provided in a resolution of the Board of Directors or in the Bylaws of
Jefferson, include the power and authority to call such meetings, but such
special meetings may not be called by any other person or persons. Neither
Jefferson's Certificate of Incorporation nor its Bylaws specifically authorize
shareholder action by unanimous written consent of the shareholders.
The Texas Act provides that a special meeting of shareholders may be called
by the president, the board of directors or by persons authorized in the
articles of incorporation or the bylaws or by the holders of at least 10% of all
of the shares entitled to vote at the proposed special meeting, unless the
articles of incorporation provide for a number of shares greater than or less
than 10%, but in no event shall the articles of incorporation provide for a
number of shares greater than 50%. Only business within the purpose or purposes
described in the notice of meeting may be conducted at a special meeting of the
shareholders.
L&B's Bylaws and Articles of Incorporation provide that a special meeting
of shareholders for any purpose may be called only by (i) the Board of Directors
pursuant to a resolution approved by a majority of the Whole Board of Directors
(defined as the number of directors which the Corporation would have if there
were no vacancies) and a majority of the directors then in office, (ii) the
Chairman of the Board, (iii) the Chief Executive Officer, or (iv) holders of a
majority of all votes entitled to be cast on any issue proposed to be considered
at such special meeting.
The Texas Act also provides that, unless otherwise provided for in the
articles of incorporation, any action required or permitted to be taken at a
meeting of shareholders may be taken without a meeting if a consent, in writing,
setting forth the action taken is signed by the holders of all shares entitled
to vote on the subject matter. Under the Texas Act, the articles of
incorporation may also specifically allow for such actions to be taken by
written consent of the shareholders having not less than the minimum number
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of votes necessary to authorize such action at a meeting at which all shares
entitled to vote thereon are present. L&B's Articles of Incorporation do not
provide for such action to be taken by written consent.
The rights of shareholders of Jefferson and those of L&B are not materially
different in these respects, except that a majority of shareholders of L&B may
call a special meeting while the shareholders of Jefferson may not.
NOTICE OF SHAREHOLDER NOMINATIONS OF DIRECTORS AND PROPOSALS
The Delaware Law does not contain any specific provisions regarding notice
of shareholders' nominations of directors or proposals.
Jefferson's Certificate of Incorporation provides that nominations for the
election of directors and proposals for any new business to be taken up at any
annual or special meeting of shareholders may be made by the Board of Directors
of Jefferson or by any shareholder of Jefferson entitled to vote generally in
the election of directors. In order for a shareholder of Jefferson to make any
such nominations and/or proposals, he or she shall give notice thereof in
writing, delivered or mailed to the Secretary of Jefferson not less than thirty
days nor more than sixty days prior to any such meeting; provided, however, that
if less than forty days' notice of the meeting is given to shareholders, such
written notice shall be delivered or mailed to the Secretary of Jefferson not
later than the close of the tenth day following the day on which notice of the
meeting was mailed to shareholders.
L&B's Articles of Incorporation provide that nominations for the election
of directors and proposals for any new business to be taken up at any annual or
special meeting of shareholders may be made by the Board of Directors of L&B or
by any shareholder of L&B entitled to vote generally in the election of
directors. In order for a shareholder of L&B to make any such nominations and/or
proposals, he or she shall give notice thereof in writing, delivered or mailed
to the principle offices of L&B not less than 60 days prior to the anniversary
date of the mailing of proxy materials by L&B in connection with the immediately
preceding annual meeting of shareholders of L&B, or, with respect to a special
meeting of shareholders for the election of directors, the close of business on
the tenth day following the date on which notice of such meeting is first given
to shareholders. The notice shall set forth a brief description of the proposal,
the name and address of the proposing shareholder, the class and number of
shares of L&B stock beneficially owned by the proposing shareholder and any
known supporters, and any financial interest held by the proposing shareholder
in the proposal.
The rights of shareholders of Jefferson and those of L&B are not materially
different in these respects.
SHAREHOLDER RIGHTS PLAN
On August 17, 1994, the Board of Directors of Jefferson declared a dividend
of one Preferred Share Purchase Right (a "Right") for each outstanding share of
Jefferson Common. The dividend was payable on September 7, 1994 (the "Jefferson
Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from Jefferson one one-hundredth share of
Jefferson Series E Preferred Stock at a price of $60.00 per one one-hundredth
Jefferson Series E Preferred Stock (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between Jefferson and Boatmen's Trust
Company, as Rights Agent.
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Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") have acquired beneficial ownership of 19.9% or more of the outstanding
shares of Jefferson Common or (ii) 10 business days (or such later date as may
be determined by action of the Board of Directors prior to such time as any
person becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 19.9% or more of such outstanding shares of Jefferson Common (the
earlier of such dates being called the "Distribution Date"), the Rights are
evidenced, with respect to any of the certificates of Jefferson Common, by such
certificate.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Jefferson Common. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
certificates representing shares of Jefferson Common issued after the Jefferson
Record Date, upon transfer or new issuance of Jefferson Common will contain a
notation incorporating the Rights Agreement by reference. Until the Distribution
Date (or earlier redemption or expiration of the Rights), the surrender for
transfer of any certificates for Jefferson Common, outstanding as of the
Jefferson Record Date, even without such notation or a copy of this Summary of
Rights being attached thereto, will also constitute the transfer of the Rights
associated with the Jefferson Common represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Jefferson Common as of the close of business on the Distribution Date and such
separate Right Certificate alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights will
expire on August 17, 2004 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by
Jefferson, in each case, as described below.
The Purchase Price payable, and the number of Jefferson Series E Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Jefferson Series E Preferred Stock, (ii) upon the grant to holders of Jefferson
Series E Preferred Stock of certain rights or warrants to subscribe for or
purchase shares of Jefferson Series E Preferred Stock at a price, or securities
convertible into shares of Jefferson Series E Preferred Stock with a conversion
price, less than the then current market price of Jefferson Series E Preferred
Stock or (iii) upon the distribution to holders of Jefferson Series E Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings or dividends payable on
Jefferson Common) or of subscription rights or warrants (other than those
referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
share of Jefferson Series E Preferred Stock issuable upon exercise of each Right
are also subject to adjustment in the event of a stock split on Jefferson Common
or a stock dividend on Jefferson Common payable in Jefferson Common or
subdivisions, consolidations or combinations of Jefferson Common occurring, in
any such case, prior to the Distribution Date.
Shares of Jefferson Series E Preferred Stock purchasable upon exercise of
the Rights will not be redeemable. Each share of Jefferson Series E Preferred
Stock will be entitled to a minimum preferential quarterly dividend payment of
$25.00 per share, but will be entitled to an aggregate dividend of 100 times the
dividend declared per share of Jefferson Common. In the event of liquidation,
the holders of Jefferson Series E Preferred Stock will be entitled to a minimum
preferential liquidation payment of $6,000.00 per share, but will be entitled to
an aggregate payment of 100 times the payment made per share of Jefferson
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Common. The Jefferson Series E Preferred Stock do not have general voting
rights. Finally, in the event of any merger, consolidation or other transaction
in which shares of Jefferson Common are exchanged, each share of Jefferson
Series E Preferred Stock will be entitled to receive 100 times the amount
received per share of Jefferson Common. These rights are protected by customary
anti-dilution provisions.
Because of the nature of the dividend and liquidation rights on Jefferson
Series E Preferred Stock, the value of the one one-hundredth interest in a share
of Jefferson Series E Preferred Stock purchasable upon exercise of each Right
should approximate the long term value of one share of Jefferson Common.
In the event that Jefferson is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that (i) any
person or group of affiliated or associated persons becomes the beneficial owner
of 19.9% or more of the outstanding shares of Jefferson Common or (ii) during
such time as there is an Acquiring Person, there shall be a reclassification of
securities or a recapitalization or reorganization of Jefferson or other
transaction or series of transactions involving Jefferson which has the effect
of increasing by more than 1% of the proportionate share of the outstanding
shares of any class of equity securities of Jefferson or any of its subsidiaries
beneficially owned by the Acquiring Person, proper provision shall be made so
that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will thereafter be void), will thereafter have the right
to receive upon exercise that number of shares of Jefferson Common having a
market value of two times the exercise price of the Right.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 19.9% or more of the outstanding
shares of Jefferson Common and prior to the acquisition by such person or group
of 50% or more of the outstanding shares of Jefferson Common, the Board of
Directors of Jefferson may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at an exchange
ratio of one share of Jefferson Common per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Jefferson Series E Preferred Stock
will be issued (other than fractions which are integral multiples of one one-
hundredth of a share of Jefferson Series E Preferred Stock and which may, at the
election of Jefferson, be evidenced by depository receipts) and in lieu thereof,
an adjustment in cash will be made based on the market price of Jefferson Common
on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 19.9% or more of the outstanding
shares of Jefferson Common, the Board of Directors of Jefferson may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on such
basis and with such conditions as the Board of Directors in its sole discretion
may establish. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.
In addition, if a bidder who does not beneficially own more than 1% of the
shares of Jefferson Common and all other voting shares of Jefferson (together
the "Voting Shares") (and who has not within the past year owned in excess of 1%
of the Voting Shares and, at a time the bidder held such greater than
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1% stake, disclosed, or caused the disclosure of, an intention which relates to
or would result in the acquisition or influence of control of Jefferson)
proposes to acquire all of the Voting Shares for cash at a price which a
nationally recognized investment banker selected by such bidder states in
writing is fair, and such bidder has obtained written financing commitments (or
otherwise has financing) and complies with certain procedural requirements, then
Jefferson, upon the request of the bidder, will hold a special meeting of
shareholders to vote on a resolution requesting the Board of Directors to accept
the bidder's proposal. If a majority of the outstanding shares entitled to vote
on the proposal vote in favor of such resolution, then for a period of 60 days
after such meeting, the Rights will be automatically redeemed at the Redemption
Price immediately prior to the consummation of any tender offer for all of such
shares at a price per share in cash equal to or greater than the price offered
by such bidder; provided, however, that no redemption will be permitted or
required after the acquisition by any person or group of affiliated or
associated persons of beneficial ownership of 19.9% or more of the outstanding
shares of Jefferson Common. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of
Jefferson without the consent of the holders of the Rights, including an
amendment to lower certain thresholds described above to not less than the
greater of (i) any percentage greater than the largest percentage of the
outstanding shares of Jefferson Common then known to Jefferson to be
beneficially owned by any person or group of affiliated or associated persons or
(ii) 10%, except that from and after such time as any person becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of Jefferson, including, without limitation, the right to vote
or to receive dividends.
The Rights Plan has certain anti-takeover effects. The Rights may cause
substantial dilution to a person or entity that attempts to acquire Jefferson on
terms not approved by the Board of Directors.
L&B does not have a shareholder rights plan. The existence of the Jefferson
Rights Agreement makes it more difficult in Jefferson's case than in the case of
L&B for a potential acquiror to effect a business combination that has not been
negotiated with the Board of Directors of Jefferson.
DISSENTERS' RIGHTS
The Delaware Law provides that, unless the certificate of incorporation of a
Delaware corporation provides otherwise, no dissenters' appraisal rights are
available to holders of shares that are listed on a national securities exchange
or designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, or are held of record
by more than 2,000 shareholders. However, appraisal rights are available under
the Delaware Law where shareholders of a corporation are required to accept in
exchange for their shares (i) shares of stock of the corporation surviving or
resulting from a merger or consolidation, or depository receipts in respect
thereof; (ii) shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of Securities
Dealers or held of record by more than 2,000 holders; (iii) cash in lieu of
fractional shares or fractional depository receipts described in (i) or (ii)
above; or (iv) any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts described in
the foregoing items (i), (ii), and (iii). Jefferson's Certificate of
Incorporation does not contain specific provisions concerning this matter.
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Under the Texas Act, a shareholder of a Texas corporation is entitled to
receive payment for the fair value of his or her shares under certain
circumstances. See "THE MERGER -- Dissenter's Rights." L&B's Bylaws and Articles
of Incorporation do not contain specific provisions concerning this matter.
The rights of shareholders of Jefferson and those of L&B are not materially
different in these respects.
TAKEOVER STATUTES
Section 203 of the Delaware Law generally prohibits a Delaware corporation
(such as Jefferson) from engaging in a Business Combination (as defined in
Section 203) with an Interested Stockholder (as defined in Section 203) for a
period of three years following the date such person became an Interested
Stockholder unless (a) prior to the date that such person became an Interested
Stockholder, the board of directors of the corporation approved either the
Business Combination or the transaction that resulted in the stockholder
becoming an Interested Stockholder, (b) upon consummation of the transaction
that resulted in the stockholder becoming an Interested Stockholder, the
Interested Stockholder owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding stock held by
directors who are also officers of the corporation and employee stock plans that
do not provide employees with the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange offer,
(c) the business combination is proposed prior to the consummation or
abandonment of and subsequent to the public announcement of a proposed
transaction which (i) constitutes a merger or consolidation of the corporation,
(ii) is with or by a person who either was not an Interested Stockholder during
the previous three years or who became an Interested Stockholder with the
approval of the corporation's board of directors and (iii) is approved or not
opposed by a majority of the board of directors then in office who were
directors prior to any person becoming an Interested Stockholder during the
previous three years, or (d) on or subsequent to the date such person became an
Interested Stockholder, the Business Combination is approved by the board of
directors of the corporation and authorized at a meeting of stockholders, and
not by written consent, by the affirmative vote of the holders of at least 66
2/3% of the outstanding voting stock of the corporation not owned by the
Interested Stockholder. A copy of Section 203 of the Delaware Law has been
annexed as Appendix B hereto.
The Texas Act does not contain a takeover statute or a "control share
acquisition" provision.
Because of the differences between the Delaware Law and the Texas Act, it is
more difficult to effect an unsolicited business combination with Jefferson than
it is to effect an unsolicited business combination with L&B.
INDEMNIFICATION
The Delaware Law grants Delaware corporations broad indemnification powers,
including the authority to provide forms of indemnification set forth by the
Delaware Law. The Certificate of Incorporation of Jefferson provides
indemnification for each person who was or is made a party or threatened to be
made a party to or is otherwise involved in any proceeding by reason of the fact
that he or she is or was a director or officer of Jefferson or is or was serving
or has agreed to serve at the request of Jefferson as a director, officer,
employee, agent partner or trustee of another corporation. In derivative suits,
indemnification covers all expenses including attorneys' fees, but excludes
amounts paid in settlement actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit. A person shall be
indemnified in a derivative suit only if (i) he is successful on the merits or
otherwise; or (ii) he acted in good faith in the transaction which is the
subject of the suit or action, and in a manner
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he reasonably believed to be in, or not opposed to, the best interests of the
corporation. In non-derivative suits, indemnification covers amounts actually
and reasonably incurred by him in connection with the defense or settlement of
the non-derivative suit, including but not limited to (i) expenses (including
attorneys' fees), (ii) amounts paid in settlement, (iii) judgments, and (iv)
fines. A determination that the standard for indemnification has been met may be
made by (i) the board of directors by a majority vote of a quorum consisting of
directors of the corporation who were not parties to the action, suit or
proceeding; or (ii) independent legal counsel (appointed by a majority of the
disinterested directors of the corporation, whether or not a quorum) in a
written opinion; or (iii) the stockholders of the corporation. Furthermore,
Jefferson will pay in advance any expenses (including attorneys' fees) which may
become subject to indemnification if the board of directors authorizes the
specific payment and the person receiving the payment undertakes in writing to
repay the same, if it is ultimately determined that he is not entitled to
indemnification by Jefferson. Jefferson's Certificate of Incorporation also
authorizes Jefferson to maintain insurance to protect Jefferson and any
director, officer, employee or agent of Jefferson or another corporation against
any expense, liability or loss, whether or not Jefferson would have the power to
indemnify such person against such expense, liability or loss under its
Certificate of Incorporation and the Delaware Law.
The Texas Act authorizes corporations to indemnify any party to any
threatened, pending or completed action, suit or proceeding who is or was a
director, officer, employee or agent of the corporation and any person who is or
was serving at the request of the corporation as director, officer, partner,
venturer, proprietor, trustee, employee or agent of another corporation or other
enterprise, if such individual acted in good faith and reasonably believed (i)
in the case of conduct in his or her official capacity as a director, that his
or her conduct was in the corporation's best interests, and (ii) in all other
cases, that his or her conduct was at least not opposed to the corporation's
best interest. In the case of any criminal proceeding, the individual must have
no reasonable cause to believe that his or her conduct was unlawful in order for
the corporation to indemnify him or her. The Texas Act provides that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged liable where the defendant's conduct
was judged to be willful or intentional misconduct in the performance of his or
her duty to the corporation, and will be limited to reasonable expenses actually
incurred in connection with the proceeding where the defendant is found liable
to the corporation or liable for receipt of improper personal benefits. Whether
such director, officer, employee or agent acted properly is determined by a
majority of a quorum of non-party directors, independent legal counsel opinion
or by non-party shareholders. A corporation may pay expenses incurred by a
director or officer before final disposition of an action or proceeding, but the
director or officer must repay such expenses if it is determined that he or she
was not entitled to indemnification. The corporation may purchase insurance on a
director, officer, employee or agent for liability asserted against him or her
whether or not the corporation could indemnify that party.
L&B's Articles of Incorporation provide that L&B will indemnify any current
and former director, officer, employee, or agent of L&B against expenses
(including the amount of judgments and the amount of settlements made with view
to the curtailment of costs of litigation, other than amounts paid to L&B
itself) actually and necessarily incurred by him in connection with the defense
of any action, suit, or proceeding in which he is made a party by reason of
being or having been such director, officer, employee or agent. However, such
person will not be indemnified in a suit or proceeding in which he or she is
adjudged to be liable for negligence or misconduct in performance of his or her
duty. Such indemnification will not be deemed exclusive of any other rights to
which such director or officer may be entitled, under any agreement, vote of
shareholders, or otherwise. The indemnity will not apply with respect to a
compromise settlement of any such action or suit or proceeding unless the
settlement is approved by the
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Board of Directors of L&B. A blanket indemnity bond, as required by law,
covering all officers, employees, and any director of L&B is maintained by L&B.
The rights of shareholders of Jefferson and those of L&B are not materially
different in these respects.
LIMITATION ON DIRECTORS' LIABILITY
Under Jefferson's Certificate of Incorporation, a director of Jefferson will
not be personally liable to Jefferson or its shareholders for monetary damages
resulting from a breach of his or her fiduciary duty as a director, except: (i)
for any breach of the director's duty of loyalty to the Corporation or its
shareholders, (ii) for acts or omissions that are not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
The Texas Act provides that a Texas corporation may include any provision in
its articles of incorporation which is not inconsistent with law, including any
provision which under the Texas Act is required or permitted to be set forth in
the bylaws which the incorporators elect to set forth in the articles of
incorporation for the regulation of the internal affairs of the corporation. The
Texas Miscellaneous Corporation Laws Act provides that a corporation may limit
the liability of its directors by provision in its articles of incorporation;
provided, however, such provision may not limit the liability of a director to
the extent the director is found liable for (i) breach of his or her duty of
loyalty to the corporation or its shareholders, (ii) an act or omission not in
good faith that constitutes a breach of duty or an act or omission that involves
intentional misconduct or a knowing violation of the law, (iii) a transaction
from which the director received an improper benefit, or (iv) an act or omission
for which liability is expressly provided for by statute. L&B's Articles of
Incorporation, contains such a provision limiting the liability of directors.
The rights of shareholders of Jefferson and those of L&B are not materially
different in these respects.
CONSIDERATION OF NON-SHAREHOLDER INTERESTS
The Delaware Law does not address the ability of a director of a Delaware
corporation to consider non-shareholder interests when discharging his or her
duties. Delaware case law, however, provides that in discharging his or her
responsibilities, a director of a Delaware corporation must limit consideration
of non-shareholder interests, and that a board of directors of a Delaware
corporation may consider non-shareholder interests only if those interests are
rationally related to benefits accruing to the shareholders of the Delaware
corporation. Delaware case law further provides that when a board of directors
of a Delaware corporation decides to sell a Delaware corporation, concern for
non-shareholder interests is inappropriate.
The Certificate of Incorporation of Jefferson grants the Board of Directors
of Jefferson broader discretion than that addressed by Delaware case law.
Specifically, Jefferson's Certificate of Incorporation provides that the Board
of Directors of Jefferson may, when evaluating a business combination or any
tender or exchange offer, give due consideration to all relevant factors
including, without limitation, social and economic effects of acceptance of such
offers on present and future customers and employees of Jefferson and
subsidiaries of Jefferson, the communities in which Jefferson and its
subsidiaries operate or are located and the ability of Jefferson and its
subsidiaries to fulfill their respective corporate objectives.
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The Texas Act does not contain provisions comparable to those described
above.
The Articles of Incorporation of L&B provide that the Board of Directors of
L&B, when evaluating a business combination or any tender or exchange offer,
shall, in addition to considering the adequacy of the amount to be paid in
connection with any such transaction, consider all of the following factors and
any other factors it deems relevant: (i) the social and economic effects of the
transaction on L&B and its subsidiaries and their respective employees,
depositors, loan and other customers, creditors and other elements of the
communities in which L&B and its subsidiaries operate or are located; (ii) the
business and financial condition and earnings prospects of the acquirors,
including, but not limited to, debt service and other existing or likely
financial obligations of the acquiror, and the possible effect of such
conditions on L&B and its subsidiaries and the elements of the communities in
which L&B and its subsidiaries operate or are located; and (iii) the competence,
experience and integrity of the acquiror and its management.
These differences do not materially affect the rights of shareholders of
either organization.
INFORMATION ABOUT L&B
BUSINESS OF L&B
L&B was incorporated in the State of Texas in November 1995, for the purpose
of becoming a savings and loan holding company for Loan and Building State
Savings Bank (the "Savings Bank"). The Savings Bank was formerly Sulphur Springs
Loan and Building Association. On October 17, 1995, the stockholders of the
Savings Bank approved a plan to reorganize the Bank into the holding company
form of ownership. The reorganization was completed on November 13, 1995, on
which date the Savings Bank became the wholly-owned subsidiary of L&B, and the
stockholders of the Savings Bank became the shareholders of L&B. Prior to the
completion of the reorganization L&B had no material assets or liabilities and
engaged in no business activity. Subsequent to the acquisition of the Savings
Bank, L&B has engaged in no significant activity other than holding the stock of
the Savings Bank and engaging in certain passive investment activities.
The Savings Bank is a state-chartered capital stock savings bank
headquartered in Sulphur Springs, Texas. The Savings Bank was known as Sulphur
Springs Loan and Building Association until October 1995, when its stockholders
approved its change to a state-chartered capital stock savings bank. The Savings
Bank, originally chartered in 1890, is a member of the Federal Home Loan Bank
system and is subject to examination and comprehensive regulation by the Texas
Savings and Loan Department, the Savings Bank's chartering authority and primary
regulator and by the Federal Deposit Insurance Corporation ("FDIC"), its primary
federal regulator. The Savings Bank's deposits are insured to the maximum limits
allowable by the FDIC through the Savings Association Insurance Fund ("SAIF").
On October 14, 1994, the Savings Bank completed its conversion from a Texas-
chartered stock savings association through the sale of 1,667,500 shares of its
common stock to certain depositors, borrowers and other members of the general
public. The conversion resulted in net proceeds of approximately $16 million,
substantially increasing the Savings Bank's net worth.
The Savings Bank conducts its business in Sulphur Springs, Texas, and in the
surrounding counties. It is a community oriented savings bank which offers a
wide variety of savings products while focusing its lending activities on
residential real estate loans secured by one-to-four family dwellings in the
communities that it serves. The Savings Bank also makes commercial real estate
loans, multi-family real estate loans, construction loans, and consumer loans
and invests in both fixed-rate and adjustable-rate investment
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securities and mortgage-backed securities issued by the United States
government, its agencies, or government-sponsored enterprises.
The Corporation's operations are conducted through its main office at 306 N.
Davis Street, Sulphur Springs, Texas, its five full service branch offices
located in the northeast Texas towns of Mt. Vernon, Mt. Pleasant, Daingerfield,
Texarkana and Pittsburg, and its mortgage loan office located in Sulphur
Springs.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table includes, as of September [30], 1996, certain
information as to the L&B Common beneficially owned by all persons or entities,
including any "group" as that term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended ("Exchange Act", who or which was known to the
Company to be the beneficial owner of more than 5% of the issued and outstanding
L&B Common.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP/(1)/ PERCENT OF CLASS
- --------------------------------------------- ------------------------- ----------------
<S> <C> <C>
Jerome H. Davis and Susan B. Davis 103,243/(2)/ 6.5%
First Save Associates, L.P.,
Second Save Associates, L.P. 119,158/(3)/ 7.5%
John Hancock Advisers, Inc. 127,000/(4)/ 8.0%
Sulphur Springs Loan and Building Association
Employee Stock Ownership Trust 100,050/(5)/ 6.3%
</TABLE>
/(1)/ Pursuant to rules promulgated by the Securities and Exchange Commission
("SEC") under the Exchange Act, a person is considered to beneficially own
shares of L&B if that person has or shares: (1) voting power, which
includes the power to vote, or direct the voting of the shares; or (2)
investment power, which includes the power to dispose, or direct the
disposition of the shares.
/(2)/ This information was provided to the SEC and to the Company by the named
persons. It was reported that Mr. Davis has sole voting and disposition
power of 25,000 shares and shared voting and disposition power of 78,243
shares and that Mr. Davis has shared voting and disposition power of
78,243 shares, except as may otherwise be deemed to be the case under
rules of the SEC. Reference is made to the Schedule 13D filed with the SEC
by such persons for more detailed information.
/(3)/ This information was provided to the SEC by the named persons, each of
which reported sole voting and disposition power for 59,579 shares. The
reporting persons disclaimed membership in a group. Reference is made to
the Schedule 13D filed with the SEC by such persons for more detailed
information.
/(4)/ This information was provided to the SEC by the named persons and its
affiliates. It was reported that the named person has sole voting and
disposition power. Reference is made to the Schedule 13D filed with the
SEC by such persons for more detailed information.
/(5)/ L&B's wholly owned subsidiary, Loan & Building State Savings Bank,
formerly was known as Sulphur Springs Loan and Building Association. The
Sulphur Springs Loan and Building
60
<PAGE>
Association Employee Stock Ownership Trust ("Trust") was established
pursuant to the Sulphur Springs Loan and Building Association Employee
Stock Ownership Plan ("ESOP") by an agreement between that entity and
Messrs. Connelly, Galyean, and Lowe, who act as trustees of the ESOP
("Trustees"). As of September 30, 1996, approximately 21,862 shares held
in the Trust had been allocated or were available for allocation to the
accounts of participating employees. Those participating employees are
entitled to direct the Trustees as to the manner in which L&B Common
allocated to them is to be voted. As of September 30, 1996, approximately
78,188 shares held in the Trust were unallocated. The Trustees vote all
unallocated L&B Common held by them for the ESOP in the same proportion for
and against proposals as participating employees vote shares of Common
Stock allocated to them. Any shares allocated to participating employees
which either abstain or do not vote are disregarded in determining this
ratio. Each share of L&B Common held in the Trust, whether allocated or
unallocated, will be exchanged for the Per Share Basic Merger
Consideration.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of September 30, 1996, the names of
each director and executive officer of L&B, the number of shares of L&B Common
owned beneficially by each director and executive officer, and the number of
shares of L&B Common owned beneficially by all directors and executive officers
of L&B as a group. None of the shareholders listed herein would own, on a pro
forma basis giving effect to the Merger, more than 1% of the issued and
outstanding shares of Jefferson Common.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNERSHIP/(1)/
OWNER
--------------------- -------------------------
<S> <C>
W.T. Allison, II 8,170 /(2)/
Enos L. Ashcroft, III 37,720 /(3)/
Daniel E. Bonner 4,220 /(4)/
Bob J. Burgin 5,770 /(5)/
James H. Connelly 7,732 /(6)/
Jeffrey C. David 2,000 /(7)/
Linda J. Galligher 5,155 /(8)/
Wayne H. Galyean 5,610 /(9)/
C. Glynn Lowe 26,766 /(10)/
Thomas J. Payne 14,720 /(11)/
Daniel M. Phillips 8,121 /(14)/
Directors and 125,984
executive
officers as a group
(11 persons)
</TABLE>
/(1)/ For purposes of this table, pursuant to rules promulgated under the
Exchange Act, a person is considered to beneficially own shares of
Common Stock if he or she has or shares: (1) voting power, which
includes the power to vote, or direct the voting of the share; or (2)
investment power, which includes the power to dispose, or direct the
disposition of the shares. No director or executive officer beneficially
owns L&B Common in excess of 1% of all of such class of securities
61
<PAGE>
issued and outstanding, except that Mr. Ashcroft beneficially owns 2.4%
and Mr. Lowe beneficially owns 1.7%.
/(2)/ Includes 700 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days.
/(3)/ Includes 1,400 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days.
/(4)/ Includes 1,400 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days; also includes
2,500 shares owned by Mr. Bonner together with his wife.
/(5)/ Includes 700 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days; also includes
1,000 shares held by Mr. Burgin's wife's IRA.
/(6)/ Includes 1,400 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty day; also includes
5,000 shares held by Mr. Connelly together with his wife and 1,012
shares in which his wife has a beneficial interest.
/(7)/ Includes 2,000 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days.
/(8)/ Includes 1,111 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days; also includes
1,000 shares owned jointly with her son.
/(9)/ Includes 1,400 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days; also includes
3,000 shares owned by mr. Galyean together with his wife and 387 shares
owned his wife's IRA.
/(10)/ Includes 6,670 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days; also includes
100 shares held by Mr. Lowe together with his wife.
/(11)/ Includes 1,400 shares underlying stock options granted under the 1995
Stock Option Plan which are exercisable within sixty days; also includes
2,500 shares beneficially owned by Mr. Payne's wife.
__________________________________
/(1)/ Addresses are provided only with respect to each beneficial owner
of more than five percent (5%) of L&B Common known to the Board
of Directors of L&B.
FAMILY RELATIONSHIPS
There are no family relationships, other than those disclosed above.
[L&B to confirm] See "INFORMATION ABOUT L&B -- Security Ownership of
Certain Beneficial Owners and Management."
62
<PAGE>
LEGAL OPINION
The legality of the securities offered hereby will be passed upon by Lewis,
Rice & Fingersh, L.C. Members of Lewis, Rice & Fingersh, L.C. and attorneys
employed by them owned, directly or indirectly, as of September 30, 1996, 3,800
shares of Jefferson Common.
EXPERTS
INDEPENDENT AUDITORS FOR JEFFERSON
The consolidated financial statements of Jefferson at December 31, 1995 and
1994 and for each of the years in the three-year period ended December 31, 1995
incorporated by reference in Jefferson's Annual Report (Form 10-K) for the year
ended December 31, 1995, have been audited by KPMG Peat Marwick LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
INDEPENDENT AUDITORS FOR L&B
The consolidated financial statements of L&B at June 30, 1996 and 1995 and
for each of the years in the three-year period ended June 30, 1996 incorporated
by reference in L&B's Annual Report (Form 10-K) for the year ended June 30,
1996, have been audited by Oakerson, Arnold, Walker & Co., independent certified
public accountants, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
PRESENCE AT SPECIAL MEETING
Representatives of Oakerson, Arnold, Walker & Co. are expected to be present
at the Special Meeting with the opportunity to make a statement if they desire
to do so and to respond to appropriate questions.
SHAREHOLDER PROPOSALS
The annual meeting of Jefferson was held on May 15, 1996. Shareholder
proposals for the annual meeting of Jefferson shareholders to be held in May
1997 must meet the requirements established by the S.E.C. for shareholder
proposals and must be received at Jefferson's executive office at 14915
Manchester Road, Ballwin, Missouri 63011 not later than December 13, 1996 in
order to be considered for inclusion in the 1997 proxy statement. Shareholder
proposals must also satisfy the requirements set forth in the Bylaws of
Jefferson described under "COMPARISON OF SHAREHOLDER RIGHTS -- Shareholder
Proposal Procedures."
63
<PAGE>
Upon receipt of any such proposal, Jefferson will determine whether or not
to include such proposal in the proxy statement and proxy in accordance with the
S.E.C.'s regulations governing the solicitation of proxies.
_______________
64
<PAGE>
APPENDIX A
----------
================================================================================
AGREEMENT AND PLAN OF MERGER
by and among
L & B FINANCIAL, INC.,
a Texas corporation,
and
JEFFERSON SAVINGS BANCORP, INC.,
a Delaware corporation,
and
JEFFERSON SAVINGS ACQUISITIONCO, INC.
a Missouri corporation
Dated September 25, 1996
================================================================================
A-1
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE - TERMS OF THE MERGER & CLOSING...................................... A-1
Section 1.01. The Merger................................................. A-1
Section 1.02. Merging Corporation........................................ A-1
Section 1.03. Surviving Corporation...................................... A-1
Section 1.04. Effect of the Merger....................................... A-1
Section 1.05. Basic Merger Consideration; Conversion of Shares........... A-1
Section 1.06. The Closing................................................ A-4
Section 1.07. Closing Date............................................... A-4
Section 1.08. Exchange Procedures; Surrender of Certificates............. A-4
Section 1.09. Actions At Closing......................................... A-5
ARTICLE TWO - REPRESENTATIONS OF L & B........................................... A-7
Section 2.01. Organization and Capital Stock............................. A-7
Section 2.02. Authorizations; No Defaults................................ A-8
Section 2.03. Subsidiaries; Partnerships; Joint Ventures................. A-9
Section 2.04. Financial Information...................................... A-9
Section 2.05. Absence of Changes......................................... A-9
Section 2.06. Regulatory Enforcement Matters............................. A-10
Section 2.07. Tax Matters................................................ A-10
Section 2.08. Litigation................................................. A-10
Section 2.09. Employment Agreements...................................... A-10
Section 2.10. Reports.................................................... A-10
Section 2.11. Investment Portfolio....................................... A-11
Section 2.12. Loan Portfolio............................................. A-11
Section 2.13. Employee Matters and ERISA................................. A-11
Section 2.14. Title to Properties; Insurance............................. A-12
Section 2.15. Environmental Matters...................................... A-13
Section 2.16. Compliance with Law........................................ A-13
Section 2.17. Undisclosed Liabilities.................................... A-14
Section 2.18. Brokerage.................................................. A-14
Section 2.19. Statements True and Correct................................ A-14
ARTICLE THREE - REPRESENTATIONS OF JEFFERSON AND ACQUISITIONCO................... A-14
Section 3.01. Organization and Capital Stock............................. A-14
Section 3.02. Authorizations; No Defaults................................ A-15
Section 3.03. Subsidiaries............................................... A-15
Section 3.04. Financial Information...................................... A-16
Section 3.05. Absence of Changes......................................... A-16
Section 3.06. Litigation................................................. A-16
Section 3.07. Reports.................................................... A-16
Section 3.08. Compliance With Law........................................ A-16
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Section 3.09. Statements True and Correct................................ A-16
Section 3.10. Brokerage.................................................. A-17
Section 3.11. Regulatory Enforcement Matters............................. A-17
Section 3.12. Tax Matters................................................ A-17
Section 3.13. Undisclosed Liabilities.................................... A-17
Section 3.14. Current Public Information................................. A-17
ARTICLE FOUR - AGREEMENTS OF L & B............................................... A-18
Section 4.01. Business in Ordinary Course................................ A-18
Section 4.02. Breaches................................................... A-21
Section 4.03. Submission to Shareholders................................. A-21
Section 4.04. Consents to Contracts and Leases........................... A-21
Section 4.05. Merger Expenses and Related Matters........................ A-21
Section 4.06. Conforming Accounting and Reserve Policies................. A-22
Section 4.07. Consummation of Agreement.................................. A-22
Section 4.08. Environmental Reports...................................... A-22
Section 4.09. Restriction on Resales..................................... A-23
Section 4.10. Access to Information...................................... A-23
Section 4.11. Subsidiary Merger.......................................... A-24
Section 4.12. Termination of Deferred Compensation Agreements............ A-24
Section 4.13. Main Office Parking Lot and Mt. Vernon Branch.............. A-24
ARTICLE FIVE - AGREEMENTS OF JEFFERSON AND ACQUISITIONCO......................... A-24
Section 5.01. Regulatory Approvals and Registration Statement............ A-24
Section 5.02. Breaches................................................... A-25
Section 5.03. Consummation of Agreement.................................. A-25
Section 5.04. Employee Benefits.......................................... A-25
Section 5.05. Directors and Officers' Liability Insurance and
Indemnification............................................ A-26
Section 5.06. Access to Information...................................... A-27
ARTICLE SIX - CONDITIONS PRECEDENT TO THE MERGER................................. A-27
Section 6.01. Conditions to Jefferson's and AcquisitionCo' Obligations... A-27
Section 6.02. Conditions to L & B's Obligations.......................... A-28
ARTICLE SEVEN - TERMINATION OR ABANDONMENT....................................... A-29
Section 7.01. Mutual Agreement........................................... A-29
Section 7.02. Material Breach............................................ A-29
Section 7.03. Environmental Reports...................................... A-30
Section 7.04. Failure of Conditions...................................... A-30
Section 7.05. Regulatory Approval Denial................................. A-30
Section 7.06. Shareholder Approval Denial................................ A-30
Section 7.07. Regulatory Enforcement Matters............................. A-30
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
Section 7.08. Share Component Fluctuation.................................... A-30
Section 7.09. Other Termination.............................................. A-30
Section 7.10. Termination Fee................................................ A-31
ARTICLE EIGHT - GENERAL.............................................................. A-32
Section 8.01. Confidential Information....................................... A-32
Section 8.02. Return of Documents............................................ A-32
Section 8.03. Publicity...................................................... A-32
Section 8.04. Notices........................................................ A-32
Section 8.05. Liabilities.................................................... A-33
Section 8.06. Expenses....................................................... A-33
Section 8.07. Nonsurvival of Representations, Warranties and Agreements...... A-34
Section 8.08. Entire Agreement............................................... A-34
Section 8.09. Headings and Captions.......................................... A-34
Section 8.10. Waiver, Amendment or Modification.............................. A-34
Section 8.11. Rules of Construction.......................................... A-34
Section 8.12. Counterparts................................................... A-34
Section 8.13. Successors and Assigns......................................... A-34
Section 8.14. Governing Law; Assignment...................................... A-34
Section 8.15. Employment Agreement........................................... A-35
Section 8.16. Time........................................................... A-35
Section 8.17. Status of Employee Benefit Plans............................... A-35
</TABLE>
EXHIBIT 1.09(a)(x) - L & B's Legal Opinion Matters
EXHIBIT 1.09(b)(vi) - Jefferson's Legal Opinion Matters
EXHIBIT 4.09 - Affiliates Agreements
EXHIBIT 8.01 - Confidentiality Agreement
EXHIBIT 8.15 - Form of C. Glynn Lowe Employment Agreement
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
----------------------------
This is an AGREEMENT AND PLAN OF MERGER (this "Agreement") made September
25, 1996, by and among L & B FINANCIAL, INC., a Texas corporation ("L & B"),
JEFFERSON SAVINGS BANCORP, INC., a Delaware corporation ("Jefferson"), and
JEFFERSON SAVINGS ACQUISITIONCO, INC., a Missouri corporation and wholly owned
subsidiary of Jefferson ("AcquisitionCo").
In consideration of the premises and the mutual terms and provisions set
forth in this Agreement, the parties hereto agree as follows.
ARTICLE ONE
-----------
TERMS OF THE MERGER & CLOSING
-----------------------------
SECTION 1.01. THE MERGER. Pursuant to the terms and provisions of this
Agreement, the General and Business Corporation Law of Missouri (the "Missouri
Corporate Law") and the Texas Business Corporation Act (the "Texas Corporate
Law") (together, the "Corporate Law"), L & B shall merge with and into
AcquisitionCo (the "Merger").
SECTION 1.02. MERGING CORPORATION. L & B shall be the merging corporation
under the Merger and the corporate identity and existence of L & B, separate and
apart from AcquisitionCo, shall cease upon consummation of the Merger.
SECTION 1.03. SURVIVING CORPORATION. AcquisitionCo shall be the surviving
corporation in the Merger. No changes in the articles of incorporation or
bylaws of AcquisitionCo shall be effected by the Merger. The directors and
officers of AcquisitionCo shall continue to serve in such capacities as the
directors and officers of the surviving corporation.
SECTION 1.04. EFFECT OF THE MERGER. The Merger shall have all of the
effects provided by this Agreement and the Corporate Law.
SECTION 1.05. BASIC MERGER CONSIDERATION; CONVERSION OF SHARES.
(a) At the Effective Time (as defined in Section 1.07 hereof), the shares
of common stock, par value $0.01 per share, of L & B (the "L & B Common") issued
and outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holders thereof, be converted
into the right to receive a combination, in the proportion described in Section
1.05(b) hereof, of cash and common stock, par value $0.01 per share, of
Jefferson (the "Jefferson Common") having an aggregate value equal to the sum of
(A) plus (B), where (A) is the product of (i) $18.50 multiplied by (ii) the
number of Issued and Outstanding L & B Shares (as hereinafter defined) as of the
Effective Time, and (B) is an amount equal to (i) L & B's consolidated earnings
for the period commencing April 1, 1996 and extending through and including the
last day of the calendar month next preceding the calendar month in which the
Effective Time occurs (the "Earnings Period"), less (ii) the aggregate amount of
any cash dividends paid and/or declared on the L & B Common during the Earnings
Period (such aggregate amount of cash and Jefferson Common to be received in
connection with the Merger is hereinafter referred to as the "Basic Merger
Consideration"). L & B's consolidated earnings
<PAGE>
during the Earnings Period shall be determined initially by the accounting firm
of Oakerson, Arnold, Walker & Co. in accordance with generally accepted
accounting principles ("GAAP"), consistently applied, which determination of
such consolidated earnings shall be subject to verification by KPMG Peat Marwick
LLP, or such other accounting firm as Jefferson shall designate. As used
herein, "Issued and Outstanding L & B Shares" shall mean the number of shares of
L & B Common issued and outstanding immediately prior to the Effective Time,
other than shares of L & B Common held for the Sulphur Springs Loan and Building
Association Recognition and Retention Plan and Trust Agreement (the "L & B
Retention Plan"). Each share of Issued and Outstanding L & B Shares, other than
shares any holders of which have duly exercised their dissenters' rights under
the Texas Corporate Law, shall, by virtue of the Merger and without any action
on the part of the holders thereof, be converted into the right to receive the
quotient of (A) divided by (B), where (A) equals the Basic Merger Consideration
and (B) equals the number of Issued and Outstanding L & B Shares (such quotient
is hereinafter defined as the "Per Share Basic Merger Consideration").
(b) One half of the aggregate value of the Basic Merger Consideration
shall be payable in cash (the "Cash Component") and one half of the aggregate
value of the Basic Merger Consideration shall be payable in shares of Jefferson
Common (the "Stock Component"). The number of shares of Jefferson Common
constituting the Stock Component shall equal the quotient of (A) divided by (B),
where (A) equals one-half of the aggregate value of the Basic Merger
Consideration and (B) equals the average per share closing price of Jefferson
Common, as reported on The Nasdaq Stock Market's National Market, ("Nasdaq") for
the 20 business days immediately preceding the 5th calendar day prior to the
Effective Time, but which such average shall not be more than $33.60 per share
and not less than $20.00 per share (the "Jefferson Average Price"). No
fractional shares of Jefferson Common shall be issued in connection with the
Merger and, in lieu thereof, holders of shares of L & B Common who would
otherwise be entitled to a fractional share interest in Jefferson Common (after
taking into account all shares of L & B Common held by such holder) shall be
paid an amount in cash equal to the product of such fractional share interest
and the closing price of a share of Jefferson Common on the Nasdaq on the
business day immediately preceding the date on which the Effective Time occurs.
Notwithstanding the foregoing, the number of whole shares of Jefferson Common to
be issued pursuant to this Section 1.05, including shares of Jefferson Common
issued pursuant to subsections (c) and (d) of this Section 1.05, will be
increased, as necessary, and the amount of cash payable to such persons will be
decreased, as necessary, such that the aggregate value of such shares of
Jefferson Common, determined as of the Closing Date, will be not less than 50%
of the aggregate consideration paid pursuant to this Section 1.05.
(c) At the Effective Time, each person who would otherwise have been
entitled to receive, but for the Merger, shares of L & B Common by reason of
awards that have been or would have been made as of February 28, 1997 under the
L & B Retention Plan shall be entitled to receive, in addition to the Per Share
Basic Merger Consideration for shares of L & B Common held by such person and
any amounts payable to such person pursuant to subsection (d) of this Section
1.05, if any, an amount equal to the product of (A) multiplied by (B), where (A)
is the number of shares of L & B Common to which such person is or would have
been entitled as of February 28, 1997 under or by reason of the L & B Retention
Plan, without regard to whether or not such shares have been awarded or earned,
and (B) is an amount equal to the Per Share Basic Merger Consideration;
provided, however, that, assuming a Per Share Basic Merger Consideration of
$18.80, the aggregate amount payable under this Section 1.05(c) shall not exceed
$667,400. The amount payable to each person pursuant to this Section 1.05(c)
shall be paid one-half in cash and one-half in shares of Jefferson Common in the
same manner that the Basic Merger Consideration is payable pursuant to Section
1.05(b).
A-2
<PAGE>
(d) At the Effective Time, each person for whom options to purchase shares
of L & B Common have been or would have been granted as of February 28, 1997
under the Sulphur Springs Loan and Building Association 1995 Stock Option Plan
adopted by L & B (the "Option Plan"), shall be entitled to receive, in addition
to the Per Share Basic Merger Consideration for shares of L & B Common held by
such person and any amounts payable to such person pursuant to subsection (c) of
this Section 1.05, if any, an amount equal to the product of (A) multiplied by
(B), where (A) is the number of shares of L & B Common issuable upon the
exercise of unexercised stock options which have been or would have been granted
to such person as of February 28, 1997 (such options being identified in Section
2.13(c) of the Disclosure Schedule), under the Option Plan, without regard to
whether such options have been granted or have become vested or exercisable, and
(B) is the difference obtained by subtracting (i) the per share exercise price
for such option(s) from (ii) an amount equal to the Per Share Basic Merger
Consideration; provided, however, that, assuming a Per Share Basic Merger
Consideration of $18.80, the aggregate amount payable under this Section 1.05(d)
shall not exceed $1,270,000. For purposes of this Agreement, the exercise price
for options which would have been granted in 1997 shall be deemed to be $10.50.
The amount payable to each person under this Section 1.05(d) shall be paid one-
half in cash and one-half in shares of Jefferson Common in the same manner that
the Basic Merger Consideration is payable pursuant to Section 1.05(b).
(e) Upon the Effective Time, all of the shares of L & B Common, by virtue
of the Merger and without any action on the part of the holders thereof, shall
no longer be outstanding and shall be canceled and retired and shall cease to
exist, and each holder of any certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of L & B Common (the
"Certificate" or "Certificates") shall thereafter cease to have any rights with
respect to such shares, except (i) the right of such holders to receive, without
interest, the Per Share Basic Merger Consideration upon the surrender of such
Certificate or Certificates in accordance with Section 1.08 hereof, or (ii) the
right provided under Section 1.05(i), as applicable.
(f) At the Effective Time, each share of L & B Common, if any, held in the
treasury of L & B or by any direct or indirect subsidiary of L & B (other than
shares held in trust accounts for the benefit of others or in other fiduciary,
nominee or similar capacities) immediately prior to the Effective Time shall be
canceled and retired and shall cease to exist.
(g) Each share of common stock, par value $1.00 per share, of
AcquisitionCo ("AcquisitionCo Common") outstanding immediately prior to the
Effective Time shall remain outstanding and shall be unaffected by the Merger.
(h) If, between the date hereof and the Effective Time, a share of
Jefferson Common shall be changed into a different number of shares of Jefferson
Common or a different class of shares by reason of reclassification,
recapitalization, splitup, exchange of shares or readjustment, or if a stock
dividend thereon shall be declared with a record date within such period, then
the number of shares of Jefferson Common constituting the Stock Component of the
Basic Merger Consideration into which a share of L & B Common will be converted
pursuant to this Section 1.05, and the number of shares of Jefferson Common
payable under subsections (c) and (d) of this Section 1.05, will be
appropriately and proportionately adjusted so that each shareholder of L & B,
and each person entitled to payment under subsections (c) and (d) of this
Section 1.05, shall be entitled to receive such fraction of a share or such
number of shares of Jefferson Common as such shareholder and such person would
have received pursuant to such reclassification, recapitalization, splitup,
exchange of shares or readjustment or as a
A-3
<PAGE>
result of such stock dividend had the record date therefor been immediately
following the Effective Time of the Merger.
(i) If holders of L & B Common dissent from this Agreement and the Merger
in accordance with the Texas Corporate Law, any issued and outstanding shares of
L & B Common held by any dissenting holder shall not be converted as described
in this Section 1.05 but from and after the Effective Time shall represent only
the right to receive such consideration as may be determined to be due to such
dissenting holder pursuant to the Texas Corporate Law; provided, however, that
each share of L & B Common outstanding immediately prior to the Effective Time
and held by a dissenting holder who shall, after the Effective Time, either
withdraw his or her demand for appraisal or lose his or her right to dissent
shall have only such rights as are provided under the Texas Corporate Law.
SECTION 1.06. THE CLOSING. The closing of the Merger (the "Closing")
shall take place at the main offices of Jefferson, or at such other location as
the parties may agree, at 10:00 A.M. Central Time on the Closing Date described
in Section 1.07 of this Agreement.
SECTION 1.07. CLOSING DATE. The Closing shall take place on the first
business day of the month following the month during which each of the
conditions in Sections 6.01 and 6.02 hereof is satisfied or waived by the
appropriate party, or as soon thereafter as practicable, or on such other date
after such satisfaction or waiver as Jefferson and L & B may agree (the "Closing
Date"). The Merger shall be effective upon the filing of Articles of Merger
with the Secretary of State of the State of Missouri and the Secretary of State
of the State of Texas (the "Effective Time"), which the parties shall use their
best efforts to cause to occur on the Closing Date.
SECTION 1.08. EXCHANGE PROCEDURES; SURRENDER OF CERTIFICATES.
(a) Boatmen's Trust Company, St. Louis, Missouri, shall act as Exchange
Agent in the Merger (the "Exchange Agent"). At or prior to the Closing,
Jefferson shall deliver, or cause to be delivered, to the Exchange Agent (i)
cash in an amount sufficient for payment of the Cash Component plus the amounts
payable in cash under subsections (c) and (d) of Sections 1.05 and (ii)
certificates for Jefferson Common sufficient for payment of the Stock Component
plus the amounts payable in shares of Jefferson Common under subsections (c) and
(d) of Section 1.05. Cash and certificates delivered by Jefferson to the
Exchange Agent shall be held in trust for payment and delivery in accordance
with this Section 1.08.
(b) As soon as reasonably practicable after the Effective Time, the
Exchange Agent shall mail or cause to be delivered (as the Exchange Agent may
determine) to each record holder of any Certificate or Certificates whose shares
were converted into the right to receive the Per Share Basic Merger
Consideration, a letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Jefferson may reasonably specify)
(each such letter, the "Merger Letter of Transmittal") and instructions for use
in effecting the surrender of the Certificates in exchange for the Per Share
Basic Merger Consideration. Upon surrender to the Exchange Agent of a
Certificate, together with a Merger Letter of Transmittal duly executed and any
other documents as may be required by the Exchange Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor solely the Per
Share Basic Merger Consideration. No interest on the Per Share Basic Merger
Consideration issuable upon the surrender of the Certificates shall be paid or
accrued for the benefit of holders of Certificates. If the Per Share Basic
Merger Consideration is to be issued to
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a person other than a person in whose name a surrendered Certificate is
registered, it shall be a condition of issuance that the surrendered Certificate
shall be properly endorsed or otherwise in proper form for transfer and that the
person requesting such issuance shall pay to the Exchange Agent any required
transfer or other taxes or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not applicable.
(c) At any time following six months after the Effective Time, Jefferson
shall be entitled to terminate the Exchange Agent relationship, and thereafter
holders of Certificates shall be entitled to look only to Jefferson (subject to
abandoned property, escheat or other similar laws) with respect to the Per Share
Basic Merger Consideration issuable upon surrender of their Certificates.
(d) No dividends that are otherwise payable on shares of Jefferson Common
constituting the Stock Component of the Basic Merger Consideration shall be paid
to persons entitled to receive such shares of Jefferson Common until such
persons surrender their Certificates. Upon such surrender, there shall be paid
to the person in whose name the shares of Jefferson Common shall be issued any
dividends which may have become payable with respect to such shares of Jefferson
Common (without interest and less the amount of taxes, if any, which may have
been imposed thereon), between the Effective Time and the time of such
surrender.
(e) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed and, if required by Jefferson, the posting by such
person of a bond in such amount as Jefferson may determine is reasonably
necessary as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent shall issue in exchange for such
lost, stolen or destroyed Certificate, the Per Share Basic Merger Consideration
deliverable in respect thereof pursuant to this Agreement.
(f) Promptly after the Effective Time, Jefferson shall deliver to the
Exchange Agent written instructions, dated as of the Closing Date and approved
by L & B, directing the Exchange Agent to mail or deliver (as the Exchange Agent
may determine) to the persons shown on such instructions the cash and shares of
Jefferson Common to which they are, respectively, entitled to receive pursuant
to subsections (c) and (d) of Section 1.05 of this Agreement.
SECTION 1.09. ACTIONS AT CLOSING.
(a) At the Closing, L & B shall deliver or cause to be delivered to
Jefferson and AcquisitionCo:
(i) a certified copy of the articles of incorporation of L & B
and a certified copy of the articles of incorporation, charter or articles
of association of each direct and indirect subsidiary of L & B, including
Loan & Building State Savings Bank (formerly Sulphur Springs Loan and
Building Association), a Texas savings bank and wholly owned subsidiary of
L & B (the "Savings Bank");
(ii) a Certificate or Certificates signed by an appropriate
officer of L & B stating that (A) each of the representations and
warranties contained in Article Two hereof is true and correct in all
material respects at the time of the Closing with the same force and effect
as if such representations and warranties had been made at Closing (except
as may otherwise be specifically
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identified in such Certificate or Certificates), (B) all of the conditions
set forth in Sections 6.01(b) and 6.01(d) (but, with respect to the latter
section, only to approvals which L & B and/or its subsidiaries are required
by law to obtain) have been satisfied or waived as provided therein and (C)
this Agreement has been approved by the requisite vote of L & B
shareholders in accordance with the Texas Corporate Law and L & B's
articles of incorporation and bylaws;
(iii) a certified copy of the resolutions of L & B's Board of
Directors and shareholders, as required for valid approval of the execution
of this Agreement and the consummation of the Merger and any other
transactions contemplated hereby;
(iv) a certified list of the shareholders of L & B dated as of
the Closing Date;
(v) a certified list of the persons participating or entitled
to participate in the L & B Retention Plan, the Option Plan and the Sulphur
Springs Loan and Building Association Employee Stock Ownership Plan (the
"ESOP"), dated as of the Closing Date, setting forth the respective
allocations, grants and/or awards thereunder, as the case may be, of each
such person;
(vi) a certified list of dissenting holders of L & B Common, if
any, dated as of the Closing Date;
(vii) a Certificate of the Texas Secretary of State, dated a
recent date, stating that L & B is in existence;
(viii)a Certificate of the Texas Comptroller of Public Accounts,
dated a recent date, stating that L & B is in good standing;
(ix) Certificates issued by the T.S.L.D., dated a recent date,
as to the good standing and/or existence of the Savings Bank, and issued by
the F.D.I.C., dated a recent date, as to the insured status of the deposits
of the Savings Bank;
(x) a legal opinion of counsel for L & B, in form reasonably
acceptable to Jefferson's counsel, opining with respect to the matters
listed on Exhibit 1.09(a)(x) attached hereto;
(xi) an original copy of the employment agreement between
Jefferson and C. Glynn Lowe, substantially in the form of Exhibit 8.15
attached hereto, duly executed by C. Glynn Lowe; and
(xii) resignations of present trustees or other fiduciaries under
the Employee Plans identified in Section 2.13(c) of the Disclosure
Schedule.
(b) At the Closing, Jefferson and/or AcquisitionCo, as the case may be,
shall deliver or cause to be delivered to L & B:
(i) a Certificate or Certificates signed by an appropriate
officer of Jefferson and AcquisitionCo, as the case may be, stating that
(A) each of the representations and warranties contained in Article Three
hereof made by Jefferson and/or AcquisitionCo, as the case may be, is true
and correct in all material respects at the time of the Closing with the
same force and effect
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as if such representations and warranties had been made by the respective
party at Closing, and (B) all of the conditions set forth in Sections
6.02(b) and 6.02(d) (but only with respect to approvals other than by L &
B's shareholders) have been satisfied or waived as provided therein;
(ii) a certified copy of the resolutions of Jefferson's Board of
Directors authorizing the execution of this Agreement and the consummation
of the transactions contemplated hereby;
(iii) a certified copy of the resolutions of AcquisitionCo's Board
of Directors and sole shareholder, as required for valid approval of the
execution of this Agreement and the consummation of the transactions
contemplated hereby;
(iv) Certificate of the Delaware Secretary of State, dated a recent
date, stating that Jefferson is in good standing;
(v) Certificate of the Missouri Secretary of State, dated a recent
date, stating that AcquisitionCo is in good standing;
(vi) a legal opinion of counsel for Jefferson, in form reasonably
acceptable to L & B's counsel, opining with respect to the matters listed on
Exhibit 1.09(b)(vi) attached hereto;
(vii) an original copy of the employment agreement between
Jefferson and C. Glynn Lowe, substantially in the form of Exhibit 8.15
attached hereto, duly executed on behalf of Jefferson;
(viii) evidence acknowledging receipt by the Exchange Agent of the
cash and certificates for Jefferson Common delivered by Jefferson to the
Exchange Agent pursuant to Section 1.08 hereof; and
(ix) appropriate appointments or designations of successor trustees
or other fiduciaries under the Employee Plans identified in Section 2.13(c)
of the Disclosure Schedule, together with the written acceptance of
appointment or designation executed by each such successor trustee or other
fiduciary so appointed or designated.
ARTICLE TWO
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REPRESENTATIONS OF L & B
------------------------
L & B hereby makes the following representations and warranties:
SECTION 2.01. ORGANIZATION AND CAPITAL STOCK.
(a) L & B is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas with full corporate power and
authority to own all of its properties and assets, to incur all of its
liabilities and to carry on its business as presently conducted. L & B is a
savings and loan holding company registered with the Office of Thrift
Supervision (the "O.T.S.") under the Home Owners' Loan Act.
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(b) The authorized capital stock of L & B consists of (i) 25,000,000
shares of L & B Common, of which, as of the date hereof, 1,584,125 shares are
issued and outstanding and 83,375 shares are held as treasury stock, and (ii)
5,000,000 shares of preferred stock, no par value per share, of which, as of the
date hereof, no shares have been issued. All of the issued and outstanding
shares of L & B Common are duly and validly issued and outstanding and are fully
paid and non-assessable. None of the outstanding shares of L & B Common has been
issued in violation of any preemptive rights of the current or past shareholders
of L & B. As of the date hereof, L & B has reserved 166,750 shares of L & B
Common for issuance under the Option Plan, had outstanding employee stock
options representing the right to acquire 150,498 shares of L & B Common
pursuant to the Option Plan, and options to acquire an additional 4,015 shares
of L & B Common may be granted from the date hereof through February 28, 1997.
As of the date hereof, 40,000 shares of L & B Common are owned by the trust
created under the L & B Retention Plan and are held by such trust for awards
under the L & B Retention Plan, 34,350 of such shares of L & B Common have been
awarded and allocated to participants pursuant to the L & B Retention Plan and
awards for an additional 1,150 shares of L & B Common may be made and allocated
to participants from the date hereof through February 28, 1997. As of the date
hereof, 100,050 shares of L & B Common have been acquired and are held by the
ESOP, of which (i) 14,723.800 shares have been allocated to ESOP participants,
(ii) 7,138.345 shares have been released from the lien placed on such shares
pursuant to that Pledge Agreement, dated January 22, 1996, between L & B and the
ESOP (the "Pledge Agreement") and are available for allocation to ESOP
participants, and (iii) 78,187.855 shares remain unreleased under the Pledge
Agreement.
(c) Except as set forth in subsection 2.01(b) above, there are no shares of
capital stock or other equity securities of L & B issued or outstanding and
there are no outstanding options, warrants, rights to subscribe for, calls, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of L & B Common or other capital
stock of L & B or contracts, commitments, understandings or arrangements by
which L & B is or may be obligated to issue additional shares of its capital
stock or options, warrants or rights to purchase or acquire any additional
shares of its capital stock. Except as disclosed in Section 2.01 of that certain
confidential writing delivered by L & B to Jefferson and AcquisitionCo and
executed by each of L & B, Jefferson and AcquisitionCo concurrently with the
delivery and execution of this Agreement (the "Disclosure Schedule"), each
Certificate representing shares of L & B Common issued by L & B in replacement
of any Certificate theretofore issued by it which was claimed by the record
holder thereof to have been lost, stolen or destroyed was issued by L & B only
upon receipt of an affidavit of lost stock certificate and indemnity agreement
of such shareholder indemnifying L & B against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
Certificate or the issuance of such replacement Certificate.
SECTION 2.02. AUTHORIZATIONS; NO DEFAULTS. L & B's Board of Directors has,
by all appropriate action, approved this Agreement, the Merger and any other
transactions contemplated hereby and authorized the execution hereof on its
behalf by its duly authorized officers and, subject to the approval of this
Agreement by the shareholders of L & B and to receipt of all required regulatory
approvals, the performance by L & B of its obligations hereunder. Except as set
forth in Section 2.02 of the Disclosure Schedule, nothing in the articles of
incorporation or bylaws of L & B, as amended, or any other agreement,
instrument, decree, proceeding, law or regulation (except as specifically
referred to in or contemplated by this Agreement) by or to which it or any of
its subsidiaries are bound or subject would prohibit or inhibit L & B from
consummating this Agreement, the Merger or any other transactions contemplated
hereby on the terms and conditions herein contained. This Agreement has been
duly and
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validly executed and delivered by L & B and constitutes a legal, valid and
binding obligation of L & B, enforceable against L & B in accordance with its
terms (except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium or other laws
affecting creditor's rights generally or the rights of creditors of savings
institutions, the accounts of which savings institutions are insured by the
Savings Association Insurance Fund of the F.D.I.C., or laws relating to the
safety and soundness of insured financial institutions and by judicial
discretion in applying principles of equity). L & B and its subsidiaries are
neither in default under nor in violation of any provision of their respective
articles of incorporation or association, charters, bylaws, or any promissory
note, indenture or any evidence of indebtedness or security therefor, lease,
contract, purchase or other commitment or any other agreement which is material
to L & B and its subsidiaries taken as a whole.
SECTION 2.03. SUBSIDIARIES; PARTNERSHIPS; JOINT VENTURES. Each of L & B's
direct and indirect subsidiaries, including the Savings Bank (collectively, the
"subsidiaries"), the name and jurisdiction of incorporation or organization of
each of which is set forth in Section 2.03 of the Disclosure Schedule, are duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation or organization and have the corporate or
other power to own their respective properties and assets, to incur their
respective liabilities and to carry on their respective business as presently
conducted. The number of issued and outstanding shares of capital stock of each
such subsidiary, including the Savings Bank, is set forth in Section 2.03 of the
Disclosure Schedule, all of which shares (except as may be otherwise there
expressly disclosed) are owned by L & B or L & B's subsidiaries, as the case may
be and as therein disclosed, free and clear of all liens, encumbrances, rights
of first refusal, options or other restrictions of any nature whatsoever, except
as otherwise may be expressly disclosed in Section 2.03 of the Disclosure
Schedule. There are no options, warrants or rights outstanding to acquire any
capital stock of any of L & B's subsidiaries and no person or entity has any
other right to purchase or acquire any unissued shares of stock of any of L &
B's subsidiaries, nor does any such subsidiary have any obligation of any nature
with respect to its unissued shares of stock. Except as may be disclosed in
Section 2.03 of the Disclosure Schedule, neither L & B nor any of L & B's
subsidiaries is a party to any partnership or joint venture or owns an equity
interest in any other business or enterprise.
SECTION 2.04. FINANCIAL INFORMATION. The audited consolidated balance
sheets of L & B (which shall include balance sheet information for Sulphur
Springs Loan and Building Association for periods before the formation of L & B)
as of June 30, 1995 and 1994 and the related consolidated income statements and
statements of changes in shareholders' equity and cash flows for the three (3)
years ended June 30, 1995, together with the notes thereto, and the unaudited
balance sheets of L & B as of December 31, 1995 and related unaudited income
statements and statements of changes in shareholders' equity and cash flows for
the nine (9) months then ended, and the year-end and quarterly Reports of
Condition and Report of Income of the Savings Bank for 1995 and March 31, 1996,
respectively, as currently on file with the Federal Deposit Insurance
Corporation (the "F.D.I.C.") and the O.T.S. (together, the "L & B Financial
Statements"), have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods presented (except as may be disclosed therein and
except for regulatory reporting differences required by the Savings Bank's
reports), and fairly present in all material respects the financial position and
the results of operations, changes in shareholders' equity and cash flows of the
entities therein described as of the dates and for the periods indicated
(subject, in the case of interim financial statements, to normal recurring year-
end adjustments, none of which will be material).
SECTION 2.05. ABSENCE OF CHANGES. Since June 30, 1995, there has not been
any material adverse change in the financial condition, the results of
operations or the business or prospects of L & B
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or any of its subsidiaries, nor have there been any events or transactions
having such a material adverse effect which should be disclosed in order to make
the L & B Financial Statements not misleading. Since the date of the most
recent T.S.L.D. and F.D.I.C. examination report regarding the Savings Bank,
there has been no material adverse change in the financial condition, the
results of operations or the business or prospects of the Savings Bank.
Notwithstanding the foregoing, any actions taken or changes made by L & B or any
of its subsidiaries, including the Savings Bank, pursuant to Section 4.05 hereof
shall not, individually or in the aggregate, be deemed to be a material adverse
change in the financial condition, the results of operations or the business or
prospects of L & B and its subsidiaries taken as a whole.
SECTION 2.06. REGULATORY ENFORCEMENT MATTERS. Except as may be disclosed
in Section 2.06 of the Disclosure Schedule, neither L & B nor any of its
subsidiaries is subject to, and has not received any notice or advice that any
of them may become subject to, any order, agreement, memorandum of understanding
or other regulatory enforcement action or proceeding with or by any federal or
state agency charged with the supervision or regulation of thrifts or thrift
holding companies or engaged in the insurance of bank or thrift deposits or any
other governmental agency having supervisory or regulatory authority with
respect to L & B or any of its subsidiaries.
SECTION 2.07. TAX MATTERS. Except as may be disclosed in Section 2.07 of
the Disclosure Schedule, L & B and its subsidiaries have filed all federal,
state and local tax returns due in respect of any of their businesses or
properties in a timely fashion and have paid or made provision, as reflected on
the L & B Financial Statements, for all amounts due shown on such returns. All
such returns fairly reflect the information required to be presented therein.
All provisions for accrued but unpaid taxes contained in the L & B Financial
Statements were made in accordance with GAAP applied on a consistent basis and
in the aggregate do not materially fail to provide for potential tax
liabilities.
SECTION 2.08. LITIGATION. Except as may be disclosed in Section 2.08 of
the Disclosure Schedule, there is no litigation, claim or other proceeding
pending or, to the knowledge of L & B, threatened, against L & B or any of its
subsidiaries, or of which the property of L & B or any of its subsidiaries is or
would be subject.
SECTION 2.09. EMPLOYMENT AGREEMENTS. Except as may be disclosed in Section
2.09 of the Disclosure Schedule, neither L & B nor any of its subsidiaries is a
party to or bound by any contract for the employment, retention or engagement,
or with respect to the severance, of any officer, employee, agent, consultant or
other person or entity which, by its terms, is not terminable by L & B or such
subsidiary on thirty (30) days written notice or less without the payment of any
amount by reason of such termination. A true, accurate and complete copy of each
such agreement and any and all amendments or supplements thereto is included as
an exhibit to Section 2.09 of the Disclosure Schedule.
SECTION 2.10. REPORTS. Except as may be disclosed in Section 2.10 of the
Disclosure Schedule, L & B and each of its subsidiaries has filed all reports
and statements, together with any amendments required to be made with respect
thereto, that they were required to file with (i) the O.T.S., (ii) the F.D.I.C.,
(iii) any and all applicable state securities, banking or thrift authorities,
including the Texas Savings and Loan Department (the "T.S.L.D."), and (iv) any
other governmental authority with jurisdiction over L & B or any of its
subsidiaries. As of their respective dates, each of such reports and documents,
including any financial statements, exhibits and schedules thereto, complied in
all material respects with the relevant statutes, rules and regulations enforced
or promulgated by the regulatory authority with which they were filed, and did
not contain any untrue statement of a material fact or omit
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to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
SECTION 2.11. INVESTMENT PORTFOLIO. Except as may be disclosed in Section
2.11 of the Disclosure Schedule, all United States Treasury securities,
obligations of other United States Government agencies and corporations,
obligations of States and political subdivisions of the United States and other
investment securities held by L & B, as reflected in the latest balance sheet of
L & B included in the L & B Financial Statements, are carried in the aggregate
at no more than cost adjusted for amortization of premiums and accretion of
discounts, except as otherwise required by FASB 115.
SECTION 2.12. LOAN PORTFOLIO. Except as may be disclosed in Section 2.12
of the Disclosure Schedule, (i) all loans and discounts shown on the L & B
Financial Statements or which were entered into after the date of the most
recent balance sheet included in the L & B Financial Statements, were and will
be made in all material respects for good, valuable and adequate consideration
in the ordinary course of the business of L & B and its subsidiaries, in
accordance in all material respects with sound banking practices, and are not
subject to any material known defenses, setoffs or counterclaims, including
without limitation any such as are afforded by usury or truth in lending laws,
except as may be provided by bankruptcy, insolvency or similar laws or by
general principles of equity; (ii) the notes or other evidences of indebtedness
evidencing such loans and all forms of pledges, mortgages and other collateral
documents and security agreements are and will be, in all material respects, to
the knowledge of L & B, enforceable, valid, true and genuine and what they
purport to be; and (iii) L & B and its subsidiaries have complied and will prior
to the Closing Date comply with all laws and regulations relating to such loans
or, to the extent there has not been such compliance, such failure to comply
will not materially interfere with the collection of any such loan.
SECTION 2.13. EMPLOYEE MATTERS AND ERISA.
(a) Except as may be disclosed in Section 2.13(a) of the Disclosure
Schedule, neither L & B nor any of its subsidiaries has entered into any
collective bargaining agreement with any labor organization with respect to any
group of employees of L & B or any of its subsidiaries and to the knowledge of
L & B there is no present effort nor existing proposal to attempt to unionize
any group of employees of L & B or any of its subsidiaries.
(b) Except as may be disclosed in Section 2.13(b) of the Disclosure
Schedule, (i) L & B and its subsidiaries are and have been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including,
without limitation, any such laws respecting employment discrimination and
occupational safety and health requirements, and neither L & B nor any of its
subsidiaries is engaged in any unfair labor practice; (ii) there is no unfair
labor practice complaint against L & B or any of its subsidiaries pending or, to
the knowledge of L & B, threatened before the National Labor Relations Board;
(iii) there is no labor dispute, strike, slowdown or stoppage actually pending
or, to the knowledge of L & B, threatened against or directly affecting L & B or
any of its subsidiaries; and (iv) neither L & B nor any of its subsidiaries has
experienced any material work stoppage or other material labor difficulty during
the past five years.
(c) Except as may be disclosed in Section 2.13(c) of the Disclosure
Schedule, neither L & B nor any of its subsidiaries maintains, contributes to or
participates in or has any liability under any employee benefit plans, as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as
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amended ("ERISA"), or any nonqualified employee benefit plans or deferred
compensation, bonus, stock or incentive plans, or other employee benefit or
fringe benefit programs for the benefit of former or current employees of L & B
or of its subsidiaries (the "Employee Plans"). No present or former employee of
L & B or any of its subsidiaries has been or is expected to be charged with
breaching and has not breached a fiduciary duty under any of the Employee Plans.
Neither L & B nor any of its subsidiaries participates in, nor has it in the
past five years participated in, nor has it any present or future obligation or
liability under, any multiemployer plan (as defined at Section 3(37) of ERISA).
Except as may be separately disclosed in Section 2.13(c) of the Disclosure
Schedule, neither L & B nor any of its subsidiaries maintains, contributes to,
or participates in, any plan that provides health, major medical, disability or
life insurance benefits to former employees of L & B or any of its subsidiaries.
(d) Except as may be disclosed in Section 2.13(d) of the Disclosure
Schedule, (i) neither L & B nor any of its subsidiaries maintains, nor have any
of them maintained for the past ten years, any Employee Plans subject to Title
IV of ERISA or Section 412 of the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) no reportable event (as defined in Section 4043 of ERISA) has
occurred with respect to any Employee Plans as to which a notice would be
required to be filed with the Pension Benefit Guaranty Corporation; (iii) no
claim is pending, and neither L & B nor any of its subsidiaries has received
notice of any threatened or imminent claim with respect to any Employee Plan
(other than a routine claim for benefits for which plan administrative review
procedures have not been exhausted) for which L & B or any of its subsidiaries
would be liable after June 30, 1996, except as are reflected on the L & B
Financial Statements; (iv) after June 30, 1996, L & B and its subsidiaries have
no liability for excise taxes under Sections 4971, 4975, 4976, 4977, 4979 or
4980B of the Code or for a fine under Section 502 of ERISA with respect to any
Employee Plan; and (v) all Employee Plans have in all material respects been
operated, administered and maintained in accordance with the terms thereof and
in compliance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code.
(e) Except as may be disclosed in Section 2.13(e) of the Disclosure
Schedule, each benefit plan maintained by L & B and/or its subsidiaries for the
benefit of their respective directors, officers and employees (including, but
not limited to, defined contribution or savings plans and deferred compensation
plans) is, to the extent required under Section 412 of the Code or Section 302
of ERISA, fully funded, except for any amounts withheld from the compensation of
any employee pursuant to a salary reduction agreement or other contribution
agreement under a plan, including but not limited to a plan intended to be
qualified under Section 401(k) or Section 125 of the Code, which are not yet
required actually to be contributed or otherwise applied to such plan pursuant
to Section 3 of ERISA and Section 2510.3-102(a) of the Regulations issued by the
Secretary of Labor. Except with respect to the vested rights of participants in
any such plan, or as may be disclosed in Section 2.13(e) of the Disclosure
Schedule, the assets of each such plan are unencumbered.
SECTION 2.14. TITLE TO PROPERTIES; INSURANCE. Except as may be disclosed
in Section 2.14 of the Disclosure Schedule, (i) L & B and its subsidiaries have
good, indefeasible and insurable title, free and clear of all liens, charges and
encumbrances (except taxes which are a lien but not yet due and liens, charges
or encumbrances reflected in the L & B Financial Statements and easements,
rights-of-way, and other restrictions which are not adversely material to the
use of the property by L & B or its subsidiary and further excepting in the case
of Other Real Estate Owned ("O.R.E.O."), as such real estate is internally
classified on the books of L & B or its subsidiaries, rights of redemption under
applicable law) to all of their real properties; (ii) all leasehold interests
for real property and any material personal
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property used by L & B and its subsidiaries in their respective businesses are
held pursuant to lease agreements which are valid and enforceable in accordance
with their terms; (iii) all such properties comply in all material respects with
all applicable private agreements, zoning requirements and other governmental
laws and regulations relating thereto and there are no condemnation proceedings
pending or, to the knowledge of L & B, threatened with respect to such
properties; (iv) L & B and its subsidiaries have valid title or other ownership
or license rights under licenses to all material intangible personal or
intellectual property used by L & B or its subsidiaries in their respective
businesses, free and clear of any claim, defense or right of any other person or
entity which is material to such property, subject only to rights of the
licensors pursuant to applicable license agreements, which rights do not
materially adversely interfere with the use of such property; and (v) all
material real properties owned, held or operated by L & B or its subsidiaries
are insured by the title insurers listed on Section 2.14 of the Disclosure
Schedule, and all material properties owned by L & B or its subsidiaries are
insured, in such amounts and against fire and other risks insured against by
extended coverage and public liability insurance, as is customary with financial
institutions of similar size.
SECTION 2.15. ENVIRONMENTAL MATTERS. (a) As used in this Agreement,
"Environmental Laws" means all local, state and federal environmental, health
and safety laws and regulations in all jurisdictions in which L & B and its
subsidiaries have done business or owned, leased or operated property,
including, without limitation, the Federal Resource Conservation and Recovery
Act, the Federal Comprehensive Environmental Response, Compensation and
Liability Act, the Federal Clean Water Act, the Federal Clean Air Act, and the
Federal Occupational Safety and Health Act.
(b) Except as may be disclosed in Section 2.15(b) of the Disclosure
Schedule, neither the conduct nor operation of L & B and its subsidiaries nor,
to the knowledge of L & B, any condition of any property presently or previously
owned, leased or operated by any of them violates or violated Environmental Laws
in any respect material to the business of L & B and its subsidiaries and no
condition has existed or event has occurred with respect to any of them or any
such property that, with notice or the passage of time, or both, would
constitute a violation material to the business of L & B and its subsidiaries of
Environmental Laws or obligate (or potentially obligate) L & B or its
subsidiaries to remedy, stabilize, neutralize or otherwise alter the
environmental condition of any such property where the aggregate cost of such
actions would be material to L & B and its subsidiaries. Except as may be
disclosed in Section 2.15(b) of the Disclosure Schedule, neither L & B nor any
of its subsidiaries has received any notice from any person or entity that L & B
or its subsidiaries or the operation or condition of any property ever owned,
leased or operated by any of them are or were in violation of any Environmental
Laws or that any of them are responsible (or potentially responsible) for
remedying, or the cleanup of, any pollutants, contaminants, or hazardous or
toxic wastes, substances or materials at, on or beneath any such property.
(c) Except as may be disclosed in Section 2.15(c) of the Disclosure
Schedule, neither L & B nor any of its subsidiaries has received notice or has
knowledge that any property in which any of them has a security interest, lien
or other encumbrance violates or violated Environmental Laws in any material
respects.
SECTION 2.16. COMPLIANCE WITH LAW. L & B and its subsidiaries have all
licenses, franchises, permits and other governmental authorizations that are
legally required to enable them to conduct their respective businesses in all
material respects and are in compliance in all material respects with all
applicable laws and regulations.
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SECTION 2.17. UNDISCLOSED LIABILITIES. L & B and its subsidiaries do not
have any material liability, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit or proceeding, hearing, charge,
complaint, claim or demand against L & B or its subsidiaries giving rise to any
such liability), except (i) for liabilities set forth in the L & B Financial
Statements, and (ii) as may be disclosed in Section 2.17 of the Disclosure
Schedule.
SECTION 2.18. BROKERAGE. Except as may be disclosed in Section 2.18 of
the Disclosure Schedule, there are no existing claims or agreements for
brokerage commissions, finders' fees, or similar compensation in connection with
the transactions contemplated by this Agreement payable by L & B or its
subsidiaries.
SECTION 2.19. STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by L & B or its subsidiaries for inclusion in (i) the
Registration Statement (as defined in Section 4.07 hereof), (ii) the Proxy
Statement/Prospectus (as defined in Section 4.03 hereof) and (iii) any other
documents to be filed with the Securities and Exchange Commission (the "S.E.C.")
or any other securities, banking, thrift or other regulatory authority in
connection with the transactions contemplated hereby, will, at the respective
times such documents are filed, and, in the case of the Registration Statement,
when it becomes effective, and, with respect to the Proxy Statement/Prospectus,
when first mailed to the shareholders of L & B, be false or misleading with
respect to any material fact, or omit to state any material fact necessary in
order to make the statements therein not misleading, or, in the case of the
Proxy Statement/Prospectus or any amendment thereof or supplement thereto, at
the time of the Stockholders' Meeting (as defined in Section 4.03), be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
L & B is responsible for filing with the S.E.C. or any other regulatory
authority in connection with the transactions contemplated hereby will comply as
to form in all material respects with the provisions of applicable law and the
applicable rules and regulations thereunder.
ARTICLE THREE
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REPRESENTATIONS OF JEFFERSON AND ACQUISITIONCO
----------------------------------------------
Jefferson and AcquisitionCo, as applicable, hereby make the following
representations and warranties:
SECTION 3.01. ORGANIZATION AND CAPITAL STOCK.
(a) Jefferson is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware with full corporate power
and authority to own all of its properties and assets, to incur all of its
liabilities and carry on its business as presently conducted. AcquisitionCo is
a corporation duly incorporated, validly existing, and in good standing under
the laws of the State of Missouri with full corporate power and authority to
carry on its business as it is now being conducted.
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(b) The authorized capital stock of Jefferson consists of (i) 20,000,000
shares of Jefferson Common, of which, as of June 30, 1996, 4,181,563 shares were
issued and outstanding. All of the issued and outstanding shares of Jefferson
Common are duly and validly issued and outstanding and are fully paid and non-
assessable. None of the outstanding shares of Jefferson Common has been issued
in violation of any preemptive rights of the current or past shareholders of
Jefferson. Jefferson has available for issuance, from treasury or otherwise, a
sufficient number of authorized shares of Jefferson Common to pay the Basic
Merger Consideration and the amounts payable in shares of Jefferson Common
pursuant to subsections (c) and (d) of Section 1.05.
(c) The authorized capital stock of AcquisitionCo consists of thirty
thousand (30,000) shares of AcquisitionCo Common, of which as of the date
hereof, 1,000 shares of AcquisitionCo Common are issued and outstanding, fully
paid and non-assessable and owned by Jefferson.
(d) The shares of Jefferson Common that are to be issued to the
shareholders of L & B pursuant to the Merger have been duly authorized and, when
so issued in accordance with the terms of this Agreement, will be validly issued
and outstanding, fully paid and nonassessable, with no personal liability
attaching to the ownership thereof.
SECTION 3.02. AUTHORIZATIONS; NO DEFAULTS. The Board of Directors of each
of Jefferson and AcquisitionCo have, by all appropriate action and as required
by applicable law, approved this Agreement, the Merger and the other
transactions contemplated hereby and authorized the execution hereof on their
behalf by their respective duly authorized officers and the performance by such
entities of their respective obligations hereunder. Nothing in the articles of
incorporation or bylaws of Jefferson or AcquisitionCo, as amended, or any other
agreement, instrument, decree, proceeding, law or regulation (except as
specifically referred to in or contemplated by this Agreement) by or to which
either of them or any of their subsidiaries are bound or subject would prohibit
or inhibit Jefferson or AcquisitionCo from entering into and consummating this
Agreement, the Merger or any other transactions contemplated hereby, on the
terms and conditions herein contained. This Agreement has been duly and validly
executed and delivered by Jefferson and AcquisitionCo and constitutes a legal,
valid and binding obligation of Jefferson and AcquisitionCo, enforceable against
Jefferson and AcquisitionCo in accordance with its terms (except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, conservatorship, moratorium or other laws affecting creditors'
rights generally or the rights of creditors of savings institutions, the
accounts of which savings institutions are insured by the Savings Association
Insurance Fund of the F.D.I.C. or laws relating to the safety and soundness of
insured financial institutions and by judicial discretion in applying principles
of equity), and no other corporate acts or proceedings are required to be taken
by Jefferson or AcquisitionCo to authorize the execution, delivery and
performance of this Agreement. Except for the requisite approval of the O.T.S.
and the T.S.L.D., no notice to, filing with, authorization by, or consent or
approval of, any federal or state regulatory authority is necessary for the
execution and delivery of this Agreement or consummation of the Merger by
Jefferson or AcquisitionCo. Jefferson and AcquisitionCo are not in default
under or in violation of any provision of their respective articles of
incorporation, bylaws or any promissory note, indenture or any evidence of
indebtedness or security therefor, lease, contract, purchase or other commitment
or any other agreement which is material to Jefferson or AcquisitionCo, as
applicable.
SECTION 3.03. SUBSIDIARIES. Each of Jefferson's significant subsidiaries
(as such term is defined under S.E.C. regulations) and AcquisitionCo is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate power to own its
respective
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properties and assets, to incur its respective liabilities and to carry on its
respective business as now being conducted.
SECTION 3.04. FINANCIAL INFORMATION. The consolidated balance sheets of
Jefferson and its subsidiaries as of December 31, 1995 and 1994 and related
consolidated statements of income, changes in stockholders' equity and cash
flows for the three (3) years ended December 31, 1995, together with the notes
thereto, included in Jefferson's Annual Report on Form 10-K for the year ended
December 31, 1995, and the unaudited consolidated balance sheet of Jefferson and
its subsidiaries as of March 31, 1996 and the related unaudited consolidated
income statement for the three (3) months then ended included in Jefferson's
Quarterly Report on Form 10-Q for the quarter then ended, as currently on file
with the S.E.C. (together, the "Jefferson Financial Statements"), have been
prepared in accordance with GAAP applied on a consistent basis (except as
disclosed therein) and fairly present the consolidated financial position and
the consolidated results of operations, changes in stockholders' equity and cash
flows of Jefferson and its consolidated subsidiaries as of the dates and for the
periods indicated (subject, in the case of interim financial statements, to
normal recurring year-end adjustments, none of which will be material, and the
absence of footnotes).
SECTION 3.05. ABSENCE OF CHANGES. Since December 31, 1995, there has not
been any material adverse change in the financial condition, the results of
operations or the business or prospects of Jefferson and its subsidiaries taken
as a whole, nor have there been any events or transactions having such a
material adverse effect which should be disclosed in order to make the Jefferson
Financial Statements not misleading.
SECTION 3.06. LITIGATION. There is no litigation, claim or other
proceeding pending or, to the knowledge of Jefferson, threatened, against
Jefferson or any of its subsidiaries, or of which the property of Jefferson or
any of its subsidiaries is or would be subject which, if adversely determined,
would have a material adverse affect on the business of Jefferson and its
subsidiaries taken as a whole.
SECTION 3.07. REPORTS. Each of Jefferson and its significant subsidiaries
has filed all reports and statements, together with any amendments required to
be made with respect thereto, that it was required to file with (i) the S.E.C.,
(ii) the O.T.S., (iii) the F.D.I.C., (iv) any state securities, banking or
thrift authorities having jurisdiction over Jefferson or any of its significant
subsidiaries, (v) Nasdaq and (vi) any other governmental authority with
jurisdiction over Jefferson or any of its significant subsidiaries. As of their
respective dates, each of such reports and documents, as amended, including the
financial statements, exhibits and schedules thereto, complied in all material
respects with the relevant statutes, rules and regulations enforced or
promulgated by the regulatory authority with which they were filed, and did not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
SECTION 3.08. COMPLIANCE WITH LAW. Jefferson and its significant
subsidiaries have all licenses, franchises, permits and other governmental
authorizations that are legally required to enable them to conduct their
respective businesses in all material respects and are in compliance in all
material respects with all applicable laws and regulations.
SECTION 3.09. STATEMENTS TRUE AND CORRECT. None of the information
supplied or to be supplied by Jefferson or AcquisitionCo for inclusion in (i)
the Registration Statement (as defined in Section 4.07
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hereof), (ii) the Proxy Statement/Prospectus (as defined in Section 4.03 hereof)
and (iii) any document to be filed with the S.E.C., or any thrift or other
regulatory authority in connection with the transactions contemplated hereby,
will, at the respective times such documents are filed, and, in the case of the
Registration Statement, when it becomes effective, and, with respect to the
Proxy Statement/Prospectus, when first mailed to the shareholders of L & B, be
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein not misleading,
or, in the case of the Proxy Statement/Prospectus or any amendment thereof or
supplement thereto, at the time of the Stockholders' Meeting, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for the Stockholders' Meeting. All documents that
Jefferson or AcquisitionCo is responsible for filing with the S.E.C., the O.T.S.
or any other regulatory authority in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
provisions of applicable law and any rules and regulations thereunder.
SECTION 3.10. BROKERAGE. There are no existing claims or agreements for
brokerage commissions, finders' fees, or similar compensation in connection with
the transactions contemplated by this Agreement payable by Jefferson or
AcquisitionCo.
SECTION 3.11. REGULATORY ENFORCEMENT MATTERS. Neither Jefferson nor
AcquisitionCo, nor any of Jefferson's other subsidiaries, is subject to, and
none of them have received any notice or advice that any may become subject to,
any order, agreement, memorandum of understanding or other regulatory
enforcement action or proceeding with or by any federal or state agency charged
with the supervision or regulation of thrifts or thrift holding companies or
engaged in the insurance of thrift deposits or any other governmental agency
having supervisory or regulatory authority with respect to Jefferson or
AcquisitionCo or any of Jefferson's other subsidiaries.
SECTION 3.12. TAX MATTERS. Jefferson and AcquisitionCo have filed all
federal, state and material local tax returns due in respect of their respective
business or properties in a timely fashion and have paid or made provision for
all amounts due as shown on such returns. All such returns fairly reflect the
information required to be presented therein. All provisions for accrued but
unpaid taxes contained in the Jefferson Financial Statements were made in
accordance with GAAP applied on a consistent basis and in the aggregate do not
materially fail to provide for potential tax liabilities.
SECTION 3.13. UNDISCLOSED LIABILITIES. Jefferson and AcquisitionCo have no
material liability, whether known or unknown, asserted or unasserted, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, and whether due
or to become due (and there is no past or present fact, situation, circumstance,
condition or other basis for any present or future action, suit or proceeding,
hearing, charge, complaint, claim or demand against Jefferson or AcquisitionCo
giving rise to any such liability), except for liabilities set forth in the
Jefferson Financial Statements.
SECTION 3.14. CURRENT PUBLIC INFORMATION. For purposes of determining
compliance with the provisions of Rule 145 of the Securities Act of 1933, as
amended (the Securities Act"), for each person who may be deemed an "affiliate"
of L & B within the meaning of such term as used in Rule 145, Jefferson meets
the requirements of Rule 144(c) under the Securities Act.
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ARTICLE FOUR
------------
AGREEMENTS OF L & B
-------------------
SECTION 4.01. BUSINESS IN ORDINARY COURSE.
(a) L & B shall not declare and/or pay any dividend or make any other
distribution to shareholders, whether in cash, stock or other property, after
the date of this Agreement and prior to the Effective Time or the earlier
termination hereof, except that L & B may, upon prior written notice to
Jefferson, declare and/or pay regular quarterly cash dividends on the L & B
Common in such amounts and at such times as are consistent with L & B's
historical practices.
(b) L & B shall, and shall cause each of its subsidiaries to, continue to
carry on after the date hereof their respective businesses and the discharge or
incurrence of obligations and liabilities, only in the usual, regular and
ordinary course of business, as heretofore conducted, and by way of
amplification and not limitation, L & B shall not, and shall cause each of its
subsidiaries not to, after the date of this Agreement, without the prior written
consent of Jefferson:
(i) make any changes in the authorized capital stock of L & B or
any of its subsidiaries; or
(ii) except as contemplated by any written agreements in existence
on June 25, 1996, (1) issue or sell any shares of L & B Common or other
capital stock of L & B or its subsidiaries, (2) grant or issue any options,
warrants, or other rights to subscribe for or purchase shares of L & B
Common or any other capital stock of L & B or its subsidiaries, (3) grant
any awards to acquire shares of L & B Common under or pursuant to the L & B
Retention Plan; (4) issue or sell any securities convertible into or
exchangeable for any capital stock of L & B or its subsidiaries; or
(iii) directly or indirectly redeem, purchase or otherwise acquire
any L & B Common or any other capital stock of L & B or its subsidiaries;
provided, however, that L & B shall transfer into treasury 4,500 shares of
L & B Common from the 40,000 shares of L & B Common presently owned by the
L & B Retention Plan trust and held for award under the L & B Retention
Plan; or
(iv) effect a reclassification, recapitalization, splitup,
exchange of shares, readjustment or other similar change in or to any
capital stock of L & B or its subsidiaries or otherwise reorganize or
recapitalize; or
(v) change its charter or articles of incorporation or
association, as the case may be, or bylaws; or
(vi) except as contemplated by written agreements in existence on
June 25, 1996, grant any increase (other than ordinary and normal increases
consistent with past practices) in the compensation payable or to become
payable to directors, officers or salaried employees, grant any stock
options or, except as required by law, adopt or make any change in any
bonus, insurance,
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pension, or other Employee Plan, agreement, payment or arrangement made to,
for or with any of such directors, officers or employees; or
(vii) borrow or agree to borrow any amount of funds, or directly
or indirectly guarantee or agree to guarantee any obligations of others,
except for borrowings in the ordinary course of business from the Federal
Home Loan Bank of Dallas and sales of mortgage loans into the secondary
market made in the ordinary course of business and with recourse or
obligation to repurchase; or
(viii) except for loans made pursuant to commitments outstanding
on June 30, 1996, make or commit to make any new loan or letter of credit or
any new or additional discretionary advance under any existing line of
credit, in principal amounts in excess of $500,000 or that would increase
the aggregate credit outstanding to any one borrower (or group of affiliated
borrowers) to more than $500,000 (excluding for this purpose any accrued
interest or overdrafts), without the prior written consent of Jefferson,
acting through its Chief Credit Officer or such other designee as Jefferson
may specify in a written notice to L & B; or
(ix) purchase or otherwise acquire any investment security for
its own account having an average remaining life to maturity greater than
five years or any asset-backed securities other than those issued or
guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation
(and L & B and its subsidiaries shall consult and confer with Jefferson with
respect to all securities transactions, even in circumstances where approval
is not required hereunder); or
(x) increase or decrease the rate of interest paid on time
deposits, or on certificates of deposit, except in a manner and pursuant to
policies consistent with past practices; or
(xi) enter into any agreement, contract or commitment out of the
ordinary course of business or having a term in excess of three (3) months
other than letters of credit, loan agreements, deposit agreements, and other
lending, credit and deposit agreements and documents made in the ordinary
course of business; or
(xii) except in the ordinary course of business, place on any of
its assets or properties any mortgage, pledge, lien, charge, or other
encumbrance, except to secure borrowings permitted under paragraph (vii) of
this Section 4.01(b); or
(xiii) except in the ordinary course of business, cancel or
accelerate any material indebtedness owing to L & B or its subsidiaries or
any claims which L & B or its subsidiaries may possess or waive any material
rights with respect thereto; or
(xiv) sell or otherwise dispose of any real property or any
tangible or intangible personal property having a value on the books of L &
B or its subsidiary in excess of $25,000 other than properties acquired in
foreclosure or otherwise in the ordinary collection of indebtedness to L & B
and its subsidiaries, except that, upon receipt of the agreements
contemplated by Section 4.12 hereof, L & B may transfer, or cause to be
transferred, to C. Glynn Lowe and Daniel M. Phillips, respectively, life
insurance policies owned by L & B or a subsidiary thereof under which C.
Glynn Lowe and Daniel M. Phillips are, respectively, the insured; or
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(xv) foreclose upon or otherwise take title to or possession or
control of any real property without first obtaining a phase one
environmental report thereon which does not reflect the need for further
environmental assessment; provided, however, that L & B and its subsidiaries
shall not be required to obtain such a report with respect to single family,
non-agricultural residential property of one acre or less to be foreclosed
upon unless it has reason to believe that such property might contain any
such waste materials or otherwise might be contaminated; or
(xvi) commit any act or fail to do any act which will cause a
breach of any agreement, contract or commitment and which will have a
material adverse effect on L & B's and/or its subsidiaries' business,
financial condition, or earnings; or
(xvii) violate any law, statute, rule, governmental regulation, or
order, which violation might have a material adverse effect on L & B's
and/or its subsidiaries' business, financial condition, or earnings; or
(xviii) purchase any real or personal property or make any other
capital expenditure where the amount paid or committed therefor is in excess
of $50,000; or
(xix) prepay any outstanding principal amount under any loan
agreement relative to the ESOP or make any interim allocations of additional
shares of L & B Common to participants under the ESOP, other than an annual
allocation as may be required under the terms of the ESOP; or
(xx) amend, modify or supplement any Employee Plans (including,
but not limited to, the ESOP) or distribute to employees of L & B and its
subsidiaries any revised summary plan descriptions or supplements to summary
plan descriptions relative to any of the Employee Plans.
(c) L & B and its subsidiaries shall not, without the prior written consent
of Jefferson, engage in any transaction or take any action that would render
untrue in any material respect any of the representations and warranties of L &
B contained in Article Two hereof, if such representations and warranties were
given as of the date of such transaction or action.
(d) L & B shall promptly notify Jefferson in writing of the occurrence of
any matter or event known to and directly involving L & B or any of its
subsidiaries, which would not include any changes in conditions that affect the
banking or thrift industry generally, that is materially adverse to the
business, operations, properties, assets, or condition (financial or otherwise)
of L & B and its subsidiaries taken as a whole.
(e) L & B shall (i) not, directly or indirectly, through any of its
directors, officers, employees, agents, affiliates or other representatives,
solicit, initiate or encourage any inquiries or proposals with respect to, or
without prior written notice to Jefferson, participate in or encourage any
negotiations leading to any offers or proposals concerning the possible sale or
other disposition of all or substantially all of the assets or capital stock of
L & B or any of its subsidiaries to, or merger of consolidation of L & B or any
of its subsidiaries with, any other person, (ii) not disclose any information
not customarily disclosed to any person or provide access to its properties,
books or records or otherwise assist or encourage any person in connection with
any of the foregoing, and (iii) give Jefferson prompt (which for
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this purpose shall mean within 24 hours) written notice of any such inquiries,
offers or proposals, including the name of the other party or parties and the
substance of any inquiry, offer or proposal.
SECTION 4.02. BREACHES. L & B shall, in the event it has knowledge of the
occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a failure of any condition precedent to any
party's obligation to effect the Merger or a breach (or would have caused or
constituted a breach had such event occurred or been known prior to the date
hereof) of any of its representations or agreements contained or referred to
herein, give prompt written notice thereof to Jefferson and use its best efforts
to prevent or promptly remedy the same.
SECTION 4.03. SUBMISSION TO SHAREHOLDERS. L & B shall cause to be duly
called and held, on a date mutually selected by Jefferson and L & B, a meeting
of the shareholders of L & B (the "Stockholders' Meeting") for submission of
this Agreement and the Merger for approval of such shareholders as required by
the Texas Corporate Law. In connection with the Stockholders' Meeting, (i) L &
B shall cooperate and assist Jefferson in preparing and filing a Proxy
Statement/Prospectus (the "Proxy Statement/Prospectus") with the S.E.C., the
O.T.S. and the T.S.L.D., if required, and upon receipt of any required approval
or clearance from any such regulatory agency, L & B shall mail such Proxy
Statement/Prospectus to its shareholders, (ii) L & B shall furnish Jefferson all
information concerning L & B and its subsidiaries that Jefferson may reasonably
request in connection with such Proxy Statement/Prospectus, and (iii) the Board
of Directors of L & B shall (subject to compliance with its fiduciary duties as
advised by counsel) recommend to its shareholders the approval of this Agreement
and the Merger and use its best efforts to obtain such shareholder approval.
SECTION 4.04. CONSENTS TO CONTRACTS AND LEASES. L & B shall use its best
efforts to obtain all necessary consents with respect to all interests of L & B
and its subsidiaries in any material leases, licenses, contracts, instruments
and rights which require the consent of another person for their transfer or
assumption pursuant to the Merger, if any.
SECTION 4.05. MERGER EXPENSES AND RELATED MATTERS.
(a) L & B and Jefferson shall consult and cooperate with each other with
respect to determining, as specified in a written notice from Jefferson to L &
B, based upon such consultation and as hereinafter provided, the amount and the
timing for recognizing for financial accounting purposes the expenses of the
Merger and the restructuring charges related to or to be incurred in connection
with the Merger.
(b) From and after the date of this Agreement to the Effective Time, L & B
shall, to the extent required under Section 412 of the Code or Section 302 of
ERISA, maintain and keep all of its benefit plans (including, but not limited
to, defined contribution plans and deferred compensation plans) fully funded,
and shall, to the extent any such benefit plan may not be fully funded, make
such contributions as are necessary to fully fund any such unfunded benefit
plan; provided, however, that L & B or any of its subsidiaries which has
withheld amounts from the compensation of any employee pursuant to a salary
reduction agreement or other contribution agreement under a plan, including but
not limited to a plan intended to be qualified under Section 401(k) or Section
125 of the Code, shall not be required to actually contribute or otherwise apply
such amounts to such plan prior to the date otherwise required pursuant to
Section 3 of ERISA and Section 2510.3-102(a) of the Regulations issued by the
Secretary of Labor.
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SECTION 4.06. CONFORMING ACCOUNTING AND RESERVE POLICIES.
(a) At the request of Jefferson, L & B shall, prior to the Closing Date,
establish and take such reserves and accruals as Jefferson shall request so as
to conform L & B's loan, accrual, reserve and other accounting policies to
Jefferson's policies, establish and take such accruals, reserves and charges in
order to implement such policies in respect of excess facilities and equipment
capacity, severance costs, litigation matters, write-off or write-down of
various assets and other appropriate accounting adjustments, and recognize for
financial accounting purposes such expenses of the Merger and restructuring
charges related to or to be incurred in connection with the Merger, in each case
at such times as are mutually agreeable to Jefferson and L & B; provided,
however, that L & B shall not be required to take any such action that is not
consistent with GAAP.
(b) No accrual or other adjustment made by L & B pursuant to the provisions
of this Section 4.06 shall constitute an acknowledgment by L & B or create any
implication, for any purpose, that such accrual or adjustment was necessary for
any purpose other than to comply with the provisions of this Section 4.06.
(c) The calculation of L & B's consolidated earnings during the Earnings
Period for the purpose of determining the Basic Merger Consideration shall be
unaffected by any accrual or adjustment made by L & B at the request of
Jefferson pursuant to this Section 4.06.
SECTION 4.07. CONSUMMATION OF AGREEMENT. L & B shall use its best efforts
to perform and fulfill all conditions and obligations on its part to be
performed or fulfilled under this Agreement, to effect the Merger in accordance
with the terms and provisions hereof and to obtain all necessary approvals and
consents on its part to be obtained pursuant to this Agreement. L & B shall
furnish to Jefferson in a timely manner all information, data and documents in
the possession of L & B or its subsidiaries requested by Jefferson as may be
required to obtain any necessary regulatory or other approvals of the Merger or
to file with the S.E.C. a registration statement on Form S-4 (the "Registration
Statement") relating to the shares of Jefferson Common to be issued to the
shareholders of L & B pursuant to the Merger and this Agreement and shall
otherwise cooperate fully with Jefferson to carry out the purpose and intent of
this Agreement.
SECTION 4.08. ENVIRONMENTAL REPORTS. L & B shall provide to Jefferson, as
soon as reasonably practical, but not later than forty-five (45) days after the
date hereof, a report ("Phase I Report") of a phase one environmental site
assessment ("Phase I ESA") on all real property owned, leased or operated by L &
B or its subsidiaries as of the date hereof (other than space in retail and
similar establishments leased or operated by L & B for automatic teller
machines) and within ten (10) days after the acquisition or lease of any real
property acquired, leased or operated by L & B or its subsidiaries after the
date hereof (other than space in retail and similar establishments leased or
operated by L & B for automatic teller machines), except as otherwise provided
in Section 4.01(b)(xv). If required by the Phase I ESA in Jefferson's
reasonable opinion, and upon written request from Jefferson to L & B within
fifteen (15) business days of Jefferson receipt of such Phase I Reports, L & B
shall provide to Jefferson as soon as reasonably practicable a report ("Phase II
Report") of a phase two investigation on properties requiring such additional
study. Jefferson shall have fifteen (15) business days from the receipt of any
Phase II Report to notify L & B of any objection to the contents of such report.
Should the cost to L & B and/or any of its subsidiaries of taking all remedial
and corrective actions and measures (i) required by applicable law, or (ii)
recommended or suggested by any such Phase I Report or Phase II Report, or (iii)
prudent
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in light of serious life, health or safety concerns (the "Remediation Cost"), in
the aggregate, exceed the sum of One Hundred Thousand Dollars ($100,000) as
reasonably estimated by an environmental expert retained for such purpose by
Jefferson and reasonably acceptable to L & B, or if the Remediation Cost cannot
be so reasonably estimated by such expert to be less than of $100,000, with any
reasonable degree of certainty, then Jefferson shall have the right pursuant to
Section 7.03 hereof, for a period of ten (10) business days following receipt of
such estimate or indication that the Remediation Cost cannot be so reasonably
estimated, to terminate this Agreement by giving written notice thereof to
L & B.
SECTION 4.09. RESTRICTION ON RESALES. L & B shall obtain and deliver to
Jefferson, at least thirty-one days prior to the Closing Date, the signed
agreement, in the form of Exhibit 4.08 hereto, of each person who may reasonably
be deemed an "affiliate" of L & B within the meaning of such term as used in
Rule 145 under the Securities Act regarding compliance with the provisions of
such Rule 145.
SECTION 4.10. ACCESS TO INFORMATION. L & B shall permit Jefferson and
AcquisitionCo, and their respective accountants, attorneys or other
representatives, reasonable access, at all reasonable times during normal
business hours and in a manner which will avoid undue disruption or interference
with the normal operations of L & B and its subsidiaries and subject to certain
laws and practices regarding confidentiality and privilege, to the properties of
L & B and its subsidiaries and shall disclose and make available to Jefferson
and AcquisitionCo, and their respective accountants, attorneys or other
representatives, all corporate, business and accounting books, documents, papers
and records relating to the assets, stock, ownership, properties, operations,
obligations and liabilities of L & B and its subsidiaries, including, but not
limited to, all books of account (including the general ledger), tax records,
minute books of directors' and shareholders' meetings, organizational documents,
material contracts and agreements, loan files, filings with any regulatory
authority, accountants' workpapers (if available and subject to the respective
independent accountants' consent), litigation files (but only to the extent that
such review would not result in a material waiver of the attorney-client or
attorney work product privileges under the rules or evidence), plans affecting
employees, reports of examination by regulatory authorities and related
correspondence, internal audit reports and reviews and related work papers,
internal loan review reports, and any other business activities or prospects in
which Jefferson or AcquisitionCo may have a reasonable and legitimate interest
in furtherance of the transactions contemplated by this Agreement. In addition,
Jefferson and AcquisitionCo, and their respective accountants, attorneys or
other representatives, at all reasonable times during normal business hours and
in a manner which will avoid undue disruption or interference with the normal
operations of L & B and its subsidiaries, may make such accounting, financial
and operating inspections, reviews and analyses with respect to auditors'
reports and such other financial statements concerning L & B and its
subsidiaries, and perform such other tests or reviews as Jefferson or
AcquisitionCo may reasonably request. L & B shall deliver to Jefferson within
ten (10) business days after the date hereof a true, accurate and complete copy
of each written plan or program disclosed in Section 2.13(c) of the Disclosure
Schedule and, with respect to each such plan or program, all (i) amendments or
supplements thereto, (ii) summary plan descriptions, (iii) lists of all current
participants and all participants with benefit entitlements, (iv) contracts
relating to plan documents, (v) actuarial valuations for any defined benefit
plan, (vi) valuations for any plan as of the most recent date, (vii)
determination letters from the Internal Revenue Service, (viii) the most recent
annual report filed with the Internal Revenue Service, (ix) registration
statements on Form S-8 and prospectuses, and (x) trust agreements. Jefferson
will hold any such information which is nonpublic in confidence in accordance
with the provisions of Section 8.01 hereof. Furthermore, Jefferson and
AcquisitionCo, and their respective accountants, attorneys or other
representatives, shall be permitted to
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contact and consult with the accounting firm or personnel responsible for
preparing the L & B Financial Statements or any other audited financial
information concerning L & B or its subsidiaries.
SECTION 4.11. SUBSIDIARY MERGER. Upon the request of Jefferson, L & B
shall cause the Savings Bank to enter into a merger agreement with First Federal
Savings Bank of North Texas, a federal savings bank and wholly owned subsidiary
of Jefferson, and take all other actions and cooperate with Jefferson in order
to prepare for and cause such merger (the "Subsidiary Merger") to be effected.
Such subsidiary merger agreement shall provide, in addition to customary terms
for mergers of subsidiaries in transactions such as this: (i) for consummation
of such Subsidiary Merger at a time on or after the Effective Time, as may be
selected by Jefferson; and (ii) that the obligations of the Savings Bank
thereunder are conditioned on the prior or simultaneous consummation of the
Merger pursuant to this Agreement.
SECTION 4.12. TERMINATION OF DEFERRED COMPENSATION AGREEMENTS. L & B
shall obtain and deliver to Jefferson prior to the Closing Date, the signed
agreements of each of Messrs C. Glynn Lowe and Daniel M. Phillips regarding
termination of the Deferred Compensation Agreements, each dated November 17,
1987, between Sulphur Springs Loan and Building Association and each such
person, (which such termination shall be effective on at the Effective Time) and
the release of all liabilities and obligations thereunder.
SECTION 4.13. MAIN OFFICE PARKING LOT AND MT. VERNON BRANCH.
(a) L & B shall obtain, on terms reasonably satisfactory to L & B, and
deliver to Jefferson prior to the Closing Date a copy of a lease agreement,
satisfactory to Jefferson, or satisfactory evidence of ownership with respect to
that certain parking lot (including all improvements thereon) located
immediately adjacent to the Savings Bank's home office at 306 North Davis
Street, Sulphur Springs, Texas.
(b) L & B shall deliver to Jefferson prior to the Closing Date a copy of a
lease, on terms satisfactory to Jefferson, with respect to the Savings Bank's
branch office located at 101 Kaufman, Mt. Vernon, Texas.
ARTICLE FIVE
------------
AGREEMENTS OF JEFFERSON AND ACQUISITIONCO
-----------------------------------------
SECTION 5.01. REGULATORY APPROVALS AND REGISTRATION STATEMENT. Jefferson
shall file, or cause to be filed, all regulatory applications required in order
to consummate the Merger, including but not limited to the necessary
applications for the prior approval of the O.T.S. and the T.S.L.D. Jefferson
shall file or cause to be filed with the S.E.C. the Registration Statement on
Form S-4 relating to the shares of Jefferson Common to be issued to the
shareholders of L & B pursuant to this Agreement, including shares to be issued
pursuant to subsections (c) and (d) of Section 1.05, and shall use its best
efforts to cause the Registration Statement to become effective. Jefferson
shall also cause the shares of Jefferson Common issued pursuant to this
Agreement to be qualified for trading on the Nasdaq National Market. Jefferson
shall keep L & B reasonably informed as to the status of such applications and
filings and make available to L & B, prior to making all such applications and
filings and upon reasonable request by L & B from time to time, copies of such
applications and any supplementally filed materials
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and promptly make available to L & B copies of any comment letters and any other
materials received by Jefferson in connection therewith, and L & B shall be
permitted to participate in the processing of each application and responses
thereto. At the time the Registration Statement becomes effective, the
Registration Statement shall comply in all material respects with the provisions
of the Securities Act and the published rules and regulations thereunder, and
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not false or misleading, and at the time of mailing thereof to the
shareholders of L & B, at the time of the Stockholders' Meeting and at the
Effective Time the Proxy Statement/Prospectus included as part of the
Registration Statement, as amended or supplemented by any amendment or
supplement, shall not contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not false or
misleading. Jefferson shall timely file or caused to be timely filed all
documents required to obtain all necessary permits and approvals from state
securities agencies or authorities, if any, required to carry out the
transactions contemplated by this Agreement, shall pay all expenses incident
thereto and shall use its best efforts to obtain such permits and approvals on a
timely basis. Jefferson shall promptly and properly prepare and file or cause
to be properly prepared and filed any other filings required under the
Securities Exchange Act of 1934 (the "Exchange Act") relating to the Merger and
the transactions contemplated herein.
SECTION 5.02. BREACHES. Jefferson shall, in the event it has knowledge of
the occurrence, or impending or threatened occurrence, of any event or condition
which would cause or constitute a breach (or would have caused or constituted a
breach had such event occurred or been known prior to the date hereof) of any of
its representations or agreements contained or referred to herein, give prompt
written notice thereof to L & B and use its best efforts to prevent or promptly
remedy the same.
SECTION 5.03. CONSUMMATION OF AGREEMENT. Jefferson and AcquisitionCo shall
use their respective best efforts to perform and fulfill all conditions and
obligations on their part to be performed or fulfilled under this Agreement, to
effect the Merger in accordance with the terms and conditions of this Agreement,
and to obtain all necessary approvals and consents on their respective parts to
be obtained pursuant to this Agreement.
SECTION 5.04. EMPLOYEE BENEFITS. Jefferson shall, with respect to each
person who remains an employee of L & B or its subsidiaries following the
Closing Date (each a "Continued Employee"), provide the benefits described in
this Section 5.04. Subject to the right of subsequent amendment, modification
or termination in Jefferson's sole discretion, each Continued Employee shall be
entitled, as a new employee of a subsidiary of Jefferson, to participate in such
employee benefit plans, as defined in Section 3(3) of ERISA, or any non-
qualified employee benefit plans or deferred compensation, stock option, bonus
or incentive plans, or other employee benefit or fringe benefit programs that
may be in effect generally for employees of all of Jefferson subsidiaries (the
"Jefferson Plans"), if and as a Continued Employee shall be eligible and, if
required, selected for participation therein under the terms thereof and
otherwise shall not be participating in a similar plan which is maintained by L
& B after the Effective Time. L & B employees shall participate therein on the
same basis as similarly situated employees of other Jefferson subsidiaries.
Jefferson shall cause each such Continued Employee to be eligible to participate
immediately in the group health plan or plans of Jefferson or the subsidiary
which will employ each such Continued Employee, without the application of any
pre-existing condition exclusion or limitation which would otherwise apply with
respect to such Continued Employee or his or her dependents provided that such
Continued Employee is not, as of the Closing Date, subject to any such exclusion
or limitation with respect to any similar group health plan or plans maintained
by L & B or its
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subsidiaries. Subject only to the foregoing, all such participation shall be
subject to the terms of such plans as may be in effect from time to time and
this Section 5.04 is not intended to give Continued Employees any rights or
privileges superior to those of other employees of Jefferson subsidiaries.
Jefferson may terminate or modify all Employee Plans and Jefferson's obligation
under this Section 5.04 shall not be deemed or construed so as to provide
duplication of similar benefits but, subject to that qualification, Jefferson
shall, for purposes of vesting and any age or period of service requirements for
commencement of participation with respect to any Jefferson Plans in which
Continued Employees may participate, credit each Continued Employee with his or
her term of service with L & B and its subsidiaries.
SECTION 5.05. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE AND
INDEMNIFICATION.
(a) Following the Effective Time, Jefferson shall provide the present and
former directors and officers of L & B and its subsidiaries, regardless of
whether or not such persons are employed or serve thereafter, with the same
directors' and officers' liability insurance coverage that Jefferson provides to
directors and officers of its other thrift subsidiaries generally, and, in
addition, for a period of three years following the Effective Time, Jefferson
shall use its best efforts to continue L & B's directors' and officers'
liability insurance coverage with respect to actions occurring prior to the
Effective Time to the extent that such coverage is obtainable for an aggregate
premium not to exceed the annual premium presently being paid by L & B. If the
premium for such insurance coverage would exceed such maximum amount, Jefferson
shall use its best efforts to procure such level of insurance as can be obtained
for a premium equal to such maximum amount.
(b) For a period of six years after the Effective Time, Jefferson and
AcquisitionCo (the survivor of the Merger) shall jointly and severally
indemnify, defend and hold harmless the present and former officers, directors,
employees and agents of L & B and its subsidiaries, including persons who have
served as fiduciaries of Employee Plans, at the Effective Time (each, an
"Indemnified Party"), regardless of whether or not such persons are employed or
serve thereafter, against all losses, expenses, claims, damages or liabilities
arising out of actions or omissions occurring on or prior to the Effective Time
to the full extent then permitted by the Corporate Law and by L & B's articles
of incorporation or bylaws and the articles of association or bylaws of L & B's
subsidiaries as in effect on the date hereof, including provisions relating to
advancement of expenses incurred in the defense of any action or suit.
(c) If after the Effective Time AcquisitionCo or any of its successors or
assigns (i) shall consolidate with or merge with and into any other corporation
or entity and shall not be the continuing or surviving corporation or entity, or
(ii) shall transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provision shall be made so that the successors and assigns of AcquisitionCo
shall assume any remaining obligations set forth in this Section 5.05. If
AcquisitionCo shall liquidate, dissolve or otherwise wind up its business, then
Jefferson shall indemnify, defend and hold harmless each Indemnified Party to
the same extent and on the same terms that AcquisitionCo was so obligated
pursuant to this Section 5.05.
(d) The provisions of this Section 5.05 are intended to be for the benefit
of, and shall be enforceable by, each of the individuals referred to in
subsections (a) and (b) of this Section 5.05 and their respective heirs and
personal representatives.
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SECTION 5.06. ACCESS TO INFORMATION. Jefferson shall permit L & B and its
accountants, attorneys or other representatives, reasonable access, at all
reasonable times during normal business hours and in a manner which will avoid
undue disruption or interference with the normal operations or Jefferson or its
subsidiaries and subject to certain laws and practices regarding confidentiality
and privilege, to the properties of Jefferson and its significant subsidiaries
and shall disclose and make available to L & B and its accountants, attorneys or
other representatives, all corporate, business and accounting books, documents,
papers and records relating to the assets, stock, ownership, properties,
operations, obligations and liabilities of Jefferson and its significant
subsidiaries, including, but not limited to, all books of account (including the
general ledger), tax records, minute books of directors' and shareholders'
meetings, organizational documents, material contracts and agreements, loan
files, filings with any regulatory authority, accountants' workpapers (if
available and subject to the respective independent accountants' consent),
litigation files (but only to the extent that such review would not result in a
material waiver of the attorney-client or attorney work product privileges under
the rules of evidence), plans affecting employees, reports of examination by
regulatory authorities and related correspondence, internal audit reports and
reviews and related work papers, internal loan review reports, and any other
business activities or prospects in which L & B may have a reasonable and
legitimate interest in furtherance of the transactions contemplated by this
Agreement. In addition, L & B and its accountants, attorneys or other
representatives, at all reasonable times during normal business hours and in a
manner which will avoid undue disruption or interference with the normal
operations of Jefferson and its significant subsidiaries, may make such
accounting, financial and operating inspections, reviews and analyses with
respect to auditors' reports and such other financial statements concerning
Jefferson and/or its significant subsidiaries, and perform such other tests as L
& B may reasonably request. L & B and its accountants, attorneys or other
representatives shall be permitted to contact and consult with the accounting
firm or personnel responsible for preparing the Jefferson Financial Statements
or any other audited financial information concerning Jefferson or its
significant subsidiaries.
SECTION 5.07. NOTICE OF CERTAIN EVENTS. Jefferson shall promptly notify L
& B in writing of the occurrence of any matter or event known to and directly
involving Jefferson or any of its subsidiaries, which would not include any
changes in conditions that affect the banking or thrift industry generally, that
is materially adverse to the business, operations, properties, assets, or
condition (financial or otherwise) of Jefferson and its subsidiaries taken as a
whole.
ARTICLE SIX
-----------
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
SECTION 6.01. CONDITIONS TO JEFFERSON'S AND ACQUISITIONCO'S OBLIGATIONS.
Jefferson's and AcquisitionCo's obligations to effect the Merger shall be
subject to the satisfaction (or waiver by Jefferson) prior to or on the Closing
Date of the following conditions:
(a) Except for changes specifically referred to in this Agreement, the
representations and warranties made by L & B in this Agreement shall be true in
all material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and as of
the Closing Date;
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(b) L & B shall have performed and complied in all material respects with
all of its obligations and agreements required to be performed on or prior to
the Closing Date under this Agreement;
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any bank or thrift regulatory authority or
other person seeking any of the foregoing be pending. There shall not be any
action taken, or any statute, rule, regulation or order enacted, entered,
enforced or applicable to the Merger which makes the consummation of the Merger
illegal;
(d) All necessary regulatory approvals, consents, authorizations and other
approvals required by law for consummation of the Merger shall have been
obtained and all waiting periods required by law shall have expired;
(e) Jefferson shall have received the environmental reports required by
Section 4.08 hereof, and shall not have elected, pursuant to Section 7.03
hereof, to terminate and cancel this Agreement;
(f) Jefferson shall have received all documents required to be received
from L & B on or prior to the Closing Date, all in form and substance reasonably
satisfactory to Jefferson;
(g) The Registration Statement shall be effective under the Securities Act
and no stop orders suspending the effectiveness of the Registration Statement
shall be in effect or proceedings for such purpose pending before or threatened
by the S.E.C.; and
(h) Jefferson shall have received an opinion of its counsel, addressed to
the board of directors of each of Jefferson and L & B, to the effect that, for
federal income purposes, the Merger will constitute a reorganization within the
meaning of Section 368(a) of the Code and that, accordingly, for federal tax
purposes (i) gain will be realized by each holder of shares of L & B Common who
receives both Jefferson Common and cash in exchange for his or her L & B Common
and will be recognized, but not in excess of the amount of cash received, (ii)
the aggregate tax basis of Jefferson Common received by a shareholder of L & B
will be the same as the aggregate basis of the L & B Common surrendered in
exchange therefor decreased by the amount of cash received by the shareholder
and increased by the amount, if any, treated as a dividend and the amount, if
any, of gain recognized by the shareholder in the exchange, and (iii) the
holding period of Jefferson Common to be received by each L & B shareholder will
include, in each instance, the period in which the shareholder held the L & B
Common surrendered in exchange therefor provided that the L & B Common is held
as a capital asset on the date of exchange.
SECTION 6.02. CONDITIONS TO L & B'S OBLIGATIONS. L & B's obligation to
effect the Merger shall be subject to the satisfaction (or waiver by L & B)
prior to or on the Closing Date of the following conditions:
(a) Except for changes specifically required by this Agreement, the
representations and warranties made by Jefferson and AcquisitionCo in this
Agreement shall be true in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
or given on the Closing Date;
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(b) Jefferson and AcquisitionCo shall have performed and complied in all
material respects with all of their obligations and agreements hereunder
required to be performed on or prior to the Closing Date under this Agreement;
(c) No temporary restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or other legal
restraint or prohibition preventing the consummation of the Merger shall be in
effect, nor shall any proceeding by any bank or thrift regulatory authority or
other governmental agency seeking any of the foregoing be pending. There shall
not be any action taken, or any statute, rule, regulation or order enacted,
entered, enforced or applicable to the Merger which makes the consummation of
the Merger illegal;
(d) All necessary regulatory approvals, consents, authorizations and other
approvals, including the requisite approval of this Agreement and the Merger by
the shareholders of L & B, required by law for consummation of the Merger shall
have been obtained and all waiting periods required by law shall have expired;
(e) L & B shall have received all documents required to be received from
Jefferson on or prior to the Closing Date, all in form and substance reasonably
satisfactory to L & B;
(f) L & B shall have received a fairness opinion from its financial advisor
for disclosure to L & B's shareholders in the Proxy Statement/Prospectus, which
fairness opinion has not been withdrawn prior to the Closing Date, to the effect
that the Merger contemplated hereby is fair to the L & B shareholders from a
financial perspective;
(g) The Registration Statement shall be effective under the Securities Act
and no stop orders suspending the effectiveness of the Registration Statement
shall be in effect or proceedings for such purpose pending before or threatened
by the S.E.C.; and
(h) L & B shall have received a copy of the opinion delivered pursuant to
Section 6.01(h) hereto.
ARTICLE SEVEN
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TERMINATION OR ABANDONMENT
--------------------------
SECTION 7.01. MUTUAL AGREEMENT. This Agreement may be terminated by the
mutual written agreement of the parties at any time prior to the Closing Date,
regardless of whether approval of this Agreement and the Merger by the
shareholders of L & B shall have been previously obtained.
SECTION 7.02. MATERIAL BREACH. In the event that there is a material
breach in any of the representations and warranties or agreements of Jefferson
or L & B, which breach is not cured within thirty (30) days after notice to cure
such breach is given to the breaching party by a non-breaching party, then the
non-breaching party making such cure demand, regardless of whether approval of
this Agreement and the Merger by the shareholders of L & B shall have been
previously obtained, may terminate and cancel this Agreement by providing
written notice of such action to the other party hereto.
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SECTION 7.03. ENVIRONMENTAL REPORTS. Jefferson may terminate this
Agreement to the extent provided by Section 4.08 and this Section 7.03 by giving
written notice of such action to L & B.
SECTION 7.04. FAILURE OF CONDITIONS. In the event that any of the
conditions to the obligations of any party are not satisfied or waived on or
prior to the Closing Date, and if any applicable cure period provided in Section
7.02 hereof has lapsed, then the affected party may, regardless of whether
approval of this Agreement and the Merger by the shareholders of L & B shall
have been previously obtained, terminate and cancel this Agreement by delivery
of written notice of such action to the other parties.
SECTION 7.05. REGULATORY APPROVAL DENIAL. If any regulatory application
filed pursuant to Section 5.01 hereof should be finally denied or disapproved by
the respective regulatory authority or if any such regulatory application should
not be finally approved within nine (9) months from the date hereof, then this
Agreement thereupon shall be deemed terminated and canceled; provided, however,
that a request for additional information or undertaking by Jefferson or
AcquisitionCo, as a condition for approval, shall not be deemed to be a denial
or disapproval so long as Jefferson or AcquisitionCo diligently provides the
requested information or undertaking. In the event an application is denied
pending an appeal, petition for review, or similar such act on the part of
Jefferson or AcquisitionCo (hereinafter referred to as the "appeal") then the
application will be deemed denied unless Jefferson or AcquisitionCo prepares and
timely files such appeal and continues the appellate process for purposes of
obtaining the necessary approval.
SECTION 7.06. SHAREHOLDER APPROVAL DENIAL. If this Agreement, the Merger
and any other transactions contemplated hereby are not approved by the requisite
vote of the shareholders of L & B, then any party may terminate this Agreement
by giving written notice of such action to the other parties.
SECTION 7.07. REGULATORY ENFORCEMENT MATTERS. In the event that L & B or
any of its subsidiaries shall become a party or subject to any new or amended
written agreement, memorandum of understanding, cease and desist order,
imposition of civil money penalties or other regulatory enforcement action or
proceeding with any federal or state agency charged with the supervision or
regulation of thrifts or thrift holding companies after the date of this
Agreement, then Jefferson or AcquisitionCo may terminate this Agreement.
SECTION 7.08. SHARE COMPONENT FLUCTUATION. If the Jefferson Average Price
is greater than $33.60 per share or less than $20.00 per share, then this
Agreement may be terminated by any party by giving written notice of such action
to the other parties.
SECTION 7.09. OTHER TERMINATION. If the Closing does not occur within
thirty (30) days after the expiration of nine (9) months from the date hereof,
then this Agreement may be terminated by any party by giving written notice of
such action to the other parties, provided that such failure of the Closing to
occur is not the result of the terminating party's default in the performance of
a material obligation or covenant under this Agreement.
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SECTION 7.10. TERMINATION FEE.
(a) Jefferson shall pay to L & B the sum of Two Hundred Fifty Thousand
Dollars ($250,000.00) as an agreed upon termination fee and as liquidated
damages, in lieu of all remedies at law or in equity and in full satisfaction of
all obligations or liabilities of Jefferson and AcquisitionCo hereunder, upon
the termination of this Agreement by L & B as the result of a material breach of
this Agreement by Jefferson and/or AcquisitionCo which breach has not been cured
by Jefferson and/or AcquisitionCo within thirty (30) days after notice to cure
such breach is given to Jefferson by L & B.
(b) L & B shall pay to Jefferson the sum of Two Hundred Fifty Thousand
Dollars ($250,000.00) as an agreed upon termination fee and as liquidated
damages, in lieu of all remedies at law or in equity and in full satisfaction of
all obligations or liabilities of L & B hereunder, upon the (i) termination of
this Agreement by Jefferson or AcquisitionCo as the result of a material breach
of this Agreement by L & B which breach has not been cured by L & B within
thirty (30) days after notice to cure such breach is given to L & B by Jefferson
or AcquisitionCo (including, without limitation, the execution of an agreement
between L & B or any subsidiary and any third party which is itself a breach of
this Agreement), or (ii) the failure of the L & B shareholders to approve this
Agreement, the Merger and/or any other transactions contemplated hereby at the
Stockholders' Meeting (other than as a result of a material breach of this
Agreement by Jefferson or AcquisitionCo), AND, in either case, the occurrence of
one or more of the following events (a "Triggering Event") within a period of
twenty-four (24) months thereafter:
(i) any person or group of persons (other than Jefferson and/or its
affiliates) shall acquire, or have the right to acquire, more than fifty
percent (50%) of the outstanding shares of L & B Common;
(ii) the expiration date of a tender or exchange offer by any person
or group of persons (other than Jefferson and/or its affiliates) to purchase
or acquire securities of L & B or any of its subsidiaries if upon
consummation of such offer, such person or group of persons would own,
control or have the right to acquire more than fifty percent (50%) of the
outstanding shares of L & B Common or other capital stock of L & B or any of
its subsidiaries; or
(iii) the entry by L & B or any of its subsidiaries into a binding
agreement or other understanding with a person or group of persons (other
than Jefferson and/or its affiliates) for such person or group of persons to
acquire, merge or consolidate with L & B or any of its subsidiaries, or to
purchase or acquire L & B or any of its subsidiaries, or all or
substantially all of the assets of L & B or any of its subsidiaries, or more
than fifty percent (50%) of the outstanding shares of L & B Common or other
capital stock of L & B or any of its subsidiaries.
For purposes of this Section 7.10(b), "person" and "group of persons" shall have
the meanings conferred thereon by Section 13(d) of the Exchange Act.
(c) L & B shall notify Jefferson promptly in writing upon its becoming
aware of the occurrence of any Triggering Event.
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ARTICLE EIGHT
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GENERAL
-------
SECTION 8.01. CONFIDENTIAL INFORMATION. The parties acknowledge the
confidential and proprietary nature of the "Protected Information" (as herein
described) that has heretofore been exchanged and that will be received from
other parties hereunder and/or their subsidiaries and agree to hold and keep,
and to instruct their respective agents, representatives, shareholders,
affiliates, employees and consultants to hold and keep, such information
confidential in accordance with the terms of that certain Confidentiality
Agreement dated June 25, 1996 among Jefferson, L & B and the Savings Bank, a
copy of which is attached hereto as Exhibit 8.01 and made a part hereof (the
"Confidentiality Agreement"). Such Protected Information will include, in
addition to any information defined as protected pursuant to Section 1(b) of the
Confidentiality Agreement, any and all financial, technical, commercial,
marketing, customer or other information concerning the business, operations and
affairs of a party or any subsidiary that may be provided to the other,
irrespective of the form of the communications, by such party's employees or
agents. Such Protected Information shall not include information that is or
becomes generally available to the public other than as a result of a disclosure
by a party or its representatives in violation of this Agreement. The parties
agree that the Protected Information will be used solely for the purposes
contemplated by this Agreement and that such Protected Information will not be
disclosed to any person other than employees and agents of a party who are
directly involved in evaluating the transaction. The Protected Information
shall not be used in any way detrimental to a party, including use directly or
indirectly in the conduct of the other party's business or any business or
enterprise in which such party may have an interest, now or in the future, and
whether or not now in competition with such other party.
SECTION 8.02. RETURN OF DOCUMENTS. Upon termination of this Agreement
without the Merger becoming effective, each party (i) shall deliver to the other
all originals and copies or other derivatives of all Protected Information made
available to such party (ii) will not retain any copies, extracts or other
reproductions or derivatives in whole or in part of such Protected Information,
and (iii) will destroy all memoranda, notes and other writings prepared by
either party based on the Protected Information.
SECTION 8.03. PUBLICITY. Jefferson, AcquisitionCo and L & B shall
cooperate with each other in the development and distribution of, and mutually
agree upon the form and content of, all news releases and other public
disclosures concerning this Agreement and the Merger and shall not issue any
news release or make any other public disclosure without the prior consent of
the other party, unless such is required by law upon the written advice of
counsel or is in response to published newspaper or other mass media reports
regarding the transaction contemplated hereby, in which such latter event the
parties shall consult with each other regarding such responsive public
disclosure.
SECTION 8.04. NOTICES. Any notice or other communication shall be in
writing and shall be deemed to have been given or made on the date of delivery,
in the case of hand delivery, or three (3) business days after deposit in the
United States Registered Mail, postage prepaid, or upon receipt if transmitted
by facsimile telecopy or any other means, addressed (in any case) as follows:
A-32
<PAGE>
(a) if to Jefferson or AcquisitionCo:
Jefferson Savings Bancorp, Inc.
14915 Manchester Road
Ballwin, Missouri 63011
Attention: Mr. David V. McCay
Facsimile: (314) 227-5009
with a copy to:
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
Attention: John K. Pruellage, Esq.
Facsimile: (314) 241-6056
and
(b) if to L & B:
L & B Financial, Inc.
306 North Davis
Sulphur Springs, Texas 75482
Attention: Mr. C. Glynn Lowe
Facsimile: (903) 885-9723
with copies to:
Shannon, Gracey, Ratliff & Miller, LLP
1600 Bank One Tower
500 Throckmorton
Fort Worth, Texas 76102
Attention: Richard G. Williams, Esq.
Facsimile: (817) 336-3735
or to such other address as any party may from time to time designate by notice
to the others.
SECTION 8.05. LIABILITIES. In the event that this Agreement is terminated
pursuant to the provisions of Article Seven hereof, except as provided in
Section 7.10 of this Agreement, no party hereto shall have any liability to any
other party for costs, expenses, damages or otherwise; provided, however, that,
notwithstanding the foregoing, in the event that this Agreement is terminated
pursuant to Section 7.02 hereof on account of a willful breach of any of the
representations and warranties set forth herein or a willful breach of any of
the agreements set forth herein, then the non-breaching party shall be entitled
to recover appropriate damages from the breaching party.
SECTION 8.06. EXPENSES. Each of the parties to this Agreement shall bear
their respective costs, fees and expenses incurred in connection with this
Agreement, the Merger and any other transactions
A-33
<PAGE>
contemplated hereby. Fees and expense reimbursement paid and payable by L & B
to its financial advisor for services rendered in connection with the
transaction contemplated by this Agreement shall not be charged against L & B's
consolidated earnings during the Earnings Period for purposes of determining the
Basic Merger Consideration, except to the extent, if any, that the aggregate
amount of such fees and reimbursement exceeds $100,000.
SECTION 8.07. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Except for, and as provided in this Section 8.07, no representation, warranty or
agreement contained in this Agreement shall survive the Effective Time or the
earlier termination of this Agreement. The agreements set forth in Sections
1.03, 1.04, 1.05(d), 1.08, 4.11, 5.04 and 5.05 shall survive the Effective Time
and the agreements set forth in Sections 7.10, 8.01, 8.02, 8.03, 8.05 and 8.06
hereof shall survive the Effective Time or the earlier termination of this
Agreement.
SECTION 8.08. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules attached hereto, constitute the entire agreement between the parties
and supersedes and cancels any and all prior discussions, negotiations,
undertakings, agreements in principle and other agreements between the parties
relating to the subject matter hereof.
SECTION 8.09. HEADINGS AND CAPTIONS. The captions of Articles and Sections
hereof are for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Agreement.
SECTION 8.10. WAIVER, AMENDMENT OR MODIFICATION. The conditions of this
Agreement that may be waived may only be waived by notice to the other party
waiving such condition. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. This Agreement may be amended or modified
by the parties hereto, at any time before or after approval of the Agreement by
the shareholders of L & B; provided, however, that after any such approval no
such amendment or modification shall alter the amount or change the form of the
Basic Merger Consideration contemplated by this Agreement to be received by
shareholders of L & B or alter or change any of the terms of this Agreement if
such alteration or change would adversely affect the holders of L & B Common.
This Agreement shall not be amended or modified except by a written document
duly executed by the parties hereto.
SECTION 8.11. RULES OF CONSTRUCTION. Unless the context otherwise
requires: (a) a term has the meaning assigned to it; (b) an accounting term not
otherwise defined has the meaning assigned to it in accordance with GAAP; (c)
"or" is not exclusive; and (d) words in the singular may include the plural and
in the plural include the singular.
SECTION 8.12. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which shall
be deemed one and the same instrument.
SECTION 8.13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Except as expressly provided for herein, there shall be no third
party beneficiaries hereof.
SECTION 8.14. GOVERNING LAW; ASSIGNMENT. This Agreement shall be governed
by the laws (other than the conflict of laws rule) of the State of Texas, except
to the extent that applicable federal and
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<PAGE>
other state laws and regulations must govern aspects of the Merger procedures
and shareholder rights related thereto. This Agreement may not be assigned by
any of the parties hereto.
SECTION 8.15. EMPLOYMENT AGREEMENT. Effective on the Closing Date,
Jefferson and C. Glynn Lowe shall enter into an employment agreement in
substantially the form of Exhibit 8.15 attached hereto.
SECTION 8.16. TIME. Time is of the essence in connection with this
Agreement.
SECTION 8.17. STATUS OF EMPLOYEE BENEFIT PLANS. Nothing in this Agreement
shall be construed to be an amendment to the ESOP, the Sulphur Springs Loan &
Building Association 401(k) Plan & Trust, or any other "employee benefit plan,"
as defined in Section 3(3) of ERISA, maintained by L & B or any of its
subsidiaries (as used in this Section 8.17, a "benefit plan"), nor shall this
Agreement or any provision hereof be considered or construed to be the
establishment of any benefit plan or create any rights under ERISA in favor of
any person. In the event of any conflict between any provision of this
Agreement and any benefit plan maintained by L & B or any of its subsidiaries,
the terms of such benefit plan shall prevail.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
A-35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
L & B FINANCIAL, INC.
By: /s/ C. Glynn Lowe
----------------------------------
C. Glynn Lowe, President and Chief
Executive Officer
JEFFERSON SAVINGS BANCORP, INC.
By: /s/ David V. McCay
----------------------------------
David V. McCay, Chairman of the
Board and President
JEFFERSON SAVINGS ACQUISITIONCO, INC.
By: /s/ David V. McCay
----------------------------------
David V. McCay, President
A-36
<PAGE>
EXHIBIT 1.09(a)(x)
------------------
L & B'S LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of L & B
under the laws of the State of Texas, its power and authority to own and operate
its properties and to carry on its business as now conducted, and its power and
authority to enter into the Agreement, to merge with AcquisitionCo in accordance
with the terms of the Agreement and to consummate the transactions contemplated
by the Agreement.
2. The due incorporation or organization, valid existence and good
standing of each of the subsidiaries of L & B listed in Section 2.03 of the
Disclosure Schedule, their power and authority to own and operate their
properties, the possession of all licenses, permits and authorizations necessary
to carry on their respective businesses as now conducted.
3. With respect to L & B, (i) the number of authorized, issued and
outstanding shares of capital stock of L & B on the Closing Date, (ii) the
nonexistence of any violation of the preemptive or subscription rights of any
person, (iii) the number of outstanding Stock Options, warrants, or other rights
to acquire, or securities convertible into, any equity security of L & B, (iv)
the nonexistence of any obligation, contingent or otherwise, to reacquire any
shares of capital stock of L & B, and (v) the nonexistence of any outstanding
stock appreciation, phantom stock or similar rights to receive shares of capital
stock or benefits derived from the value of underlying shares, except as
disclosed in the Agreement.
4. With respect to L & B's subsidiaries, (i) the number of authorized,
issued and outstanding shares of capital stock on the Closing Date and the
ownership of all issued shares by L & B, (ii) the nonexistence of any violation
of the preemptive or subscription rights of any person, (iii) the nonexistence
of any outstanding options, warrants, or other rights to acquire, or securities
convertible into, any equity securities of such subsidiary, (iv) the
nonexistence of any obligation, contingent or otherwise, to reacquire any shares
of capital stock of such subsidiary, and (v) the nonexistence of any outstanding
stock appreciation, phantom stock or similar rights to receive shares of capital
stock or benefits derived from the value of underlying shares.
5. The due and proper performance of all corporate acts and other
proceedings necessary or required to be taken by L & B to authorize the
execution, delivery and performance of the Agreement, the due execution and
delivery of the Agreement by L & B, and the Agreement as a valid and binding
obligation of L & B, enforceable against L & B in accordance with its terms
(subject to the provisions of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally from time to time in effect, and equitable
principles relating to the granting of specific performance and other equitable
remedies as a matter of judicial discretion).
6. The execution of the Agreement by L & B, and the consummation of the
Merger and the other transactions contemplated therein, do not violate or cause
a default under L & B's articles of incorporation or bylaws, or any statute,
regulation or rule or any judgment, order or decree against or any material
agreement known to counsel binding upon L & B or its subsidiaries.
<PAGE>
7. Except for the regulatory approvals and registrations to be obtained
or accomplished by Jefferson, the receipt of all required consents, approvals
(including the requisite approval of the shareholders of L & B), orders or
authorizations of, or registrations, declarations or filings with or notices to,
any court, administrative agency or commission or other governmental authority
or instrumentality, domestic or foreign, or any other person or group of persons
or entity required to be obtained or made by L & B or its subsidiaries in
connection with the respective execution and delivery of the Agreement or the
consummation of the transactions contemplated therein.
8. If requested by Jefferson pursuant to Section 4.11 of the Agreement,
the due and proper performance of all corporate acts and other proceedings
necessary or required to be taken by the Savings Bank to authorize the
execution, delivery and performance of the Agreement to Merge with First Federal
Savings Bank of North Texas, and the Agreement to Merge as a valid and binding
obligation of the Savings Bank, enforceable against the Savings Bank in
accordance with its terms (subject to the provisions of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally from time to time in effect, and
equitable principles relating to the granting of specific performance and other
equitable remedies as a matter of judicial discretion).
9. The nonexistence, to the knowledge of counsel, of any material
actions, suits, proceedings, orders, investigations or claims pending or
threatened against or affecting L & B or its subsidiaries which, if adversely
determined, would have a material adverse effect upon their respective
properties or assets or the transactions contemplated by the Agreement.
2
<PAGE>
EXHIBIT 1.09(b)(vi)
-------------------
JEFFERSON'S LEGAL OPINION MATTERS
1. The due incorporation, valid existence and good standing of Jefferson
and AcquisitionCo under the laws of the State of Delaware and the State of
Missouri, respectively, and their respective power and authority to enter into
the Agreement and to consummate the transactions contemplated thereby.
2. The due and proper performance of all corporate acts and other
proceedings required to be taken by each of Jefferson and AcquisitionCo to
authorize the execution, delivery and performance of the Agreement, the due
execution and delivery of the Agreement by Jefferson and AcquisitionCo, and the
Agreement as a valid and binding obligation of Jefferson and AcquisitionCo,
enforceable against each of Jefferson and AcquisitionCo in accordance with its
terms (subject to the provisions of bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforceability of creditors' rights
generally from time to time in effect, and equitable principles relating to the
granting of specific performance and other equitable remedies as a matter of
judicial discretion).
3. The due authorization and, when issued to the shareholders of L & B in
accordance with the terms of the Agreement, the valid issuance of the shares of
Jefferson Common to be issued pursuant to the Merger, such shares being fully
paid and nonassessable, with no personal liability attaching to the ownership
thereof.
4. The execution and delivery of the Agreement by Jefferson and
AcquisitionCo and the consummation of the transactions contemplated therein, as
neither conflicting with, in breach of or in default under, resulting in the
acceleration of, creating in any party the right to accelerate, terminate,
modify or cancel, or violate, any provision of Jefferson's and AcquisitionCo's
certificate or articles of incorporation or bylaws, or any statute, regulation,
rule, judgment, order or decree binding upon Jefferson and AcquisitionCo which
would be materially adverse to the business of Jefferson and its subsidiaries
taken as a whole.
5. Except for regulatory approvals to be obtained by L & B or the Savings
Bank, the receipt of all required consents, approvals, orders or authorizations
of, or registrations, declarations or filings with or without notices to, any
court, administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, or any other person or entity required to
be obtained or made by or with respect to Jefferson or AcquisitionCo in
connection with the execution and delivery of the Agreement or the consummation
of the transactions contemplated by the Agreement.
<PAGE>
EXHIBIT 4.09
------------
___________________, 1996
Jefferson Savings Bancorp, Inc.
14915 Manchester Road
Ballwin, Missouri 63011
Re: Agreement and Plan of Merger, dated as of September 25, 1996 (the
"Merger Agreement"), by and among L & B Financial, Inc. ("L & B"),
Jefferson Savings Bancorp, Inc. ("Jefferson"), and Jefferson Savings
Acquisition Co. ("AcquisitionCo")
Gentlemen:
I have been advised that I may be deemed to be an affiliate of L & B, as
that term is defined for purposes of paragraphs (c) and (d) of Rule 145 ("Rule
145") of the Rules and Regulations of the Securities and Exchange Commission
(the "Commission") promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
Pursuant to the terms and conditions of the Merger Agreement, each share of
common stock of L & B owned by me as of the effective time of the merger
contemplated by the Merger Agreement (the "Merger") may be converted into the
right to receive a combination of shares of common stock of Jefferson (the
"Jefferson Shares") and cash. This letter is delivered to Jefferson pursuant to
Section 4.09 of the Merger Agreement.
A. I represent and warrant to Jefferson and agree that:
1. I shall not make any sale, transfer or other disposition of the
Jefferson Shares I receive pursuant to the Merger in violation of the
Securities Act or the Rules and Regulations of the Commission promulgated
thereunder.
2. I understand that the issuance of the Jefferson Shares to me
pursuant to the Merger will be registered with the Commission under the
Securities Act. I also understand that because I may be deemed an
"affiliate" of L & B and because any distributions by me of the Jefferson
Shares will not be registered under the Securities Act, such Jefferson
Shares must be held by me unless (i) the sale, transfer or other
distribution has been registered under the Securities Act, (ii) the sale,
transfer or other distribution of such Jefferson Shares is made in
accordance with the provisions of Rule 145, or (iii) in the opinion of
counsel acceptable to Jefferson some other exemption from registration
under the Securities Act is available with respect to any such proposed
distribution, sale, transfer or other disposition of such Jefferson Shares.
B. I understand and agree that:
1. Stop transfer instructions will be issued with respect to the
Jefferson Shares and there will be placed on the certificates representing
such Jefferson Shares, or any certificate delivered in substitution
therefor, a legend stating in substance:
<PAGE>
Jefferson Savings Bancorp, Inc.
________________, 1996
Page 2
"The shares represented by this Certificate were issued in a
transaction to which Rule 145 under the Securities Act of 1933, as
amended, applied. The shares represented by this certificate may be
transferred only in accordance with the terms of a letter agreement
dated _________________, 1996, by the registered holder in favor of
Jefferson Savings Bancorp, Inc., a copy of which agreement is on file
at the principal offices of Jefferson Savings Bancorp, Inc."
2. Unless the transfer by me of Jefferson Shares is a sale made in
compliance with the provisions of Rule 145(d) or made pursuant to an
effective registration statement under the Securities Act, Jefferson
reserves the right to place the following legend on the Certificates issued
to my transferee:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired from a
person who received such shares in a transaction to which Rule 145
under the Securities Act of 1933, as amended, applied. The shares have
not been acquired by the holder with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933, as amended, and may not be sold or otherwise
transferred unless the shares have been registered under the
Securities Act of 1933, as amended, or an exemption from registration
is available."
I understand and agree that the legends set forth in paragraphs 1 and 2
above shall be removed by delivery of substitute Certificates without any legend
if I deliver to Jefferson a copy of a letter from the staff of the Commission,
or an opinion of counsel in form and substance satisfactory to Jefferson, to the
effect that no such legend is required for the purpose of the Securities Act.
I have carefully read this letter and the Merger Agreement and understand
the requirements of each and the limitations imposed upon the distribution,
sale, transfer or other disposition of Jefferson Shares by me.
Very truly yours,
<PAGE>
EXHIBIT 8.01
------------
CONFIDENTIALITY AGREEMENT
<PAGE>
CONFIDENTIALITY AGREEMENT
THIS CONFIDENTIALITY AGREEMENT (this "Agreement") is made and entered into
as of the 25th day of June, 1996, by and among JEFFERSON SAVINGS BANCORP, INC.,
a Delaware corporation ("Jefferson"), L & B FINANCIAL, INC., a Texas corporation
("L & B") and LOAN & BUILDING STATE SAVINGS BANK, a Texas savings bank and
wholly owned subsidiary of L & B ("Savings Bank").
RECITALS
A. WHEREAS, Jefferson desires to receive certain data and other
information of a confidential or proprietary nature concerning the business
operations of L & B and Savings Bank.
B. WHEREAS, L & B and Savings Bank consider the information to be
disclosed to Jefferson confidential and proprietary, but is willing to provide
such information and allow such disclosure on a confidential basis, but only
according to the terms and conditions set forth herein.
C. WHEREAS, L & B and Savings Bank desire to receive certain data and
other information of a confidential or proprietary nature concerning the
business operations of Jefferson.
D. WHEREAS, Jefferson considers the information to be disclosed to L & B
and Savings Bank confidential and proprietary, but is willing to provide such
information and allow such disclosure on a confidential basis, but only
according to the terms and conditions set forth herein.
E. WHEREAS, The parties hereto desire to set forth their mutual
understandings and agreements with respect to the foregoing.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained
and other good and valuable consideration (the receipt, adequacy and sufficiency
of which are hereby acknowledged by the parties by their execution hereof), the
parties agree as follows:
SECTION 1. PROTECTED INFORMATION TO BE KEPT CONFIDENTIAL.
(a) Upon the execution of this Agreement by Jefferson, L & B and
Savings Bank, the parties hereto may hereafter disclose "Protected Information"
(as defined below) to each other. The parties agree to keep any Protected
Information confidential until such time, if ever, as the Protected Information
becomes available to the general public (other than as a result of a disclosure
by any party hereto or any of their respective agents, representatives,
affiliates, shareholders, employees or consultants in violation of its
obligations of confidentiality), and will not, without the prior written consent
of the other, disclose the Protected Information other than to agents,
representatives, affiliates, employees and consultants of such party who need to
know the Protected Information for the purposes of testing, investigating,
studying and reviewing the Protected Information.
<PAGE>
(B) "Protected Information" means any and all financial, contractual
and/or technical information concerning each party hereto and the operations
thereof, including, without limitation, financial statements, audit reports,
customer lists, financial analyses, operating statements and reports, trade
secrets, data, proprietary computer software, marketing plans and strategy,
product development plans, pricing policies and cost and profit information,
whether disclosed orally, in writing, or by inspection, all of which information
is regarded to be highly confidential, proprietary and/or secret, or which is
subject to an obligation to a third party to maintain as confidential,
proprietary or secret.
SECTION 2. PROHIBITED DISCLOSURES. Without the prior written consent, and
except as required by law or permitted by Section 1(a), the parties hereto will
not disclose to any person (A) the Protected Information or the fact that the
Protected Information has been made available, (B) that discussions or
negotiations are taking place or have taken place concerning a possible
transaction between Jefferson and L & B, or (C) any of the proposed terms,
conditions or other facts with respect to any such possible transaction.
SECTION 3. EXCLUDED INFORMATION. The term "Protected Information" does
not include such portions of any disclosed information which (A) are or become
generally available to the public other than as a result of a disclosure by any
party hereto in violation of its respective obligation of confidentiality, (B)
become available to a party on a nonconfidential basis from a source which is
not prohibited from disclosing such information to that party by a legal,
contractual or fiduciary obligation, or (C) which is disclosed pursuant to
Section 4 hereof.
SECTION 4. LEGALLY COMPELLED DISCLOSURES. In the event that any party
hereto becomes legally compelled to disclose the Protected Information, each
such party, as applicable, will provide the other party with prompt notice of
any legal actions compelling disclosure or threats of such action, so that such
other party may seek a protective order or other appropriate remedy or waive
compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained or such other party waives
compliance with the provisions of this Agreement, the disclosing party will
furnish or cause to be furnished only that portion of the Protected Information
which it is legally required to furnish, and will exercise its best efforts to
obtain reliable assurances that confidential treatment is accorded the Protected
Information so furnished.
SECTION 5. NON-USE.
(a) The parties hereto will not use any Protected Information
provided by the other for any purpose other than the purpose noted above. Each
party hereto will not use any information or knowledge provided by the other to
engage in any activities which are in conflict with the interests of such other
party nor permit any Protected Information to be used in violation of the
insider trading prohibitions of applicable securities laws.
(b) In the event the contemplated transaction between Jefferson and L
& B is not concluded, upon request each party shall return to the other all
Protected Information received by it from the other.
SECTION 6. AMENDMENT AND MODIFICATION. No amendment, modification,
supplement, termination, consent or waiver of any provision of this Agreement,
nor consent to any departure herefrom, will in any event be effective unless the
same is in writing and is signed by the party against
2
<PAGE>
whom enforcement of the same is sought. Any such waiver of any provision of
this Agreement and any consent to any departure from the terms of any provision
of this Agreement is to be effective only in the specific instance and for the
specific purpose for which given.
SECTION 7. ASSIGNMENTS. No party may assign or transfer any of its rights
or obligations under this Agreement to any other person without the prior
written consent of the other party.
SECTION 8. CAPTIONS. Captions contained in this Agreement have been
inserted herein only as a matter of convenience and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provision
hereof.
SECTION 9. COUNTERPARTS. This Agreement may be executed by the parties on
any number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the parties notwithstanding that all the
parties are not signatories to the same counterpart.
SECTION 10. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions of
the parties, whether oral or written.
SECTION 11. FAILURE OR DELAY. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or privilege hereunder
operates as a waiver thereof; nor does any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. No notice to
or demand on any party in any case entitles such party to any other or further
notice or demand in similar or other circumstances.
SECTION 12. FURTHER ASSURANCES. The parties will execute and deliver
such further instruments and do such further acts and things as may be required
to carry out the intent and purpose of this Agreement.
SECTION 13. GOVERNING LAW. This Agreement and the rights and obligations
of the parties hereunder are to be governed by and construed and interpreted in
accordance with the laws of the State of Texas applicable to contracts made and
to be performed wholly within Texas, without regard to choice or conflict of
laws rules.
SECTION 14. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction is, as to such
jurisdiction, ineffective to the extent of any such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof, or affecting the validity, enforceability or legality of such
provision in any other jurisdiction, unless the ineffectiveness of such
provision would result in such a material change as to cause completion of the
transactions contemplated hereby to be unreasonable.
SECTION 15. LEGAL FEES. In the event any party brings suit to construe
or enforce the terms hereof, or raises this Agreement as a defense in a suit
brought by another party, the prevailing party is entitled to recover its
attorneys' fees and expenses.
SECTION 16. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are
binding upon, inure to the benefit of, and are enforceable by or against, the
parties and their respective heirs, executors,
3
<PAGE>
administrators or other legal representatives, permitted successors and assigns
and other entities that hold and own a majority of the outstanding shares of
common stock of such parties.
SECTION 17. SIGNATORY WARRANTY. Each person executing this Agreement
warrants that such person is authorized to do so on behalf of the party for whom
the person signs this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day, month and year first above written.
JEFFERSON SAVINGS BANCORP, INC.
By:
---------------------------------------
David V. McCay
Chairman of the Board and President
L & B FINANCIAL, INC.
By: /s/
-----------------------------------
C. Glynn Lowe
President and Chief Executive Officer
LOAN & BUILDING STATE SAVINGS BANK
By: /s/
-----------------------------------
C. Glynn Lowe
President and Chief Executive Officer
4
<PAGE>
EXHIBIT 8.15
------------
FORM OF C. GLYNN LOWE EMPLOYMENT AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
the _____ day of _______________, 1996, by and among JEFFERSON SAVINGS BANCORP,
INC., a Delaware corporation ("Jefferson"), FIRST FEDERAL SAVINGS BANK OF NORTH
TEXAS., a federal savings bank and wholly owned subsidiary of Jefferson ("First
Federal"), and C. GLYNN LOWE ("Officer").
RECITALS
A. WHEREAS, Jefferson, Jefferson Savings AcquisitionCo, Inc.
("AcquisitionCo"), a Missouri corporation and wholly owned subsidiary of
Jefferson, and L & B Financial, Inc. ("L & B"), a Texas corporation and holding
company of Loan and Building State Savings Bank, a Texas savings bank, have
entered into that certain Agreement and Plan of Merger dated September ___, 1996
(the "Merger Agreement"), pursuant to which L & B will merge with and into
AcquisitionCo (the "Merger"), with AcquisitionCo being the survivor.
B. WHEREAS, it is anticipated that, contemporaneously with the
consummation of the Merger, the Loan and Building State Savings Bank would be
merged with and into First Federal under the charter of First Federal (the
"Subsidiary Merger").
C. WHEREAS, Jefferson and First Federal desire to assure themselves of
the services of Officer to First Federal after the consummation of the
Subsidiary Merger, and Officer also desires to provide his services to First
Federal on a full time basis pursuant to the terms and conditions set forth in
this Agreement.
D. WHEREAS, The parties hereto desire to set forth their mutual
understandings and agreements with respect to the foregoing.
AGREEMENT
In consideration of the foregoing, the mutual covenants herein contained
and other good and valuable consideration (the receipt, adequacy and sufficiency
of which are hereby acknowledged by the parties by their execution hereof), the
parties agree as follows:
SECTION 1. EMPLOYMENT. First Federal agrees to employ, and Jefferson
agrees to cause First Federal to employ, immediately upon consummation of the
Subsidiary Merger, Officer as an executive officer of First Federal under the
title of Regional President and Chief Operating Officer of First Federal, and
Officer agrees to be so employed during the term of this Agreement, upon the
terms and conditions hereinafter set forth (the "Employment").
SECTION 2. TERM OF AGREEMENT. The term of the Employment under this
Agreement (the "Term") shall commence on the closing date of the Subsidiary
Merger and shall continue in full force and effect for a period of two (2) years
thereafter subject to the provisions of Section 5 and Section 10 hereof. The
Term may be extended annually for such additional one (1) year periods as the
parties hereto may agree upon in writing from time to time.
SECTION 3. DUTIES. During the Term of this Agreement, Officer shall
devote his full business time and best efforts in carrying out his duties as an
executive officer of First Federal as aforesaid,
<PAGE>
including without limitation (i) maintaining, promoting and developing customer
relations, (ii) supporting and promoting the interests of First Federal, and
(iii) such other duties as are appropriate for an employee holding an executive
level position as may be assigned to Officer by First Federal. Officer
covenants and agrees to diligently, exclusively and faithfully serve First
Federal or its successors and, consistent with his historical practices, to
devote his full business time, attention, time, care, undivided loyalty and best
efforts to the performance of such services and the fulfillment of duties
attendant thereto.
SECTION 4. COMPENSATION. As full consideration for all services Officer
shall render to First Federal hereunder, Jefferson shall cause First Federal to
compensate Officer in the following manner:
(a) ANNUAL SALARY. First Federal shall pay Officer an annual salary
of One Hundred Ten Thousand Dollars ($110,000), payable in the manner and in
accordance with the customary payroll practices of First Federal. Officer's
annual salary may be increased from time to time in accordance with the normal
business practices of First Federal as determined by the Board of Directors of
First Federal. Officer shall not receive additional compensation or fees for
service as an advisory director to the Board of Directors of First Federal or
any committees thereof.
(b) BONUS. In addition to his annual salary, Officer shall, during
the Term of this Agreement, be eligible to participate in Jefferson's executive
bonus plan, as such plan may exist from time to time, at such level as
determined at the sole discretion of the Board of Directors of Jefferson.
(c) OTHER BENEFITS.
(i) CORPORATE BENEFITS. Officer shall, during the Term of this
Agreement, be entitled to participate in any and all employee welfare plans,
employee benefit plans, retirement plans, medical plans and similar plans of
First Federal generally now or hereafter in effect and open to participation
by qualifying employees of First Federal generally (in accordance with the
eligibility and other requirements established for such corporate benefits).
(ii) REIMBURSEMENT FOR BUSINESS EXPENSES. Officer shall, during
the Term of this Agreement, receive reimbursement in full for all reasonable
business and travel expenses incurred by Officer in performing his duties
hereunder.
(iii) VACATION. Officer shall, during the Term of this
Agreement, receive such amount of paid vacation during each calendar year in
accordance with the normal vacation policy of First Federal, but in no event
less than four (4) weeks during each calendar year.
(iv) AUTOMOBILE. Officer shall, during the Term of this
Agreement, receive an automobile allowance of $600 per month for use in the
performance of his duties to First Federal.
SECTION 5. TERMINATION. The Board of Directors of First Federal may
terminate Officer's employment at any time, but any termination by the Board
other than for Cause (as hereinafter defined) shall not prejudice Officer's
right to compensation or other benefits expressly provided for under this
Agreement. Upon termination of Officer's employment during the Term of this
Agreement because of death, Disability, Resignation or Cause, this Agreement
shall terminate with neither party having any further rights or obligations
except as provided in this Section 5 and Sections 6, 7 and 9 below. As used
above, the terms "Disability," "Resignation" and "Cause" shall have the meanings
set forth below.
2
<PAGE>
(a) DISABILITY. "Disability" shall mean termination because of
Officer's absence from duties with First Federal on a full time basis for the
waiting period specified in the Disability Insurance Policy of First Federal, as
a result of incapacity due to physical or mental illness.
(b) RESIGNATION. "Resignation" shall mean voluntary termination by
Officer for any reason whatsoever.
(c) CAUSE. "Cause" shall mean termination by First Federal upon (A)
Officer's continued failure to substantially perform duties for First Federal
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to
Officer by the Board of Directors of Jefferson, which specifically identifies
the manner in which such Board of Directors believes that Officer has not been
substantially performing his duties, or (B) Officer's misconduct which is
reasonably believed to be materially injurious to Jefferson or First Federal,
which shall be deemed to include Officer's personal dishonesty, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than minor traffic violations or similar offenses) or final
cease and desist order, or material breach of this Agreement.
(d) NOTICE OF TERMINATION. Any termination pursuant to this Section
5 shall be communicated by written Notice of Termination delivered to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in this
Agreement relied upon and shall set forth, in reasonable detail, the facts and
circumstances claimed to provide a basis for termination of Officer's employment
under the provision so indicated.
(e) DATE OF TERMINATION. "Date of Termination" shall mean the date
on which a Notice of Termination is given.
SECTION 6. CERTAIN BENEFITS UPON TERMINATION DUE TO DISABILITY;
TERMINATION FOR CAUSE. If, during the Term of this Agreement, Officer's
employment by First Federal shall be terminated because of Disability, then
Officer shall receive the benefits provided by First Federal's Disability
Insurance Policy, which benefits shall be no less than those currently provided
under First Federal's Disability Insurance Policy. Officer shall have no right
to receive compensation or benefits for any period after termination for Cause.
The provisions of this Section 6 shall survive a termination of this Agreement
because of Disability or for Cause.
SECTION 7. COVENANT NOT TO COMPETE. Officer agrees that, in the event
that his employment with First Federal is lawfully terminated because of Cause
or Resignation, he will not Carry on or Participate in the Banking or Financial
Business (as such activity is defined below) in the designated Community
Reinvestment Act service area of Jefferson and First Federal, for a period of
two (2) years (the "Noncompetition Period") after such termination. As used in
this Agreement, the term "Carry on or Participate in the Banking or Financial
Business" shall mean engaging in material competition, directly or indirectly,
with Jefferson or First Federal (and/or their subsidiaries or affiliates, or
their successors or assigns) solely or jointly with others, as a director,
officer, employee, agent, partner, joint venturer, advisor, consultant,
stockholder, individual proprietor or lender or, in any other manner or capacity
whatever, engaging in or rendering material banking or financial services to any
other bank, savings association, holding company, mortgage company, finance
company, loan company or other financial institution or business which is in
competition with Jefferson or First Federal (and/or their subsidiaries or
affiliates or their successors or assigns) and which such other business has a
main office, branch office,
3
<PAGE>
loan production office or which otherwise solicits business directly or
indirectly within the designated Community Reinvestment Act service area. In
addition to the foregoing, for a period of two (2) years after such termination,
Officer shall not solicit any banking business from any customer of Jefferson or
First Federal or their subsidiaries. As used in this Section 7, the term
"stockholder" shall not include any investment in a public corporation where
Officer owns less than 5% of the stock issued and outstanding. The provisions
of this Section 7 shall survive any termination of this Agreement.
SECTION 8. PROVISIONS RELATING TO THE NON-COMPETE COVENANT. Officer
acknowledges and agrees that the restrictions contained in Section 7 are
reasonable. In the event, however, that any of such restrictions are considered
unreasonable by a court of competent jurisdiction, then the court so holding may
effect any change to the restrictions necessary to render the same enforceable
by the court. Officer acknowledges that any violation by him of the provisions
of Section 7 could cause serious and irreparable harm to Jefferson and First
Federal incapable of being measured in money damages. Accordingly, Officer
acknowledges and agrees that, in the event of a breach or threatened breach by
him of the provisions of Section 7, Jefferson and First Federal, or either of
them, shall be entitled to seek, in addition to other rights or remedies, an
injunction or restraining order against Officer.
SECTION 9. CONFIDENTIAL INFORMATION. Officer agrees that he shall not, to
the detriment of Jefferson or First Federal (and/or their subsidiaries or
affiliates, or their successors or assigns), impart any confidential information
or knowledge relative to Jefferson or First Federal (and/or their subsidiaries
or affiliates, or their successors or assigns), to any person or entity,
corporate or otherwise, without specific prior written permission from Jefferson
to do so, and Officer agrees that all such information or knowledge shall be
kept strictly confidential. Officer confirms and agrees that such information
constitutes the exclusive property of Jefferson and First Federal. The
provisions of this Section 9 shall survive any termination of this Agreement.
SECTION 10. REGULATORY COMPLIANCE MATTERS.
(a) If Officer is suspended and/or temporarily prohibited from
participating in the conduct of First Federal's affairs as the result of a
notice served under Section 8(e)(3) or (g)(1) of the Federal Deposit Insurance
Act, First Federal's obligations hereunder shall be suspended for the period of
time Officer is so suspended or temporarily prohibited beginning on the date of
service of such notice to First Federal, unless such suspension of Officer is
stayed by appropriate proceedings. If the charges in the notice are dismissed,
First Federal may in its discretion (i) pay Officer all or part of the
compensation withheld while its obligations hereunder were suspended, and (ii)
reinstate, in whole or in part, any of such obligations.
(b) If Officer is removed and/or permanently prohibited from
participating in the conduct of First Federal's affairs by an order issued under
Section 8(e)(4) or (g)(1) of the Federal Deposit Insurance Act, all obligations
of First Federal hereunder shall terminate as of the effective date of the order
and First Federal shall not be required to provide Officer with a Notice of
Termination. Notwithstanding the foregoing, the obligations provided in Section
9 hereof, and any rights of the parties hereunder which have vested as of such
effective date, shall not be affected.
(c) If First Federal is in default (as defined in Section 3(x)(1) of
the Federal Deposit Insurance Act), all obligations of the parties hereunder
shall terminate as of the date of the default and First Federal shall not be
required to provide Officer with a Notice of Termination. Notwithstanding the
foregoing, the obligations provided in Section 9 hereof, and any rights of the
parties hereunder which have vested as of the date of default, shall not be
affected.
4
<PAGE>
(d) All obligations hereunder shall be terminated, except to the
extent it is determined that continuation of this Agreement is necessary for the
continued operation of First Federal (i) by the Director of the Office of Thrift
Supervision (the "Director") or his or her designee, at the time the Federal
Deposit Insurance Corporation or Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of First Federal under the
authority contained in Section 13(c) of the Federal Deposit Insurance Act, or
(ii) by the Director or his or her designee, at the time the Director or his or
her designee approves a supervisory merger to resolve problems related to the
operation of First Federal or when First Federal is determined by the Director
to be in an unsafe or unsound condition. In any such event, First Federal shall
not be required to provide Officer with a Notice of Termination. Notwithstanding
the foregoing, any rights of the parties hereunder which have already vested
shall not be affected by any action described in this Section 10(d).
SECTION 11. NOTICES. All notices or other communications hereunder shall
be in writing and shall be deemed to have been given when personally delivered
or deposited in the United States mail, certified or registered, return receipt
requested, postage prepaid, or sent by Federal Express or other recognized
overnight courier service that provides proof of delivery, and addressed as
follows:
(a) if to Jefferson:
Jefferson Savings Bancorp, Inc.
14915 Manchester Road
Ballwin, Missouri 63011
Attention: Mr. David V. McCay
Chairman of the Board and President
with a copy to,
John K. Pruellage, Esq.
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
(b) if to First Federal:
First Federal Savings Bank of North Texas
116 E. South Street
Longview, Texas 75606
Attention: Mr. David V. McCay
Chairman of the Board and President
5
<PAGE>
with a copy to,
John K. Pruellage, Esq.
Lewis, Rice & Fingersh, L.C.
500 North Broadway, Suite 2000
St. Louis, Missouri 63102
(c) if to Officer:
Mr. C. Glynn Lowe
341 Azalea
Sulphur Springs, Texas 75482
with a copy to,
Richard G. Williams, Esq.
Shannon, Gracey, Ratliff & Miller, LLP
1600 Bank One Tower
500 Throckmorton
Fort Worth, Texas 76102
or to such other address as notice shall have been given pursuant to the
provisions hereof.
SECTION 12. AMENDMENT AND MODIFICATION. No amendment, modification,
supplement, termination, consent or waiver of any provision of this Agreement,
nor consent to any departure herefrom, shall in any event be effective unless
the same is in writing and is signed by the party against whom enforcement of
the same is sought. Any waiver of any provision of this Agreement and any
consent to any departure from the terms of any provision of this Agreement is to
be effective only in the specific instance and for the specific purpose for
which given.
SECTION 13. ASSIGNMENT. No party may assign or transfer any of its rights
or obligations under this Agreement to any other person without the prior
written consent of the other party hereto.
SECTION 14. CAPTIONS. Captions contained in this Agreement have been
inserted herein only as a matter of convenience and in no way define, limit,
extend or describe the scope of this Agreement or the intent of any provision
hereof.
SECTION 15. COMPLIANCE WITH LAW. None of the terms or provisions of this
Agreement require any of the parties to take any action prohibited by, or
contrary to, applicable law.
SECTION 16. COUNTERPARTS. This Agreement may be executed by the parties
on any number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on all the parties notwithstanding that all the
parties are not signatories to the same counterpart.
SECTION 17. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, letters of intent, understandings, negotiations
and discussions of the parties, whether oral or written.
6
<PAGE>
SECTION 18. FAILURE OR DELAY. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or privilege hereunder
operates as a waiver thereof; nor does any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof, or the exercise of any other right, power or privilege. No notice to
or demand on any party in any case entitles such party to any other or further
notice or demand in similar or other circumstances.
SECTION 19. FURTHER ASSURANCES. The parties shall execute and deliver
such further instruments and do such further acts and things as may reasonably
be required to carry out the intent and purpose of this Agreement.
SECTION 20. GOVERNING LAW. This Agreement and the rights and obligations
of the parties hereunder are to be governed by and construed and interpreted in
accordance with the laws of the State of Texas applicable to contracts made and
to be performed wholly within Texas, without regard to choice or conflict of
laws rules.
SECTION 21. SUCCESSORS AND ASSIGNS. All provisions of this Agreement are
binding upon, inure to the benefit of, and are enforceable by or against, the
parties and their respective heirs, executors, administrators or other legal
representatives and permitted successors and assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
JEFFERSON SAVINGS BANCORP, INC.
By: _____________________________________
David V. McCay
Chairman of the Board and President
FIRST FEDERAL SAVINGS BANK OF NORTH TEXAS
By: _____________________________________
David V. McCay
Chairman of the Board and President
_____________________________________
C. GLYNN LOWE
7
<PAGE>
APPENDIX B
----------
[Letterhead of THE BANK ADVISORY GROUP]
November 18, 1996
Board of Directors
L & B Financial, Inc.
Sulphur Springs, Texas
Gentlemen:
You have requested that The Bank Advisory Group, Inc. act as an independent
financial analyst and advisor to the common shareholders of L & B Financial,
Inc., Sulphur Springs, Texas ("L&B"), and its wholly-owned subsidiary, Loan and
Building State Savings Bank, Sulphur Springs, Texas ("State Savings Bank"),
previously known as Sulphur Springs Loan and Building Association.
Specifically, we have been asked to render advice and analysis in connection
with the proposed merger (the "Merger") of L&B with and into Jefferson
AcquisitionCo, Inc., a wholly-owned subsidiary of Jefferson Savings Bancorp,
Inc., Ballwin, Missouri ("Jefferson"). In our role as an independent financial
analyst, you have requested our opinion with regard to the fairness -- from the
perspective of the common shareholders of L&B -- of the financial terms of the
proposed merger pursuant to the provisions of the Agreement and Plan of Merger
(the "Agreement") dated __________________, 19____.
In conjunction with our review of the Agreement, our understanding is that
Jefferson proposes to consummate the Merger pursuant to the following financial
terms:
. Each issued and outstanding common share of L&B, other than the shares any
holders of which have duly exercised and perfected their dissenters' rights
under the Texas Business Corporation Act, shall receive a combination of
cash and Jefferson common stock having an aggregate value of $18.50 per
share, plus L&B's earnings (less dividends paid or declared) for the period
commencing April 1, 1996 and ending on the last day of the calendar month
preceding the effective time of the Merger (the "Per Share Basic
Consideration"). L&B's outstanding common shares includes all L&B shares
which are issued and outstanding, with the exclusion of the L&B shares held
for the Sulphur Springs Loan and Building Association Recognition and
Retention Plan and Trust Agreement (the "Retention Plan").
. The Per Share Basic Consideration shall consist of 50% cash and 50%
Jefferson common stock, with the exchange ratio for Jefferson common shares
based upon the average per share closing prices of Jefferson common stock,
as reported on the Nasdaq Stock Market's National Market ("Nasdaq") for the
20 business days immediately preceding the fifth calendar day prior to the
effective time of the Merger. The average per share closing price for
Jefferson's common stock shall not exceed $33.60, and shall not be less
than $20.00.
. No fractional shares of Jefferson's common stock will be issued and, in
lieu thereof, holders of shares of L&B common stock who would otherwise be
entitled to a fractional share interest will be paid an amount in cash
equal to the product of such fractional share interest and the closing
price of a share of Jefferson's common stock on the Nasdaq on the business
day immediately preceding the effective date of the Merger.
<PAGE>
Board of directors
L & B Financial, Inc.
November 13, 1996
Page 2
. As the effective date of the Merger, each person who would otherwise be
entitled to receive shares of L&B common stock by reason of awards that
have been or would have been made as of February 28, 1997 under the
Retention Plan shall be entitled to receive an amount equal to the product
of: (i) the number of L&B common shares to which such person is or would be
entitled as of February 28, 1997 under or by reason of the Retention Plan,
times (ii) the Per Share Per Share Basic Consideration. However, the
aggregate amount payable to participants in the Retention Plan shall not
exceed $667,400.
. As of the date of the effective time of the Merger, each person for whom
options to purchase L&B common shares have been or would have been granted
as of February 28, 1997 under the Sulphur Springs Loan and Building
Association 1995 Stock Option Plan adopted by L&B (the "Option Plan") shall
be entitled to receive an amount equal to the product of: (i) the number
of L&B common shares issuable upon the exercise of unexercised stock
options which have been or would have been granted to such person as of
February 28, 1997, under the Option Plan, without regard to whether such
options have been granted or have become vested or exercisable, times (ii)
the difference obtained by subtracting the per share exercise price for
such options from the Per Share Basic Consideration. However, the
aggregate amount payable to option holders shall not exceed $1,270,000.
The Bank Advisory Group, Inc., as part of its line of professional services,
specializes in rendering valuation opinions of financial institutions in
connection with mergers and acquisitions nationwide. Prior to our retention for
this assignment, The Bank Advisory Group has not provided financial advisory
services to L&B and State Savings Bank, or to Jefferson Savings Bancorp, Inc.
In connection with this opinion and with respect to L&B Financial, Inc., we have
reviewed, among other things:
1. Audited consolidated financial statements for L&B for the years ended
June 30, 1996, 1995, and 1994;
2. Audited financial statements for Sulphur Springs Loan and Building
Association for the years ended June 30, 1995 and 1994;
3. Reports of Condition and Income for Loan and Building State Savings
Bank for the year ended December 31, 1995, and for the nine month
period ending September 30, 1996, as filed with Federal bank
regulatory agencies;
4. Thrift Financial Report for Sulphur Springs Loan and Building
Association for the 1994 calendar quarters, and for the calendar
quarters ended September 30, June 30, and March 31, 1995, as filed
with the Office of Thrift Supervision;
5. The economy in general and, in particular, the local economies in
which State Savings Bank operates;
6. Certain internal financial analyses and forecasts for State Savings
Bank prepared by the management of State Savings Bank, including
projections of future performance;
<PAGE>
Board of directors
L & B Financial, Inc.
November 13, 1996
Page 3
7. Certain other summary materials and analyses with respect to State
Savings Bank's loan portfolio, securities portfolio, deposit base,
fixed assets, and operations including, but not limited to: (i)
schedules of loans and other assets identified by management as
deserving special attention or monitoring given the characteristics of
the loan/asset and the local economy, (ii) analyses concerning the
adequacy of the loan loss reserve, (iii) schedules of "other real
estate owned," including current carrying values and recent
appraisals, and (iv) schedules of securities, detailing book values,
market values, and lengths to maturity; and
8. Such other information -- including financial studies, analyses,
investigations, and economic and market criteria -- that we deem
relevant to this assignment.
In connection with this opinion and with respect to Jefferson Savings Bancorp,
Inc., we have reviewed, among other things:
1. Audited consolidated financial statements for Jefferson, in Annual
Report Form and Form 10-K, for the years ended December 31, 1995,
1994, and 1993;
2. Quarterly financial statements for Jefferson, in both "press release"
and quarterly report format, for the 1995 calendar quarters, and the
calendar quarters ended September 30, June 30, and March 31, 1996;
3. Thrift Financial Report for the Jefferson's subsidiary thrift
institutions (Jefferson Savings & Loan Association, Ballwin, Missouri,
and First Federal Savings Bank of North Texas, Longview, Texas), for
the 1995 calendar quarters, and for the calendar quarters ended
September 30, June 30, and March 31, 1996, as filed with the Office of
Thrift Supervision;
4. Equity research reports regarding Jefferson prepared by Stifel,
Nicolaus, & Co., St. Louis, Missouri;
5. The condition of the financial institution industry, as indicated in
financial reports filed with various Federal bank regulatory
authorities by all Federally-insured financial institutions;
6. The economy in general and, in particular, the major trade areas in
which Jefferson and its subsidiaries operate; and
7. Such other information -- including financial studies, analyses,
investigations, and economic and market criteria -- that we deem
relevant to this assignment.
<PAGE>
Board of directors
L & B Financial, Inc.
November 13, 1996
Page 4
In connection with this opinion and with respect to the proposed Merger, we have
reviewed, among other things:
1. The Agreement, and any amendments thereto, that sets forth, among
other items, the terms, conditions to closing, pending litigation
against both L&B and Jefferson, and representations and warranties of
L&B and Jefferson with respect to the proposed Merger;
2. The Proxy Statement-Prospectus, to which this opinion is appended,
that is being furnished to the shareholders of L&B in connection with
the proposed Merger;
3. The financial terms and price levels for profitable United States
thrift organizations having total assets between $75 million & $250
million -- together with the financial performance and condition of
such thrift organizations;
4. The financial terms and stated price levels of other financial
institutions, the proposed acquisition of which has been publicly
announced by Jefferson subsequent to January 1, 1994, and prior to the
date of this opinion;
5. The price-to-equity and price-to-earnings multiples of financial
institutions based in the mid-western United States which have
publicly-traded common stock, together with the financial performance
and condition of such financial institutions; and
6. Such other information -- including financial studies, analyses,
investigations, and economic and market criteria -- that we deem
relevant to this assignment.
Based on our experience, we believe our review of, among other things, the
aforementioned items provides a reasonable basis for our opinion, recognizing
that we are expressing an informed professional opinion -- not a certification
of value.
We have relied upon the information provided by the management of L&B and
Jefferson, or otherwise reviewed by us, as being complete and accurate in all
material respects. Furthermore, we have not verified through independent
inspection or examination the specific assets or liabilities of L&B and
Jefferson or their subsidiary institutions. We have also assumed that there has
been no material change in the assets, financial conditions, results of
operations, or business prospects of L&B and Jefferson since the date of the
last financial statements made available to us. We have met with the management
of both L&B and Jefferson for the purpose of discussing the relevant information
that has been provided to us.
Based on all factors that we deem relevant and assuming the accuracy and
completeness of the information and data provided to us, we conclude that the
terms of the proposed Merger, as outlined herein, are fair, from a financial
standpoint, to the common shareholders of L&B Financial, Inc.
<PAGE>
Board of directors
L & B Financial, Inc.
November 13, 1996
Page 5
This opinion is available for disclosure to the shareholders of L&B.
Accordingly, we hereby consent to the inclusion of our opinion as an appendix to
the Proxy Statement/Prospectus relating to the proposed Merger, and to the
reference of our firm in the Proxy Statement/Prospectus.
Respectfully submitted,
THE BANK ADVISORY GROUP, INC.
By ______________________________________
<PAGE>
APPENDIX C
----------
EXCERPTS OF TEXAS BUSINESS CORPORATION ACT (DISSENTERS' RIGHTS)
5.11 RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS.--A. Any shareholder of a domestic corporation shall have the right to
dissent from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if shareholder
approval is required by Article 5.03 or 5.16 of this Act and the shareholder
holds shares of a class or series that was entitled to vote thereon as a class
or otherwise;
(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise provided in
the articles of incorporation) of all, or substantially all, the property and
assets, with or without good will, of a corporation requiring the special
authorization of the shareholders as provided by this Act;
(3) Any plan of exchange pursuant to Article 5.02 of this Act in which the
shares of the corporation of the class or series held by the shareholder are to
be acquired.
B. Notwithstanding the provisions of Section A of this Article, a
shareholder shall not have the right to dissent from any plan of merger in which
there is a single surviving or new domestic or foreign corporation, or from any
plan of exchange, if (1) the shares held by the shareholder are part of a class
shares of which are listed on a national securities exchange, or are held of
record by not less than 2,000 holders, on the record date fixed to determine the
shareholders entitled to vote on the plan of merger or the plan of exchange, and
(2) the shareholder is not required by the terms of the plan of merger or the
plan of exchange to accept for his or her shares any consideration other than
(a) shares of a corporation that, immediately after the effective time of the
merger or exchange, will be part of a class or series of shares of which are (i)
listed, or authorized for listing upon official notice of issuance, on a
national securities exchange, or (ii) held of record by not less than 2,000
holders, and (b) cash in lieu of fractional shares otherwise entitled to be
received. (Last amended by Ch. 901 L. '91, eff. 8-26-91.)
5.12 PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID CORPORATE ACTION.--A.
Any shareholder of any domestic corporation who has the right to dissent from
any of the corporate actions referred to in Article 5.11 of this Act may
exercise that right to dissent only by complying with the following procedures:
(1) (a) With respect to proposed corporate action that is submitted to a
vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action, setting
out that the shareholder's right to dissent will be exercised if the action is
effective and giving the shareholder's address, to which notice thereof shall be
delivered or mailed in that event. If the action is effected and the
shareholder shall not have voted in favor of the action, the corporation, in the
case of action other than a merger, or the surviving or new corporation (foreign
or domestic) or other entity that is liable to discharge the shareholder's right
of dissent, in the case of a merger, shall, within ten (10) days after the
action is effected, deliver or mail to the shareholder written notice that the
action has been effected, and the shareholder may, within ten (10) days from the
delivery or mailing of the
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notice, make written demand on the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, for payment of the
fair value of the shareholder's shares. The fair value of the shares shall be
the value thereof as of the day immediately preceding the meeting, excluding any
appreciation or depreciation in anticipation of the proposed action. The demand
shall state the number and class of the shares owned by the shareholder and the
fair value of the shares as estimated by the shareholder. Any shareholder
failing to make demand within the ten (10) day period shall be bound by the
action.
(b) With respect to proposed corporate action that is approved pursuant to
Section A of Article 9.10 of this Act, the corporation, in the case of action
other than a merger, and the surviving or new corporation (foreign or domestic)
or other entity that is liable to discharge the shareholder's right of dissent,
in the case of a merger, shall, within ten (10) days after the date the action
is effected, mail to each shareholder of record as of the effective date of the
action notice of the fact and date of the action and that the shareholder may
exercise the shareholder's right to dissent from the action. The notice shall
be accompanied by a copy of this Article and any articles or documents filed by
the corporation with the Secretary of State to effect the action. If the
shareholder shall not have consented to the taking of the action, the
shareholder may, within twenty (20) days after the mailing of the notice, make
written demand on the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, for payment of the fair value of
the shareholder's shares. The fair value of the shares shall be the value
thereof as of the date the written consent authorizing the action was delivered
to the corporation pursuant to Section A of Article 9. 10 of this Act, excluding
any appreciation or depreciation in anticipation of the action. The demand
shall state the number and class of shares owned by the dissenting shareholder
and the fair value of the shares as estimated by the shareholder. Any
shareholder failing to make demand within the twenty (20) day period shall be
bound by the action.
(2) Within twenty (20) days after receipt by the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, of a
demand for payment made by a dissenting shareholder in accordance with
Subsection (1) of this Section, the corporation (foreign or domestic) or other
entity shall deliver or mail to the shareholder a written notice that shall
either set out that the corporation (foreign or domestic) or other entity
accepts the amount claimed in the demand and agrees to pay that amount within
ninety (90) days after the date on which the action was effected, and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed, or shall contain an estimate by the corporation
(foreign or domestic) or other entity of the fair value of the shares, together
with an offer to pay the amount of that estimate within ninety (90) days after
the date on which the action was effected, upon receipt of notice within sixty
(60) days after that date from the shareholder that the shareholder agrees to
accept that amount and, in the case of shares represented by certificates, upon
the surrender of the certificates duly endorsed.
(3) If, within sixty (60) days after the date on which the corporate action
was effected, the value of the shares is agreed upon between the shareholder and
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, payment for the shares shall be made within ninety
(90) days after the date on which the action was effected and, in the case of
shares represented by certificates, upon surrender of the certificates duly
endorsed. Upon payment of the agreed value, the shareholder shall cease to have
any interest in the shares or in the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition
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in any court of competent jurisdiction in the county in which the principal
office of the domestic corporation is located, asking for a finding and
determination of the fair value of the shareholder's shares. Upon the filing of
any such petition by the shareholder, service of a copy thereof shall be made
upon the corporation (foreign or domestic) or other entity, which shall, within
ten (10) days after service, file in the office of the clerk of the court in
which the petition was filed a list containing the names and addresses of all
shareholders of the domestic corporation who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the corporation (foreign or domestic) or other entity. If the
petition shall be filed by the corporation (foreign or domestic) or other
entity, the petition shall be accompanied by such a list. The clerk of the
court shall give notice of the time and place fixed for the hearing of the
petition by registered mail to the corporation (foreign or domestic) or other
entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The
appraisers shall have power to examine any of the books and records of the
corporation the shares of which they are charged with the duty of valuing, and
they shall make a determination of the fair value of the shares upon such
investigation as to them may seem proper. The appraisers shall also afford a
reasonable opportunity to the parties interested to submit to them pertinent
evidence as to the value of the shares. The appraisers shall also have such
power and authority as may be conferred on Masters in Chancery by the Rules of
Civil Procedure or by the order of their appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, beginning 91 days after the date on which the
applicable corporate action from which the shareholder elected to dissent was
effected to the date of such judgment, to the shareholders entitled to payment.
The judgment shall be payable to the holders of uncertificated shares
immediately but to the holders of shares represented by certificates only upon,
and simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as court
costs, and all court costs, shall be allotted between the parties in the manner
that the court determines to be fair and equitable.
E. Shares acquired by the existing, surviving, or new corporation
(foreign or domestic) or other entity, as the case may be, pursuant to the
payment of the agreed value of the shares or pursuant to payment of the judgment
entered for the value of the shares, as in this Article provided, shall, in the
case of a merger, be treated as provided in the plan of merger and, in all other
cases, may be held and disposed of by the corporation as in the case of other
treasury shares.
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F. The provisions of this Article shall not apply to a merger if, on the
date of the filing of the articles of merger, the surviving corporation is the
owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by
this Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his or her shares or money damages to the shareholder with respect to the
action. If the existing, surviving, or new corporation (foreign or domestic) or
other entity, as the case may be, complies with the requirements of this
Article, any shareholder who fails to comply with the requirements of this
Article shall not be entitled to bring suit for the recovery of the value of his
or her shares or money damages to the shareholder with respect to the action.
(Last amended by Ch. 215, L. '93, eff. 9-1-93.)
5.13 PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS.--A. Any
shareholder who has demanded payment for his or her shares in accordance with
either Article 5.12 or 5.16 of this Act shall not thereafter be entitled to vote
or exercise any other rights of a shareholder except the right to receive
payment for his or her shares pursuant to the provisions of those articles and
the right to maintain an appropriate action to obtain relief on the ground that
the corporate action would be or was fraudulent, and the respective shares for
which payment has been demanded shall not thereafter be considered outstanding
for the purposes of any subsequent vote of shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder,
the corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his or her shares
in accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the corporation, terminate such shareholder's rights under Articles
5.12 and 5.16 of this Act unless a court of competent jurisdiction for good and
sufficient cause shown shall otherwise direct. If uncertificated shares for
which payment has been demanded or shares represented by a certificate on which
notation has been so made shall be transferred, any new certificate issued
therefor shall bear similar notation together with the name of the original
dissenting holder of such shares and a transferee of such shares shall acquire
by such transfer no rights in the corporation other than those which the
original dissenting shareholder had after making demand for payment of the fair
value thereof.
C. Any shareholder who has demanded payment for his shares in accordance
with either Article 5.12 or 5.16 of this Act may withdraw such demand at any
time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 or 5.16 of this Act asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section B
of this Article the corporation shall terminate the shareholder's rights under
Article 5.12 or 5.16 of this Act, as the case may be, or if no petition asking
for a finding and determination of fair value of such shares by a court shall
have been filed within the time provided in Article 5.12 or 5.16 of this Act, as
the case may be, or if after the hearing of a petition filed pursuant to Article
5.12 or 5.16, the court shall determine that such shareholder is not entitled to
the relief provided by those articles, then, in any such case, such shareholder
and all persons claiming under him shall be conclusively presumed to have
approved and ratified the corporate action from which he dissented and shall be
bound thereby, the right
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of such shareholder to be paid the fair value of his shares shall cease, and his
status as a shareholder shall be restored without prejudice to any corporate
proceedings which may have been taken during the interim, and such shareholder
shall be entitled to receive any dividends or other distributions made to
shareholders in the interim. (Last amended by Ch. 215, L. '93, eff. 9-1-93.)
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Jefferson's directors, officers, employees and agents have certain rights
of indemnification provided under Article XVII of Jefferson's Certificate of
Incorporation and Section 145 of the General Corporation Law of the State of
Delaware ("Delaware Corporation Law").
Section 145 of the Delaware Corporation Law provides that a director,
officer, employee or agent of a Delaware corporation who was or is a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (a) must be indemnified by the corporation for all expenses
of such litigation which are actually and reasonably incurred when he is
successful on the merits or otherwise in defense of an action; (b) may be
indemnified by the corporation for expenses actually and reasonably incurred,
judgments, fines and amounts paid in settlement of such litigation (other than a
suit by or in the right or the corporation), even if he or she is not successful
on the merits, if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation (and in the case of a criminal proceeding, had no reason to believe
his or her conduct was unlawful); and (c) may be indemnified by the corporation
for expenses of a suit by which are actually and reasonably incurred by or in
the right of the corporation, even if he or she is not successful on the merits,
if he or she acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to the best interests of the corporation, provided, that
no such indemnification may be made if such person is found liable to the
corporation unless a court determines, in view of all the circumstances, that he
or she is fairly and reasonably entitled to indemnification.
Section 145 of the Delaware Corporation Law also empowers a corporation to
advance litigation expenses to a director, officer, employee or agent upon
receipt of an undertaking by such person to repay the amount advanced if it is
ultimately determined that he or she is not entitled to indemnification.
The Delaware indemnification statute described above also provides that the
indemnification and advancement of expenses provisions of such statute are not
exclusive of any rights an individual may have under any by-law, agreement, vote
of shareholders or disinterested directors or otherwise. In addition, the
corporation retains the power to purchase and maintain liability insurance
covering such persons, whether or not the corporation would have the power to
indemnify him or her against such liability.
Article XVII of Jefferson's Certificate of Incorporation contain provisions
which are substantially similar to Section 145 of the Delaware Corporation Law
described above, but such provisions make mandatory the permissive
indemnification and advancement of expenses provisions of the statute. Article
XVII further provides that, the indemnification provided by such articles shall
be deemed to be a contract between Jefferson and the persons entitled to
indemnification thereunder, and any repeal or modification of such Article shall
not affect any rights or obligations then existing with respect to any state of
facts then or theretofore existing or any action, suit or proceeding theretofore
or thereafter brought based in whole or in part upon any such state of facts.
The indemnification and advance payments provided for in Article XVII shall
continue as to a person who has ceased to hold a position as a director,
officer, employee or agent and shall inure to his or her heirs, executors and
administrators. Article XVII further provides that if it or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction,
Jefferson shall nevertheless indemnify each director, officer, employee, and
agent of
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Jefferson as to costs, charges, and expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement with respect to any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
including an action by or in the right of Jefferson to the full extent permitted
by any applicable portion of Article XVII that shall not have been invalidated
and to the full extent permitted by applicable law.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling Jefferson
pursuant to the foregoing provisions, Jefferson has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as part of this Registration
Statement:
(2) Agreement and Plan of Merger, dated September 25, 1996, by
and among Jefferson Savings Bancorp, Inc., Jefferson Savings
AcquisitionCo, Inc. and L & B Financial, Inc. (Appendix A to
Proxy Statement/Prospectus). The Registrant agrees to
furnish supplementally a copy of any omitted schedule to the
Commission upon request;
(5) Opinion of Lewis, Rice & Fingersh, L.C. regarding legality;
(8) Opinion of Lewis, Rice & Fingersh, L.C. regarding federal
income tax consequences;
(23)(a) Consent of KPMG Peat Marwick LLP;
(23)(b) Consent of Oakerson, Arnold, Walker & Co.;
(23)(c) Consent of Lewis, Rice & Fingersh, L.C. (in opinion
regarding legality);
(23)(d) Consent of Lewis, Rice & Fingersh, L.C. (in opinion
regarding federal income tax consequences);
(23)(e) Consent of The Bank Advisory Group, Inc. (in Fairness
Opinion attached as Appendix B to Proxy
Statement/Prospectus);
(24) Powers of Attorney;
(99)(a) Form of Proxy Card for L & B Financial, Inc. Special
Meeting;
(99)(b) Form of Letter to Shareholders of L & B Financial, Inc. to
accompany Proxy Statement/Prospectus;
(99)(c) Form of Notice of L & B Financial, Inc. Special Meeting;
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<PAGE>
(99)(d) Fairness Opinion of The Bank Advisory Group, Inc. (Appendix
B to Proxy Statement/Prospectus); and
(99)(e) Excerpts of the Texas Business Corporation Act (Dissenters'
Rights) (Appendix C to Proxy Statement/Prospectus).
The following exhibits are incorporated herein by reference:
(3)(a) Certificate of Incorporation of Jefferson Savings Bancorp,
Inc.;
(3)(b) Bylaws of Jefferson Savings Bancorp, Inc., as amended; and
(4) Rights Agreement, dated August 17, 1994, between Jefferson
Savings Bancorp, Inc. and Boatmen's Trust Company.
Note: No long-term debt instrument issued by Jefferson
Savings Bancorp, Inc. exceeds 10% of the consolidated total
assets of Jefferson Savings Bancorp, Inc. and its
subsidiaries. In accordance with paragraph 4(iii) of Item
601 of Regulation S-K, Jefferson Savings Bancorp, Inc. will
furnish to the S.E.C. upon request copies of long-term debt
instruments and related agreements.
(b) No financial statement schedules are required to be filed herewith
pursuant to Item 21(b) or (c) of this Form.
ITEM 22. UNDERTAKINGS.
(1) The undersigned Registrant hereby undertakes as follows: That prior to
any public reoffering of the securities registered hereunder through the use of
a prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c)
promulgated pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), the issuer undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other Items of the applicable form.
(2) The undersigned Registrant undertakes that every prospectus (i) that
is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports
to meet the requirements of Section 10(a)(3) of the Securities Act, and is used
in connection with an offering of securities subject to Rule 415 promulgated
pursuant to the Securities Act, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) The undersigned Registrant hereby undertakes to respond to requests
for information that is incorporated by reference into the prospectus pursuant
to Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
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(4) The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(5) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(6) The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii)To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(7) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions (see Item 20 --
Indemnification of Directors and Officers), or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy expressed in the Securities Act, and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or
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paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act, and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of St.
Louis, State of Missouri, on ___________________, 1996.
JEFFERSON SAVINGS BANCORP, INC.
By ________________________________
David V. McCay
Chairman of the Board, President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on _______________________, 1996.
_______________________ Chairman of the Board, President and Chief
David V. McCay Executive Officer (principal executive officer)
_______________________ Senior Vice President, Treasurer, Chief Financial
Paul J. Milano Officer and Senior Accounting Officer (principal
financial and accounting officer)
_______________________ Director
Frank C. Bick
_______________________ Director
William W. Canfield
_______________________ Director
Lloyd D. Doerflinger
_______________________ Director
Dorian D. Magwitz
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_____________________________ Director
Forrest W. Miller, Jr.
_____________________________ Director
Edward G. Throop
_________________________________________
*Attorney-in-fact
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<PAGE>
INDEX TO EXHIBITS
Number Exhibit
- ------ -------
(2) Agreement and Plan of Merger, dated September 25, 1996, by and
among Jefferson Savings Bancorp, Inc., Jefferson Savings
AcquisitionCo, Inc. and L & B Financial, Inc. (Appendix A to the
Proxy Statement/Prospectus).
(3)(a) Certificate of Incorporation of Jefferson Savings Bancorp, Inc.
(incorporated herein by reference from Registration Statement on
Form S-1 filed December 23, 1992 (File No. 33-56324)).
(3)(b) Bylaws of Jefferson Savings Bancorp, Inc., as amended,
(incorporated herein by reference from Registration Statement on
Form S-1 filed December 23, 1992 (File No. 33-56324)).
(4) Rights Agreement, dated August 17, 1994, between Jefferson Savings
Bancorp, Inc. and Boatmen's Trust Company (incorporated herein by
reference from Registration Statement on Form 8-A, filed August
19, 1994).
(5) Opinion of Lewis, Rice & Fingersh, L.C. regarding legality.
(8) Opinion of Lewis, Rice & Fingersh, L.C. regarding federal income
tax consequences.
(23)(a) Consent of KPMG Peat Marwick LLP.
(23)(b) Consent of Oakerson, Arnold, Walker & Co.
(23)(c) Consent of Lewis, Rice & Fingersh, L.C. (in opinion regarding
legality).
(23)(d) Consent of Lewis, Rice & Fingersh, L.C. (in opinion regarding
federal income tax consequences).
(23)(e) Consent of The Bank Advisory Group, Inc. (in Fairness Opinion
attached as Appendix B to Proxy Statement/Prospectus).
(24) Powers of Attorney.
(99)(a) Form of Proxy Card for L & B Financial, Inc. Special Meeting.
(99)(b) Form of Letter to Shareholders of L & B Financial, Inc. to
accompany Proxy Statement/Prospectus.
(99)(c) Form of Notice of L & B Financial, Inc. Special Meeting.
(99)(d) Fairness Opinion of The Bank Advisory Group, Inc. (Appendix B to
Proxy Statement/Prospectus).
(99)(e) Excerpts of the Texas Business Corporation Act (Dissenters'
Rights) (Appendix C to Proxy Statement/Prospectus).
<PAGE>
EXHIBIT (5)
-----------
<PAGE>
LEWIS, RICE & FINGERSH
A LIMITED LIABILITY COMPANY
ATTORNEYS AT LAW
500 N. BROADWAY, SUITE 2000
ST. LOUIS, MISSOURI 63102-2147
TEL (314) 444-7600
FAX (314) 241-6056
____________________, 1996
Jefferson Savings Bancorp, Inc.
14915 Manchester Road
Ballwin, Missouri 63011
RE: REGISTRATION STATEMENT ON FORM S-4
Dear Sirs:
In connection with a certain Registration Statement on Form S-4 (the
"Registration Statement") filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, you have requested that we furnish you our
opinion as to the legality of the shares of the common stock, $0.01 par value
(the "Common Stock"), of Jefferson Savings Bancorp, Inc. (the "Company")
registered thereunder, which Common Stock is to be issued pursuant to an
Agreement and Plan of Merger (the "Merger Agreement"), dated September 25, 1996,
among the Company, Jefferson Savings AcquisitionCo, Inc. and L & B Financial,
Inc.
As counsel to the Company, we have participated in the preparation of the
Registration Statement. We have examined and are familiar with the Company's
Certificate of Incorporation, Bylaws, as amended, records of corporate
proceedings and such other information and documents as we have deemed necessary
or appropriate.
Based upon the foregoing, we are of the opinion that the Common Stock has
been duly authorized and will, when issued as contemplated in the Registration
Statement and the Merger Agreement, be validly issued, fully paid and non-
assessable.
We consent to the use of this opinion as an Exhibit to the Registration
Statement.
Very truly yours,
LEWIS, RICE & FINGERSH, L.C.
ST. LOUIS, MISSOURI . KANSAS CITY, MISSOURI . CLAYTON, MISSOURI . WASHINGTON,
MISSOURI . BELLEVILLE, ILLINOIS . HAYS, KANSAS . LEAWOOD, KANSAS
<PAGE>
EXHIBIT (8)
-----------
<PAGE>
[TO BE PROVIDED]
<PAGE>
EXHIBIT (23)(a)
---------------
<PAGE>
CONSENT OF KPMG PEAT MARWICK LLP
[to be provided]
<PAGE>
EXHIBIT (23)(b)
---------------
<PAGE>
CONSENT OF OAKERSON, ARNOLD, WALKER & CO.
[to be provided]
<PAGE>
EXHIBIT (23)(e)
---------------
<PAGE>
CONSENT OF THE BANK ADVISORY GROUP, INC.
[to be provided]
<PAGE>
EXHIBIT (24)
------------
<PAGE>
POWER OF ATTORNEY
1933 ACT REGISTRATION STATEMENT
OF
JEFFERSON SAVINGS BANCORP, INC.
KNOW ALL MEN BY THESE PRESENTS, That the person whose signature appears
below hereby constitutes and appoints David V. McCay, Gary G. Honerkamp and Paul
J. Milano, and each of them, the true and lawful attorneys-in-fact and agents
for him and in his name, place or stead, in any and all capacities, to sign and
file, or cause to be signed and filed, with the Securities and Exchange
Commission (the "Commission"), any registration statement or statements on Form
S-4 under the Securities Act of 1933, as amended, relating to the issuance of
common stock of Jefferson Savings Bancorp, Inc. in connection with the Agreement
and Plan of Merger, dated September 25, 1996, by and among Jefferson Savings
Bancorp, Inc., Jefferson Savings AcquisitionCo, Inc. and L & B Financial, Inc.,
and any and all amendments and supplements thereto, before or after
effectiveness of such statements, and any and all other documents required to be
filed with the Commission in connection therewith, granting unto said attorneys-
in-fact and agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully and to all intents and
purposes as the undersigned might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Dated: December 10, 1996
/s/ Frank C. Bick
------------------------------------------------
Frank C. Bick
<PAGE>
POWER OF ATTORNEY
1933 ACT REGISTRATION STATEMENT
OF
JEFFERSON SAVINGS BANCORP, INC.
KNOW ALL MEN BY THESE PRESENTS, That the person whose signature appears
below hereby constitutes and appoints David V. McCay, Gary G. Honerkamp and Paul
J. Milano, and each of them, the true and lawful attorneys-in-fact and agents
for him and in his name, place or stead, in any and all capacities, to sign and
file, or cause to be signed and filed, with the Securities and Exchange
Commission (the "Commission"), any registration statement or statements on Form
S-4 under the Securities Act of 1933, as amended, relating to the issuance of
common stock of Jefferson Savings Bancorp, Inc. in connection with the Agreement
and Plan of Merger, dated September 25, 1996, by and among Jefferson Savings
Bancorp, Inc., Jefferson Savings AcquisitionCo, Inc. and L & B Financial, Inc.,
and any and all amendments and supplements thereto, before or after
effectiveness of such statements, and any and all other documents required to be
filed with the Commission in connection therewith, granting unto said attorneys-
in-fact and agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully and to all intents and
purposes as the undersigned might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Dated: December 10, 1996
/s/ William W. Canfield
---------------------------------------
William W. Canfield
<PAGE>
POWER OF ATTORNEY
1933 ACT REGISTRATION STATEMENT
OF
JEFFERSON SAVINGS BANCORP, INC.
KNOW ALL MEN BY THESE PRESENTS, That the person whose signature appears
below hereby constitutes and appoints David V. McCay, Gary G. Honerkamp and Paul
J. Milano, and each of them, the true and lawful attorneys-in-fact and agents
for him and in his name, place or stead, in any and all capacities, to sign and
file, or cause to be signed and filed, with the Securities and Exchange
Commission (the "Commission"), any registration statement or statements on Form
S-4 under the Securities Act of 1933, as amended, relating to the issuance of
common stock of Jefferson Savings Bancorp, Inc. in connection with the Agreement
and Plan of Merger, dated September 25, 1996, by and among Jefferson Savings
Bancorp, Inc., Jefferson Savings AcquisitionCo, Inc. and L & B Financial, Inc.,
and any and all amendments and supplements thereto, before or after
effectiveness of such statements, and any and all other documents required to be
filed with the Commission in connection therewith, granting unto said attorneys-
in-fact and agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully and to all intents and
purposes as the undersigned might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Dated: December 10, 1996
/s/ Lloyd D. Doerflinger
---------------------------------------
Lloyd D. Doerflinger
<PAGE>
POWER OF ATTORNEY
1933 ACT REGISTRATION STATEMENT
OF
JEFFERSON SAVINGS BANCORP, INC.
KNOW ALL MEN BY THESE PRESENTS, That the person whose signature appears
below hereby constitutes and appoints David V. McCay, Gary G. Honerkamp and Paul
J. Milano, and each of them, the true and lawful attorneys-in-fact and agents
for her and in her name, place or stead, in any and all capacities, to sign and
file, or cause to be signed and filed, with the Securities and Exchange
Commission (the "Commission"), any registration statement or statements on Form
S-4 under the Securities Act of 1933, as amended, relating to the issuance of
common stock of Jefferson Savings Bancorp, Inc. in connection with the Agreement
and Plan of Merger, dated September 25, 1996, by and among Jefferson Savings
Bancorp, Inc., Jefferson Savings AcquisitionCo, Inc. and L & B Financial, Inc.,
and any and all amendments and supplements thereto, before or after
effectiveness of such statements, and any and all other documents required to be
filed with the Commission in connection therewith, granting unto said attorneys-
in-fact and agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully and to all intents and
purposes as the undersigned might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Dated: December 10, 1996
/s/ Dorian D. Magwitz
-------------------------------------
Dorian D. Magwitz
<PAGE>
POWER OF ATTORNEY
1933 ACT REGISTRATION STATEMENT
OF
JEFFERSON SAVINGS BANCORP, INC.
KNOW ALL MEN BY THESE PRESENTS, That the person whose signature appears
below hereby constitutes and appoints David V. McCay, Gary G. Honerkamp and Paul
J. Milano, and each of them, the true and lawful attorneys-in-fact and agents
for him and in his name, place or stead, in any and all capacities, to sign and
file, or cause to be signed and filed, with the Securities and Exchange
Commission (the "Commission"), any registration statement or statements on Form
S-4 under the Securities Act of 1933, as amended, relating to the issuance of
common stock of Jefferson Savings Bancorp, Inc. in connection with the Agreement
and Plan of Merger, dated September 25, 1996, by and among Jefferson Savings
Bancorp, Inc., Jefferson Savings AcquisitionCo, Inc. and L & B Financial, Inc.,
and any and all amendments and supplements thereto, before or after
effectiveness of such statements, and any and all other documents required to be
filed with the Commission in connection therewith, granting unto said attorneys-
in-fact and agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully and to all intents and
purposes as the undersigned might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Dated: December 10, 1996
/s/ Forrest W. Miller, Jr.
---------------------------------------
Forrest W. Miller, Jr.
<PAGE>
POWER OF ATTORNEY
1933 ACT REGISTRATION STATEMENT
OF
JEFFERSON SAVINGS BANCORP, INC.
KNOW ALL MEN BY THESE PRESENTS, That the person whose signature appears
below hereby constitutes and appoints David V. McCay, Gary G. Honerkamp and Paul
J. Milano, and each of them, the true and lawful attorneys-in-fact and agents
for him and in his name, place or stead, in any and all capacities, to sign and
file, or cause to be signed and filed, with the Securities and Exchange
Commission (the "Commission"), any registration statement or statements on Form
S-4 under the Securities Act of 1933, as amended, relating to the issuance of
common stock of Jefferson Savings Bancorp, Inc. in connection with the Agreement
and Plan of Merger, dated September 25, 1996, by and among Jefferson Savings
Bancorp, Inc., Jefferson Savings AcquisitionCo, Inc. and L & B Financial, Inc.,
and any and all amendments and supplements thereto, before or after
effectiveness of such statements, and any and all other documents required to be
filed with the Commission in connection therewith, granting unto said attorneys-
in-fact and agents, full power and authority to do and perform each and every
act and thing requisite and necessary to be done as fully and to all intents and
purposes as the undersigned might or could do in person, and ratifying and
confirming all that said attorneys-in-fact and agents may lawfully do or cause
to be done by virtue hereof.
Dated: December 10, 1996
/s/ Edward G. Throop
------------------------------------
Edward G. Throop
<PAGE>
EXHIBIT (99)(a)
---------------
<PAGE>
PROXY
SPECIAL MEETING OF SHAREHOLDERS
L & B FINANCIAL, INC.
____________________, 199__
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE ASSOCIATION
The undersigned shareholder of L & B Financial, a Texas corporation
("L & B"), hereby appoints ______________________ and ______________________
(the "Proxies"), and either of them, with full power to act alone, as proxies,
each with full power of substitution and revocation, to vote all shares of
common stock of L & B that the undersigned is entitled to vote at the Special
Meeting of Shareholders to be held at the offices of Loan and Building State
Savings Bank, 306 North Davis, Sulphur Springs, Texas 75482 on
____________________, 199__, at _______ __.m. local time, and at any
adjournments or postponements thereof, with all powers the undersigned would
possess if personally present, as follows:
Proposal to approve an Agreement and Plan of Merger, dated September 25,
1996, by and among Jefferson Savings Bancorp, Inc., a Delaware corporation
("Jefferson"), Jefferson Savings AcquisitionCo, Inc., a Missouri corporation
and wholly owned subsidiary of Jefferson, and L & B Financial, Inc.
______ FOR ______ AGAINST ______ ABSTAIN
Proposal to permit the Special Meeting of Shareholders to be adjourned or
postponed, in the discretion of the Proxies, which adjournment or
postponement could be used for the purpose, among others, of allowing time
for the solicitation of additional votes to approve the referenced Agreement
and Plan of Merger.
______ FOR ______ AGAINST ______ ABSTAIN
The undersigned hereby ratifies and confirms all that said proxies, or either of
them or their substitutes, may lawfully do or cause to be done by virtue hereof,
and acknowledges receipt of the notice of said meeting and the Proxy
Statement/Prospectus accompanying it.
THIS PROXY WILL BE VOTED AS SPECIFIED BY YOU ABOVE. IF NO SPECIFICATION IS
MADE, YOUR SHARES WILL BE VOTED "FOR" THE PROPOSALS DESCRIBED ABOVE.
Dated _________________, 199__
-----------------------------------------------
Please insert date of signing. Sign exactly as
name appears at left. Where stock is issued in
two or more names, all should sign. If signing
as attorney, administrator, executor, trustee
or guardian, give full title as such. A
corporation should sign by an authorized
officer and affix seal.
<PAGE>
EXHIBIT (99)(b)
---------------
<PAGE>
On letterhead of:
L & B Financial, Inc.
________, 1996
Dear Shareholder:
We are pleased to invite you to attend the Special Meeting of Shareholders
(the "Special Meeting") of L & B Financial, Inc. ("L & B") on _________________,
199__. The Special Meeting will be held at the offices of Loan and Building
State Savings Bank, 306 North Davis, Sulphur Springs, Texas 75482, commencing at
______ __.m. local time.
At the Special Meeting, shareholders of L & B will be asked to approve the
merger of L & B with Jefferson Savings AcquisitionCo, Inc., a Missouri
corporation and wholly owned subsidiary of Jefferson Savings Bancorp, Inc.
("Jefferson"), St. Louis, Missouri. The terms of the merger provide that upon
consummation of the merger each outstanding share of common stock of L & B will
be converted into a combination of cash and shares of common stock of Jefferson.
Your Board of Directors submits this proposed merger to you after careful
review and consideration. We believe that this proposed merger will provide
significant value to all shareholders, enabling holders of L & B common stock to
participate in the expanded opportunities for growth that association with a
larger, more geographically-diversified financial organization makes possible
and position L & B and its shareholders to take advantage of future
opportunities as the banking industry continues to consolidate and restructure.
Accordingly, the Board has approved the merger as being in the best interests of
L & B and its shareholders and recommends that you vote in favor of the merger
at the Special Meeting.
You are urged to read carefully the accompanying Proxy
Statement/Prospectus, which contains detailed information concerning the matters
to be acted upon at the Special Meeting.
Your participation in the meeting, in person or by proxy, is important.
Therefore, we ask that you please mark, sign and date the enclosed proxy card
and return it as soon as possible in the enclosed postage-paid envelope. If you
attend the Special Meeting, you may vote in person if you wish, even if you have
previously mailed in your proxy card.
Sincerely,
<PAGE>
EXHIBIT 99(c)
-------------
<PAGE>
L & B FINANCIAL, INC.
A TEXAS CORPORATION
--------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON ____________________, 199__
--------------------
The Special Meeting of Shareholders (the "Special Meeting") of L & B
Financial, Inc. ("L & B") will be held on _________________, 199__, at _______
__.m., local time, at the offices of Loan and Building State Savings Bank, 306
North Davis, Sulphur Springs, Texas 75482, for the purpose of considering and
voting upon a proposal to approve and adopt the Agreement and Plan of Merger,
dated September 25, 1996, attached as Appendix A to the accompanying Proxy
Statement/Prospectus, providing for the merger of L & B with and into Jefferson
Savings AcquisitionCo, Inc., a Missouri corporation and wholly owned subsidiary
of Jefferson Savings Bancorp, Inc., St. Louis, Missouri.
Only the holders of common stock of L & B of record at the close of
business on ______________, 199__ are entitled to notice of and to vote at the
Special Meeting or at any adjournments or postponements thereof.
EACH SHAREHOLDER IS URGED TO COMPLETE AND RETURN PROMPTLY THE ACCOMPANYING
PROXY WHETHER OR NOT HE OR SHE PLANS TO ATTEND THE SPECIAL MEETING. The prompt
return of your signed proxy will help assure a quorum and aid L & B in reducing
the expense of additional proxy solicitation. The giving of such proxy does not
affect your right to vote in person in the event you attend the Special Meeting.
By Order of the Board of Directors
Secretary
Sulphur Springs, Texas
____________________, 199__
L & B SHAREHOLDERS SHOULD NOT SEND IN THEIR STOCK CERTIFICATES UNTIL THEY
RECEIVE THE LETTER OF TRANSMITTAL FORM AND INSTRUCTIONS FOR SUBMITTING SUCH
CERTIFICATES.
