EXHIBIT 99.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LANDMARK BANCSHARES, INC.,
MNB BANCSHARES, INC.
AND
LANDMARK MERGER COMPANY
APRIL 19, 2001
LIST OF EXHIBITS
Exhibit A Amended and Restated Certificate of Incorporation of Newco
Exhibit B Bylaws of Newco
Exhibit C List of Directors and Executive Officers of Newco
Exhibit D Form of Opinion of Counsel to LBI
Exhibit E Form of Opinion of Counsel to MNB
Exhibit F Form of Exchange Agent Agreement
Exhibit G Newco Employment Agreements
LIST OF SCHEDULES
Schedule 4.1 MNB Organization
Schedule 4.2 Subsidiary Organization
Schedule 4.5 MNB Capitalization
Schedule 4.6 MNB Subsidiary Capitalization
Schedule 4.7 MNB Financial Statements and Reports
Schedule 4.9 MNB Title to Properties
Schedule 4.10 MNB Condition and Sufficiency of Assets
Schedule 4.12 MNB Undisclosed Liabilities; Adverse Changes
Schedule 4.13 MNB Taxes
Schedule 4.14 MNB Compliance with ERISA
Schedule 4.15 MNB Compliance with Legal Requirements
Schedule 4.16 MNB Legal Proceedings; Orders
Schedule 4.17 MNB Absence of Certain Changes and Events
Schedule 4.18 MNB Properties, Contracts, Benefit Plans and Other
Agreements
Schedule 4.19 MNB No Defaults
Schedule 4.20 MNB Insurance
Schedule 4.21 MNB Compliance with Environmental Laws
Schedule 4.22 MNB Regulatory Filings
Schedule 4.25 MNB Brokerage Commissions
Schedule 5.1 LBI Organization
Schedule 5.2 LBI Subsidiary Organization
Schedule 5.5 LBI Capitalization
Schedule 5.6 LBI Subsidiary Capitalization
Schedule 5.7 LBI Financial Statements and Reports
Schedule 5.9 LBI Title to Properties
Schedule 5.10 LBI Condition and Sufficiency of Assets
Schedule 5.12 LBI Undisclosed Liabilities; Adverse Changes
Schedule 5.13 LBI Taxes
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LIST OF SCHEDULES
Schedule 5.14 LBI Compliance with ERISA
Schedule 5.15 LBI Compliance with Legal Requirements
Schedule 5.16 LBI Legal Proceedings; Orders
Schedule 5.17 LBI Absence of Certain Changes and Events
Schedule 5.18 LBI Properties, Contracts, Benefit Plans and
Other Agreements
Schedule 5.19 LBI No Defaults
Schedule 5.20 LBI Insurance
Schedule 5.21 LBI Compliance with Environmental Laws
Schedule 5.22 Regulatory Filings
Schedule 5.25 LBI Brokerage Commissions
Schedule 8.7 Employee Benefit Plan Payments; Newco Employee
Benefits
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of this 19th day of April, 2001, among LANDMARK BANCSHARES, INC., a Kansas
corporation ("LBI"), MNB BANCSHARES, INC., a Delaware corporation ("MNB"), and
LANDMARK MERGER COMPANY, a Delaware corporation ("Newco").
RECITALS
A. LBI and MNB each desire to merge with and into Newco (the "Merger")
with Newco as the resulting corporation (the "Resulting Corporation").
B. Subject to the terms of this Agreement, each outstanding share of
the common stock of LBI, $0.10 par value per share ("LBI Common Stock"), and
each outstanding share of the common stock of MNB, $0.01 par value per share
("MNB Common Stock"), shall be converted at the time of the consummation of the
Merger (the "Closing") into the right to receive the number of shares of the
common stock of Newco, $0.01 par value per share ("Newco Common Stock"), as set
forth below.
C. The parties desire to make certain representations, warranties and
agreements in connection with the Merger and also agree to certain prescribed
conditions of the Merger.
AGREEMENTS
In consideration of the mutual covenants, representations and
warranties contained herein, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. In addition to those terms defined throughout
this Agreement, the following terms, when used herein, shall have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
(a) "Affiliate" means with respect to:
(i) a particular individual: (A) each other member
of such individual's Family; (B) any Person that is directly or indirectly
controlled by such individual or one or more members of such individual's
Family; (C) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and (D) any
Person with respect to which such individual or one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity); and
(ii) a specified Person other than an individual:
(A) any Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly
under common control with such specified Person; (B) any Person that holds a
Material Interest in such specified Person; (C) each Person that serves as a
director, officer, partner, executor or trustee of such specified Person (or in
a similar capacity); (D) any Person in which such specified Person holds a
Material Interest; (E) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and (F) any
Affiliate of any individual described in clause (B) or (C) of this subsection
(ii).
(b) "Applicable Contract" means any Contract: (i) under which
either MNB or LBI, or any of its respective Subsidiaries, has or may acquire any
rights; (ii) under which either MNB or LBI, or any of its respective
Subsidiaries is or may be subject to any obligation or liability; or (iii) by
which either MNB or LBI, or any of its respective Subsidiaries or any of the
assets owned or used by any of them is or may be bound.
(c) "Best Efforts" means the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to ensure that
such result is achieved as expeditiously as possible, provided, however, that an
obligation to use Best Efforts under this Agreement does not require the Person
subject to that obligation to take actions that would result in a materially
adverse change in the benefits to such Person of this Agreement and the
Contemplated Transactions.
(d) "Breach" means with respect to a representation, warranty,
covenant, obligation or other provision of this Agreement or any instrument
delivered pursuant to this Agreement, any inaccuracy in or breach of, or any
failure to perform or comply with, in a material respect, such representation,
warranty, covenant, obligation or other provision.
(e) "Business Day" means any day means any day on which the
trading of stocks occurs on the New York Stock Exchange.
(f) "Call Report" means the quarterly report of income and
condition required to be filed with the Federal Deposit Insurance Corporation by
any depository institution (as defined in the Federal Deposit Insurance Act, as
amended).
(g) "Contemplated Transactions" means all of the transactions
contemplated by this Agreement, including: (i) the Merger; (ii) the performance
by MNB, LBI, Newco, SNB and LFSB of their respective covenants and obligations
under this Agreement; and (iii) Newco's acquisition of control of MNB and LBI
and their respective Subsidiaries; and (iv) the merger of LFSB with and into
SNB.
(h) "Contract" means any agreement, contract, obligation,
promise or understanding (whether written or oral and whether express or
implied) that is legally binding.
(i) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
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(j) "Family" means with respect to an individual: (i) the
individual; (ii) the individual's spouse; and (iii) any other natural person who
is related to the individual or the individual's spouse within the second degree
who resides with the individual.
(k) "Knowledge" means with respect to:
(i) an individual, that the individual is actually
aware of the fact or other matter in question; and
(ii) a Person (other than an individual), that an
individual who is serving, as a director, officer, managing partner, executor or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of the fact or other matter in question, provided, however, that in
the case of MNB, Knowledge means the Knowledge of any director or executive
officer of SNB, and in the case of LBI, Knowledge means the Knowledge of any
director or executive officer of LFSB.
(l) "LBI Subsidiary" means any Subsidiary of LBI.
(m) "LBI Transactional Expenses" means all transaction costs
of LBI necessary to consummate the Contemplated Transactions, including its
share of organizational expenses of Newco fees, the aggregate expenses of
attorneys, accountants, consultants, financial advisors and other professional
advisors incurred by LBI in connection with this Agreement and the Contemplated
Transactions, LBI's costs of preparing, printing and mailing the Proxy
Statement-Prospectus and all other non-payroll related costs and expenses in
each case incurred or to be incurred by LBI through the Effective Time in
connection with this Agreement and the Contemplated Transactions, excluding,
however, all payments and expenses associated with the acceleration of payment
of compensation (including severance benefits, allocation and vesting under any
employee stock ownership plan, stock option plans, retention plans, deferred
compensation agreements or any other LBI Employee Benefit Plan, as defined
below).
(n) "LFSB" means Landmark Federal Savings Bank, a federally
chartered savings bank with its main office located in Dodge City, Kansas, and a
Subsidiary of LBI.
(o) "Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational, or other administrative order,
constitution, law, ordinance, regulation, policy statement, directive, statute
or treaty.
(p) "Material Adverse Effect" means with respect to a Person
(other than an individual), a material adverse effect (whether or not required
to be accrued or disclosed under Statement of Financial Accounting Standards No.
5): (i) on the condition (financial or otherwise), properties, assets,
liabilities, businesses or results of operations of such Person (but does not
include any such effect resulting from or attributable to any action or omission
by MNB or LBI or any Subsidiary of either of them taken by any of the foregoing
with the prior written consent of the other parties hereto in contemplation of
the Contemplated Transactions); or (ii) on the ability of such Person to perform
its obligations under this Agreement on a timely basis, provided,
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however, that it does not include the effect of any change of law, rule or
regulation or general economic event or change in interest rates affecting
financial institutions generally.
(q) "Material Interest" means the direct or indirect
beneficial ownership (as currently defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of: (i) voting securities or other voting
interests representing at least 10% of the outstanding voting power of a Person;
or (ii) equity securities or other equity interests representing at least 10% of
the outstanding equity securities or equity interests in a Person.
(r) "MNB Subsidiary" means any Subsidiary of MNB.
(s) "MNB Transactional Expenses" means all transaction costs
of MNB necessary to consummate the Contemplated Transactions, including its
share of organizational expenses of Newco fees, the aggregate expenses of
attorneys, accountants, consultants, financial advisors and other professional
advisors incurred by MNB in connection with this Agreement and the Contemplated
Transactions, MNB's costs of preparing, printing and mailing the Proxy
Statement-Prospectus and all other non-payroll related costs and expenses in
each case incurred or to be incurred by MNB through the Effective Time in
connection with this Agreement and the Contemplated Transactions, excluding,
however, all payments and expenses associated with acceleration of payment of
compensation (including severance benefits, allocation and vesting under any
employee stock ownership plan, stock option plans, retention plans, deferred
compensation agreements or any other MNB Employee Benefit Plan, as defined
below).
(t) "Order" means any award, decision, injunction, judgment,
order, ruling, extraordinary supervisory letter, memorandum of understanding,
resolution, agreement, directive, subpoena or verdict entered, issued, made,
rendered or required by any court, administrative or other governmental agency,
including any Regulatory Authority, or by any arbitrator.
(u) "Ordinary Course of Business" shall include any action
taken by a Person only if such action:
(i) is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
(ii) is not required to be authorized by the board
of directors of such Person (or by any Person or group of Persons exercising
similar authority), other than loan approvals for customers of a financial
institution; and
(iii) is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), other than loan
approvals for customers of a financial institution, in the ordinary course of
the normal day-to-day operations of other Persons that are in the same line of
business as such Person.
(v) "Person" means any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union or
other entity or Regulatory Authority.
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(w) "Proceeding" means any action, arbitration, audit,
hearing, investigation, litigation or suit (whether civil, criminal,
administrative, investigative or informal) commenced, brought, conducted or
heard by or before, or otherwise involving, any judicial or governmental
authority, including a Regulatory Authority, or arbitrator.
(x) "Regulatory Authorities" means any federal, state or local
governmental body, agency or authority that under applicable statutes and
regulations: (i) has supervisory, judicial, administrative, police, taxing or
other power or authority over MNB or LBI or any of its respective Subsidiaries;
(ii) is required to approve, or give its consent to the Contemplated
Transactions; or (iii) with which a filing must be made in connection with the
Contemplated Transactions, including in any case, the Board of Governors of the
Federal Reserve System and the Office of Thrift Supervision.
(y) "Representative" means with respect to a particular
Person, any director, officer, manager, employee, agent, consultant, advisor or
other representative of such Person, including legal counsel, accountants and
financial advisors.
(z) "SNB" means Security National Bank, a national bank with
its main office located in Manhattan, Kansas, and a Subsidiary of MNB.
(aa) "Subsidiary" means with respect to any Person (the
"Owner"), any corporation or other Person whose securities or other interests
having the power to elect a majority of that corporation's or other Person's
board of directors or similar governing body, or otherwise having the power to
direct the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the future occurrence
of a contingency), are held by the Owner or one or more of its Subsidiaries.
(bb) "TFR" means the quarterly Thrift Financial Report of
Condition required to be filed with the Office of Thrift Supervision by any
federally chartered savings bank.
(cc) "Tax" means any tax (including any income tax, capital
gains tax, value-added tax, sales tax, property tax, franchise tax, gift tax or
estate tax), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any fine,
penalty, interest or addition to tax), imposed, assessed or collected by or
under the authority of any Regulatory Authority or payable pursuant to any
tax-sharing agreement or any other Contract relating to the sharing or payment
of any such tax, levy, assessment, tariff, duty, deficiency or fee.
(dd) "Tax Return" means any return (including any information
return), report, statement, schedule, notice, form or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Regulatory Authority in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
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(ee) "Threatened" means having received (orally or in writing)
any demand, statement or notice regarding a claim, Proceeding, dispute, action
or other matter, or the occurrence of any other event or the existence of any
other circumstances, that would lead a prudent Person to conclude that such a
claim, Proceeding, dispute, action or other matter is likely to be asserted,
commenced, taken or otherwise pursued in the future.
(ff) "Termination Date" means March 1, 2002, or such later
date as shall have been agreed to in writing by the parties to this Agreement.
Section 1.2 Principles of Construction.
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(a) In this Agreement, unless otherwise stated or the context
otherwise requires, the following uses apply: (i) actions permitted under this
Agreement may be taken at any time and from time to time in the actor's sole
discretion; (ii) references to a statute refer to the statute as in effect on
the date of this Agreement and to any successor statute, and to all regulations
promulgated under or implementing the statute or successor, as in effect at the
relevant time; (iii) in computing periods from a specified date to a later
specified date, the words "from" and "commencing on" (and the like) mean "from
and including," and the words "to," "until" and "ending on" (and the like) mean
"to, but excluding"; (iv) references to a governmental or quasi-governmental
agency, authority or instrumentality shall also refer to a regulatory body that
succeeds to the functions of the agency, authority or instrumentality; (v)
indications of time of day mean Dodge City, Kansas time; (vi) "including" means
"including, but not limited to"; (vii) all references to sections, schedules and
exhibits are to sections, schedules and exhibits in or to this Agreement unless
otherwise specified; (viii) all words used in this Agreement will be construed
to be of such gender or number as the circumstances require; and (ix) the
captions and headings of articles, sections, schedules and exhibits appearing in
or attached to this Agreement have been inserted solely for convenience of
reference and shall not be considered a part of this Agreement nor shall any of
them affect the meaning or interpretation of this Agreement or any of its
provisions.
(b) The Book of Schedules of each of LBI and MNB referred to
in this Agreement consist of the agreements and other documentation described
and referred to in this Agreement with respect to such party, which Schedules
were delivered by each of LBI and MNB to the other not less than one (1)
Business Day before the date of this Agreement. The disclosures in the
Schedules, and those in any supplement thereto, shall relate only to the
representations and warranties in the section of this Agreement to which they
expressly relate and not to any other representation or warranty in this
Agreement. In the event of any inconsistency between the statements in the body
of this Agreement and those in the Schedules (other than an exception expressly
set forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.
(c) All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles in the
United States consistent with those used in the preparation of the most recent
audited consolidated financial statements of LBI or MNB, as the case may be
("GAAP").
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(d) With regard to each and every term and condition of this
Agreement and any and all agreements and instruments subject to the terms
hereof, the parties to this Agreement understand and agree that the same have or
has been mutually negotiated, prepared and drafted, and that if at any time the
parties hereto desire or are required to interpret or construe any such term or
condition or any agreement or instrument subject hereto, no consideration shall
be given to the issue of which party to this Agreement actually prepared,
drafted or requested any term or condition of this Agreement or any agreement or
instrument subject hereto.
ARTICLE 2
THE MERGER
Section 2.1 Manner of Merger. Upon the terms and subject to the
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conditions of this Agreement, at the Effective Time (as defined below), LBI and
MNB shall be merged with and into Newco pursuant to the provisions of, and with
the effect provided in the General Corporation Law of the State of Delaware, as
amended (the "Delaware Code"), and Newco shall be the Resulting Corporation.
After the Merger, Newco will change its name to "Landmark Bancshares, Inc." As a
result of the Merger, each share of LBI Common Stock issued and outstanding
immediately prior to the Effective Time, other than any Dissenting Shares held
by LBI stockholders or as otherwise provided herein, and each share of MNB
Common Stock issued and outstanding immediately prior to the Effective Time,
other than Dissenting Shares held by MNB stockholders or as otherwise provided
herein, will be converted into the right to receive the number of shares of
Newco Common Stock in accordance with the LBI Exchange Ratio and the MNB
Exchange Ratio, respectively, as set forth in Section 3.1(a).
Section 2.2 Closing; Effective Time.
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(a) Provided that this Agreement shall not have been
terminated in accordance with its terms, the Closing shall occur through the
mail, or at a place that is mutually acceptable to MNB and LBI, or if they fail
to agree, at the main office of LFSB located at Central and Spruce Streets,
Dodge City, Kansas, at 10:00 a.m. on the date that is twenty-one (21) Business
Days after the end of the last month in which all required approvals or consents
of the Regulatory Authorities for the Contemplated Transactions have been
received and all statutory waiting periods relating to such approvals have
expired (the "Closing Date").
(b) The parties to this Agreement agree to file on the Closing
Date the appropriate certificate of merger, as contemplated by Section 17-6702
of the General Corporation Code of Kansas (the "Kansas Code"), with the
Secretary of State of the State of Kansas, and an appropriate certificate of
merger, as contemplated by Section 252(c) of the Delaware Code, with the
Secretary of State of the State of Delaware. The Merger shall be effective at
the time and on the date agreed to by the parties to this Agreement, and in the
event the parties fail to so agree, at 12:01 a.m. of the day following the date
on which the certificate of merger is accepted for filing by the Secretary of
State of the State of Delaware (the "Effective Time").
Section 2.3 Effect of Merger. At the Effective Time, the effect of the
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Merger shall be as provided in Section 259 of the Delaware Code. Without
limiting the generality of the
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foregoing, at the Effective Time, all the property, rights, privileges, powers
and franchises of MNB and LBI shall be vested in the Resulting Corporation, and
all debts, liabilities and duties of MNB and LBI shall become the debts,
liabilities and duties of the Resulting Corporation.
Section 2.4 Amended and Restated Certificate of Incorporation. MNB and
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LBI agree to cause to be filed at the Effective Time with the Secretary of State
of the State of Delaware an amendment and restatement of the certificate of
incorporation of Newco substantially in the form attached as Exhibit A, and such
amended and restated certificate of incorporation shall thereafter represent the
certificate of incorporation of the Resulting Corporation until amended as
provided by law.
Section 2.5 Bylaws. The bylaws of Newco, in the form attached as
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Exhibit B, shall be the bylaws of the Resulting Corporation until amended as
provided by law.
Section 2.6 Directors and Officers. From and after the Effective Time,
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the directors and executive officers of the Resulting Corporation shall be as
set forth in Exhibit C, with three (3) members in each of Class I and Class II,
and four (4) members of Class III, of the Resulting Corporation's board of
directors. Such directors and executive officers shall serve until their
successors shall have been elected or appointed and shall have qualified in
accordance with the Delaware Code and the certificate of incorporation and
bylaws of the Resulting Corporation.
Section 2.7 LBI's Deliveries at Closing. At the Closing, LBI shall
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deliver, or cause to be delivered to MNB the following items:
(a) copies of resolutions of the board of directors and the
stockholders of LBI approving this Agreement and the consummation of the
Contemplated Transactions; certified as of the Closing Date by the Secretary or
any Assistant Secretary of LBI;
(b) a good standing certificate for LBI issued by the
Secretary of State of the State of Kansas and dated not more than fifteen (15)
Business Days prior to the Closing Date;
(c) a good standing certificate for LFSB issued by the Office
of Thrift Supervision (the "OTS") and dated not more than fifteen (15) Business
Days prior to the Closing Date;
(d) a copy of the articles of incorporation of LBI certified
not more than fifteen (15) Business Days prior to the Closing Date by the
Secretary of State of the State of Kansas;
(e) a copy of the charter of LFSB certified not more that
fifteen (15) Business Days prior to the Closing Date by the OTS;
(f) a certificate of the Secretary or any Assistant Secretary
of LBI dated the Closing Date and certifying a copy of LBI's bylaws;
(g) a certificate of the Secretary or any Assistant Secretary
of LFSB dated the Closing Date and certifying a copy of LFSB's bylaws;
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(h) a certificate executed by the President or Vice President
and Secretary or any Assistant Secretary of LBI, dated the Closing Date, stating
that: (i) there have been no further amendments to the articles of incorporation
and charter delivered pursuant to this Section; (ii) all of the representations
and warranties of LBI set forth in this Agreement, as the same may have been
updated pursuant to Section 7.6, are true and correct in all material respects
with the same force and effect as if all of such representations and warranties
were made at the Closing Date, provided, however, that to the extent such
representations and warranties expressly relate to an earlier date, such
representations shall be true and correct in all material respects on and as of
such earlier date, and provided further, that to the extent that representations
and warranties are made in this Agreement subject to a standard of materiality
or Knowledge, such representations and warranties shall be true and correct in
all respects; and (iii) LBI has performed or complied in all material respects
with all of the covenants and obligations to be performed or complied with by it
under the terms of this Agreement on or prior to the Closing Date, provided,
however, that to the extent performance and compliance with such covenants and
obligations are subject in this Agreement to a standard of materiality, LBI
shall have performed and complied in all respects with such covenants and
obligations;
(i) a list of LBI's stockholders as of the Closing Date
certified by the Secretary or any Assistant Secretary of LBI;
(j) a certificate of each of LBI's legal counsel, accountants
and financial advisor or investment banker, if any, representing that all fees
and expenses incurred by LBI prior to and including the Effective Time have been
paid in full, or certificates from these professionals that all fees and
expenses incurred by LBI prior to and including the Effective Time have been
invoiced to LBI and a certificate from LBI that all invoiced amounts have been
paid or accrued;
(k) a legal opinion of LBI's counsel, ▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇,
PC, dated the Closing Date to the effect set forth in Exhibit D; and
(l) such other documents as MNB or its counsel shall
reasonably request.
Section 2.8 MNB's Deliveries at Closing. At the Closing, MNB shall
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deliver, or cause to be delivered to LBI the following items:
(a) copies of resolutions of the board of directors and the
stockholders of MNB approving this Agreement and the consummation of the
Contemplated Transactions; certified as of the Closing Date by the Secretary or
any Assistant Secretary of MNB;
(b) a good standing certificate for MNB issued by the
Secretary of State of the State of Delaware, dated not more than fifteen (15)
Business Days prior to the Closing Date;
(c) a good standing certificate for SNB issued by the Office
of the Comptroller of the Currency (the "OCC") and dated not more than fifteen
(15) Business Days prior to the Closing Date;
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(d) a copy of the certificate of incorporation of MNB
certified not more than fifteen (15) Business Days prior to the Closing Date by
the Secretary of State of the State of Delaware;
(e) a copy of the articles of association of SNB certified
not more that fifteen (15) Business Days prior to the Closing Date by the OCC;
(f) a certificate of the Secretary or any Assistant Secretary
of MNB dated the Closing Date and certifying a copy of MNB's bylaws;
(g) a certificate of the Cashier or any Assistant Cashier of
SNB dated the Closing Date and certifying a copy of SNB's bylaws;
(h) a certificate executed by the President or Vice President
and Secretary or any Assistant Secretary of MNB, dated the Closing Date, stating
that: (i) there have been no further amendments to the certificate of
incorporation and articles of association delivered pursuant to this Section;
(ii) all of the representations and warranties of MNB set forth in this
Agreement, as the same may have been updated pursuant to Section 6.6, are true
and correct in all material respects with the same force and effect as if all of
such representations and warranties were made at the Closing Date, provided,
however, that to the extent such representations and warranties expressly relate
to an earlier date, such representations shall be true and correct in all
material respects on and as of such earlier date, and provided further, that to
the extent that representations and warranties are made in this Agreement
subject to a standard of materiality or Knowledge, such representations and
warranties shall be true and correct in all respects; and (iii) MNB has
performed or complied in all material respects with all of the covenants and
obligations to be performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date, provided, however, that to the extent
performance and compliance with such covenants and obligations are subject in
this Agreement to a standard of materiality, MNB shall have performed and
complied in all respects with such covenants and obligations;
(i) a list of MNB's stockholders as of the Closing Date
certified by the Secretary or any Assistant Secretary of MNB;
(j) a certificate of each of MNB's legal counsel, accountants
and financial advisor or investment banker, if any, representing that all fees
and expenses incurred by MNB prior to and including the Effective Time have been
paid in full, or certificates from these professionals that all fees and
expenses incurred by MNB prior to and including the Effective Time have been
invoiced to MNB and a certificate from MNB that all invoiced amounts have been
paid or accrued;
(k) a legal opinion of MNB's counsel, Barack ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, dated the Closing Date to the effect set forth
in Exhibit E; and
(l) such other documents as LBI or its counsel shall
reasonably request.
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Section 2.9 Newco's Deliveries at Closing. At the Closing, Newco
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shall deliver, or cause to be delivered to MNB and LBI the following items:
(a) copies of resolutions of the board of directors and the
stockholders of Newco approving this Agreement and the consummation of the
Contemplated Transactions; certified as of the Closing Date by the Secretary or
any Assistant Secretary of Newco;
(b) a good standing certificate for Newco issued by the
Secretary of State of the State of Delaware, dated not more than fifteen (15)
Business Days prior to the Closing Date;
(c) a copy of the certificate of incorporation of Newco
certified not more than fifteen (15) Business Days prior to the Closing Date by
the Secretary of State of the State of Delaware;
(d) a certificate of the Secretary or any Assistant Secretary
of Newco dated the Closing Date and certifying a copy of Newco's bylaws;
(e) a certificate executed by the President or Vice President
and Secretary or any Assistant Secretary of Newco, dated the Closing Date,
stating that: (i) there have been no further amendments to the certificate of
incorporation delivered pursuant to this Section; and (ii) Newco has performed
or complied in all material respects with all of the covenants and obligations
to be performed or complied with by it under the terms of this Agreement on or
prior to the Closing Date, provided, however, that to the extent performance and
compliance with such covenants and obligations are subject in this Agreement to
a standard of materiality, Newco shall have performed and complied in all
respects with such covenants and obligations;
(f) a list of Newco's stockholders as of the Closing Date
certified by the Secretary or any Assistant Secretary of Newco; and
(g) such other documents as MNB, LBI or the counsel of either
shall reasonably request.
Section 2.10 Bank Merger. Concurrently with the Merger and immediately
-----------
after the Effective Time, MNB and LBI intend to merge LFSB with and into, and
under the charter of, SNB, with the resulting bank to be known as Landmark
National Bank (the "Bank Merger"). The Bank Merger will be effected pursuant to
a merger agreement in the form required by the National Bank Act, as amended
(the "National Bank Act"), and by other applicable Legal Requirements,
containing terms and conditions not inconsistent with the Agreement as mutually
determined by MNB and LBI (the "Bank Merger Agreement"). The Bank Merger shall
occur only if the Merger is consummated, and it shall become effective
immediately after the Effective Time or such later time as may be determined by
MNB and LBI. To obtain the necessary regulatory approvals for the Bank Merger to
occur immediately after the Effective Time, MNB and LBI agree to cause each of
SNB and LFSB, respectively, to approve, adopt, execute and deliver the Bank
Merger Agreement and to take such other steps as are reasonably necessary prior
to the Effective Time to effect the Bank Merger. MNB and LBI agree to share
equally the costs incurred to effect the Bank Merger.
11
Section 2.11 Absence of Control. Subject to any specific provisions of
this Agreement, it is the intent of the parties to this Agreement that neither
MNB nor LBI by reason of this Agreement shall be deemed (until consummation of
the Contemplated Transactions) to control, directly or indirectly, the other
party and shall not exercise, or be deemed to exercise, directly or indirectly,
a controlling influence over the management or policies of such other party.
ARTICLE 3
CONVERSION OF SECURITIES IN THE MERGER
Section 3.1 Manner of Merger.
----------------
(a) Subject to the provisions of this Article, by virtue of
the Merger and without any action on the part of MNB, LBI or Newco, or the
holder of any MNB Common Stock, LBI Common Stock or Newco Common Stock:
(i) each share of Newco Common Stock issued and
outstanding immediately prior to the Effective Time shall at the Effective Time
be canceled without consideration and without any action required on the part of
LBI or MNB, as the holders thereof;
(ii) each share of LBI Common Stock issued and
outstanding immediately prior to the Effective Time shall become and
automatically be converted into one (1) share of Newco Common Stock (the "LBI
Exchange Ratio"), and shall thereafter represent the right to receive and be
exchangeable for such number of shares, rounded to the nearest thousandth of a
share of Newco Common Stock (the "LBI Exchange Shares"), provided, however, that
all shares of LBI Common Stock held by LBI as treasury stock shall not be
converted into shares of Newco Common Stock, but instead shall be canceled as a
result of the Merger; and
(iii) each share of MNB Common Stock issued and
outstanding immediately prior to the Effective Time shall become and
automatically be converted into five hundred twenty three thousandths (0.523)
shares of Newco Common Stock (the "MNB Exchange Ratio"), and shall thereafter
represent the right to receive and be exchangeable for such number of shares,
rounded to the nearest thousandth of a share of Newco Common Stock (the "MNB
Exchange Shares"), provided, however, that all shares of MNB Common Stock held
by MNB as treasury stock shall not be converted into shares of Newco Common
Stock, but instead shall be canceled as a result of the Merger, and provided
further, that no Dissenting Shares (as defined below) held by stockholders of
MNB shall be converted into shares of Newco Common Stock, but instead shall be
treated as described in Section 3.4.
(b) After the Effective Time, no holder of LBI Common Stock or
MNB Common Stock which is issued and outstanding immediately prior to the
Effective Time will have any rights in respect of such LBI Common Stock or MNB
Common Stock, respectively, except: (i) to receive shares of Newco Common Stock
for the shares of LBI Common Stock or MNB Common Stock, respectively, converted
as provided in this Section, plus an amount in cash, as provided below, for any
fractional share of Newco Common Stock which such holder would have been
entitled to receive; or (ii) to receive payment for such shares of LBI Common
Stock or
12
MNB Common Stock, respectively, in the manner and to the extent provided in
Section 262 of the Delaware Code.
(c) If prior to the Effective Date either LBI or MNB changes
(or establishes a record date for changing) the number of shares of MNB Common
Stock or LBI Common Stock issued and outstanding as a result of a stock split,
stock dividend, recapitalization or similar transaction with respect to the
outstanding LBI Common Stock or MNB Common Stock and the record date therefor
shall be prior to the Effective Date, the number of shares of Newco Common Stock
to be received by the stockholder of the party making such change shall be
proportionately adjusted to reflect such change in that party's issued and
outstanding shares.
Section 3.2 Steps of Transaction.
--------------------
(a) The parties shall mutually select a Person to serve as
exchange agent (the "Exchange Agent") for the parties to effect the surrender of
certificates representing outstanding shares of either LBI Common Stock or MNB
Common Stock (the "Certificates") in exchange for Newco Common Stock and/or cash
in redemption of fractional shares. The Exchange Agent shall serve under the
terms of an exchange agent agreement substantially in the form attached as
Exhibit F. On the date agreed to by the parties to this Agreement, and in the
event the parties fail to so agree, the date which is ten (10) Business Days
prior to the Closing, the Exchange Agent shall mail or cause to be mailed to
each then current holder of record of a Certificate or Certificates a form of
transmittal letter (the "Letter of Transmittal") providing instructions for the
transmittal of the Certificates and shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates (or a lost certificate affidavit and a bond in a
form reasonably acceptable to Newco). LBI and MNB agree to cause the Exchange
Agent to use all reasonable efforts to mail or cause to be mailed the Letter of
Transmittal to all Persons who become holders of LBI Common Stock or MNB Common
Stock, respectively, subsequent to the date the Letter of Transmittal was first
mailed to LBI and MNB stockholders, respectively, and by 5:00 p.m. on the date
which is five (5) Business Days prior to the Closing Date.
(b) As promptly as practicable after the Effective Time, Newco
shall cause the Exchange Agent to deliver to each holder of LBI Common Stock or
MNB Common Stock who previously submitted an effective Letter of Transmittal
accompanied by the Certificates covered by such Letter of Transmittal: (i)
certificates representing the number of whole shares of Newco Common Stock into
which the shares of LBI Common Stock or MNB Common Stock previously represented
by the Certificates so surrendered were converted; plus (ii) an amount in cash,
as provided below, for any fractional share of Newco Common Stock which such
holder would have been entitled to receive.
(c) Within twenty (20) days after the Effective Time, Newco
shall cause the Exchange Agent to send to each holder of record of LBI Common
Stock or MNB Common Stock immediately prior to the Effective Time who has not
previously submitted his or her Certificates, additional transmittal materials
for use in surrendering Certificates to the Exchange Agent and instructions for
use in effecting such surrender in exchange for shares of Newco Common Stock and
cash for any fractional shares.
13
(d) No dividends or other distributions declared after the
Effective Time with respect to Newco Common Stock and payable to any former
stockholders of record of LBI or MNB shall be paid to a former stockholder of
LBI or MNB who holds any unsurrendered Certificate with respect to LBI Common
Stock or MNB Common Stock, respectively, until the stockholder shall surrender
the Certificate. Until so surrendered and exchanged, each outstanding
Certificate shall for all purposes, other than the payment of dividends or other
distributions, if any, to former holders of record of shares of LBI Common Stock
or MNB Common Stock represent the shares of Newco Common Stock into and for
which such shares have been so converted; provided, however, that upon surrender
of a Certificate, there shall be paid to the record holder or holders of the
Certificate, the amount, without interest thereon, of such dividends and other
distributions, if any, which previously have become payable with respect to the
number of whole shares of Newco Common Stock represented by such Certificate.
(e) No fractional shares of Newco Common Stock shall be issued
upon the surrender for exchange of Certificates; no dividend or distribution of
Newco shall relate to any fractional share interest; and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Newco. Instead, each holder of shares of LBI Common Stock or MNB
Common Stock having a fractional interest in shares of Newco Common Stock
arising upon the conversion of such shares of LBI Common Stock or MNB Common
Stock shall, at the time of surrender of the Certificates, be paid by Newco an
amount in cash, without interest, determined by multiplying such fractional
share of Newco Common Stock by the average of the closing sale prices of Newco
Common Stock for the five (5) trading days immediately following the Closing
Date.
(f) All shares of Newco Common Stock, and any required cash
payments for fractional shares, into and for which shares of LBI Common Stock or
MNB Common Stock shall have been converted and exchanged pursuant to this
Agreement, shall be deemed to have been issued in full satisfaction of all
rights pertaining to such converted and exchanged shares of LBI Common Stock and
MNB Common Stock.
(g) At the Effective Time, LBI and MNB shall each deliver to
the Exchange Agent a certified copy of a list of its respective stockholders,
after which there shall be no further registration or transfers on the stock
transfer books of LBI of the shares of LBI Common Stock or on the stock transfer
books of MNB of the shares of MNB Common Stock, all of which were outstanding
immediately prior to the Effective Time. If after the Effective Time
Certificates representing shares of LBI Common Stock or MNB Common Stock are
presented to the Exchange Agent or Newco, they shall be canceled and exchanged
for Newco Common Stock as provided in this Agreement.
(h) If a certificate representing shares of Newco Common Stock
is to be issued in a name other than that in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition of the issuance
thereof that the Certificate so surrendered shall be properly endorsed,
accompanied by all documents required to evidence and effect such transfer and
otherwise in proper form for transfer and that the Person requesting such
exchange shall pay to Newco any transfer or other taxes required by reason of
the issuance of a certificate representing shares of Newco Common Stock in any
name other than that of the registered holder of the
14
Certificate surrendered, or otherwise required, or shall establish to the
satisfaction of Newco that such tax has been paid or is not payable.
Section 3.3 Tax Free Reorganization. The parties to this Agreement
------------------------
intend for the Merger to qualify as a nontaxable reorganization within the
meaning of Section 368 and related sections of the Internal Revenue Code of
1986, as amended (the "Code"), and agree to cooperate and to take such actions
as may be reasonably necessary to ensure such result.
Section 3.4 Dissenting Shares. Notwithstanding anything to the contrary
-----------------
contained in this Agreement, to the extent appraisal rights are available to
stockholders of LBI or MNB pursuant to the provisions of any applicable Legal
Requirements, any shares of LBI Common Stock or MNB Common Stock held by a
Person who objects to the Merger, whose shares either were not entitled to vote
or were not voted in favor of the Merger and who complies with all of the
provisions of the applicable Legal Requirements concerning the rights of such
Person to dissent from the Merger and to require appraisal of such Person's
shares and who has not withdrawn such objection or waived such rights prior to
the Effective Time (collectively with respect to all such LBI or MNB
stockholders, the "Dissenting Shares"), shall not be converted pursuant to
Section 3.1, but shall become the right to receive such consideration as may be
determined to be due to the holder of such Dissenting Shares pursuant to the
applicable Legal Requirements, including, if applicable, any costs determined to
be payable by either LBI or MNB to its respective holders of Dissenting Shares
pursuant to an order of any court pursuant to any applicable Legal Requirements;
provided, however, that each Dissenting Share held by a Person at the Effective
Time who shall, after the Effective Time, withdraw the demand for appraisal or
lose the right of appraisal, in either case pursuant to applicable Legal
Requirements shall be deemed to be converted, as of the Effective Time, into the
number of shares of Newco Common Stock as is determined in accordance with
Section 3.1.
Section 3.5 Options.
-------
(a) At and after the Effective Time, each option granted by
LBI and MNB to purchase shares of LBI Common Stock and MNB Common Stock,
respectively, which is outstanding and unexercised immediately prior thereto
shall cease to represent a right to acquire shares of either LBI Common Stock or
MNB Common Stock and shall be converted automatically into an option to purchase
shares of Newco Common Stock (the "LBI Converted Stock Options" and the "MNB
Converted Stock Options," respectively) in an amount and at an exercise price
determined as provided below and otherwise subject to the terms of the
agreements evidencing the grants of such options:
(i) the number of shares of Newco Common Stock to
be subject to each LBI Converted Stock Option shall be equal to the product of
the number of shares of LBI Common Stock subject to the original option and the
LBI Exchange Ratio, provided that any fractional shares of Newco Common Stock
shall be rounded up to the next highest whole share;
(ii) the exercise price per share of Newco Common
Stock under the LBI Converted Stock Option shall be equal to the exercise price
per share of LBI Common Stock
15
under the original option divided by the LBI Exchange Ratio, provided that such
exercise price shall be rounded to the nearest whole cent;
(iii) the number of shares of Newco Common Stock to
be subject to each MNB Converted Stock Option shall be equal to the product of
the number of shares of MNB Common Stock subject to the original option and the
MNB Exchange Ratio, provided that any fractional shares of Newco Common Stock
shall be rounded up to the next highest whole share; and
(iv) the exercise price per share of Newco Common
Stock under the MNB Converted Stock Option shall be equal to the exercise price
per share of MNB Common Stock under the original option divided by the MNB
Exchange Ratio, provided that such exercise price shall be rounded to the
nearest whole cent.
(b) The adjustment provided in this Section with respect to
any options which are "incentive stock options" (as defined in Section 422 of
the Code), shall be and is intended to be effected in a manner which is
consistent with Section 424(a) of the Code. The duration and other terms of the
LBI Converted Stock Options and MNB Converted Stock Options shall be the same as
the original option except that all references to LBI or MNB, as the case may
be, shall be deemed to be references to Newco.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES BY MNB
MNB hereby represents and warrants to LBI that the following are true
and correct as of the date hereof, and will be true and correct as of the
Effective Time:
Section 4.1 MNB Organization. MNB: (a) is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Delaware
and is also in good standing in each other jurisdiction in which the nature of
the business conducted or the properties or assets owned or leased by it makes
such qualification necessary; (b) is registered with the Board of Governors of
the Federal Reserve System (the "Federal Reserve") as a bank holding company
under the federal Bank Holding Company Act of 1956, as amended (the "BHCA"); and
(c) has full power and authority, corporate and otherwise, to operate as a bank
holding company and to own, operate and lease its properties as presently owned,
operated and leased, and to carry on its business as it is now being conducted.
Copies of the certificate of incorporation and bylaws of MNB and all amendments
thereto set forth in Schedule 4.1 of the MNB Book of Schedules are complete and
correct. MNB owns no voting stock or equity securities of any corporation,
association, partnership or other entity, other than all of the voting stock of
SNB and as set forth on Schedule 4.1 of the MNB Book of Schedules.
Section 4.2 MNB Subsidiary Organization. SNB is a national banking
------------------------------
association duly organized, validly existing and in good standing under the laws
of the United States of America. SNB has full power and authority, corporate and
otherwise, to own, operate and lease its properties as presently owned, operated
and leased, and to carry on its business as it is now
16
being conducted, and is duly qualified to do business and is in good standing in
each jurisdiction in which the nature of the business conducted or the
properties or assets owned or leased by it makes such qualification necessary.
Copies of the articles of association and bylaws of SNB and all amendments
thereto set forth in Schedule 4.2 of the MNB Book of Schedules are complete and
correct. SNB owns no voting stock or equity securities of any corporation,
association, partnership or other entity, other than as shown on Schedule 4.2 of
the MNB Book of Schedules.
Section 4.3 Authorization. MNB has the requisite corporate power and
-------------
authority to enter into and perform its obligations under this Agreement and the
execution, delivery and performance of this Agreement by MNB and the
consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action, subject to stockholder approval.
This Agreement constitutes a legal, valid and binding obligation of MNB
enforceable in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws and
subject to general principles of equity.
Section 4.4 No Conflict. Neither the execution nor delivery of this
------------
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time): (a) contravene, conflict with or result in a violation of any provision
of the certificate of incorporation, the articles of association, the bylaws or
any resolution adopted by the board of directors or stockholders of, MNB or any
MNB Subsidiary; (b) contravene, conflict with or result in a violation of any
Legal Requirement or any Order to which MNB or any MNB Subsidiary, or any of the
assets that are owned or used by them, may be subject, other than any of the
foregoing that would be satisfied by compliance with the provisions of the BHCA,
the Securities Act of 1933, as amended (the "Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the National Bank Act and
the Delaware Code; and (c) contravene, conflict with or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate or modify any material Applicable Contract to which MNB or
any MNB Subsidiary is a party or by which any of their respective assets is
bound; or (d) result in the creation of any lien, charge or encumbrance upon, or
with respect to, any of the assets owned or used by MNB or any MNB Subsidiary.
Except for the requisite approval of its stockholders, neither MNB nor any MNB
Subsidiary is or will be required to give any notice to, or obtain any consent
from, any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated Transactions.
Section 4.5 MNB Capitalization. The authorized capital stock of MNB
-------------------
consists, and at March 31, 2001, consisted of: (a) 3,000,000 shares of common
stock, $0.01 par value per share, of which 1,563,905 shares were issued, and
none of which shares were held in the treasury of MNB as of that date; and (b)
200,000 shares of preferred stock, $0.01 par value per share, none of which
shares were issued and outstanding. The maximum number of shares of MNB Common
Stock (assuming for this purpose that share equivalents constitute MNB Common
Stock) that would be outstanding immediately prior to the Effective Time
(including treasury shares) if all options, warrants, conversion rights and
other rights with respect thereto were exercised and the
17
restrictions on any restricted stock were no longer applicable is 1,638,137
shares. All of the outstanding shares of capital stock of MNB have been duly and
validly authorized and issued and are fully paid and nonassessable. To the
Knowledge of MNB and except as disclosed in this Agreement or on the Schedules,
none of the shares of authorized capital stock of MNB are, nor on the Closing
Date will they be, subject to any claim of right except pursuant to this
Agreement. Except as contemplated in this Agreement or as set forth in Schedule
4.5 of the MNB Book of Schedules, there are, as of the date of this Agreement,
no outstanding subscriptions, contracts, conversion privileges, options,
warrants, calls or other rights obligating MNB or any MNB Subsidiary to issue,
sell or otherwise dispose of, or to purchase, redeem or otherwise acquire, any
shares of capital stock of MNB or any MNB Subsidiary. There are no outstanding
securities of MNB that are convertible into, or exchangeable for, any shares of
MNB's capital stock, and except as provided in this Section or otherwise
disclosed in this Agreement, LBI is not a party to any Contract relating to the
issuance, sale or transfer of any equity securities or other securities of MNB.
None of the shares of MNB Common Stock were issued in violation of any federal
or state securities laws or any other Legal Requirement. MNB does not own or
have any Contract to acquire any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business except for the capital stock of SNB and as set forth in Schedule 4.5 of
the MNB Book of Schedules. Except as disclosed in or permitted by this Agreement
or as provided on Schedule 4.5 of the MNB Book of Schedules, no shares of MNB
capital stock have been purchased, redeemed or otherwise acquired, directly or
indirectly, by MNB or any MNB Subsidiary and no dividends or other distributions
payable in any equity securities of MNB or any MNB Subsidiary have been
declared, set aside, made or paid to the stockholders of MNB.
Section 4.6 MNB Subsidiary Capitalization. The authorized capital stock
-----------------------------
of SNB consists, and at the Effective Time will consist, exclusively of
2,000,000 shares of common stock, $1.00 par value per share, all of which shares
are, and immediately prior to the Closing will be, duly authorized, validly
issued and outstanding, fully paid and nonassessable except as provided in
Section 55 of the National Bank Act (the "SNB Bank Shares"). MNB is, and will be
on the Closing Date, the record and beneficial owner of one hundred percent
(100%) of SNB Shares, free and clear of any lien or encumbrance whatsoever,
except as set forth in Schedule 4.6 of the MNB Book of Schedules. The SNB Bank
Shares are, and will be on the Closing Date, freely transferable and are, and
will be on the Closing Date, subject to no claim of right except pursuant to
this Agreement and as set forth in Schedule 4.6 of the MNB Book of Schedules.
There are no options, warrants, rights, calls or commitments of any character
relating to any additional shares of the capital stock of SNB. No capital stock
or other security issued by SNB has been issued in violation of, or without
compliance with, any preemptive rights of stockholders. There are no outstanding
securities of SNB that are convertible into, or exchangeable for, any shares of
SNB's capital stock, and SNB is not a party to any Contract relating to the
issuance, sale or transfer of any equity securities or other securities of SNB.
SNB does not own, or have any Contract to acquire, any equity securities or
other securities of any Person or any direct or indirect equity or ownership
interest in any other business, except as set forth in Schedule 4.6 of the MNB
Book of Schedules.
18
Section 4.7 Financial Statements and Reports. True, correct and
-----------------------------------
complete copies of the following financial statements of MNB are included in
Schedule 4.7 of the MNB Book of Schedules:
(a) Consolidated Balance Sheets and the related Statements of
Income, Statements of Changes in Stockholders' Equity and Statements of Cash
Flows of MNB for the years ended December 31, 1998, 1999 and 2000;
(b) Consolidated Balance Sheet and the related Statement of
Income of MNB for the three months ended March 31, 2001; and
(c) Call Reports for SNB at the close of business on December
31, 1998, 1999 and 2000.
The financial statements described in this Section (the "MNB Financial
Statements") are complete and correct in all material respects and fairly and
accurately present the respective financial position, assets, liabilities and
results of operations of MNB and the MNB Subsidiaries at the respective dates
of, and for the periods referred to in, the MNB Financial Statements. The
financial statements described in clause (a) above are audited statements and
have been prepared in conformity with GAAP. The financial statements described
in clauses (b) and (c) above have been prepared on a basis consistent with past
accounting practices and as required by applicable rules or regulations and
fairly present the consolidated financial condition and results of operations at
the dates and for the periods presented, subject to year-end audit adjustments
(which changes in the aggregate would not reasonably be expected to have a
Material Adverse Effect on MNB on a consolidated basis). The MNB Financial
Statements do not include any material assets or omit to state any material
liabilities, absolute or contingent, or other facts, which inclusion or omission
would render the MNB Financial Statements misleading in any material respect.
Section 4.8 Books and Records. The books of account, minute books,
------------------
stock record books and other records of MNB and each MNB Subsidiary are complete
and correct in all material respects and have been maintained in accordance with
sound business practices and all applicable Legal Requirements, including the
maintenance of any adequate system of internal controls. The minute books of MNB
and each MNB Subsidiary contain accurate and complete records in all material
respects of all meetings held of, and corporate action taken by, its respective
stockholders, board of directors and committees of the board of directors. At
the Closing, all of those books and records will be in the possession of MNB and
the MNB Subsidiaries.
Section 4.9 Title to Properties. MNB and each MNB Subsidiary has good
--------------------
and marketable title to all assets and properties, whether real or personal,
tangible or intangible, that it purports to own, subject to no valid liens,
mortgages, security interests, encumbrances or charges of any kind except: (a)
as noted in the most recent MNB Financial Statement or in Schedule 4.9 of the
MNB Book of Schedules; (b) statutory liens for Taxes not yet delinquent or being
contested in good faith by appropriate Proceedings and for which appropriate
reserves have been established and reflected on the MNB Financial Statements;
(c) pledges or liens required to be granted in connection with the acceptance of
government deposits, granted in connection with
19
repurchase or reverse repurchase agreements or otherwise incurred in the
Ordinary Course of Business; and (d) minor defects and irregularities in title
and encumbrances that do not materially impair the use thereof for the purposes
for which they are held. Except as set forth in Schedule 4.9 of the MNB Book of
Schedules, MNB and each MNB Subsidiary as lessee has the right under valid and
existing leases to occupy, use, possess and control any and all of the
respective property leased by it. Except where any failure would not reasonably
be expected to have a Material Adverse Effect on MNB on a consolidated basis,
all buildings and structures owned by MNB and each MNB Subsidiary lie wholly
within the boundaries of the real property owned or validly leased by it, do not
encroach upon the property of, or otherwise conflict with the property rights
of, any other Person.
Section 4.10 Condition and Sufficiency of Assets. Except as set forth
------------------------------------
in Schedule 4.10 of the MNB Book of Schedules, the buildings, structures and
equipment of MNB and each MNB Subsidiary are in good operating condition and
repair, and are adequate for the uses to which they are being put, and none of
such buildings, structures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
the aggregate in nature or in cost. Except where any failure would not
reasonably be expected to have a Material Adverse Effect on MNB on a
consolidated basis, the real property, buildings, structures and equipment owned
or leased by MNB and each MNB Subsidiary are in compliance with the Americans
with Disabilities Act of 1990, as amended, and the regulations promulgated
thereunder, and all other building and development codes and other restrictions,
including subdivision regulations, building and construction regulations,
drainage codes, health, fire and safety laws and regulations, utility tariffs
and regulations, conservation laws and zoning laws and ordinances. The assets
and properties, whether real or personal, tangible or intangible, that MNB or
any MNB Subsidiary purport to own are sufficient for the continued conduct of
the business of MNB and such MNB Subsidiary after the Closing in substantially
the same manner as conducted prior to the Closing.
Section 4.11 Loan Loss Reserve. All loans and loan commitments extended
-----------------
by SNB and any extensions, renewals or continuations of such loans and loan
commitments (the "MNB Loans") were made in accordance with customary lending
standards of the MNB Subsidiary in the Ordinary Course of Business. The MNB
Loans are evidenced by appropriate and sufficient documentation and constitute
valid and binding obligations to SNB enforceable in accordance with their terms,
except as may be limited by any bankruptcy, insolvency, moratorium or other laws
affecting creditors' rights generally by the exercise of judicial discretion.
All such MNB Loans are, and at the Closing will be, free and clear of any
encumbrance or other charge, except for permitted liens, and SNB has materially
complied, and at the Closing will have materially complied with, all Legal
Requirements relating to the MNB Loans. The reserve for probable loan and lease
losses of SNB is, and will be on the Closing Date, adequate in all material
respects to provide for probable or specific losses, net of recoveries relating
to loans previously charged off. None of the MNB Loans is subject to any
material offset or claim of offset, and the aggregate loan balances in excess of
MNB's consolidated reserve for loan and lease losses are to MNB's Knowledge,
based on past loan loss experience, collectible in accordance with their terms
(except as limited above) and all uncollectible loans have been charged off.
20
Section 4.12 Undisclosed Liabilities; Adverse Changes. Except as set
------------------------------------------
forth in Schedule 4.12 of the MNB Book of Schedules, neither MNB nor any MNB
Subsidiary has any material liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent or otherwise), except
for liabilities or obligations reflected or reserved against in the MNB
Financial Statements, liabilities and obligations arising under contracts and
arrangements which are either set forth in Schedule 4.18 of the MNB Book of
Schedules, or are of a type described in Section 4.18, but not included in
Schedule 4.18 of the MNB Book of Schedules because the amounts involved do not
meet the amounts specified for inclusion in Schedule 4.18 of the MNB Book of
Schedules, current liabilities incurred in the Ordinary Course of Business since
the respective dates thereof and other liabilities or obligations that in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
MNB on a consolidated basis. Since the date of the latest MNB Financial
Statement, there has not been any change in the business, operations,
properties, prospects, assets or condition of MNB or any MNB Subsidiary, and no
event has occurred or circumstance exists, that has had, or would reasonably be
expected to have, a Material Adverse Effect on MNB on a consolidated basis.
Section 4.13 Taxes. MNB and each MNB Subsidiary has duly filed or will
-----
duly file all material Tax Returns required to be filed by it for all periods
prior to the Closing, and each such Tax Return is or will be complete and
accurate in all material respects. Except as set forth on Schedule 4.13 of the
MNB Book of Schedules, neither MNB nor any MNB Subsidiary is: (a) delinquent in
the payment of any Taxes shown on such Tax Returns or on any assessments
received by it for such Taxes; (b) a party to or is the subject of any pending
Order, Proceeding, audit, examination or investigation by any Regulatory
Authority that is related to assessment or collection of Taxes paid or payable
by MNB or any MNB Subsidiary for any year, nor does MNB have any Knowledge of
any of the foregoing that are Threatened; or (c) subject to any agreement
extending the period for assessment or collection of any Tax. None of the Tax
liabilities of MNB or any MNB Subsidiary has ever been audited by any Regulatory
Authority since January 1, 1993. The reserve for Taxes in the audited financial
statements of MNB for the year ended December 31, 2000, is adequate to cover all
of the Tax liabilities of MNB and each MNB Subsidiary that may become payable in
future years in respect to any transactions consummated prior to December 31,
2000. Neither MNB nor any MNB Subsidiary has and, to the MNB's Knowledge, will
not have any liability for Taxes of any nature for or in respect of the
operation of its respective businesses or ownership of its respective assets
from December 31, 2000, up to and including the Effective Time, except to the
extent reflected on the audited MNB Financial Statements for the year ended
December 31, 2000, or on the Subsequent MNB Financial Statements or otherwise
reflected in the books and records of MNB and the MNB Subsidiaries for the
period following its then most recent of the Subsequent MNB Financial
Statements. MNB has delivered to LBI true, correct and complete copies of all
income Tax Returns previously filed with respect to the last three fiscal years
of MNB and the MNB Subsidiaries and any tax examination reports and statements
of deficiencies assessed or agreed to for any of MNB or any MNB Subsidiary for
any such time period.
Section 4.14 Compliance With ERISA. Except as set forth in Schedule
----------------------
4.14 of the MNB Book of Schedules, all employee benefit plans (as defined in
Section 3(3) of ERISA) established or maintained by MNB or any MNB Subsidiary or
to which MNB or any MNB
21
Subsidiary contributes, are in compliance in all material respects with all
applicable requirements of ERISA, and are in compliance in all material respects
with all applicable requirements (including qualification and non-discrimination
requirements in effect as of the Effective Time) of the Code for obtaining the
tax benefits the Code thereupon permits with respect to such employee benefit
plans. For purposes of this Section, non-compliance with the Code and ERISA is
material if such non-compliance would reasonably be expected to have a Material
Adverse Effect on MNB. No such employee benefit plan has, or as of the Closing
will have, any amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA) for which MNB or any MNB Subsidiary would be liable to any
Person under Title IV of ERISA if any such employee benefit plan were terminated
as of the Closing, which amounts would be material to MNB and the MNB
Subsidiaries taken as a whole. Each employee benefit plan as defined in Section
4001(c)(3) of the Code satisfies the minimum funding standards of Section 412 of
the Code (if applicable). There would be no obligations of MNB or any MNB
Subsidiary under Title IV of ERISA relating to any employee benefit plan that is
a multi-employer plan if any such plan were terminated or if MNB or any MNB
Subsidiary withdrew from any such plan as of the Closing. No payments will be
made as a result of the Merger that will be subject to nondeductibility under
Section 280G of the Code or subject to an excise tax under Section 4999 of the
Code.
Section 4.15 Compliance With Legal Requirements. MNB and each MNB
-------------------------------------
Subsidiary holds all licenses, certificates, permits, franchises and rights from
all appropriate Regulatory Authorities necessary for the conduct of its
respective business and where failure to do so would reasonably be expected to
have a Material Adverse Effect on MNB. Except as set forth in Schedule 4.15 of
the MNB Book of Schedules, MNB and each MNB Subsidiary is, and at all times
since January 1, 1998, has been, in compliance with each Legal Requirement that
is or was applicable to it or to the conduct or operation of its respective
businesses or the ownership or use of any of its respective assets, except in
each case where any non-compliance did not have, or would not reasonably be
expected to have, a Material Adverse Effect on MNB on a consolidated basis. No
event has occurred or circumstance exists that (with or without notice or lapse
of time): (a) may constitute or result in a violation by MNB or any MNB
Subsidiary of, or a failure on the part of MNB or any MNB Subsidiary to comply
with, any Legal Requirement; or (b) may give rise to any obligation on the part
of MNB or any MNB Subsidiary to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature in connection with a failure to
comply with any Legal Requirement, except for any of the foregoing that would
not reasonably be expected to have a Material Adverse Effect on MNB on a
consolidated basis. Except as set forth in Schedule 4.15 of the MNB Book of
Schedules, neither MNB nor any MNB Subsidiary has received, at any time since
January 1, 1998, any notice or other communication (whether oral or written)
from any Regulatory Authority or any other Person, nor does MNB have any
Knowledge, regarding any actual, alleged, possible or potential: (x) violation
of, or failure to comply with, any material Legal Requirement to which MNB or
any MNB Subsidiary, or any of the assets owned or used by any of them, is or has
been subject, or investigation with respect to any of the foregoing conducted by
any Regulatory Authority; or (y) obligation on the part of MNB or any MNB
Subsidiary to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature in connection with a failure to comply with any
material Legal Requirement.
22
Section 4.16 Legal Proceedings; Orders. Schedule 4.16 of the MNB Book
--------------------------
of Schedules is a true and correct list of all Proceedings and Orders pending,
entered into or, to the Knowledge of MNB, Threatened against, affecting or
involving MNB or any MNB Subsidiary or any of their respective assets or
businesses, or the Contemplated Transactions, since January 1, 1998, that had,
or would reasonably be expected to have, a Material Adverse Effect on MNB on a
consolidated basis or that would impair MNB's ability to consummate any of the
Contemplated Transactions, and there is no fact to MNB's Knowledge that would
provide a basis for any other Proceeding or Order involving MNB or any MNB
Subsidiary, or any of its respective officers or directors in their capacities
as such, or its assets, business or goodwill that would reasonably be expected
to have a Material Adverse Effect on MNB or that would impair MNB's ability to
consummate any of the Contemplated Transactions. To the Knowledge of MNB, no
officer, director, agent or employee of MNB or any MNB Subsidiary is subject to
any Order that prohibits such officer, director, agent or employee from engaging
in or continuing any conduct, activity or practice relating to the businesses of
MNB or any MNB Subsidiary.
Section 4.17 Absence of Certain Changes and Events. Except as set forth
-------------------------------------
in Schedule 4.17 of the MNB Book of Schedules, since December 31, 2000, MNB and
each MNB Subsidiary has conducted its respective business only in the Ordinary
Course of Business and with respect to each there has not been any:
(a) change in its authorized or issued capital stock; grant
of any stock option or right to purchase shares of its capital stock; issuance
of any security convertible into such capital stock or evidences of indebtedness
(except in connection with customer deposits); grant of any registration rights;
purchase, redemption, retirement or other acquisition by it of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of its capital stock (except for
payment of dividends and distributions from any wholly-owned MNB Subsidiary to
MNB and pursuant to Section 6.4);
(b) amendment to its certificate or articles of
incorporation, articles of association or bylaws or any resolutions adopted by
its board of directors or stockholders with respect to the same;
(c) payment or increase of any bonuses, salaries or other
compensation to any of its stockholders, directors, officers or employees,
except for normal increases in the Ordinary Course of Business or in accordance
with any then existing MNB Employee Benefit Plan, or entry by it into any
employment, consulting, non-competition, change in control, severance or similar
Contract with any stockholder, director, officer or employee;
(d) adoption, amendment (except for any amendment necessary
to comply with any Legal Requirement) or termination of, or increase in the
payments to or benefits under, any MNB Employee Benefit Plan (as defined below);
(e) material damage to or destruction or loss of any of its
assets or property, whether or not covered by insurance;
23
(f) entry into, termination or extension of, or receipt of
notice of termination of, any joint venture or similar agreement pursuant to any
Contract or any similar transaction;
(g) except for this Agreement, entry into any Contract or
incurrence of any obligation or liability (fixed or contingent) other than in
the Ordinary Course of Business;
(h) material change in any existing lease of real or personal
property to which it is a party;
(i) sale (other than any sale in the Ordinary Course of
Business), lease or other disposition of any of its assets or properties or
mortgage, pledge or imposition of any lien or other encumbrance upon any of its
material assets or properties, except for tax and other liens that arise by
operation of law and with respect to which payment is not past due and except
for pledges or liens: (i) required to be granted in connection with the
acceptance by any MNB Subsidiary of government deposits; (ii) granted in
connection with repurchase or reverse repurchase agreements; or (iii) otherwise
incurred in the Ordinary Course of Business;
(j) incurrence by it of any obligation or liability (fixed or
contingent) other than in the Ordinary Course of Business;
(k) other than in the Ordinary Course of Business,
cancellation or waiver by it of any debts, claims or rights with a value in
excess of $15,000;
(l) any investment by it of a capital nature exceeding
$50,000 or aggregate investments of a capital nature exceeding $100,000;
(m) except for the Contemplated Transactions, merger or
consolidation with or into any other Person, or acquisition of any stock, equity
interest or business of any other Person;
(n) transaction for the borrowing or loaning of monies, other
than in the Ordinary Course of Business;
(o) suffered any change or changes having a Material Adverse
Effect on it, or in the operation or conduct of its respective business;
(p) conducted its respective business in any manner other
than substantially as it was being conducted prior to such time;
(q) purchased any investment security that is callable prior
to its stated maturity, that has a stated maturity of thirty (30) months or more
or has a purchase price of greater than $250,000;
(r) obtained any variable rate advances with maturities of
greater than one (1) year from the Federal Home Loan Bank;
(s) agreement material change in its accounting methods used;
or
24
(t) agreement, whether oral or written, by it to do any of
the foregoing.
Section 4.18 Properties, Contracts, Employee Benefit Plans and Other
---------------------------------------------------------
Agreements. Except for loan agreements evidencing loans or loan commitments made
----------
by SNB in the Ordinary Course of Business, Schedule 4.18 of the MNB Book of
Schedules lists or describes the following with respect to MNB and each MNB
Subsidiary:
(a) all real property owned by MNB and each MNB Subsidiary
and the principal buildings and structures located thereon, together with a
legal description of such real estate, and each lease of real property to which
MNB and each MNB Subsidiary is a party, identifying the parties thereto, the
annual rental payable, the expiration date thereof and a brief description of
the property covered, and in each case of either owned or leased real property,
the proper identification, if applicable, of each such property as a branch or
main office or other office of MNB or any MNB Subsidiary;
(b) All loan and credit agreements, conditional sales
contracts or other title retention agreements or security agreements relating to
money borrowed by MNB or any MNB Subsidiary, exclusive of deposit agreements
with customers of SNB entered into in the Ordinary Course of Business,
agreements for the purchase of federal funds and repurchase agreements;
(c) each Applicable Contract that involves performance of
services or delivery of goods or materials by MNB or any MNB Subsidiary of an
amount or value in excess of $25,000;
(d) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of MNB or
any MNB Subsidiary in excess of $25,000;
(e) each Applicable Contract not referred to elsewhere in
this Section which:
(i) relates to the future purchase of goods
or services in excess of the requirements of its respective business at current
levels or for normal operating purposes;
(ii) materially affect the business or financial
condition of MNB or any MNB Subsidiary;
(f) each lease, rental, license, installment and conditional
sale agreement and other Applicable Contract affecting the ownership of, leasing
of, title to or use of any personal property having a value per item or
requiring payments in excess of $25,000, or with terms of more than one year;
(g) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual property
(collectively, "Intellectual Property Assets"), including agreements with
current or former employees, consultants or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property Assets
of MNB or any MNB Subsidiary;
25
(h) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
(i) each joint venture, partnership and other Applicable
Contract (however named) involving a sharing of profits, losses, costs or
liabilities by MNB or any MNB Subsidiary with any other Person;
(j) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of MNB or any MNB Subsidiary or
any Affiliate of any of the foregoing, or limit the ability of MNB or any MNB
Subsidiary or any Affiliate of any of the foregoing to engage in any line of
business or to compete with any Person;
(k) each Applicable Contract providing for payments to or by
any Person based on sales, purchases or profits, other than direct payments for
goods;
(l) the name and annual salary of each director and officer
of MNB and each MNB Subsidiary, and the profit sharing, bonus or other form of
compensation (other than salary) paid or payable by MNB, each MNB Subsidiary or
a combination of any of them to or for the benefit of each such person in
question for the years ended December 31, 1999 and 2000, and for the current
fiscal year of MNB, and any employment agreement, consulting agreement,
non-competition, severance or change in control agreement or other similar
arrangement or plan with respect to each such person;
(m) each profit sharing, group insurance, hospitalization,
stock option, pension, retirement, bonus, employment, severance, change in
control, deferred compensation, stock bonus, stock purchase or other employee
welfare or benefit agreements, plans or arrangements established, maintained,
sponsored or undertaken by MNB or any MNB Subsidiary for the benefit of the
officers, directors or employees of MNB or any MNB Subsidiary, including each
trust or other agreement with any custodian or any trustee for funds held under
any such agreement, plan or arrangement, and all other Contracts or arrangements
under which pensions, deferred compensation or other retirement benefits are
being paid or may become payable by MNB or any MNB Subsidiary for the benefit of
the employees of MNB or any MNB Subsidiary (collectively, the "MNB Employee
Benefit Plans"), and, in respect to any of them, the latest three (3) reports or
forms, if any, filed with the Department of Labor and Pension Benefit Guaranty
Corporation under the ERISA, the latest three (3) financial or actuarial reports
and any currently effective Internal Revenue Service private rulings or
determination letters obtained by or for the benefit of MNB or any MNB
Subsidiary;
(n) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by MNB or any MNB Subsidiary to be responsible for consequential damages;
(o) each Applicable Contract for capital expenditures in
excess of $50,000, or all Applicable Contracts for all capital expenditures
which in the aggregate require payments in excess of $100,000; and
26
(p) the name of each Person who is or would be entitled
pursuant to any Contract or MNB Employee Benefit Plan to receive any payment
from MNB or any MNB Subsidiary as a result of the consummation of the
Contemplated Transactions (including any payment that is or would be due as a
result of any actual or constructive termination of a Person's employment or
position following such consummation) and the maximum amount of such payment;
(q) each amendment, supplement and modification (whether oral
or written) in respect of any of the foregoing.
Copies of each document, plan or Contract listed and described in
Schedule 4.18 of the MNB Book of Schedules are appended to such Schedule.
Section 4.19 No Defaults. Except as set forth in Schedule 4.19 of the
-----------
MNB Book of Schedules, each Contract identified or required to be identified in
Schedule 4.18 of the MNB Book of Schedules is in full force and effect in all
material respects and is valid and enforceable in accordance with its terms,
except as may be limited by any bankruptcy, insolvency, moratorium or by the
exercise of judicial discretion. MNB and each MNB Subsidiary is, and at all
times since January 1, 1998, has been, in full compliance with all applicable
terms and requirements of each Contract under which MNB or any MNB Subsidiary
has or had any obligation or liability or by which MNB or any MNB Subsidiary or
any of their respective assets owned or used by them is or was bound, except
where any such failure to be in full compliance did not have or would reasonably
be expected not to have a Material Adverse Effect on MNB on a consolidated
basis. Each other Person that has or had any obligation or liability under any
such Contract under which MNB or any MNB Subsidiary has or had any rights is,
and at all times since January 1, 1998, has been, to the Knowledge of MNB, in
compliance with applicable terms and requirements of such Contract in all
material respects. No event has occurred or circumstance exists that (with or
without notice or lapse of time) may contravene, conflict with or result in a
violation or breach of, or give MNB, any MNB Subsidiary or other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify, any material
Applicable Contract. Except in the Ordinary Course of Business with respect to
loans made by SNB, neither MNB nor any MNB Subsidiary has given to or received
from any other Person, at any time since January 1, 1998, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible
or potential material violation or breach of, or default under, any Contract.
Other than in the Ordinary Course of Business in connection with workouts and
restructured loans, there are no renegotiations of, attempts to renegotiate or
outstanding rights to renegotiate any material amounts paid or payable to MNB or
any MNB Subsidiary under current or completed Contracts with any Person, and no
such Person has made written demand for such renegotiation.
Section 4.20 Insurance. Schedule 4.20 of the MNB Book of Schedules
---------
lists the policies of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by MNB or any MNB Subsidiary on
the date hereof. Each policy is in full force and effect (except for any
expiring policy that is replaced by coverage at least as extensive) until the
Closing. All premiums due on such policies have been paid in full.
27
Section 4.21 Compliance with Environmental Laws. Except as set forth in
----------------------------------
Schedule 4.21 of the MNB Book of Schedules and except for any of the following
that did not have or would not reasonably be expected to have a Material Adverse
Effect on MNB and the MNB Subsidiaries on a consolidated basis, there are no
actions, suits, investigations, liabilities, inquiries, Proceedings or Orders
involving MNB or any MNB Subsidiary or any of their respective assets that are
pending or, to the Knowledge of MNB, Threatened, nor to the Knowledge of MNB is
there any factual basis for any of the foregoing, as a result of any asserted
failure of MNB or any MNB Subsidiary, or any predecessor thereof, to comply with
any federal, state, county and municipal law, including any statute, regulation,
rule, ordinance, Order, restriction and requirement, relating to underground
storage tanks, petroleum products, air pollutants, water pollutants or process
waste water or otherwise relating to the environment or toxic or hazardous
substances or to the manufacture, processing, distribution, use, recycling,
generation, treatment, handling, storage, disposal or transport of any hazardous
or toxic substances or petroleum products (including polychlorinated biphenyls,
whether contained or uncontained, and asbestos-containing materials, whether
friable or not), including, the Federal Solid Waste Disposal Act, the Hazardous
and Solid Waste Amendments, the Federal Clean Air Act, the Federal Clean Water
Act, the Occupational Health and Safety Act, the Federal Resource Conservation
and Recovery Act, the Toxic Substances Control Act, the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and the Superfund
Amendments and Reauthorization Act of 1986, all as amended, and regulations of
the Environmental Protection Agency, the Nuclear Regulatory Agency and any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect (collectively, the "Environmental Laws"). No
environmental clearances or other governmental approvals are required for the
conduct of the business of MNB or any MNB Subsidiary or the consummation of the
Contemplated Transactions. To the Knowledge of MNB, neither MNB nor any MNB
Subsidiary is the owner of any interest in real estate on which any substances
have been used, stored, deposited, treated, recycled or disposed of, which
substances if known to be present on, at or under such property, would require
clean-up, removal or some other remedial action under any Environmental Law.
Section 4.22 Regulatory Filings. MNB and each MNB Subsidiary has filed
------------------
in a timely manner all required filings with all proper Regulatory Authorities,
including: (a) the Securities and Exchange Commission (the "SEC"); (b) the
Federal Reserve; (c) the Federal Deposit Insurance Corporation (the "FDIC"); and
(d) the OCC. To the Knowledge of MNB, all filings with such federal and state
regulatory agencies were accurate and complete in all material respects as of
the dates of the filings, and no such filing has made any untrue statement of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading. Accurate and complete copies of each document filed by MNB with
the SEC since January 1, 2001, are attached as Schedule 4.22 of the MNB Book of
Schedules.
Section 4.23 Agency and Custodial Accounts. Each MNB Subsidiary has
------------------------------
properly administered all accounts for which it acts as fiduciary, agent,
custodian or investment advisor, in accordance with the terms of the governing
documents and applicable Legal Requirements and common law. No MNB Subsidiary or
any of its respective directors, officers or employees has
28
committed any breach of trust with respect to any such account, and the
accountings for each such account are true and correct in all material respects
and accurately reflect the assets of such account.
Section 4.24 Disclosure. No representation or warranty made in this
----------
Agreement by MNB contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained herein under
the circumstances under which they were made not misleading. Except as and to
the extent reflected or reserved against in MNB's audited financial statements
for the year ended December 31, 2000, or the Subsequent MNB Financial Statements
(as such term is defined below), neither MNB nor any MNB Subsidiary has, and
with respect to the Subsequent MNB Financial Statements will not have, any
liabilities or obligations, of any nature, secured or unsecured, (whether
accrued, absolute, contingent or otherwise) including, any Tax liabilities due
or to become due, which would reasonably be expected to have a Material Adverse
Effect on MNB.
Section 4.25 Brokerage Commissions. Except as set forth in Schedule
----------------------
4.25 of the MNB Book of Schedules, none of MNB or any MNB Subsidiary or any of
their respective Representatives has incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
Section 4.26 Delays. To the Knowledge of MNB, there is no reason
------
why the granting of any of the regulatory approvals referred to in Section 8.2
would be denied, unduly delayed or otherwise unavailable.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES BY LBI
LBI hereby represents and warrants to MNB that the following are true
and correct as of the date hereof, and will be true and correct as of the
Effective Time:
Section 5.1 LBI Organization. LBI: (a) is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the State of Kansas and
is also in good standing in each other jurisdiction in which the nature of the
business conducted or the properties or assets owned or leased by it makes such
qualification necessary; (b) is registered with the OTS as a unitary savings and
loan holding company pursuant to the Home Owners' Loan Act, as amended (the
"HOLA"); and (c) has full power and authority, corporate and otherwise, to
operate as a bank holding company and to own, operate and lease its properties
as presently owned, operated and leased, and to carry on its business as it is
now being conducted. Copies of the articles of incorporation and bylaws of LBI
and all amendments thereto set forth in Schedule 5.1 of the LBI Book of
Schedules are complete and correct. LBI owns no voting stock or equity
securities of any corporation, association, partnership or other entity, other
than all of the voting stock of LFSB and as set forth on Schedule 5.1 of the LBI
Book of Schedules.
Section 5.2 LBI Subsidiary Organization. LFSB is a federal savings bank
---------------------------
duly organized, validly existing and in good standing under the laws of the
United States of America.
29
LFSB has full power and authority, corporate and otherwise, to own, operate and
lease its properties as presently owned, operated and leased, and to carry on
its business as it is now being conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which the nature of the business
conducted or the properties or assets owned or leased by it makes such
qualification necessary. Copies of the charter and bylaws of LFSB and all
amendments thereto set forth in Schedule 5.2 of the LBI Book of Schedules are
complete and correct. LFSB owns no voting stock or equity securities of any
corporation, association, partnership or other entity, other than as shown on
Schedule 5.2 of the LBI Book of Schedules.
Section 5.3 Authorization. LBI has the requisite corporate power and
-------------
authority to enter into and perform its obligations under this Agreement and the
execution, delivery and performance of this Agreement by LBI and the
consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action, subject to stockholder approval.
This Agreement constitutes a legal, valid and binding obligation of LBI
enforceable in accordance with its terms except as such enforcement may be
limited by bankruptcy, insolvency, reorganization or other similar laws and
subject to general principles of equity.
Section 5.4 No Conflict. Neither the execution nor delivery of this
------------
Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time): (a) contravene, conflict with or result in a violation of any provision
of the articles of incorporation, the charter, the bylaws or any resolution
adopted by the board of directors or stockholders of, LBI or any LBI Subsidiary;
(b) contravene, conflict with or result in a violation of any Legal Requirement
or any Order to which LBI or any LBI Subsidiary, or any of the assets that are
owned or used by them, may be subject, other than any of the foregoing that
would be satisfied by compliance with the provisions of the HOLA, the Securities
Act, the Exchange Act and the Kansas Code; and (c) contravene, conflict with or
result in a violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify any material
Applicable Contract to which LBI or any LBI Subsidiary is a party or by which
any of their respective assets is bound; or (d) result in the creation of any
lien, charge or encumbrance upon, or with respect to, any of the assets owned or
used by LBI or any LBI Subsidiary. Except for the requisite approval of its
stockholders, neither LBI nor any LBI Subsidiary is or will be required to give
any notice to, or obtain any consent from, any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
Section 5.5 LBI Capitalization. The authorized capital stock of LBI
-------------------
consists, and at March 31, 2001, consisted of: (a) 10,000,000 shares of common
stock, $0.10 par value per share, of which 2,281,312 shares were issued, and of
which 1,188,874 shares were held in the treasury of LBI as of that date; and (b)
5,000,000 shares of preferred stock, no par value per share, none of which
shares were issued and outstanding. The maximum number of shares of LBI Common
Stock (assuming for this purpose that share equivalents constitute LBI Common
Stock) that would be outstanding immediately prior to the Effective Time
(including treasury shares) if all options, warrants, conversion rights and
other rights with respect thereto were exercised and the restrictions on any
restricted stock were no longer applicable is 1,298,259 shares. All of the
30
outstanding shares of capital stock of LBI have been duly and validly authorized
and issued and are fully paid and nonassessable. To the Knowledge of LBI and
except as disclosed in this Agreement or on the Schedules, none of the shares of
authorized capital stock of LBI are, nor on the Closing Date will they be,
subject to any claim of right except pursuant to this Agreement. Except as
contemplated in this Agreement or as set forth in Schedule 5.5 of the LBI Book
of Schedules, there are, as of the date of this Agreement, no outstanding
subscriptions, contracts, conversion privileges, options, warrants, calls or
other rights obligating LBI or any LBI Subsidiary to issue, sell or otherwise
dispose of, or to purchase, redeem or otherwise acquire, any shares of capital
stock of LBI or any LBI Subsidiary. There are no outstanding securities of LBI
that are convertible into, or exchangeable for, any shares of LBI's capital
stock, and except as provided in this Section or otherwise disclosed in this
Agreement, LBI is not a party to any Contract relating to the issuance, sale or
transfer of any equity securities or other securities of LBI. None of the shares
of LBI Common Stock were issued in violation of any federal or state securities
laws or any other Legal Requirement. LBI does not own or have any Contract to
acquire any equity securities or other securities of any Person or any direct or
indirect equity or ownership interest in any other business except for the
capital stock of LFSB and as set forth in Schedule 5.5 of the LBI Book of
Schedules. Except as disclosed in or permitted by this Agreement or as provided
on Schedule 5.5 of the LBI Book of Schedules, no shares of LBI capital stock
have been purchased, redeemed or otherwise acquired, directly or indirectly, by
LBI or any LBI Subsidiary and no dividends or other distributions payable in any
equity securities of LBI or any LBI Subsidiary have been declared, set aside,
made or paid to the stockholders of LBI.
Section 5.6 LBI Subsidiary Capitalization. The authorized capital stock
-----------------------------
of LFSB consists, and at the Effective Time will consist, exclusively of 130,975
shares of common stock, $25.00 par value per share, all of which shares are, and
immediately prior to the Closing will be, duly authorized, validly issued and
outstanding, fully paid and nonassessable (the "LFSB Bank Shares"). LBI is, and
will be on the Closing Date, the record and beneficial owner of one hundred
percent (100%) of LFSB Shares, free and clear of any lien or encumbrance
whatsoever, except as set forth in Schedule 5.6 of the LBI Book of Schedules.
The LFSB Bank Shares are, and will be on the Closing Date, freely transferable
and are, and will be on the Closing Date, subject to no claim of right except
pursuant to this Agreement and as set forth in Schedule 5.6 of the LBI Book of
Schedules. There are no options, warrants, rights, calls or commitments of any
character relating to any additional shares of the capital stock of LFSB. No
capital stock or other security issued by LFSB has been issued in violation of,
or without compliance with, any preemptive rights of stockholders. There are no
outstanding securities of LFSB that are convertible into, or exchangeable for,
any shares of LFSB's capital stock, and LFSB is not a party to any Contract
relating to the issuance, sale or transfer of any equity securities or other
securities of LFSB. The Bank does not own, or have any Contract to acquire, any
equity securities or other securities of any Person or any direct or indirect
equity or ownership interest in any other business, except as set forth in
Schedule 5.6 of the LBI Book of Schedules.
Section 5.7 Financial Statements and Reports. True, correct and
-----------------------------------
complete copies of the following financial statements of LBI are included in
Schedule 5.7 of the LBI Book of Schedules:
31
(a) Consolidated Balance Sheets and the related Statements of
Income, Statements of Changes in Stockholders' Equity and Statements of Cash
Flows of LBI for the years ended September 30, 1998, 1999 and 2000;
(b) Consolidated Balance Sheet and the related Statement of
Income of LBI for the six months ended March 31, 2001; and
(c) TFRs for LFSB at the close of business on December 31,
1998, 1999 and 2000.
The financial statements described in this Section (the "LBI Financial
Statements") are complete and correct in all material respects and fairly and
accurately present the respective financial position, assets, liabilities and
results of operations of LBI and the LBI Subsidiaries at the respective dates
of, and for the periods referred to in, the LBI Financial Statements. The
financial statements described in clause (a) above are audited statements and
have been prepared in conformity with GAAP. The financial statements described
in clauses (b) and (c) above have been prepared on a basis consistent with past
accounting practices and as required by applicable rules or regulations and
fairly present the consolidated financial condition and results of operations at
the dates and for the periods presented, subject to year-end audit adjustments
(which changes in the aggregate would not reasonably be expected to have a
Material Adverse Effect on LBI on a consolidated basis). The LBI Financial
Statements do not include any material assets or omit to state any material
liabilities, absolute or contingent, or other facts, which inclusion or omission
would render the LBI Financial Statements misleading in any material respect.
Section 5.8 Books and Records. The books of account, minute books,
------------------
stock record books and other records of LBI and each LBI Subsidiary are complete
and correct in all material respects and have been maintained in accordance with
sound business practices and all applicable Legal Requirements, including the
maintenance of any adequate system of internal controls. The minute books of LBI
and each LBI Subsidiary contain accurate and complete records in all material
respects of all meetings held of, and corporate action taken by, its respective
stockholders, board of directors and committees of the board of directors. At
the Closing, all of those books and records will be in the possession of LBI and
the LBI Subsidiaries.
Section 5.9 Title to Properties. LBI and each LBI Subsidiary has good
--------------------
and marketable title to all assets and properties, whether real or personal,
tangible or intangible, that it purports to own, subject to no valid liens,
mortgages, security interests, encumbrances or charges of any kind except: (a)
as noted in the most recent LBI Financial Statement or in Schedule 5.9 of the
LBI Book of Schedules; (b) statutory liens for Taxes not yet delinquent or being
contested in good faith by appropriate Proceedings and for which appropriate
reserves have been established and reflected on the LBI Financial Statements;
(c) pledges or liens required to be granted in connection with the acceptance of
government deposits, granted in connection with repurchase or reverse repurchase
agreements or otherwise incurred in the Ordinary Course of Business; and (d)
minor defects and irregularities in title and encumbrances that do not
materially impair the use thereof for the purposes for which they are held.
Except as set forth in Schedule 5.9 of the LBI Book of Schedules, LBI and each
LBI Subsidiary as lessee has the right under valid and existing leases to
occupy, use, possess and control any and all of the respective property leased
by it.
32
Except where any failure would not reasonably be expected to have a Material
Adverse Effect on LBI on a consolidated basis, all buildings and structures
owned by LBI and each LBI Subsidiary lie wholly within the boundaries of the
real property owned or validly leased by it, do not encroach upon the property
of, or otherwise conflict with the property rights of, any other Person
Section 5.10 Condition and Sufficiency of Assets. Except as set forth
------------------------------------
in Schedule 5.10 of the LBI Book of Schedules, the buildings, structures and
equipment of LBI and each LBI Subsidiary are in good operating condition and
repair, and are adequate for the uses to which they are being put, and none of
such buildings, structures or equipment is in need of maintenance or repairs
except for ordinary, routine maintenance and repairs that are not material in
the aggregate in nature or in cost. Except where any failure would not
reasonably be expected to have a Material Adverse Effect on LBI on a
consolidated basis, the real property, buildings, structures and equipment owned
or leased by LBI and each LBI Subsidiary are in compliance with the Americans
with Disabilities Act of 1990, as amended, and the regulations promulgated
thereunder, and all other building and development codes and other restrictions,
including subdivision regulations, building and construction regulations,
drainage codes, health, fire and safety laws and regulations, utility tariffs
and regulations, conservation laws and zoning laws and ordinances. The assets
and properties, whether real or personal, tangible or intangible, that LBI or
any LBI Subsidiary purport to own are sufficient for the continued conduct of
the business of LBI and such LBI Subsidiary after the Closing in substantially
the same manner as conducted prior to the Closing.
Section 5.11 Loan Loss Reserve. All loans and loan commitments extended
-----------------
by LFSB and any extensions, renewals or continuations of such loans and loan
commitments (the "LBI Loans") were made in accordance with customary lending
standards of the LFSB in the Ordinary Course of Business. The LBI Loans are
evidenced by appropriate and sufficient documentation and constitute valid and
binding obligations to LFSB enforceable in accordance with their terms, except
as may be limited by any bankruptcy, insolvency, moratorium or other laws
affecting creditors' rights generally by the exercise of judicial discretion.
All such LBI Loans are, and at the Closing will be, free and clear of any
encumbrance or other charge, except for permitted liens, and LFSB has materially
complied, and at the Closing will have materially complied with, all Legal
Requirements relating to the LBI Loans. The reserve for probable loan and lease
losses of LFSB is, and will be on the Closing Date, adequate in all material
respects to provide for probable or specific losses, net of recoveries relating
to loans previously charged off. None of the LBI Loans is subject to any
material offset or claim of offset, and the aggregate loan balances in excess of
LBI's consolidated reserve for loan and lease losses are to LBI's Knowledge,
based on past loan loss experience, collectible in accordance with their terms
(except as limited above) and all uncollectible loans have been charged off.
Section 5.12 Undisclosed Liabilities; Adverse Changes. Except as set
------------------------------------------
forth in Schedule 5.12 of the LBI Book of Schedules, neither LBI nor any LBI
Subsidiary has any material liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent or otherwise), except
for liabilities or obligations reflected or reserved against in the LBI
Financial Statements, liabilities and obligations arising under contracts and
arrangements which are either set forth in Schedule 5.18 of the LBI Book of
Schedules, or are of a type described in Section 5.18, but not included in
Schedule 5.18 of the LBI Book of
33
Schedules because the amounts involved do not meet the amounts specified for
inclusion in Schedule 5.18 of the LBI Book of Schedules, current liabilities
incurred in the Ordinary Course of Business since the respective dates thereof
and other liabilities or obligations that in the aggregate would not reasonably
be expected to have a Material Adverse Effect on LBI on a consolidated basis.
Since the date of the latest LBI Financial Statement, there has not been any
change in the business, operations, properties, prospects, assets or condition
of LBI or any LBI Subsidiary, and no event has occurred or circumstance exists,
that has had, or would reasonably be expected to have, a Material Adverse Effect
on LBI on a consolidated basis.
Section 5.13 Taxes. LBI and each LBI Subsidiary has duly filed or will
-----
duly file all material Tax Returns required to be filed by it for all periods
prior to the Closing, and each such Tax Return is or will be complete and
accurate in all material respects. Except as set forth on Schedule 5.13 of the
LBI Book of Schedules, neither LBI nor any LBI Subsidiary is: (a) delinquent in
the payment of any Taxes shown on such Tax Returns or on any assessments
received by it for such Taxes; (b) a party to or is the subject of any pending
Order, Proceeding, audit, examination or investigation by any Regulatory
Authority that is related to assessment or collection of Taxes paid or payable
by LBI or any LBI Subsidiary for any year, nor does LBI have any Knowledge of
any of the foregoing that are Threatened; or (c) subject to any agreement
extending the period for assessment or collection of any Tax. None of the Tax
liabilities of LBI or any LBI Subsidiary has ever been audited by any Regulatory
Authority since January 1, 1994. The reserve for Taxes in the audited financial
statements of LBI for the year ended September 30, 2000, is adequate to cover
all of the Tax liabilities of LBI and each LBI Subsidiary that may become
payable in future years in respect to any transactions consummated prior to
September 30, 2000. Neither LBI nor any LBI Subsidiary has and, to the LBI's
Knowledge, will not have any liability for Taxes of any nature for or in respect
of the operation of its respective businesses or ownership of its respective
assets from September 30, 2000, up to and including the Effective Time, except
to the extent reflected on the audited LBI Financial Statements for the year
ended September 30, 2000, or on the Subsequent LBI Financial Statements or
otherwise reflected in the books and records of LBI and the LBI Subsidiaries for
the period following its then most recent of the Subsequent LBI Financial
Statements. LBI has delivered to MNB true, correct and complete copies of all
income Tax Returns previously filed with respect to the last three fiscal years
of LBI and the LBI Subsidiaries and any tax examination reports and statements
of deficiencies assessed or agreed to for any of LBI or any LBI Subsidiary for
any such time period.
Section 5.14 Compliance With ERISA. Except as set forth in Schedule
----------------------
5.14 of the LBI Book of Schedules, all employee benefit plans (as defined in
Section 3(3) of ERISA) established or maintained by LBI or any LBI Subsidiary or
to which LBI or any LBI Subsidiary contributes, are in compliance in all
material respects with all applicable requirements of ERISA, and are in
compliance in all material respects with all applicable requirements (including
qualification and non-discrimination requirements in effect as of the Effective
Time) of the Code for obtaining the tax benefits the Code thereupon permits with
respect to such employee benefit plans. For purposes of this Section,
non-compliance with the Code and ERISA is material if such non-compliance would
reasonably be expected to have a Material Adverse Effect on LBI. No such
employee benefit plan has, or as of the Closing will have, any amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA) for
which LBI or any LBI Subsidiary
34
would be liable to any Person under Title IV of ERISA if any such employee
benefit plan were terminated as of the Closing, which amounts would be material
to LBI and the LBI Subsidiaries taken as a whole. Each employee benefit plan as
defined in Section 4001(c)(3) of the Code satisfies the minimum funding
standards of Section 412 of the Code (if applicable). There would be no
obligations of LBI or any LBI Subsidiary under Title IV of ERISA relating to any
employee benefit plan that is a multi-employer plan if any such plan were
terminated or if LBI or any LBI Subsidiary withdrew from any such plan as of the
Closing. No payments will be made as a result of the Merger that will be subject
to nondeductibility under Section 280G of the Code or subject to an excise tax
under Section 4999 of the Code.
Section 5.15 Compliance With Legal Requirements. LBI and each LBI
-------------------------------------------
Subsidiary holds all licenses, certificates, permits, franchises and rights from
all appropriate Regulatory Authorities necessary for the conduct of its
respective business and where failure to do so would reasonably be expected to
have a Material Adverse Effect on LBI. Except as set forth in Schedule 5.15 of
the LBI Book of Schedules, LBI and each LBI Subsidiary is, and at all times
since January 1, 1998, has been, in compliance with each Legal Requirement that
is or was applicable to it or to the conduct or operation of its respective
businesses or the ownership or use of any of its respective assets, except in
each case where any non-compliance did not have, or would not reasonably be
expected to have, a Material Adverse Effect on LBI on a consolidated basis. No
event has occurred or circumstance exists that (with or without notice or lapse
of time): (a) may constitute or result in a violation by LBI or any LBI
Subsidiary of, or a failure on the part of LBI or any LBI Subsidiary to comply
with, any Legal Requirement; or (b) may give rise to any obligation on the part
of LBI or any LBI Subsidiary to undertake, or to bear all or any portion of the
cost of, any remedial action of any nature in connection with a failure to
comply with any Legal Requirement, except for any of the foregoing that would
not reasonably be expected to have a Material Adverse Effect on LBI on a
consolidated basis. Except as set forth in Schedule 5.15 of the LBI Book of
Schedules, neither LBI nor any LBI Subsidiary has received, at any time since
January 1, 1998, any notice or other communication (whether oral or written)
from any Regulatory Authority or any other Person, nor does LBI have any
Knowledge, regarding any actual, alleged, possible or potential: (x) violation
of, or failure to comply with, any material Legal Requirement to which LBI or
any LBI Subsidiary, or any of the assets owned or used by any of them, is or has
been subject, or investigation with respect to any of the foregoing conducted by
any Regulatory Authority; or (y) obligation on the part of LBI or any LBI
Subsidiary to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature in connection with a failure to comply with any
material Legal Requirement.
Section 5.16 Legal Proceedings; Orders. Schedule 5.16 of the LBI Book
--------------------------
of Schedules is a true and correct list of all Proceedings and Orders pending,
entered into or, to the Knowledge of LBI, Threatened against, affecting or
involving LBI or any LBI Subsidiary or any of their respective assets or
businesses, or the Contemplated Transactions, since January 1, 1998, that had,
or would reasonably be expected to have, a Material Adverse Effect on LBI on a
consolidated basis or that would impair LBI's ability to consummate any of the
Contemplated Transactions, and there is no fact to LBI's Knowledge that would
provide a basis for any other Proceeding or Order involving LBI or any LBI
Subsidiary, or any of its respective officers or directors in their capacities
as such, or its assets, business or goodwill that would reasonably be
35
expected to have a Material Adverse Effect on LBI or that would impair LBI's
ability to consummate any of the Contemplated Transactions. To the Knowledge of
LBI, no officer, director, agent or employee of LBI or any LBI Subsidiary is
subject to any Order that prohibits such officer, director, agent or employee
from engaging in or continuing any conduct, activity or practice relating to the
businesses of LBI or any LBI Subsidiary.
Section 5.17 Absence of Certain Changes and Events. Except as set forth
-------------------------------------
in Schedule 5.17 of the LBI Book of Schedules, since September 30, 2000, LBI and
each LBI Subsidiary has conducted its respective business only in the Ordinary
Course of Business and with respect to each there has not been any:
(a) change in its authorized or issued capital stock; grant
of any stock option or right to purchase shares of its capital stock; issuance
of any security convertible into such capital stock or evidences of indebtedness
(except in connection with customer deposits); grant of any registration rights;
purchase, redemption, retirement or other acquisition by it of any shares of any
such capital stock; or declaration or payment of any dividend or other
distribution or payment in respect of shares of its capital stock (except for
payment of dividends and distributions from any wholly-owned LBI Subsidiary to
LBI and pursuant to Section 7.4);
(b) amendment to its articles of incorporation, charter or
bylaws or any resolutions adopted by its board of directors or stockholders with
respect to the same;
(c) payment or increase of any bonuses, salaries or other
compensation to any of its stockholders, directors, officers or employees,
except for normal increases in the Ordinary Course of Business or in accordance
with any then existing LBI Employee Benefit Plan, or entry by it into any
employment, consulting, non-competition, change in control, severance or similar
Contract with any stockholder, director, officer or employee;
(d) adoption, amendment (except for any amendment necessary
to comply with any Legal Requirement) or termination of, or increase in the
payments to or benefits under, any LBI Employee Benefit Plan (as defined below);
(e) material damage to or destruction or loss of any of its
assets or property, whether or not covered by insurance;
(f) entry into, termination or extension of, or receipt of
notice of termination of, any joint venture or similar agreement pursuant to any
Contract or any similar transaction;
(g) except for this Agreement, entry into any Contract or
incurrence of any obligation or liability (fixed or contingent) other than in
the Ordinary Course of Business;
(h) material change in any existing lease of real or personal
property to which it is a party;
(i) sale (other than any sale in the Ordinary Course of
Business), lease or other disposition of any of its assets or properties or
mortgage, pledge or imposition of any lien or other encumbrance upon any of its
material assets or properties, except for tax and other liens that arise
36
by operation of law and with respect to which payment is not past due and except
for pledges or liens: (i) required to be granted in connection with the
acceptance by LFSB of government deposits; (ii) granted in connection with
repurchase or reverse repurchase agreements; or (iii) otherwise incurred in the
Ordinary Course of Business;
(j) incurrence by it of any obligation or liability (fixed or
contingent) other than in the Ordinary Course of Business;
(k) other than in the Ordinary Course of Business,
cancellation or waiver by it of any debts, claims or rights with a value in
excess of $15,000;
(l) any investment by it of a capital nature exceeding
$50,000 or aggregate investments of a capital nature exceeding $100,000;
(m) except for the Contemplated Transactions, merger or
consolidation with or into any other Person, or acquisition of any stock, equity
interest or business of any other Person;
(n) transaction for the borrowing or loaning of monies, other
than in the Ordinary Course of Business;
(o) suffered any change or changes having a Material Adverse
Effect on it, or in the operation or conduct of its respective business;
(p) conducted its respective business in any manner other
than substantially as it was being conducted prior to such time;
(q) purchased any investment security that is callable prior
to its stated maturity, that has a stated maturity of thirty (30) months or more
or has a purchase price of greater than $250,000;
(r) obtained any variable rate advances with maturities of
greater than one (1) year from the Federal Home Loan Bank;
(s) agreement material change in its accounting methods used;
or
(t) agreement, whether oral or written, by it to do any of
the foregoing.
Section 5.18 Properties, Contracts, Employee Benefit Plans and Other
---------------------------------------------------------
Agreements. Except for loan agreements evidencing loans or loan commitments made
----------
by LFSB in the Ordinary Course of Business, Schedule 5.18 of the LBI Book of
Schedules lists or describes the following with respect to LBI and each LBI
Subsidiary:
(a) all real property owned by LBI and each LBI Subsidiary
and the principal buildings and structures located thereon, together with a
legal description of such real estate, and each lease of real property to which
LBI and each LBI Subsidiary is a party, identifying the parties thereto, the
annual rental payable, the expiration date thereof and a brief description of
the property covered, and in each case of either owned or leased real property,
the proper
37
identification, if applicable, of each such property as a branch or main office
or other office of LBI or any LBI Subsidiary;
(b) All loan and credit agreements, conditional sales
contracts or other title retention agreements or security agreements relating to
money borrowed by LBI or any LBI Subsidiary, exclusive of deposit agreements
with customers of LFSB entered into in the Ordinary Course of Business,
agreements for the purchase of federal funds and repurchase agreements;
(c) each Applicable Contract that involves performance of
services or delivery of goods or materials by LBI or any LBI Subsidiary of an
amount or value in excess of $25,000;
(d) each Applicable Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of LBI or
any LBI Subsidiary in excess of $25,000;
(e) each Applicable Contract not referred to elsewhere in
this Section which:
(i) relates to the future purchase of goods
or services in excess of the requirements of its respective business at
current levels or for normal operating purposes;
(ii) materially affect the business or financial
condition of LBI or any LBI Subsidiary;
(f) each lease, rental, license, installment and conditional
sale agreement and other Applicable Contract affecting the ownership of, leasing
of, title to or use of any personal property having a value per item or
requiring payments in excess of $25,000, or with terms of more than one year;
(g) each licensing agreement or other Applicable Contract
with respect to Intellectual Property Assets, including agreements with current
or former employees, consultants or contractors regarding the appropriation or
the non-disclosure of any of the Intellectual Property Assets of LBI or any LBI
Subsidiary;
(h) each collective bargaining agreement and other Applicable
Contract to or with any labor union or other employee representative of a group
of employees;
(i) each joint venture, partnership and other Applicable
Contract (however named) involving a sharing of profits, losses, costs or
liabilities by LBI or any LBI Subsidiary with any other Person;
(j) each Applicable Contract containing covenants that in any
way purport to restrict the business activity of LBI or any LBI Subsidiary or
any Affiliate of any of the foregoing, or limit the ability of LBI or any LBI
Subsidiary or any Affiliate of any of the foregoing to engage in any line of
business or to compete with any Person;
(k) each Applicable Contract providing for payments to or by
any Person based on sales, purchases or profits, other than direct payments for
goods;
38
(l) the name and annual salary of each director and officer
of LBI and each LBI Subsidiary, and the profit sharing, bonus or other form of
compensation (other than salary) paid or payable by LBI, each LBI Subsidiary or
a combination of any of them to or for the benefit of each such person in
question for the years ended September 30, 1999 and 2000, and for the current
fiscal year of LBI, and any employment agreement, consulting agreement,
non-competition, severance or change in control agreement or other similar
arrangement or plan with respect to each such person;
(m) each profit sharing, group insurance, hospitalization,
stock option, pension, retirement, bonus, employment, severance, change in
control, deferred compensation, stock bonus, stock purchase or other employee
welfare or benefit agreements, plans or arrangements established, maintained,
sponsored or undertaken by LBI or any LBI Subsidiary for the benefit of the
officers, directors or employees of LBI or any LBI Subsidiary, including each
trust or other agreement with any custodian or any trustee for funds held under
any such agreement, plan or arrangement, and all other Contracts or arrangements
under which pensions, deferred compensation or other retirement benefits are
being paid or may become payable by LBI or any LBI Subsidiary for the benefit of
the employees of LBI or any LBI Subsidiary (collectively, the "LBI Employee
Benefit Plans"), and, in respect to any of them, the latest three (3) reports or
forms, if any, filed with the Department of Labor and Pension Benefit Guaranty
Corporation under the ERISA, the latest three (3) financial or actuarial reports
and any currently effective Internal Revenue Service private rulings or
determination letters obtained by or for the benefit of LBI or any LBI
Subsidiary;
(n) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express undertaking
by LBI or any LBI Subsidiary to be responsible for consequential damages;
(o) each Applicable Contract for capital expenditures in
excess of $50,000, or all Applicable Contracts for all capital expenditures
which in the aggregate require payments in excess of $100,000; and
(p) the name of each Person who is or would be entitled
pursuant to any Contract or LBI Employee Benefit Plan to receive any payment
from LBI or any LBI Subsidiary as a result of the consummation of the
Contemplated Transactions (including any payment that is or would be due as a
result of any actual or constructive termination of a Person's employment or
position following such consummation) and the maximum amount of such payment;
(q) each amendment, supplement and modification (whether oral
or written) in respect of any of the foregoing.
Copies of each document, plan or Contract listed and described in
Schedule 5.18 of the LBI Book of Schedules are appended to such Schedule.
Section 5.19 No Defaults. Except as set forth in Schedule 5.19 of the
-----------
LBI Book of Schedules, each Contract identified or required to be identified in
Schedule 5.18 of the LBI Book of Schedules is in full force and effect in all
material respects and is valid and enforceable in
39
accordance with its terms, except as may be limited by any bankruptcy,
insolvency, moratorium or by the exercise of judicial discretion. LBI and each
LBI Subsidiary is, and at all times since January 1, 1998, has been, in full
compliance with all applicable terms and requirements of each Contract under
which LBI or any LBI Subsidiary has or had any obligation or liability or by
which LBI or any LBI Subsidiary or any of their respective assets owned or used
by them is or was bound, except where any such failure to be in full compliance
did not have or would reasonably be expected not to have a Material Adverse
Effect on LBI on a consolidated basis. Each other Person that has or had any
obligation or liability under any such Contract under which LBI or any LBI
Subsidiary has or had any rights is, and at all times since January 1, 1998, has
been, to the Knowledge of LBI, in compliance with applicable terms and
requirements of such Contract in all material respects. No event has occurred or
circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with or result in a violation or breach of, or give LBI,
any LBI Subsidiary or other Person the right to declare a default or exercise
any remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any material Applicable Contract. Except in the Ordinary
Course of Business with respect to loans made by LFSB, neither LBI nor any LBI
Subsidiary has given to or received from any other Person, at any time since
January 1, 1998, any notice or other communication (whether oral or written)
regarding any actual, alleged, possible or potential material violation or
breach of, or default under, any Contract. Other than in the Ordinary Course of
Business in connection with workouts and restructured loans, there are no
renegotiations of, attempts to renegotiate or outstanding rights to renegotiate
any material amounts paid or payable to LBI or any LBI Subsidiary under current
or completed Contracts with any Person, and no such Person has made written
demand for such renegotiation.
Section 5.20 Insurance. Schedule 5.20 of the LBI Book of Schedules
---------
lists the policies of insurance (including bankers blanket bond and insurance
providing benefits for employees) owned or held by LBI or any LBI Subsidiary on
the date hereof. Each policy is in full force and effect (except for any
expiring policy that is replaced by coverage at least as extensive) until the
Closing. All premiums due on such policies have been paid in full.
Section 5.21 Compliance with Environmental Laws. Except as set forth in
----------------------------------
Schedule 5.21 of the LBI Book of Schedules and except for any of the following
that did not have or would not reasonably be expected to have a Material Adverse
Effect on LBI and the LBI Subsidiaries on a consolidated basis, there are no
actions, suits, investigations, liabilities, inquiries, Proceedings or Orders
involving LBI or any LBI Subsidiary or any of their respective assets that are
pending or, to the Knowledge of LBI, Threatened, nor to the Knowledge of LBI is
there any factual basis for any of the foregoing, as a result of any asserted
failure of LBI or any LBI Subsidiary, or any predecessor thereof, to comply with
any Environmental Laws. No environmental clearances or other governmental
approvals are required for the conduct of the business of LBI or any LBI
Subsidiary or the consummation of the Contemplated Transactions. To the
Knowledge of LBI, neither LBI nor any LBI Subsidiary is the owner of any
interest in real estate on which any substances have been used, stored,
deposited, treated, recycled or disposed of, which substances if known to be
present on, at or under such property, would require clean-up, removal or some
other remedial action under any Environmental Law.
40
Section 5.22 Regulatory Filings. LBI and each LBI Subsidiary has filed
------------------
in a timely manner all required filings with all proper Regulatory Authorities,
including: (a) the SEC; (b) the OTS; and (c) the FDIC. To the Knowledge of LBI,
all filings with such federal and state regulatory agencies were accurate and
complete in all material respects as of the dates of the filings, and no such
filing has made any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. Accurate and
complete copies of each document filed by LBI with the SEC since October 1,
2000, are attached as Schedule 5.22 of the LBI Book of Schedules.
Section 5.23 Agency and Custodial Accounts. Each LBI Subsidiary has
------------------------------
properly administered all accounts for which it acts as fiduciary, agent,
custodian or investment advisor, in accordance with the terms of the governing
documents and applicable Legal Requirements and common law. No LBI Subsidiary or
any of its respective directors, officers or employees has committed any breach
of trust with respect to any such account, and the accountings for each such
account are true and correct in all material respects and accurately reflect the
assets of such account.
Section 5.24 Disclosure. No representation or warranty made in this
----------
Agreement by LBI contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements contained herein under
the circumstances under which they were made not misleading. Except as and to
the extent reflected or reserved against in LBI's audited financial statements
for the year ended September 30, 2000, or the Subsequent LBI Financial
Statements (as such term is defined below), neither LBI nor any LBI Subsidiary
has, and with respect to the Subsequent LBI Financial Statements will not have,
any liabilities or obligations, of any nature, secured or unsecured, (whether
accrued, absolute, contingent or otherwise) including, any Tax liabilities due
or to become due, which would reasonably be expected to have a Material Adverse
Effect on LBI.
Section 5.25 Brokerage Commissions. Except as set forth in Schedule
----------------------
5.25 of the LBI Book of Schedules, none of LBI or any LBI Subsidiary or any of
their respective Representatives has incurred any obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
Section 5.26 Delays. To the Knowledge of LBI, there is no reason
------
why the granting of any of the regulatory approvals referred to in Section 8.2
would be denied, unduly delayed or otherwise unavailable.
ARTICLE 6
COVENANTS OF MNB
From and after the date hereof and until the Effective Time, MNB hereby
covenants and agrees with LBI as follows:
Section 6.1 Information, Access and Confidentiality.
---------------------------------------
41
(a) Upon providing reasonable notice, LBI and its
Representatives shall, at all times during normal business hours prior to the
Closing Date, have full and continuing access to the facilities, operations,
records and properties of MNB and each MNB Subsidiary. LBI and its
Representatives may, prior to the Closing Date, make or cause to be made such
reasonable investigation of the operations, records and properties of MNB and
each MNB Subsidiary, including observation of any audit of, and examination of
any audit work papers with respect to, MNB or any MNB Subsidiary, and of its and
their financial and legal condition as LBI shall deem necessary or advisable to
familiarize itself with such records, properties and other matters; provided,
that such access or investigation shall not interfere unnecessarily with the
normal operations of MNB or any of the MNB Subsidiary. Upon request, MNB and
each MNB Subsidiary will furnish LBI or its Representatives its attorneys'
responses to auditors' requests for information and such financial and operating
data and other information reasonably requested by LBI developed by MNB or any
MNB Subsidiary, its auditors, accountants or attorneys (provided with respect to
attorneys, such disclosure shall be limited to information that would not result
in the waiver by MNB or any MNB Subsidiary of any claim of attorney-client
privilege), and will permit LBI or its Representatives to discuss such
information directly with any individual or firm performing auditing or
accounting functions for MNB or any MNB Subsidiary, and such auditors and
accountants shall be directed to furnish copies of any reports or financial
information as developed to LBI or its Representatives. No investigation by LBI
shall affect the representations and warranties made by MNB. This Section shall
not require the disclosure of any information the disclosure of which to LBI
would be prohibited by law.
(b) Any confidential information or trade secrets received by
MNB, its employees or agents in the course of the examination described in
Section 7.1 shall be treated confidentially, and any correspondence, memoranda,
records, copies, documents and electronic or other media of any kind containing
either such confidential information, or trade secrets or both shall be
destroyed by MNB or, at LBI's request, returned to LBI in the event this
Agreement is terminated as provided in Section 11.1. Such information shall not
be used by MNB or its agents to the detriment of LBI or any LBI Subsidiary.
Section 6.2 Carry on in Regular Course. MNB and each MNB Subsidiary
---------------------------
shall carry on its business diligently and substantially in the same manner as
is presently being conducted and shall not make or institute any unusual or
material change in its methods of doing business without the prior written
consent of LBI, which consent shall not be unreasonably withheld or delayed. MNB
shall, and shall also cause each MNB Subsidiary to, unless otherwise consented
to in writing in advance by LBI:
(a) conduct its business only in the Ordinary Course of
Business;
(b) use its Best Efforts to preserve intact its current
business organization, keep available the services of its current officers,
employees and agents, and maintain the relations and goodwill with its
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with it;
42
(c) confer and consult with LBI concerning operational
matters of a material nature, any sales of investment securities or loans that
were not originated with the intent to sell, and any changes or revisions to the
asset-liability management of SNB;
(d) enter into loan transactions only in accordance with
sound credit practices and only on terms and conditions which are not materially
more favorable than those available to the borrower from competitive sources in
transactions in the ordinary course of business and consistent with prudent
banking practices and policies and regulations of applicable regulatory
authorities, and in that connection, MNB will consult and discuss with LBI all
new credits or new lending relationships, or extensions or renewals of any
existing credit relationships, approved in excess of $1,000,000 to any Person or
Persons and his, her or their Affiliates from the date hereof to the Effective
Time;
(e) consistent with past practice, maintain a reserve for
probable loan and lease losses that is adequate in all material respects to
provide for probable losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest receivable);
(f) maintain all of its assets necessary for the conduct of
its business in good operating condition and repair, reasonable wear and tear
and damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(g) file in a timely manner all required filings with all
Regulatory Authorities and cause such filings to be true and correct in all
material respects; and
(h) maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior years and comply
with all Legal Requirements.
With respect to any written request by MNB for LBI's consent to any
non-permitted action of MNB or any MNB Subsidiary described in this Section, MNB
shall be entitled to conclusively presume LBI has consented to any such action
unless MNB shall have received LBI's written objection to such action within
three (3) Business Days of the date of LBI's receipt of such written request.
Section 6.3 Negative Covenants. Except as otherwise provided by this
-------------------
Agreement, between the date of this Agreement and the Closing Date, MNB will
not, and will cause each MNB Subsidiary not to, without the prior written
consent of LBI, which consent shall not be unreasonably withheld or delayed,
take any affirmative action, or fail to take any reasonable action within its
control, as a result of which any of the changes or events listed in Section
4.17 is likely to occur. With respect to any written request by MNB for LBI's
consent to any non-permitted action of MNB or any MNB Subsidiary described in
this Section, MNB shall be entitled to conclusively presume LBI has consented to
any such action unless MNB shall have received LBI's written objection to such
action within three (3) Business Days of the date of LBI's receipt of such
written request.
43
Section 6.4 Dividends. Notwithstanding anything contained herein to the
---------
contrary, between the date of this Agreement and the Effective Time, MNB may
continue to declare and pay to its stockholders, on dates consistent with its
past practices, its normal quarterly cash dividend not to exceed $0.0625 per
share of MNB Common Stock, and shall declare, pay or make no other dividend or
other distribution or payment in respect of, or redemption of, shares of MNB
Common Stock, provided, however, that MNB shall not declare the record date for
any dividend, or pay or make any such dividend or other distribution or payment,
in the quarter in which the Effective Time shall occur. It is the intent of this
Section to provide that the holders of MNB Common Stock will receive either
payment of dividends on their shares of MNB Common Stock as permitted under this
Section or the payment of cash dividends as the holders of the MNB Exchange
Shares for the calendar quarter during which the Effective Time shall occur, but
will not receive and will not become entitled to receive for the same calendar
quarter both the payment of a permitted dividend as stockholders of MNB and the
payment of a cash dividend as the holders of the MNB Exchange Shares. If MNB
does not declare and pay permitted dividends on its MNB Common Stock in a
particular calendar quarter because of MNB's reasonable expectation that the
Effective Time would occur in such quarter wherein the holders of MNB Common
Stock would have become entitled to receive cash dividends for such calendar
quarter on the MNB Exchange Shares, and the Effective Time does not in fact
occur in said calendar quarter, then, as a result thereof, MNB shall be entitled
to declare and pay a permitted dividend on said shares of MNB Common Stock for
said calendar quarter as soon as reasonably practicable.
Section 6.5 Subsequent MNB Financial Statements. As soon as available
------------------------------------
after the date hereof, MNB will furnish LBI copies of: (a) each filing made
subsequent to April 1, 2001, by MNB with the SEC; (b) the monthly unaudited
balance sheets and profit and loss statements of MNB on a consolidated basis,
and SNB on a stand-alone basis, prepared in each case for MNB's internal use,
(c) the Call Report of SNB for each quarterly period completed after the date of
this Agreement and prior to the Effective Time; and (d) all other financial
reports or statements submitted by MNB or any MNB Subsidiary to Regulatory
Authorities after the date hereof, to the extent permitted by law (collectively,
the "Subsequent MNB Financial Statements"). The Subsequent MNB Financial
Statements shall be prepared on a basis consistent with past accounting
practices and shall fairly present in all material respects the financial
condition and results of operations for the dates and periods presented, subject
in the case of unaudited financial statements to year-end audit adjustments
(which changes in the aggregate would not reasonably be expected to be
materially adverse). The Subsequent MNB Financial Statements will not include
any material assets or omit to state any material liabilities, absolute or
contingent, or other facts, which inclusion or omission would render such
financial statements misleading in any material respect.
Section 6.6 Advice of Changes. Between the date of this Agreement and
-----------------
the Closing Date, MNB will promptly notify LBI in writing if MNB or any MNB
Subsidiary becomes aware of any fact or condition that causes or constitutes a
Breach of any of MNB's representations and warranties as of the date of this
Agreement, or if MNB or any MNB Subsidiary becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made as
of the time of
44
occurrence or discovery of such fact or condition. If any such fact or condition
would require any change in the Schedules if such Schedules were dated the date
of the occurrence or discovery of any such fact or condition, MNB will promptly
deliver to LBI a supplement to the Schedules specifying such change, provided,
however, that receipt of notice of such facts after the date of this Agreement
shall have no effect on the truth and accuracy of the representations and
warranties made in this Agreement and the delivery of any such updated Schedule
shall not in itself be sufficient to cure any prior Breach. During the same
period, MNB will promptly notify LBI of the occurrence of any Breach of any
covenant of MNB in this Article or of the occurrence of any event that might
reasonably be expected to make the satisfaction of the conditions in Article 10
impossible or unlikely. MNB shall also provide to LBI copies of each written
communication sent to its stockholders between the date of this Agreement and
the Closing Date.
Section 6.7 Stockholders' Meeting. MNB shall cause a meeting of its
----------------------
stockholders for the purpose of acting upon this Agreement to be held at the
earliest practicable date after the Registration Statement (as defined below)
has been declared effective by the SEC. MNB shall send to its stockholders at
least thirty (30) days prior to such meeting, notice of such meeting together
with the Proxy Statement-Prospectus (as defined below) which shall include a
copy of this Agreement and a copy of Section 262 of the Delaware Code governing
the rights of dissenting stockholders. Subject to its fiduciary duties, MNB and
its board of directors shall recommend to stockholders the approval of this
Agreement and shall solicit proxies voting only in favor thereof from the
stockholders of MNB.
Section 6.8 Information Provided to LBI. MNB agrees that none of the
----------------------------
information concerning MNB or any MNB Subsidiary that is provided or to be
provided by MNB to LBI for inclusion or that is included in the Registration
Statement or Proxy Statement-Prospectus and any other documents to be filed with
any Regulatory Authority in connection with the Contemplated Transactions 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 mailed, 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 meeting of MNB's stockholders referred to above, 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 meeting in connection with which the Proxy
Statement-Prospectus shall be mailed. Notwithstanding the foregoing, MNB shall
have no responsibility for the truth or accuracy of any information with respect
to LBI or any LBI Subsidiary or any of their Affiliates contained in the
Registration Statement or the Proxy Statement-Prospectus or in any document
submitted to, or other communication with, any Regulatory Authority.
Section 6.9 Environmental Matters. LBI may in its discretion, prior to
---------------------
the Closing, retain at its own expense an independent professional consultant to
perform an environmental site assessment and render to LBI a report (an
"Environmental Report") to determine if any real property in which MNB holds any
interest contains or gives evidence that any violations of Environmental Laws
have occurred on any such property. Neither LBI nor its independent professional
consultant shall enter upon any such real property in which MNB or any MNB
45
Subsidiary holds only a mortgagee's interest without the prior permission of MNB
and the Person in possession thereof. MNB shall not withhold such permission
unreasonably, and shall use all reasonable efforts to obtain such permission for
LBI from the Person in possession of any such mortgaged real property for which
LBI desires its independent professional consultant to conduct a site
assessment. LBI shall have no duty to act upon any information produced by such
reviews or investigations with or for the benefit of MNB, any MNB Subsidiary or
any other Person, but shall provide such information to MNB as soon as
practicable after such information becomes available to LBI.
Section 6.10 Exclusivity. Subject to its fiduciary duties and except as
-----------
otherwise set forth herein, none of MNB, any MNB Subsidiary or any of their
respective directors, officers, employees, professional and financial advisors,
representatives, agents and Affiliates shall, directly or indirectly, make,
encourage, facilitate, solicit, initiate or assist any inquiries, proposals,
offers or expressions of interest from, or provide any nonpublic information or
access to MNB's or any MNB Subsidiary's premises to, or participate in any
discussions or negotiations with, any Person (other than LBI and Newco and their
directors, officers, employees, professional and financial advisors,
representatives, agents and Affiliates) concerning or relating to: (a) any
merger, sale of assets not in the Ordinary Course of Business, acquisition,
business combination, change of control or other similar transaction involving
MNB or any MNB Subsidiary, or (b) any purchase or other acquisition by any
Person of five percent (5%) or more of the capital stock of MNB or of any
capital stock of any MNB Subsidiary, or (c) any issuance by any MNB Subsidiary
of any shares of its capital stock (collectively, a "Competing MNB Proposal").
MNB will promptly advise LBI of, and communicate to LBI the terms and conditions
of, and the identity of the Person making, any Competing MNB Proposal, and will
promptly furnish LBI with copies of any non-privileged documents provided to and
received from such Person, and summaries of any other communications with
respect to such Competing MNB Proposal. Upon the date of this Agreement, MNB
will terminate all discussions and negotiations that it has heretofore engaged
in or conducted with any other Person with respect to any of the above, and will
advise its directors, officers, employees, professional and financial advisors,
representatives, agents and Affiliates to also terminate the same.
Notwithstanding the foregoing, MNB may engage in discussions or negotiations
with, furnish nonpublic information concerning MNB and any MNB Subsidiary and
their respective properties, assets and business, and grant access to the
facilities of MNB and any MNB Subsidiary, to any Person that hereafter makes a
Competing MNB Proposal that was not directly or indirectly, after the date
hereof, made, encouraged, facilitated, solicited, initiated or assisted by MNB,
any MNB Subsidiary or any of their respective directors, officers, employees,
professional or financial advisors, representatives, agents or Affiliates (an
"Unsolicited MNB Proposal"), but only to the extent that: (i) the board of
directors of MNB receives a written opinion from its independent financial
advisor that such proposal may be superior to the Contemplated Transactions from
a financial point of view to MNB's stockholders; (ii) MNB's outside legal
counsel advises MNB that the maker of the Unsolicited MNB Proposal may legally
acquire MNB and SNB; (iii) MNB's board of directors, after consultation with its
outside legal counsel, determines in good faith that such action is necessary
for MNB's board of directors to comply with its fiduciary duties to its
stockholders under all applicable Legal Requirements; and (iv) prior to
furnishing such information to, or entering into discussions or negotiations
with, such Person, MNB provides reasonable notice to LBI to the effect that it
is furnishing information to, or entering into discussions or negotiations with,
such Person.
46
Section 6.11 Best Efforts; Cooperation. Subject to the terms and
---------------------------
conditions of this Agreement, MNB agrees to exercise good faith and use its Best
Efforts to satisfy the various covenants and conditions to Closing in this
Article 6 and Article 10, respectively, and to consummate the Contemplated
Transactions as promptly as possible. MNB will not intentionally take or
intentionally permit to be taken any action that would be a Breach of the terms
or provisions of this Agreement. Between the date of this Agreement and the
Closing Date, MNB will, and will cause each MNB Subsidiary and all of the
Affiliates and Representatives of MNB and each MNB Subsidiary to, cooperate with
LBI with respect to all filings that LBI is required by Legal Requirements to
make in connection with the Contemplated Transactions. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest Newco with full title to all properties,
assets, rights, approvals, immunities and franchises of MNB, the proper officers
and directors of MNB shall take all such necessary action to vest Newco with
such rights.
Section 6.12 Amendment of MNB Rights Agreement. Prior to the Effective
---------------------------------
Time, MNB shall take all actions that may be necessary to amend the Rights
Agreement dated as of March 20, 2001, between MNB and SNB, to provide that LBI
is not an "Acquiring Person" as defined by the Rights Agreement.
Section 6.13 Accrual of Costs. On or prior to the Closing Date, MNB
----------------
shall fully pay or accrue as may be required by GAAP: (a) the cost of any
benefits or contributions supplied or made or to be supplied or made through the
Effective Time under any of the MNB Employee Benefit Plans; (b) the costs of any
corrective action to bring any such plans into compliance with applicable law;
(c) the aggregate cost of complying with any representation, warranty or
covenant of MNB set forth in this Agreement; and (d) all MNB Transactional
Expenses.
ARTICLE 7
COVENANTS OF LBI
From and after the date hereof and until the Effective Time, LBI hereby
covenants and agrees with MNB as follows:
Section 7.1 Information, Access and Confidentiality.
---------------------------------------
(a) Upon providing reasonable notice, MNB and its
Representatives shall, at all times during normal business hours prior to the
Closing Date, have full and continuing access to the facilities, operations,
records and properties of LBI and each LBI Subsidiary. MNB and its
Representatives may, prior to the Closing Date, make or cause to be made such
reasonable investigation of the operations, records and properties of LBI and
each LBI Subsidiary, including observation of any audit of, and examination of
any audit work papers with respect to, LBI or any LBI Subsidiary, and of its and
their financial and legal condition as MNB shall deem necessary or advisable to
familiarize itself with such records, properties and other matters; provided,
that such access or investigation shall not interfere unnecessarily with the
normal operations of LBI or any of the LBI Subsidiary. Upon request, LBI and
each LBI Subsidiary will furnish MNB or its Representatives its attorneys'
responses to auditors' requests for information and such financial
47
and operating data and other information reasonably requested by MNB developed
by LBI or any LBI Subsidiary, its auditors, accountants or attorneys (provided
with respect to attorneys, such disclosure shall be limited to information that
would not result in the waiver by LBI or any LBI Subsidiary of any claim of
attorney-client privilege), and will permit MNB or its Representatives to
discuss such information directly with any individual or firm performing
auditing or accounting functions for LBI or any LBI Subsidiary, and such
auditors and accountants shall be directed to furnish copies of any reports or
financial information as developed to MNB or its Representatives. No
investigation by MNB shall affect the representations and warranties made by
LBI. This Section shall not require the disclosure of any information the
disclosure of which to MNB would be prohibited by law.
(b) Any confidential information or trade secrets received by
LBI, its employees or agents in the course of the examination described in
Section 6.1 shall be treated confidentially, and any correspondence, memoranda,
records, copies, documents and electronic or other media of any kind containing
either such confidential information, or trade secrets or both shall be
destroyed by LBI or, at MNB's request, returned to MNB in the event this
Agreement is terminated as provided in Section 11.1. Such information shall not
be used by LBI or its agents to the detriment of MNB or any MNB Subsidiary.
Section 7.2 Carry on in Regular Course. LBI and each LBI Subsidiary
---------------------------
shall carry on its business diligently and substantially in the same manner as
is presently being conducted and shall not make or institute any unusual or
material change in its methods of doing business without the prior written
consent of MNB, which consent shall not be unreasonably withheld or delayed. LBI
shall, and shall also cause each LBI Subsidiary to, unless otherwise consented
to in writing in advance by MNB:
(a) conduct its business only in the Ordinary Course of
Business;
(b) use its Best Efforts to preserve intact its current
business organization, keep available the services of its current officers,
employees and agents, and maintain the relations and goodwill with its
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with it;
(c) confer and consult with MNB concerning operational
matters of a material nature, any sales of investment securities or loans that
were not originated with the intent to sell, and any changes or revisions to the
asset-liability management of LFSB;
(d) enter into loan transactions only in accordance with
sound credit practices and only on terms and conditions which are not materially
more favorable than those available to the borrower from competitive sources in
transactions in the ordinary course of business and consistent with prudent
banking practices and policies and regulations of applicable regulatory
authorities, and in that connection, LBI will consult and discuss with MNB all
new credits or new lending relationships, or extensions or renewals of any
existing credit relationships, approved in excess of $1,000,000 to any Person or
Persons and his, her or their Affiliates from the date hereof to the Effective
Time;
48
(e) consistent with past practice, maintain a reserve for
probable loan and lease losses that is adequate in all material respects to
provide for probable losses, net of recoveries relating to loans previously
charged off, on loans outstanding (including accrued interest receivable);
(f) maintain all of its assets necessary for the conduct of
its business in good operating condition and repair, reasonable wear and tear
and damage by fire or unavoidable casualty excepted, and maintain policies of
insurance upon its assets and with respect to the conduct of its business in
amounts and kinds comparable to that in effect on the date hereof and pay all
premiums on such policies when due;
(g) file in a timely manner all required filings with all
Regulatory Authorities and cause such filings to be true and correct in all
material respects; and
(h) maintain its books, accounts and records in the usual,
regular and ordinary manner, on a basis consistent with prior years and comply
with all Legal Requirements.
With respect to any written request by LBI for MNB's consent to any
non-permitted action of LBI or any LBI Subsidiary described in this Section, LBI
shall be entitled to conclusively presume MNB has consented to any such action
unless LBI shall have received MNB's written objection to such action within
three (3) Business Days of the date of MNB's receipt of such written request.
Section 7.3 Negative Covenants. Except as otherwise provided by this
-------------------
Agreement, between the date of this Agreement and the Closing Date, LBI will
not, and will cause each LBI Subsidiary not to, without the prior written
consent of MNB, which consent shall not be unreasonably withheld or delayed,
take any affirmative action, or fail to take any reasonable action within its
control, as a result of which any of the changes or events listed in Section
5.17 is likely to occur. With respect to any written request by LBI for MNB's
consent to any non-permitted action of LBI or any LBI Subsidiary described in
this Section, LBI shall be entitled to conclusively presume MNB has consented to
any such action unless LBI shall have received MNB's written objection to such
action within three (3) Business Days of the date of MNB's receipt of such
written request.
Section 7.4 Dividends. Notwithstanding anything contained herein to the
---------
contrary, between the date of this Agreement and the Effective Time, LBI may
continue to declare and pay to its stockholders, on dates consistent with its
past practices, its normal quarterly cash dividend not to exceed $0.15 per share
of LBI Common Stock, and shall declare, pay or make no other dividend or other
distribution or payment in respect of, or redemption of, shares of LBI Common
Stock, provided, however, that LBI shall not declare the record date for any
dividend, or pay or make any such dividend or other distribution or payment, in
the quarter in which the Effective Time shall occur. It is the intent of this
Section to provide that the holders of LBI Common Stock will receive either
payment of dividends on their shares of LBI Common Stock as permitted under this
Section or the payment of cash dividends as the holders of the LBI Exchange
Shares for the calendar quarter during which the Effective Time shall occur, but
will not receive and will not become entitled to receive for the same calendar
quarter both the payment of a permitted
49
dividend as stockholders of LBI and the payment of a cash dividend as the
holders of the LBI Exchange Shares. If LBI does not declare and pay permitted
dividends on its LBI Common Stock in a particular calendar quarter because of
LBI's reasonable expectation that the Effective Time would occur in such quarter
wherein the holders of LBI Common Stock would have become entitled to receive
cash dividends for such calendar quarter on the LBI Exchange Shares, and the
Effective Time does not in fact occur in said calendar quarter, then, as a
result thereof, LBI shall be entitled to declare and pay a permitted dividend on
said shares of LBI Common Stock for said calendar quarter as soon as reasonably
practicable.
Section 7.5 Subsequent LBI Financial Statements. As soon as available
------------------------------------
after the date hereof, LBI will furnish MNB copies of: (a) each filing made
subsequent to April 1, 2001, by LBI with the SEC; (b) the monthly unaudited
balance sheets and profit and loss statements of LBI on a consolidated basis,
and LFSB on a stand-alone basis, prepared in each case for LBI's internal use,
(c) the TFR of LFSB for each quarterly period completed after the date of this
Agreement and prior to the Effective Time; and (d) all other financial reports
or statements submitted by LBI or any LBI Subsidiary to Regulatory Authorities
after the date hereof, to the extent permitted by law (collectively, the
"Subsequent LBI Financial Statements"). The Subsequent LBI Financial Statements
shall be prepared on a basis consistent with past accounting practices and shall
fairly present in all material respects the financial condition and results of
operations for the dates and periods presented, subject in the case of unaudited
financial statements to year-end audit adjustments (which changes in the
aggregate would not reasonably be expected to be materially adverse). The
Subsequent LBI Financial Statements will not include any material assets or omit
to state any material liabilities, absolute or contingent, or other facts, which
inclusion or omission would render such financial statements misleading in any
material respect.
Section 7.6 Advice of Changes. Between the date of this Agreement and
-----------------
the Closing Date, LBI will promptly notify MNB in writing if LBI or any LBI
Subsidiary becomes aware of any fact or condition that causes or constitutes a
Breach of any of LBI's representations and warranties as of the date of this
Agreement, or if LBI or any LBI Subsidiary becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would (except as
expressly contemplated by this Agreement) cause or constitute a Breach of any
such representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. If any such
fact or condition would require any change in the Schedules if such Schedules
were dated the date of the occurrence or discovery of any such fact or
condition, LBI will promptly deliver to MNB a supplement to the Schedules
specifying such change, provided, however, that receipt of notice of such facts
after the date of this Agreement shall have no effect on the truth and accuracy
of the representations and warranties made in this Agreement and the delivery of
any such updated Schedule shall not in itself be sufficient to cure any prior
Breach. During the same period, LBI will promptly notify MNB of the occurrence
of any Breach of any covenant of LBI in this Article or of the occurrence of any
event that might reasonably be expected to make the satisfaction of the
conditions in Article 9 impossible or unlikely. LBI shall also provide to MNB
copies of each written communication sent to its stockholders between the date
of this Agreement and the Closing Date.
50
Section 7.7 Stockholders' Meeting. LBI shall cause a meeting of its
----------------------
stockholders for the purpose of acting upon this Agreement to be held at the
earliest practicable date after the Registration Statement (as defined below)
has been declared effective by the SEC. LBI shall send to its stockholders at
least thirty (30) days prior to such meeting, notice of such meeting together
with the Proxy Statement-Prospectus (as defined below). Subject to its fiduciary
duties, LBI and its board of directors shall recommend to stockholders the
approval of this Agreement and shall solicit proxies voting only in favor
thereof from the stockholders of LBI.
Section 7.8 Information Provided to MNB. LBI agrees that none of the
----------------------------
information concerning LBI or any LBI Subsidiary that is provided or to be
provided by LBI to MNB for inclusion or that is included in the Registration
Statement or Proxy Statement-Prospectus and any other documents to be filed with
any Regulatory Authority in connection with the Contemplated Transactions 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 mailed, 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 meeting of LBI's stockholders referred to above, 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 meeting in connection with which the Proxy
Statement-Prospectus shall be mailed. Notwithstanding the foregoing, LBI shall
have no responsibility for the truth or accuracy of any information with respect
to MNB or any MNB Subsidiary or any of their Affiliates contained in the
Registration Statement or the Proxy Statement-Prospectus or in any document
submitted to, or other communication with, any Regulatory Authority.
Section 7.9 Environmental Matters. MNB may in its discretion, prior to
---------------------
the Closing, retain at its own expense an independent professional consultant to
perform an environmental site assessment and render to MNB an Environmental
Report to determine if any real property in which LBI holds any interest
contains or gives evidence that any violations of Environmental Laws have
occurred on any such property. Neither MNB nor its independent professional
consultant shall enter upon any such real property in which LBI or any LBI
Subsidiary holds only a mortgagee's interest without the prior permission of LBI
and the Person in possession thereof. LBI shall not withhold such permission
unreasonably, and shall use all reasonable efforts to obtain such permission for
MNB from the Person in possession of any such mortgaged real property for which
MNB desires its independent professional consultant to conduct a site
assessment. MNB shall have no duty to act upon any information produced by such
reviews or investigations with or for the benefit of LBI, any LBI Subsidiary or
any other Person, but shall provide such information to LBI as soon as
practicable after such information becomes available to MNB.
Section 7.10 Exclusivity. Subject to its fiduciary duties and except as
-----------
otherwise set forth herein, none of LBI, any LBI Subsidiary or any of their
respective directors, officers, employees, professional and financial advisors,
representatives, agents and Affiliates shall, directly or indirectly, make,
encourage, facilitate, solicit, initiate or assist any inquiries, proposals,
offers or expressions of interest from, or provide any nonpublic information or
access to LBI's or any LBI Subsidiary's premises to, or participate in any
discussions or negotiations with, any Person
51
(other than MNB and Newco and their directors, officers, employees, professional
and financial advisors, representatives, agents and Affiliates) concerning or
relating to: (a) any merger, sale of assets not in the Ordinary Course of
Business, acquisition, business combination, change of control or other similar
transaction involving LBI or any LBI Subsidiary, or (b) any purchase or other
acquisition by any Person of five percent (5%) or more of the capital stock of
LBI or of any capital stock of any LBI Subsidiary, or (c) any issuance by any
LBI Subsidiary of any shares of its capital stock (collectively, a "Competing
LBI Proposal"). LBI will promptly advise MNB of, and communicate to MNB the
terms and conditions of, and the identity of the Person making, any Competing
LBI Proposal, and will promptly furnish MNB with copies of any non-privileged
documents provided to and received from such Person, and summaries of any other
communications with respect to such Competing LBI Proposal. Upon the date of
this Agreement, LBI will terminate all discussions and negotiations that it has
heretofore engaged in or conducted with any other Person with respect to any of
the above, and will advise its directors, officers, employees, professional and
financial advisors, representatives, agents and Affiliates to also terminate the
same. Notwithstanding the foregoing, LBI may engage in discussions or
negotiations with, furnish nonpublic information concerning LBI and any LBI
Subsidiary and their respective properties, assets and business, and grant
access to the facilities of LBI and any LBI Subsidiary, to any Person that
hereafter makes a Competing LBI Proposal that was not directly or indirectly,
after the date hereof, made, encouraged, facilitated, solicited, initiated or
assisted by LBI, any LBI Subsidiary or any of their respective directors,
officers, employees, professional or financial advisors, representatives, agents
or Affiliates (an "Unsolicited LBI Proposal"), but only to the extent that: (i)
the board of directors of LBI receives a written opinion from its independent
financial advisor that such proposal may be superior to the Contemplated
Transactions from a financial point of view to LBI's stockholders; (ii) LBI's
outside legal counsel advises LBI that the maker of the Unsolicited LBI Proposal
may legally acquire LBI and LFSB; (iii) LBI's board of directors, after
consultation with its outside legal counsel, determines in good faith that such
action is necessary for LBI's board of directors to comply with its fiduciary
duties to its stockholders under all applicable Legal Requirements; and (iv)
prior to furnishing such information to, or entering into discussions or
negotiations with, such Person, LBI provides reasonable notice to MNB to the
effect that it is furnishing information to, or entering into discussions or
negotiations with, such Person.
Section 7.11 Best Efforts; Cooperation. Subject to the terms and
---------------------------
conditions of this Agreement, LBI agrees to exercise good faith and use its Best
Efforts to satisfy the various covenants and conditions to Closing in this
Article 7 and Article 9, respectively, and to consummate the Contemplated
Transactions as promptly as possible. LBI will not intentionally take or
intentionally permit to be taken any action that would be a Breach of the terms
or provisions of this Agreement. Between the date of this Agreement and the
Closing Date, LBI will, and will cause each LBI Subsidiary and all of the
Affiliates and Representatives of LBI and each LBI Subsidiary to, cooperate with
MNB with respect to all filings that MNB is required by Legal Requirements to
make in connection with the Contemplated Transactions. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest Newco with full title to all properties,
assets, rights, approvals, immunities and franchises of LBI, the proper officers
and directors of LBI shall take all such necessary action to vest Newco with
such rights.
52
Section 7.12 Data Processing Agreement. LBI agrees to consult with MNB
-------------------------
prior to the entry by it or any LBI subsidiary into any new, or any extension of
any existing, data processing agreement. LBI agrees to coordinate with MNB the
negotiation of any new or extension of any existing data processing agreement
with the purpose of achieving the best possible economic and business result in
light of the Bank Merger.
Section 7.13 Accrual of Costs. On or prior to the Closing Date, LBI
----------------
shall fully pay or accrue as may be required by GAAP: (a) the cost of any
benefits or contributions supplied or made or to be supplied or made through the
Effective Time under any of the LBI Employee Benefit Plans; (b) the costs of any
corrective action to bring any such plans into compliance with applicable law;
(c) the aggregate cost of complying with any representation, warranty or
covenant of LBI set forth in this Agreement; and (d) all LBI Transactional
Expenses.
ARTICLE 8
COVENANTS OF ALL PARTIES
Section 8.1 Necessary Approvals. LBI and MNB agree that MNB's counsel
--------------------
will have primary responsibility for preparation of the Registration Statement
and MNB will have primary responsibility for the preparation of the necessary
applications for regulatory approval of the Contemplated Transactions. Each of
LBI and MNB and their respective Subsidiaries and Newco agree fully and promptly
to cooperate with each other and their respective counsels and accountants in
connection with any steps to be taken as part of their obligations under this
Agreement.
Section 8.2 Regulatory Approvals. By no later than forty-five (45) days
--------------------
after the date of this Agreement, Newco shall make all appropriate filings with
Regulatory Authorities for approval of the Contemplated Transactions, including
the preparation of an application or any amendment thereto or any other required
statements or documents filed or to be filed by any party with: (a) the Federal
Reserve pursuant to the BHCA; (b) the OTS pursuant to the HOLA; (c) the OCC
pursuant to the National Bank Act; and (d) any other Person or Regulatory
Authority pursuant to any applicable Legal Requirement, for authority to
consummate the Contemplated Transactions. LBI and MNB shall pursue in good faith
the regulatory approvals necessary to consummate the Contemplated Transactions.
In advance of any filing made under this Section, LBI and MNB and their
respective counsel shall be provided with the opportunity to comment thereon,
and LBI, MNB and Newco each agree promptly to advise each other and each other's
counsel of any material communication received by it or its counsel from any
Regulatory Authorities with respect to such filings.
Section 8.3 SEC Registration. By no later than sixty (60) days after
-----------------
the date of this Agreement, Newco shall file with the SEC a Registration
Statement on an appropriate form under the Securities Act covering the shares of
Newco Common Stock to be issued pursuant to this Agreement and shall use all
reasonable efforts to cause the same to become effective and thereafter, until
the Effective Time or lawful termination of this Agreement, to keep the same
effective and, if necessary, amend and supplement the same (the Registration
Statement, and any amendments and supplements thereto, is referred to as the
"Registration Statement"). The
53
Registration Statement shall include a Proxy Statement-Prospectus prepared by
Newco that is reasonably acceptable to MNB and LBI (the "Proxy
Statement-Prospectus"), for use in connection with the meetings of the
stockholders of MNB and LBI referred to in Section 6.7 and Section 7.7,
respectively, of this Agreement, all in accordance with the rules and
regulations of the SEC. Newco shall, as soon as practicable after the execution
of this Agreement, make all filings required to obtain all permits,
authorizations, consents or approvals required under any applicable Legal
Requirements (including all state securities laws) for the issuance of the
shares of Newco Common Stock to stockholders of LBI and MNB. In advance of any
filing made under this Section, LBI and MNB and their respective counsel shall
be provided with the opportunity to comment thereon, and LBI, MNB and Newco each
agree promptly to advise each other and each other's counsel of any material
communication received by it or its counsel from the SEC or any other Regulatory
Authorities with respect to such filings.
Section 8.4 Customer and Employee Relationships. Each of LBI and MNB
agrees that its respective representatives may jointly:
(a) participate in meetings or discussions with officers and
employees of MNB and LBI and their Subsidiaries in connection with employment
opportunities with Newco after the Effective Time; and
(b) contact Persons having dealings with MNB or LBI or any of
its respective Subsidiaries for the purpose of informing such Persons of the
services to be offered by Newco after the Effective Time.
Section 8.5 Newco Expenses. Except as otherwise provided herein, all
--------------
costs and expenses incurred by a party to this Agreement shall be borne by such
party, including the fees of their respective accountants and attorneys. All
organizational expenses of Newco and other reasonable expenses incurred by Newco
in the performance of its duties under this Agreement shall be shared equally
between MNB and LBI.
Section 8.6 Publicity. Prior to the Effective Time, the parties to this
---------
Agreement will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this Agreement or the
Contemplated Transactions and shall not issue any such press release or make any
such public statement without the prior consent of the other parties, except as
may be required by law.
Section 8.7 Employee Benefit Plan Payments; Newco Employee Benefits.
----------------------------------------------------------
LBI and MNB agree to take or cause to be taken the actions described in Schedule
8.7 with respect to the payment of amounts due under the LBI Employee Benefits
Plans and MNB Employee Benefits Plans, and to the organization of Newco. LBI and
MNB further agree to cooperate to determine prior to the Closing the types of
benefits to be offered after the Effective Time by Newco to former employees of
MNB and LBI who become employees of Newco.
Section 8.8 Director and Officer Liability Coverage. LBI and MNB agree
---------------------------------------
to cooperate to attempt to obtain after the Effective Time directors' and
officers' liability insurance coverage for the officers and directors of Newco,
to the extent the same is economically
54
practicable. Any such coverage shall be on substantially the same terms and
conditions and provide the same coverage against personal liability for actions
taken after the Effective Time as the most protective coverage which is
currently provided to officers and directors of either MNB or LBI. Such coverage
may be provided through an insurance policy or through an agreement by Newco to
indemnify such officers and directors. LBI and MNB also agree to cooperate to
attempt to obtain as of the Effective Time and to maintain in effect for a
period of not less than three (3) years after the Effective Time directors' and
officers' liability insurance coverage for the officers and directors of each of
LBI and MNB with respect to actions taken by them prior to the Effective Time to
the extent that such coverage is available and mutually determined by the
parties to be economically practicable ("Tail Coverage"). Notwithstanding any
such Tail Coverage, the parties further agree that after the Effective Time
Newco will indemnify for a period of six (6) years the current and past officers
and directors of LBI and MNB for all actions taken by them prior to the
Effective Time in their respective capacities as officers and directors of LBI
and MNB to the same extent as the indemnification provided by LBI or MNB to its
respective officers and directors as of the time immediately prior to the
Effective Time. The directors and officers of LBI and MNB shall be third party
beneficiaries to this Section and this Section shall survive the Effective Time.
Section 8.9 Actions by Newco. Prior to the date hereof, LBI and MNB
----------------
have incorporated Newco under the Delaware Code, and Newco has issued one half
of Newco's capital stock to each of MNB and LBI. MNB and LBI agree that from and
after the date hereof they shall each cause Newco to take all other corporate
and other actions that are necessary for Newco to comply with its respective
obligations under this Agreement and to effectuate the Contemplated
Transactions.
Section 8.10 Employment Agreements. Unless otherwise provided in this
----------------------
Agreement, Newco shall honor the terms of all employment, change in control and
severance agreements in effect as of the date of this Agreement and to which any
of LBI, MNB or any of their respective Subsidiaries is a party. LBI and MNB
shall cause Newco to enter into employment agreements in the form of Exhibit G
with the individuals listed on such Exhibit to become effective at the Effective
Time.
Section 8.11 Trademarks. Prior to the Closing Date, LBI and MNB shall
----------
cause Newco to purchase any Intellectual Property Assets (including logos) and
associated goodwill owned by LBI, MNB or any of their respective Subsidiaries.
ARTICLE 9
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF MNB
MNB's obligation to consummate the Contemplated Transactions and to
take the other actions required to be taken by MNB at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by MNB, in whole or in part):
55
Section 9.1 Accuracy of Representations and Warranties. All of the
---------------------------------------------
representations and warranties of LBI set forth in this Agreement shall be true
and correct in all material respects with the same force and effect as if all of
such representations and warranties were made at the Closing Date, provided,
however, that to the extent such representations and warranties expressly relate
to an earlier date, such representations shall be true and correct in all
material respects on and as of such earlier date, and provided further, that to
the extent that such representations and warranties are made in this Agreement
subject to a standard of materiality or Knowledge, such representations and
warranties shall be true and correct in all respects.
Section 9.2 LBI's Performance. LBI shall have performed or complied in
-----------------
all material respects with all of the covenants and obligations to be performed
or complied with by it under the terms of this Agreement on or prior to the
Closing Date, provided, however, that to the extent performance and compliance
with such covenants and obligations are subject in this Agreement to a standard
of materiality, LBI shall have performed and complied in all respects with such
covenants and obligations.
Section 9.3 Proceedings and Documents Satisfactory. All proceedings,
---------------------------------------
corporate or other, to be taken by LBI in connection with the Contemplated
Transactions, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to counsel for MNB.
Section 9.4 Statutory Requirements. This Agreement shall have been duly
----------------------
and validly authorized by the stockholders of LBI. Such stockholder approval
shall have been obtained in conformity with all applicable laws at a meeting of
stockholders for which proxies are solicited in compliance with applicable laws
and requirements.
Section 9.5 No Proceedings. Neither LBI nor any LBI Subsidiary shall be
--------------
made a party to, or to the Knowledge of LBI, Threatened by any Proceedings
which, in the reasonable opinion of MNB, have or are likely to have a Material
Adverse Effect on LBI, and no Proceeding shall have been instituted, made or
threatened by any Person relating to the Merger or the validity or propriety of
the Contemplated Transactions that MNB reasonably believes will result in
material damages or an Order enjoining the Merger or a determination that LBI
failed to comply with legal requirements of a material nature in connection with
any of the Contemplated Transactions.
Section 9.6 Absence of Certain Changes or Events. From the date hereof
------------------------------------
to the Effective Time, there shall be and have been no Material Adverse Effect
on LBI, or any event or occurrence reasonably likely to result in a Material
Adverse Effect on LBI, excluding costs associated with the Contemplated
Transactions and any payments that become due and payable under any LBI Employee
Benefits Plans as a result of the occurrence of the Contemplated Transactions.
Section 9.7 Regulatory Approvals. All of the approvals from Regulatory
--------------------
Authorities referred to in Section 8.2, or otherwise reasonably necessary in the
opinion of MNB to consummate the Contemplated Transactions, shall have been
obtained and shall be reasonably satisfactory to MNB.
56
Section 9.8 Registration Statement. The Registration Statement shall
-----------------------
have become effective and no stop order suspending such effectiveness shall have
been issued or threatened by the SEC that suspends the effectiveness of the
Registration Statement and no Proceeding shall have been commenced or be pending
or Threatened for such purpose.
Section 9.9 Fairness Opinion. As of the date of this Agreement and
-----------------
prior to distribution of the Proxy Statement-Prospectus to the stockholders of
MNB, MNB shall have received an opinion from ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇, Inc. to
the effect that the consideration to be received by MNB's stockholders in
connection with the Merger, from a financial point of view, is fair to MNB's
stockholders, and the same shall not have been withdrawn prior to the Closing.
Section 9.10 Environmental Reports. MNB shall have been granted
----------------------
acceptable access to any real property in which LBI or any LBI Subsidiary has an
interest and for which MNB desired its independent professional consultant to
prepare an Environmental Report, and the results of any Environmental Report
rendered to MNB with respect to such real property shall have not disclosed any
violation of Environmental Laws which would reasonably be expected to have a
Material Adverse Effect on LBI.
Section 9.11 Tax Opinion. MNB shall have received an opinion of KPMG
-----------
LLP, in form and substance reasonably satisfactory to it, dated as of the date
of the Registration Statement and updated through the Closing Date,
substantially to the effect that the Merger will constitute a tax free
reorganization under Section 368 of the Code.
Section 9.12 Other Consents and Approvals. Any consents or approvals
------------------------------
other than those described in Section 9.7 that are required to be secured by LBI
to consummate the Contemplated Transactions shall have been obtained and shall
be reasonably satisfactory to MNB.
ARTICLE 10
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF LBI
LBI's obligation to consummate the Contemplated Transactions and to
take the other actions required to be taken by LBI at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by LBI, in whole or in part):
Section 10.1 Accuracy of Representations and Warranties. All of the
---------------------------------------------
representations and warranties of MNB set forth in this Agreement shall be true
and correct in all material respects with the same force and effect as if all of
such representations and warranties were made at the Closing Date, provided,
however, that to the extent such representations and warranties expressly relate
to an earlier date, such representations shall be true and correct in all
material respects on and as of such earlier date, and provided further, that to
the extent that such representations and warranties are made in this Agreement
subject to a standard of materiality or Knowledge, such representations and
warranties shall be true and correct in all respects.
57
Section 10.2 MNB's Performance. MNB shall have performed or complied in
-----------------
all material respects with all of the covenants and obligations to be performed
or complied with by it under the terms of this Agreement on or prior to the
Closing Date, provided, however, that to the extent performance and compliance
with such covenants and obligations are subject in this Agreement to a standard
of materiality, MNB shall have performed and complied in all respects with such
covenants and obligations.
Section 10.3 Proceedings and Documents Satisfactory. All proceedings,
---------------------------------------
corporate or other, to be taken by MNB in connection with the Contemplated
Transactions, and all documents incident thereto, shall be reasonably
satisfactory in form and substance to counsel for LBI.
Section 10.4 Statutory Requirements. This Agreement shall have been
-----------------------
duly and validly authorized by the stockholders of MNB. Such stockholder
approval shall have been obtained in conformity with all applicable laws at a
meeting of stockholders for which proxies are solicited in compliance with
applicable laws and requirements.
Section 10.5 No Proceedings. Neither MNB nor any MNB Subsidiary shall
--------------
be made a party to, or to the Knowledge of MNB, Threatened by any Proceedings
which, in the reasonable opinion of LBI, have or are likely to have a Material
Adverse Effect on MNB, and no Proceeding shall have been instituted, made or
threatened by any Person relating to the Merger or the validity or propriety of
the Contemplated Transactions that LBI reasonably believes will result in
material damages or an Order enjoining the Merger or a determination that MNB
failed to comply with legal requirements of a material nature in connection with
any of the Contemplated Transactions.
Section 10.6 Absence of Certain Changes or Events. From the date hereof
------------------------------------
to the Effective Time, there shall be and have been no Material Adverse Effect
on MNB, or any event or occurrence reasonably likely to result in a Material
Adverse Effect on MNB, excluding costs associated with the Contemplated
Transactions and any payments that become due and payable under any MNB Employee
Benefits Plans as a result of the occurrence of the Contemplated Transactions.
Section 10.7 Regulatory Approvals. All of the approvals from Regulatory
--------------------
Authorities referred to in Section 8.2, or otherwise reasonably necessary in the
opinion of LBI to consummate the Contemplated Transactions, shall have been
obtained and shall be reasonably satisfactory to LBI.
Section 10.8 Registration Statement. The Registration Statement shall
-----------------------
have become effective and no stop order suspending such effectiveness shall have
been issued or threatened by the SEC that suspends the effectiveness of the
Registration Statement and no Proceeding shall have been commenced or be pending
or Threatened for such purpose.
Section 10.9 Accrual of Costs. On or prior to the Closing Date, the sum
----------------
of: (a) the cost of any benefits or contributions supplied or made or to be
supplied or made through the Effective Time under any of the MNB Employee
Benefit Plans; (b) the costs of any corrective action to bring any such plans
into compliance with applicable law; (c) the aggregate cost of complying with
any representation, warranty or covenant of MNB set forth in this Agreement;
58
and (d) all MNB Transactional Expenses shall be fully paid or accrued for in
accordance with GAAP.
Section 10.10 Fairness Opinion. As of the date of this Agreement and
-----------------
prior to distribution of the Proxy Statement-Prospectus to the stockholders of
LBI, LBI shall have received an opinion from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. to the
effect that the consideration to be received by LBI's stockholders in connection
with the Merger, from a financial point of view, is fair to LBI's stockholders,
and the same shall not have been withdrawn prior to the Closing.
Section 10.11 Environmental Reports. LBI shall have been granted
----------------------
acceptable access to any real property in which MNB or any MNB Subsidiary has an
interest and for which LBI desired its independent professional consultant to
prepare an Environmental Report, and the results of any Environmental Report
rendered to LBI with respect to such real property shall have not disclosed any
violation of Environmental Laws which would reasonably be expected to have a
Material Adverse Effect on MNB.
Section 10.12 Tax Opinion. LBI shall have received an opinion of KPMG
-----------
LLP, in form and substance reasonably satisfactory to it, dated as of the date
of the Registration Statement and updated through the Closing Date,
substantially to the effect that the Merger will constitute a tax free
reorganization under Section 368 of the Code.
Section 10.13 Other Consents and Approvals. Any consents or approvals
-----------------------------
other than those described in Section 10.7 that are required to be secured by
MNB to consummate the Contemplated Transactions shall have been obtained and
shall be reasonably satisfactory to LBI.
ARTICLE 11
TERMINATION AND ABANDONMENT
Section 11.1 Termination of Agreement. This Agreement may be terminated
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only as set forth below:
(a) by mutual consent of the Boards of Directors of MNB and
LBI, each evidenced by appropriate written resolutions;
(b) by MNB if: (i) any of the conditions in Article 9 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of MNB to comply with its
obligations under this Agreement); (ii) the failure to satisfy such condition
would reasonably be expected to have a Material Adverse Effect upon Newco or its
stockholders if the Closing were to occur; and (iii) MNB has not waived such
condition on or before the Closing Date, provided, however, that the condition
set forth in clause (ii) of this paragraph need not be satisfied to terminate
this Agreement if the failure to satisfy any condition was the result of any
intentional or grossly negligent: (A) action, (B) failure to act or (C)
misrepresentation, of or by LBI;
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(c) by LBI if: (i) any of the conditions in Article 10 has
not been satisfied as of the Closing Date or if satisfaction of such a condition
is or becomes impossible (other than through the failure of LBI to comply with
its obligations under this Agreement); (ii) the failure to satisfy such
condition would reasonably be expected to have a Material Adverse Effect upon
Newco or its stockholders if the Closing were to occur; and (iii) LBI has not
waived such condition on or before the Closing Date, provided, however, that the
condition set forth in clause (ii) of this paragraph need not be satisfied to
terminate this Agreement if the failure to satisfy any condition was the result
of any intentional or grossly negligent: (A) action, (B) failure to act or (C)
misrepresentation, of or by MNB;
(d) by MNB by giving written notice of such termination to
LBI if: (i) there has been (A) a material breach of any covenant herein (except
for breaches of Section 7.7 or Section 7.10, which are separately addressed in
Section 11.1(g)) on the part of LBI which has not been cured or adequate
assurance of cure given, in either case within thirty (30) Business Days
following notice of such breach from MNB, unless such breach or failure is a
result of the failure by MNB to perform and comply in all material respects with
any of its material obligations under this Agreement that are to be performed or
complied with by it prior to or on the date required hereunder; or (B) a breach
of a representation or warranty of LBI herein that (individually or, together
with other such breaches, in the aggregate) could reasonably be expected to have
a Material Adverse Effect on Newco following the consummation of the Merger, and
that, in the reasonable opinion of MNB's board of directors, by its nature
cannot be cured on or prior to the Termination Date; or (ii) there shall have
occurred or been proposed after the date of this Agreement, any change in any
Legal Requirement, or after the date of this Agreement there shall have been any
Order by any Regulatory Authority that could reasonably be expected to prevent
or delay consummation of the Merger beyond the Termination Date;
(e) by LBI by giving written notice of such termination to
MNB if: (i) there has been (A) a material breach of any covenant herein (except
for breaches of Section 6.7 or Section 6.10 which are separately addressed in
Section 11.1(h)) on the part of MNB which has not been cured or adequate
assurance of cure given, in either case within thirty (30) Business Days
following notice of such breach from LBI, unless such breach or failure is a
result of the failure by LBI to perform and comply in all material respects with
any of its material obligations under this Agreement which are to be performed
or complied with by it prior to or on the date required hereunder; or (B) a
breach of a representation or warranty of MNB herein that (individually or,
together with other such breaches, in the aggregate) could reasonably be
expected to have a Material Adverse Effect on Newco, following the consummation
of the Merger, and that, in the reasonable opinion of LBI's board of directors,
by its nature cannot be cured on or prior to the Termination Date; or (ii) there
shall have occurred or been proposed after the date of this Agreement, any
change in any Legal Requirement, or after the date of this Agreement there shall
have been any Order by any Regulatory Authority that could reasonably be
expected to prevent or delay consummation of the Merger beyond the Termination
Date;
(f) by MNB or LBI, by giving written notice of such
termination to the other party or parties, if: (i) the Federal Reserve, the OTS
the OCC or any Regulatory Authority the approval of which is required for
consummation of the Contemplated Transactions has denied approval of any of the
Contemplated Transactions and such denial has become final and nonappealable;
(ii) any application, filing or notice for a regulatory approval has been
withdrawn at the request or recommendation of the applicable Regulatory
Authority and a petition for rehearing shall not have been
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granted or an amended application shall not have been accepted for filing by the
applicable Regulatory Authority within the sixty (60) day period following such
withdrawal; or (iii) the Effective Time shall not have occurred at or before
11:59 p.m. on the Termination Date, provided, however (and without limiting the
applicability, if any, of the provisions of Section 11.2 below, with respect to
the occurrence of any event described in clauses (i) or (ii) above), that the
right to terminate this Agreement under this Section 11.1(f) shall not be
available to any party to this Agreement whose failure to fulfill any of its
obligations (excluding warranties and representations) under this Agreement has
been the cause of or resulted in the occurrence of the event described in clause
(iii) above;
(g) by MNB, by giving written notice of such termination to
LBI, and subject to the special termination fee set forth in Section 11.5(a) if:
(i) LBI breaches its obligations under Section 7.10; (ii) LBI breaches any of
its obligations under Section 7.7 to call a stockholders' meeting to vote on,
and to recommend to its stockholders to vote to approve, this Agreement and the
Contemplated Transactions, including the Merger; or (iii) LBI's stockholders
fail to approve this Agreement and the Merger;
(h) by LBI, by giving written notice of such termination to
MNB, and subject to the special termination fee set forth in Section 11.5(b) if:
(i) MNB breaches its obligations under Section 6.10; (ii) MNB breaches any of
its obligations under Section 6.7 to call a stockholders' meeting to vote on,
and to recommend to its stockholders to vote to approve, this Agreement and the
Contemplated Transactions, including the Merger; or (iii) MNB's stockholders
fail to approve this Agreement and the Merger;
(i) by MNB, by giving written notice of such termination to
LBI, and subject to the special termination fee set forth in Section 11.5(a), if
MNB receives an Unsolicited MNB Proposal that is determined in good faith by the
MNB Board of Directors, after consultation with MNB's financial advisor, is on
terms that are more favorable to the stockholders of MNB than the Merger and has
a reasonable prospect of being consummated in accordance with its terms (a
"Superior MNB Proposal"); provided, however, that MNB shall not be permitted to
terminate this Agreement pursuant to this Section 11.1(i) unless MNB shall have
given LBI five (5) Business Days' prior written notice thereof (or, if there are
less than five (5) Business Days remaining prior to the Closing, written notice
prior to the Closing) of its intent to so terminate this Agreement pursuant to
this Section 11.1(i), together with a summary of the terms of, and the identity
of the Person making, such Superior MNB Proposal;
(j) by LBI, by giving written notice of such termination to
MNB, and subject to the special termination fee set forth in Section 11.5(b), if
LBI receives an Unsolicited LBI Proposal that is determined in good faith by the
LBI Board of Directors, after consultation with LBI's financial advisor, is on
terms that are more favorable to the stockholders of LBI than the Merger and has
a reasonable prospect of being consummated in accordance with its terms (a
"Superior LBI Proposal"), provided, however, that LBI shall not be permitted to
terminate this Agreement pursuant to this Section 11.1(j) unless LBI shall have
given MNB five (5) Business Days' prior written notice thereof (or, if there are
less than five (5) Business Days remaining prior to the Closing, written notice
prior to the Closing) of its intent to so terminate this Agreement pursuant to
this Section 11.1(j), together with a summary of the terms of, and the identity
of the Person making, such Superior LBI Proposal;
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(k) by MNB, by giving written notice of such termination to
LBI, and subject to the special termination fee set forth in Section 11.5(b), if
the fairness opinion provided for in Section 9.9 shall have been withdrawn prior
to the Closing; or
(l) by LBI, by giving written notice of such termination to
MNB, and subject to the special termination fee set forth in Section 11.5(a), if
the fairness opinion provided for in Section 10.9 shall have been withdrawn
prior to the Closing.
Section 11.2 Effect of Termination or Abandonment. In the event of the
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termination of this Agreement and the abandonment of the Merger pursuant to
Section 11.1, this Agreement shall become null and void, MNB shall bear all MNB
Transactional Expenses, LBI shall bear all LBI Transactional Expenses, and there
shall be no liability of one party to the other or any restrictions on the
future activities on the part of any party to this Agreement, or its respective
directors, officers or stockholders, except for the obligations of MNB and LBI
concerning confidentiality referred to in Section 6.1 and Section 7.1,
respectively, and except as provided under Section 11.3, Section 11.4 and
Section 11.5.
Section 11.3 Payments to LBI. Subject to the further provisions of this
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Section, if: (a) LBI terminates this Agreement pursuant to Section 11.1(h)(iii);
or (b) MNB terminates this Agreement pursuant to Section 11.1(k), then in any
such case, MNB shall pay to LBI, upon its written demand, the LBI Transactional
Expenses in an amount not to exceed $350,000. Also subject to the further
provisions of this Section, if LBI terminates this Agreement pursuant to Section
11.1(e)(i)(A), Section 11.1(h)(i) or Section 11.1(h)(ii), then in any such case,
MNB shall pay to LBI, upon its written demand, the LBI Transactional Expenses in
an amount not to exceed $350,000, and an additional sum equal to $500,000 (the
"MNB Base Termination Fee"). The payment of the sums described in this Section
shall be made by wire transfer of immediately available funds to such account as
LBI shall designate, such sums shall constitute liquidated damages and the
receipt thereof shall be the sole and exclusive remedy of LBI and the LBI
Subsidiaries against MNB, the MNB Subsidiaries and their respective officers,
directors, employees and stockholders for any claims arising from or relating in
any way to this Agreement or the transactions contemplated herein; provided,
however, that nothing herein shall preclude or bar LBI from asserting or
enforcing any such claim against any Person other than MNB, the MNB Subsidiaries
and their respective officers, directors, employees and stockholders and the
foregoing is made expressly subject to the provisions of Section 11.5.
Notwithstanding the foregoing, this Section 11.3 shall not require MNB to pay to
LBI any MNB Base Termination Fee or LBI Transactional Expenses if the Merger is
not consummated as a result of the lawful termination of this Agreement by (x)
the mutual consent of LBI and MNB pursuant to Section 11.1(a), (y) LBI or MNB
pursuant to Section 11.1(f), or (z) LBI pursuant to Section 11.1(e)(ii).
Section 11.4 Payments to MNB. Subject to the further provisions of this
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Section, if: (a) MNB terminates this Agreement pursuant to Section 11.1(g)(iii);
or (b) LBI terminates this Agreement pursuant to Section 11.1(l), then in any
such case, LBI shall pay to MNB, upon its written demand, the MNB Transactional
Expenses in an amount not to exceed $350,000. Also subject to the further
provisions of this Section, if MNB terminates this Agreement pursuant to Section
11.1(d)(i)(A), Section 11.1(g)(i) or Section 11.1(g)(ii), then in any such case,
LBI shall pay to MNB, upon its written demand, the MNB Transactional Expenses in
an amount not to exceed
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$350,000, and an additional sum equal to $500,000 (the "LBI Base Termination
Fee"). The payment of the sums described in this Section shall be made by wire
transfer of immediately available funds to such account as MNB shall designate,
such sums shall constitute liquidated damages and the receipt thereof shall be
the sole and exclusive remedy of MNB and the MNB Subsidiaries against LBI, the
LBI Subsidiaries and their respective officers, directors, employees and
stockholders for any claims arising from or relating in any way to this
Agreement or the transactions contemplated herein; provided, however, that
nothing herein shall preclude or bar MNB from asserting or enforcing any such
claim against any Person other than LBI, the LBI Subsidiaries and their
respective officers, directors, employees and stockholders and the foregoing is
made expressly subject to the provisions of Section 11.5. Notwithstanding the
foregoing, this Section 11.4 shall not require LBI to pay MNB any LBI Base
Termination Fee or MNB Transactional Expenses if the Merger is not consummated
as a result of the lawful termination of this Agreement by (x) the mutual
consent of LBI and MNB pursuant to Section 11.1(a), (y) LBI or MNB pursuant to
Section 11.1(f), or (z) MNB pursuant to Section 11.1(d)(ii).
Section 11.5 Special Termination Fees. (a) If this Agreement is
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terminated by MNB pursuant to Section 11.1(d)(i)(A) or Section 11.1(g) or by LBI
pursuant to Section 11.1(j) or Section 11.1(l), and within twelve (12) months
after such termination LBI shall enter into a definitive written agreement with
any Person (other than MNB and its Affiliates) with respect to an acquisition of
not less than twenty-five percent (25%) of the outstanding shares of LBI Common
Stock or all or substantially all of the assets of LBI or LFSB, LBI shall pay to
MNB, within ten (10) Business Days after the execution of such definitive
agreement, the amount of $1.0 million by wire transfer of immediately available
funds to such account as MNB shall designate.
(b) If this Agreement is terminated by LBI pursuant to Section
11.1(e)(i)A) or Section 11.1(h) or by MNB pursuant to Section 11.1(i) or Section
11.1(k), and within twelve (12) months after such termination MNB shall enter
into a definitive written agreement with any Person (other than LBI and its
Affiliates) with respect to an acquisition of not less than twenty-five percent
(25%) of the outstanding shares of MNB Common Stock or all or substantially all
of the assets of MNB or SNB, MNB shall pay to LBI, within ten (10) Business Days
after the execution of such definitive agreement, the amount of $1.0 million by
wire transfer of immediately available funds to such account as LBI shall
designate.
(c) All payments made pursuant to this Section shall constitute
liquidated damages and the receipt thereof shall be the sole and exclusive
remedy of the receiving party against the party making such payment, its
Affiliates and their respective directors, officers and stockholders for any
claims arising out of or relating in any way to this Agreement or the
transactions contemplated herein; provided, however, that nothing herein shall
preclude or bar the party receiving such payment from asserting or enforcing any
such claim against any Person other than the party making such payment, such
party's Affiliates and their respective officers, directors, employees and
stockholders.
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ARTICLE 12
MISCELLANEOUS
Section 12.1 Governing Law. All questions concerning the construction,
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validity and interpretation of this Agreement, and the performance of the
obligations imposed by this Agreement shall be governed by the internal laws of
the State of Kansas applicable to contracts made and wholly to be performed in
such state without regard to conflicts of laws, except that the law of the state
of Delaware shall apply to all matters of corporate law and except to the extent
superseded by federal law.
Section 12.2 Assignment. Neither this Agreement nor any of the rights
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or obligations hereunder may be assigned, in whole or in part, by any of the
parties to this Agreement without the prior written consent of the other parties
to this Agreement and any purported assignment in violation hereof shall be void
and of no effect.
Section 12.3 Amendment and Modification. The parties may by written
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agreement signed by LBI and MNB: (a) extend the time for the performance of any
of the obligations or other acts of the parties hereto; (b) waive any
inaccuracies in the representations or warranties contained in this Agreement or
in any document delivered pursuant to this Agreement; and (c) waive compliance
with or modify, amend or supplement any of the conditions, covenants,
agreements, representations or warranties contained in this Agreement or waive
or modify performance of any of the obligations of any of the parties to this
Agreement, which are for the benefit of the waiving party, provided, however,
that no such modification, amendment or supplement agreed to after authorization
of this Agreement by the stockholders of LBI or LBI shall affect the rights of
such respective stockholders in any manner which is materially adverse to such
stockholders. The failure of any party to this Agreement to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
Section 12.4 Notices. All notices, requests and other communications
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hereunder shall be in writing (which shall include telecopier communication) and
shall be deemed to have been duly given if delivered by hand or by overnight
express delivery service, mailed certified or registered mail with first class
postage prepaid or telecopied if confirmed immediately thereafter by also
mailing a copy of any notice, request or other communication by certified or
registered mail with first class postage prepaid:
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(a) If to LBI or Newco, to:
Landmark Bancshares, Inc.
Central and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇▇ Spidi & ▇▇▇▇▇, PC
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Person and place as LBI shall furnish to MNB in writing; or
(b) if to MNB or Newco, to:
MNB Bancshares, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Barack ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Person or place as MNB shall furnish to LBI in writing. Except
as otherwise provided herein, all such notices, requests or other communications
shall be effective: (i) if delivered by hand, when delivered; (ii) if mailed in
the manner provided in this Section, five (5) Business Days after deposit with
the United States Postal Service; (iii) if delivered by overnight express
delivery service, on the next Business Day after deposit with such service; (iv)
if by telecopier, on the next Business Day if also confirmed by mail in the
manner provided in this Section.
Section 12.5 Entire Agreement. This Agreement and any documents
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executed by the parties pursuant to this Agreement and referred to herein
constitute the entire understanding and
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agreement of the parties to this Agreement and supersede all other prior
agreements and understandings, written or oral, relating to such subject matter
between the parties, except for the Joint Confidentiality Agreement between LBI
and MNB dated December 5, 2000. This Agreement and every representation,
warranty, covenant, agreement and provision hereof shall be binding upon and
inure to the benefit of the parties to this Agreement and their respective
successors and permitted assigns.
Section 12.6 Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement unless the
consummation of the Contemplated Transactions is adversely affected thereby.
Section 12.7 Further Instruments. The parties to this Agreement will,
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at or before the Effective Time, execute and deliver such further instruments as
may be reasonably requested by any other party which are necessary to or
appropriate with respect to the consummation of the transactions contemplated by
this Agreement.
Section 12.8 Counterparts. This Agreement and any amendments thereto
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may be executed in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 12.9 All Reasonable Efforts. Each party represents and warrants
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that it will use all reasonable efforts to bring about the transactions
contemplated by this Agreement as soon as practicable provided that this Section
shall not obligate LBI or MNB to remedy any breach of any of its
representations, warranties and covenants herein. In the event that any party
becomes aware of the occurrence or impending occurrence of any event which would
constitute or cause a breach by it of any of the representations or warranties
herein, or would have constituted or caused a breach by it of any of the
representations or warranties herein, had such an event occurred or been known
prior to the date hereof, said party shall immediately give detailed and written
notice thereof to the other party.
Section 12.10 Survival of Representations and Warranties. Except as
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otherwise expressly provided herein, including in Section 8.7 and Section 8.8,
the covenants, representations and warranties contained in this Agreement shall
survive only until the Effective Time.
Section 12.11 No Third Party Beneficiaries. This Agreement is not
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intended to and shall not create any rights in or confer any benefits upon any
Person or entity other than the parties hereto and the Persons identified in
Section 8.8.
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IN WITNESS WHEREOF, the parties to this Agreement have caused it to be
executed by their respective officers as of the day and year first written
above.
ATTEST: LANDMARK BANCSHARES, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary President & CEO
ATTEST: MNB BANCSHARES, INC.
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Secretary President & CEO
ATTEST: LANDMARK MERGER COMPANY
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary Chairman
ATTEST: LANDMARK FEDERAL SAVINGS BANK
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary President & CEO
ATTEST: SECURITY NATIONAL BANK
By: /s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Secretary President & CEO