-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, W6/PgmQykyQJU9nA3zKo1kl67WP111IgKHeHk9VTu2LE9n2iCsCyql3k80P0c0Fu +KGl8DM1lwHrYwhqcaUzaQ== 0000906280-95-000026.txt : 19950414 0000906280-95-000026.hdr.sgml : 19950414 ACCESSION NUMBER: 0000906280-95-000026 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19950407 SROS: MSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MIDSOUTH BANCORP INC CENTRAL INDEX KEY: 0000745981 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 721020809 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: 1933 Act SEC FILE NUMBER: 033-58499 FILM NUMBER: 95527741 BUSINESS ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 BUSINESS PHONE: 3182378343 MAIL ADDRESS: STREET 1: 102 VERSAILLES BLVD CITY: LAFAYETTE STATE: LA ZIP: 70501 S-4 1 As filed with the Securities and Exchange Commission on ________________, 1995 Registration No. 33- ============================================================================== Draft 4/5/95, 10:50 a.m. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 MidSouth Bancorp, Inc. (Exact name of registrant as specified in its charter) Louisiana 6711 72-1020809 (State or other (Primary Standard Industrial (I.R.S. Employer jurisdiction of Classification Code Number) Identification Number) incorporation or organization) 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 (318) 237-8343 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) Copy to: C. R. Cloutier Copy to: ANTHONY J. CORRERO, III P. O. Box 3745 ALAN JACOBS Correro, Fishman & Casteix, L.L.P. Lafayette, Louisiana 70502 McGlinchey Stafford Lang 47th Floor (318) 237-8343 A Law Corporation 201 St. Charles Avenue (Name, address, including 2777 Stemmon Freeway New Orleans, Louisiana 70170-4700 zip code, and telephones Suite 925 number, including area code, Dallas, Texas 75207 of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: Upon the date of the shareholders' meeting of Sugarland Bancshares, Inc. described in this registration statement. If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, please check the following box.
CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Title of Each Number of Offering Aggregate Class of Securities Shares Price Per Offering Amount of to be Registered to be Share Price Registration Fee Registered __________________________________________________________________________________________ Series A Cumulative Convertible Preferred Stock 187,286 $ 11.25 $ 2,106,968 $726.54 Common Stock, no par value 187,286 - - - __________________________________________________________________________________________
Calculated in accordance with Rule 457(f)(2), based on the aggregate book value as of December 31, 1994 of the shares of Common Stock of Sugarland Bancshares, Inc. to be converted in connection with the mergers described in this registration statement. Consists of shares that may be issued upon conversion of the Preferred Stock registered hereby. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ========================================================================== MIDSOUTH BANCORP, INC. CROSS REFERENCE SHEET
Item of Form S-4 Location in Prospectus A. Information About the Transaction 1. Forepart of Registration Statement Cover Page and Outside Front Cover Page of Prospectus 2. Inside Front and Outside Back Cover Inside Cover; Table of Contents Pages of Prospectus 3. Risk Factors, Ratio of Earnings to * Fixed Charges and Other Information 4. Terms of Transaction Summary; The Plan 5. Pro Forma Financial Information MidSouth Bancorp, Inc. Pro Forma Condensed Combined Financial Statements (Unaudited) 6. Material Contacts with the Company * Being Acquired 7. Additional Information Required for * Reoffering by Persons and Parties Deemed to be Underwriters 8. Interests of Named Experts and * Counsel 9. Disclosure of Commission Position * on Indemnification for Securities Act Liability B. Information About the Registrant 10.Information with Respect to S-3 * Registrants 11.Incorporation of Certain Information * by Reference 12.Information with Respect to S-2 or Information About MidSouth S-3 Registrants 13.Incorporation of Certain Information Information About MidSouth by Reference 14.Information with Respect to Registrants * other than S-2 or S-3 Registrants C. Information About the Company Being Acquired 15.Information with Respect to S-3 * Companies 16.Information with Respect to S-2 or * S-3 Companies 17.Information with Respect to Information about Sugarland Companies other than S-2 or S-3 Companies D. Voting and Management Information 18.Information if Proxies, Consents or Authorizations are to be Solicited (1) Date, Time and Place Introductory Statement-General Information (2) Revocability of Proxy Introductory Statement-Solicitation, Voting and Revocation of Proxies (3) Dissenters' Rights of Dissenters' Rights Appraisal (4) Persons Making Solicitation Introductory Statement-General (5) Interests of Certain Persons in Summary - Interests of Certain Persons in the Matters to be Acted Upon; Mergers; The Plan - Interests of Certain Voting Securities and Principal Persons in the Mergers; The Plan - Employee Holders Thereof Benefits; Information About Sugarland - Security Ownership of Principal Shareholders and Management; Security Ownership of Management and Certain Beneficial Owners of MidSouth (6) Vote Required for Approval Introductory Statement-Shares Entitled to Vote; Quorum; Vote Required (7) Directors and Executive Officers; Information About Sugarland; Executive Compensation; Certain Information About MidSouth; Relationships and Related Election of Directors of MidSouth; Transactions Security Ownership of Management and Certain Beneficial Owners of MidSouth; Executive Compensation and Certain Transactions 19.Information if Proxies, Consents or * Authorizations are not to be Solicited or in an Exchange Offer
* Not applicable or answer is in the negative. SUGARLAND BANCSHARES, INC. 1527 W. Main Street Jeanerette, Louisiana 70544 ___________ , 1995 Dear Shareholder: You are cordially invited to attend a Special Meeting of Shareholders of Sugarland Bancshares, Inc. ("Sugarland") to be held on ______________________, 1995 at _________ ___.m., local time at Sugarland's main office, 1527 W. Main Street, Jeanerette, Louisiana. At the meeting, you will be asked to consider and vote upon a proposal to approve an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things, Sugarland State Bank (the "Bank"), the banking subsidiary of Sugarland, will be merged into MidSouth National Bank ("MidSouth Bank"), the wholly-owned subsidiary of MidSouth Bancorp, Inc. ("MidSouth"), and Sugarland will merge into MidSouth (the "Holding Company Merger"). The terms of the Plan provide that, on the effective date of the Holding Company Merger, each outstanding share of common stock of Sugarland will be converted into one share of MidSouth preferred stock as more fully described in the attached Joint Proxy Statement and Prospectus. You are urged carefully to read the Joint Proxy Statement and Prospectus in its entirety for a more complete description of the terms of the Plan and the proposed Mergers. The Plan has been approved by your Board of Directors. The Board believes, based on its own analysis and the opinion of Sugarland's financial advisor (all of which are described in the accompanying Joint Proxy Statement and Prospectus), that the proposed mergers are in the best interest of Sugarland's shareholders. After consummation of the proposed mergers, you, as a new shareholder of MidSouth, will own convertible preferred stock in MidSouth, which is intended to be publicly traded on the American Stock Exchange Emerging Company Marketplace. As a result of the mergers, the combined entities, through MidSouth, will be better able to offer a broad range of banking services to its customers and to compete more effectively with holding companies and other financial institutions in the changing economic and legal environment facing all financial institutions. The Board of Directors recommends that you vote FOR the Plan and urges you to execute the enclosed proxy and return it promptly in the accompanying envelope. Very truly yours, D. J. Tranchina President SUGARLAND BANCSHARES, INC. 1527 W. Main Street Jeanerette, Louisiana 70544 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON ____________, 1995 Jeanerette, Louisiana ______________, 1995 A Special Meeting of Shareholders of Sugarland Bancshares, Inc. ("Sugarland") will be held on ___________, 1995 at__________ _____.m. local time at Sugarland's main office, 1527 W. Main Street, Jeanerette, Louisiana, to vote upon the following matters: 1. A proposal to approve an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things: (a) Sugarland State Bank, the subsidiary of Sugarland, will be merged into MidSouth National Bank, the wholly-owned subsidiary of MidSouth Bancorp, Inc. ("MidSouth"), (b) Sugarland will be merged into MidSouth and (c) on the effective date of the merger of MidSouth and Sugarland, each outstanding share of common stock of Sugarland will be converted into one share of MidSouth Series A Cumulative Convertible Preferred Stock as determined in accordance with the terms of the Plan. 2. Such other matters as may properly come before the Special Meeting and any adjournment thereof. Only shareholders of record at the close of business on __________________________, 1995 are entitled to notice of and to vote at the Special Meeting. Dissenting shareholders who comply with the procedural requirements of the Business Corporation Law of Louisiana will be entitled to receive payment of the fair cash value of their shares if the merger of MidSouth and Sugarland is effected upon approval by less than eighty percent (80%) of the total voting power of Sugarland. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the special meeting, please mark, date and sign the enclosed proxy and return it promptly in the enclosed stamped envelope. Your proxy may be revoked by appropriate notice to Sugarland's Secretary, or by execution and delivery of a later-dated proxy, at any time prior to the voting thereof. If you attend the Special Meeting, you may withdraw your proxy and vote in person. BY ORDER OF THE BOARD OF DIRECTORS __________________________________ Ronald R. Hebert, Sr., Secretary MIDSOUTH BANCORP, INC. 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 ______________, 1995 Dear Shareholder: You are invited to attend the annual meeting of shareholders of MidSouth Bancorp, Inc. ("MidSouth") to be held on ____________________________, 1995 at 2:00 p.m., local time at MidSouth's main office, 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana. At the meeting, you will be asked (i) to elect directors of MidSouth and (ii) to approve the issuance of up to 187,286 shares of MidSouth Series A Cumulative, Convertible Preferred Stock (the "Preferred Stock") in connection with an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things, Sugarland State Bank, the subsidiary of Sugarland Bancshares, Inc. ("Sugarland"), will merge into MidSouth National Bank ("MidSouth Bank"), the wholly- owned subsidiary of MidSouth, and Sugarland will merge into MidSouth the ("Holding Company Merger"). The terms of the Plan provide that, on the effective date of the Holding Company Merger, each outstanding share of common stock of Sugarland will be converted into one share of MidSouth Preferred Stock as more fully described in the attached Joint Proxy Statement and Prospectus. You are urged carefully to read the Joint Proxy Statement and Prospectus in its entirety for a more complete description of the terms of the Plan and the proposed mergers. The Plan has been approved unanimously by your Board of Directors. The Board believes that the proposed mergers are in the best interest of MidSouth's shareholders. As a result of the proposed mergers, through MidSouth Bank, MidSouth will be able to compete more effectively with holding companies and other financial institutions in the changing economic and legal environment facing all financial institutions. The Board of Directors recommends that you vote FOR the issuance of the Preferred Stock and urges you to execute the enclosed proxy and return it promptly in the accompanying envelope. Very truly yours, C.R. Cloutier President MIDSOUTH BANCORP, INC. 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON ____________, 1995 Lafayette, Louisiana ______________, 1995 The annual meeting of shareholders of MidSouth Bancorp, Inc. ("MidSouth") will be held on ___________, 1995 at 2:00 p.m. local time at MidSouth's main office, 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana, to vote upon the following matters: 1.The election of directors of MidSouth. 2. The issuance of up to 187,286 shares of MidSouth Series A Cumulative, Convertible Preferred Stock (the "Preferred Stock") in connection with an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan") pursuant to which, among other things: (a) Sugarland State Bank, the subsidiary of Sugarland Bancshares, Inc. ("Sugarland"), will merge into MidSouth National Bank, the wholly-owned subsidiary of MidSouth, (b) Sugarland will merge into MidSouth and (c) on the effective date of the merger of MidSouth and Sugarland, each outstanding share of common stock of Sugarland will be converted into one share of Preferred Stock as determined in accordance with the terms of the Plan. 3. Such other matters as may properly come before the meeting or any adjournments thereof. Only shareholders of record at the close of business on ___________________________, 1995 are entitled to notice of and to vote at the annual meeting. Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the annual meeting, please mark, date and sign the enclosed proxy and return it promptly in the enclosed stamped envelope. Your proxy may be revoked by appropriate notice to MidSouth's Secretary at any time prior to the voting thereof. BY ORDER OF THE BOARD OF DIRECTORS ___________________________________ Karen L. Hail, Secretary PROSPECTUS MIDSOUTH BANCORP, INC. Series A Cumulative Convertible Preferred Stock _____________________ JOINT PROXY STATEMENT MidSouth Bancorp, Inc. Annual Meeting of Shareholders to be held ______________, 1995 Sugarland Bancshares, Inc. Special Meeting of Shareholders to be held _____________, 1995 MidSouth Bancorp, Inc. ("MidSouth") has filed a Registration Statement pursuant to the Securities Act of 1933 (the "Securities Act") covering up to 187,286 shares of Cumulative, Convertible Preferred Stock, Series A, of MidSouth (the "Preferred Stock") which may be issued in connection with a proposed merger of Sugarland Bancshares, Inc. ("Sugarland") into MidSouth. This document constitutes the Joint Proxy Statement of MidSouth and Sugarland in connection with the transactions described herein and a Prospectus of MidSouth with respect to the shares of MidSouth Preferred Stock to be issued if the merger is consummated. ___________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ___________________ No person has been authorized to give any information or to make any representations other than those contained in this Joint Proxy Statement and Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by MidSouth or Sugarland. This Joint Proxy Statement and Prospectus shall not constitute an offer by MidSouth to sell or the solicitation of an offer by MidSouth to buy, nor shall there be any sale of the securities offered by this Joint Proxy Statement and Prospectus in any state in which, or to any person to whom, it would be unlawful prior to registration or qualification under the laws of such state for MidSouth to make such an offer or solicitation. Neither the delivery of this Joint Proxy Statement and Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of MidSouth or Sugarland since the date hereof. ___________________ This Joint Proxy Statement and Prospectus is dated __________, 1995. AVAILABLE INFORMATION MidSouth is subject to the informational requirements of the Securities Exchange Act of 1934 and in accordance therewith is required to file reports and other information with the Securities and Exchange Commission (the "Commission"). Such reports, together with proxy statements and other information filed by MidSouth, can be inspected at and copies thereof may be obtained at prescribed rates from, the public reference facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and from the Commission's Regional Offices at 7 World Trade Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. MidSouth has filed with the Commission a Registration Statement on Form S-4 ("Registration Statement") under the Securities Act with respect to the Preferred Stock offered by this Joint Proxy Statement and Prospectus. This Joint Proxy Statement and Prospectus does not contain all of the information set forth in the Registration Statement or the exhibits thereto. Statements contained in this Joint Proxy Statement and Prospectus as to the contents of any documents are necessarily summaries of the documents, and each statement is qualified in its entirety by reference to the copy of the applicable document filed with the Commission. For further information with respect to MidSouth, reference is made to the Registration Statement, including the exhibits thereto. As more fully set forth under the heading captioned "Information about MidSouth" elsewhere herein, certain information with respect to MidSouth has been incorporated by reference into this Joint Proxy Statement and Prospectus. In addition, the Agreement and Plan of Merger and related merger agreement described in this Joint Proxy Statement and Prospectus has been incorporated herein by reference. MidSouth hereby undertakes to provide without charge to each person to whom a copy of this Joint Proxy Statement and Prospectus has been delivered, upon the written or oral request of such person, a copy of any or all of the information or documents which have been incorporated by reference herein, other than exhibits to such documents. Requests for such copies should be directed to C.R. Cloutier, President, MidSouth Bancorp, Inc., 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501, telephone (318) 237-8343. In order to ensure timely delivery of the documents, any request should be made by ______________, 1995. TABLE OF CONTENTS SUMMARY Page The Companies ..................................... i The Banks ......................................... i The Meetings ...................................... i Purpose of the Meetings; Vote Required ............ ii Reasons for the Plan; Recommendation of the Companies' Boards of Directors .................. iii Opinion of Chaffe & Associates, Inc. .............. iv Conversion of Sugarland Common Stock .............. iv Description of MidSouth Preferred Stock ........... iv Exchange of Certificates .......................... vi Conditions to Consummation of the Mergers ......... vi Waiver, Amendment and Termination ................. vii Interests of Certain Persons in the Mergers ....... viii Joinder of Shareholders ........................... viii Employee Benefits ................................. ix Certain Federal Income Tax Consequences ........... ix Dissenters' Rights ................................ ix Selected Financial Data of Sugarland .............. x Selected Financial Data of MidSouth ............... xi Comparative Per Share Data (Unaudited) ............ xii Market Prices and Dividends ....................... xiii INTRODUCTORY STATEMENT ....................................... 1. General ........................................... 1. Purpose of the Meetings ........................... 1. Shares Entitled to Vote; Quorum; Vote Required .... 2. Solicitation, Voting and Revocation of Proxies .... 3. THE PLAN ..................................................... 4. General ........................................... 4. Background of and Reasons for the Plan ............ 4. Opinion of Chaffe & Associates, Inc. .............. 6. Conversion of Sugarland Common Stock .............. 10. Effective Date .................................... 11. Exchange of Certificates .......................... 11. Regulatory Approvals and Other Conditions of the Mergers .......................................... 12. Conduct of Business Prior to the Effective Date ............................................. 13. Waiver, Amendment and Termination ................. 14. Interests of Certain Persons in the Mergers ....... 15. Joinder of Shareholders ........................... 16. Employee Benefits ................................. 17. Expenses .......................................... 17. Status Under Federal Securities Laws; Certain Restrictions on Resales .......................... 17. CERTAIN FEDERAL INCOME TAX CONSEQUENCES ...................... 18. DISSENTERS' RIGHTS ........................................... 19. INFORMATION ABOUT SUGARLAND .................................. 21. Description of the Business ....................... 21. Competition ....................................... 22. Property .......................................... 23. Employees ......................................... 23. Market Prices and Dividends ....................... 23. Legal Proceedings ................................. 24. Security Ownership of Principal Shareholders and Management ..................... 24. SUGARLAND MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................ 26. INFORMATION ABOUT MIDSOUTH ................................... 40. COMPARATIVE RIGHTS OF SHAREHOLDERS ........................... 40. Preferred Stock ................................... 40. Directors ......................................... 41. Business Combinations ............................. 41. Special Meetings of Shareholders .................. 42. Bylaws ............................................ 42. Vote Required for Shareholder Action .............. 42. Limitation of Personal Liability and Indemnification of Directors and Officers ....... 43. RIGHTS AND PREFERENCES OF MIDSOUTH PREFERRED STOCK ........... 43. Dividend Rights ................................... 43. Redemption Rights ................................. 45. Conversion Rights ................................. 45. Voting Rights ..................................... 45. Liquidation Rights ................................ 46. Preemptive Rights ................................. 46. PRO FORMA FINANCIAL STATEMENTS ............................... 46. ELECTION OF DIRECTORS OF MIDSOUTH ............................ 52. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS OF MIDSOUTH ........................ 55. Security Ownership of Management .................. 55. Security Ownership of Certain Beneficial Owners .......................................... 57. EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS .............. 58. Summary Compensation Table ........................ 58. Option Exercises and Holdings ..................... 59. Employment and Severance Contracts ................ 59. Certain Transactions .............................. 59. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS ............. 60. SHAREHOLDER PROPOSALS ........................................ 60. LEGAL MATTERS ................................................ 60. EXPERTS ...................................................... 60. OTHER MATTERS ................................................ 60. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF SUGARLAND ................................................. F-1 SUGARLAND BANCSHARES, INC. CONSOLIDATED FINANCIAL STATEMENTS ................................................... F-2 Appendix A - Fairness Opinion of Chaffe & Associates, Inc. Appendix B - Form of Provisions of Articles of Incorporation of MidSouth Relating to the Preferred Stock SUMMARY The following summary is necessarily incomplete and is qualified in its entirety by the more detailed information appearing elsewhere herein, the appendices hereto and the documents incorporated herein by reference. Shareholders are urged to read carefully all such material. As of the date of this Joint Proxy Statement and Prospectus, Sugarland Bancshares, Inc. owns 99.8% of the outstanding stock of Sugarland State Bank and is in the process of acquiring the remaining .2%. See "The Plan-General." The Companies MidSouth Bancorp, Inc., a Louisiana corporation ("MidSouth") is a one bank holding company that owns all of the outstanding stock of MidSouth National Bank ("MidSouth Bank"). At December 31, 1994, MidSouth had total consolidated assets of approximately $104 million and shareholders' equity of approximately $5.4 million. MidSouth's principal executive offices are at 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501, and its telephone number is (318) 237-8343. See "Information About MidSouth." Sugarland Bancshares, Inc., a Louisiana corporation ("Sugarland"), is a one bank holding company that owns 99.8% of the outstanding stock of Sugarland State Bank (the "Bank"). At December 31, 1994, Sugarland had total consolidated assets of approximately $17.5 million and shareholders' equity of approximately $2.1 million. Sugarland's principal executive offices are at 1527 W. Main Street, Jeanerette, Louisiana 70544, and its telephone number is (318) 276-6307. See "Information About Sugarland." MidSouth and Sugarland are collectively referred to herein as the "Companies." The Banks MidSouth Bank is a full service commercial bank offering consumer and commercial banking services in Lafayette, Iberia, Jefferson Davis and St. Martin Parishes. At December 31, 1994, MidSouth Bank had total assets of approximately $104 million and total deposits of approximately $96 million. In addition to its main banking facility in Lafayette, Louisiana, MidSouth Bank operates full service branches in Breaux Bridge, Cecilia and Jennings, Louisiana, and also operates four ATM machines, three in Lafayette and one in Breaux Bridge. The Bank, a Louisiana state chartered bank, is a full service commercial bank offering consumer and commercial banking services in Iberia Parish. At December 31, 1994, the Bank had total assets of approximately $17.5 million and total deposits of approximately $15.3 million. In addition to its main banking facility in Jeanerette, Louisiana, the Bank operates a full service branch in New Iberia, Louisiana. MidSouth Bank and the Bank are collectively referred to herein as the "Banks." The Meetings The annual meeting of the shareholders of MidSouth and a special meeting of the shareholders of Sugarland will be held on __________ , 1995 and ______, 1995, respectively, at the time and place set forth in the accompanying Notice of Annual Meeting of Shareholders of MidSouth (the "Annual Meeting") and Notice of Special Meeting of Shareholders of Sugarland (the "Special Meeting") (the Annual Meeting and the Special Meeting are collectively referred to herein as the "Meetings"). Only record holders of the common stock (the "MidSouth Common Stock") of MidSouth at the close of business on ___________________________, 1995 are entitled to notice of and to vote at the Annual Meeting. Only record holders of the common stock (the "Sugarland Common Stock") of Sugarland at the close of business on ______________, 1995 are entitled to notice of and to vote at the Special Meeting. On the respective record dates, there were 736,375 shares of MidSouth Common Stock outstanding and 187,286 shares of Sugarland Common Stock outstanding, each of which is entitled to one vote on each matter properly to come before the Meeting of the respective Company. Purpose of the Meetings; Vote Required The purpose of the Special Meeting is to vote upon a proposal to approve an Agreement and Plan of Merger and related merger agreement (collectively, the "Plan"), pursuant to which the Bank will be merged into MidSouth Bank (the "Bank Merger"), and Sugarland will be merged into MidSouth (the "Holding Company Merger" which, together with the Bank Merger, are collectively called the "Mergers"), and on the effective date of the Holding Company Merger, each outstanding share of Sugarland Common Stock will be converted into one share of Cumulative Convertible Preferred Stock, Series A, of MidSouth (the "Preferred Stock"), in accordance with the terms of the Plan. As a result of the Mergers the business and properties of the Bank will become the business and properties of MidSouth Bank, the business and properties of Sugarland will become the business and properties of MidSouth, and shareholders of Sugarland will receive the consideration described below under "Conversion of Sugarland Common Stock." See "Introductory Statement - Purpose of the Meetings." The purpose of the Annual Meeting is to vote upon a proposal to approve the issuance up to 187,286 shares of the Preferred Stock of MidSouth to be issued to shareholders of Sugarland in exchange for their Sugarland Common Stock in connection with the Mergers. Shareholders of MidSouth, in addition to voting on the Plan, will also elect directors. See "Introductory Statement - Purpose of the Meetings." The Plan must be approved by the shareholders of Sugarland by the affirmative vote of two-thirds of the voting power present, in person or by proxy, at the Special Meeting. Directors, executive officers and certain principal shareholders of Sugarland beneficially owning an aggregate of 89,956 shares, or approximately 48.03% of the outstanding Sugarland Common Stock, have executed agreements pursuant to which, among other things, they agreed, subject to certain conditions, to vote in favor of approval of the Plan. Approval of the Plan by the shareholders of MidSouth is not required under either the Louisiana Business Corporation Law (the "LBCL") or the Articles of Incorporation of MidSouth. However, under the rules of the American Stock Exchange Emerging Company Market (the "AMEX") on which the MidSouth Common Stock is listed, shareholders of MidSouth are required to approve the issuance of the Preferred Stock to be exchanged for the Sugarland Common Stock in connection with the Mergers. The proposal to issue the Preferred Stock must be approved by the affirmative vote of a majority of the votes cast at the Annual Meeting. The directors and executive officers of MidSouth owning an aggregate of 306,616 shares, or approximately 42.9% of the outstanding MidSouth Common Stock, have informed MidSouth that they intend to vote their shares in favor of issuance of the Preferred Stock. See "Introductory Statement - Shares Entitled to Vote; Quorum; Vote Required." Reasons for the Plan; Recommendation of the Companies' Boards of Directors The Board of Directors of Sugarland believes that approval of the Plan is in the best interest of Sugarland and its shareholders and recommends that its shareholders vote "FOR" the approval of the Plan. The Board of Directors of Sugarland believes that the terms of the Plan will provide significant value to all Sugarland shareholders and enable them to participate in opportunities for growth that Sugarland's Board of Directors believes the Mergers make possible. In recommending the Plan to Sugarland's shareholders, Sugarland's Board of Directors considered, among other factors, the financial terms of the Plan; the likelihood and potential adverse impact of increased competition for Sugarland in its market area if Sugarland remains independent; the ability of the combined Companies and Banks to compete in the relevant banking markets; the market price of MidSouth Common Stock; the business, financial condition, results of operation and prospects of MidSouth, MidSouth Bank, Sugarland and the Bank; the respective dividend policies of MidSouth and Sugarland; and the federal income tax consequences of the Plan to Sugarland's shareholders, to the extent MidSouth Preferred Stock is received in the Holding Company Merger. The Board of Directors of MidSouth believes that approval of the issuance of the Preferred Stock is in the best interest of MidSouth and its shareholders. In addition to the financial terms, among the factors considered by the Board in recommending the issuance of the Preferred Stock were (i) the increased competitive advantages available to MidSouth and MidSouth Bank through the combined capital of the Banks and the economies of scale created as a result of the Mergers, and (ii) the increased market share and additional markets available to MidSouth and MidSouth Bank as a result of the Mergers. The financial and other terms of the Plan were arrived at through arm's length negotiations between representatives of the Companies. Determination of the consideration to be received by Sugarland's shareholders was based upon various factors considered by the Boards of Directors of MidSouth and Sugarland, including primarily the comparative financial condition, historical results of operations, current business and future prospects of the Companies and the Banks, and the desirability of combining the financial and managerial resources of the Banks to pursue available consumer and commercial banking business in Lafayette, Jefferson Davis, Iberia and St. Martin parishes. The Boards of Directors of the Companies have approved the Plan. The Board of Directors of Sugarland recommends that its shareholders vote FOR approval of the Plan, and the Board of Directors of MidSouth recommends that its shareholders vote FOR the issuance of the Preferred Stock. See "The Plan - Background of and Reasons for the Plan." Opinion of Chaffe & Associates, Inc. Chaffe & Associates, Inc. ("Chaffe") was engaged as an independent financial expert to render an opinion as to the fairness to Sugarland and its shareholders from a financial point of view of the consideration to be received by Sugarland's shareholders pursuant to the provisions of the Plan. Chaffe was selected because of its experience, reputation and expertise in the financial services industry. A copy of the opinion delivered by Chaffe dated December 30, 1994 is attached as Appendix A and should be read in its entirety. The opinion concludes that, as of December 30, l994, and based on and subject to the assumptions made, the factors considered, the review undertaken and the limitations stated, the proposed Exchange Ratio (as defined in the opinion) is fair to Sugarland and its shareholders from a financial point of view. The opinion does not constitute a recommendation to any shareholder on how to vote at the Special Meeting. See "The Plan - Opinion of Chaffe & Associates, Inc." for further information regarding, among other things, the selection of Chaffe and its compensation arrangement in connection with the Plan. Conversion of Sugarland Common Stock Under the terms of the Plan, on the date the Holding Company Merger becomes effective (the "Effective Date"), and assuming no Sugarland shareholders perfect dissenters' rights, each outstanding share of Sugarland Common Stock will be converted into a number of shares of MidSouth Preferred Stock equal to the quotient of 187,286 divided by the number of outstanding shares of Sugarland Common Stock on the Effective Date. Currently, there are 187,286 shares of Sugarland Common Stock outstanding. Accordingly, assuming no change in the number of outstanding shares of Sugarland, each share of Common Stock of Sugarland will be converted into one share of MidSouth Preferred Stock. See "The Plan - Conversion of Sugarland Common Stock." In lieu of the issuance of any fractional share of Preferred Stock to which a holder of Sugarland Common Stock may be entitled, each shareholder of Sugarland, upon surrender of the certificate or certificates which immediately prior to the Effective Date represented Sugarland Common Stock held by such shareholder, will be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by $14.25. See "The Plan- Conversion of Sugarland Common Stock." Description of MidSouth Preferred Stock Dividend Rights. Cash dividends on shares of MidSouth Preferred Stock are cumulative from the date of issuance of such shares and are payable when, as and if declared by the MidSouth Board of Directors, out of funds legally available therefor, at an annual rate (except in certain cases with respect to dividends due in 1995) fixed on December 31 of each year for the ensuing calendar year, and equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum; provided that the annual dividend rate will in no case be greater than 10% nor less than 6%; and provided further that the annual dividend rate will be fixed at 10% from and after the tenth anniversary of the date of issuance of the Preferred Stock. If more than one yield is shown for December maturities, the average will be applied, and if no yield is quoted for December maturities, the yield for the next earlier available month will be applied. On the basis of the foregoing, from the date of issuance of the Preferred Stock through December 31, 1995, the annual dividend rate will be 8.28%. Dividends payable on the Preferred Stock will be paid on the first day of January, April, July and October of each year, provided that the initial dividend will be payable on the first day of January, April, July or October that is at least 91 days from the date of original issuance of the Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days. The aggregate amount of the initial dividend payable to holders of Preferred Stock (A) will be increased by the amount by which certain expenses of Sugarland related to the Plan are less than $110,000 (the "Additional Amount"), or (B) will be reduced by the amount by which certain expenses (as defined in the Articles) exceed $110,000 (the "Subtracted Amount"). In any case in which the Additional Amount is greater than the dividend that would have been paid for the 90 excluded days set forth or in which the Subtracted Amount is greater than the amount otherwise payable under this paragraph, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. If any quarterly dividend is not paid when due, the unpaid amount will bear interest at a rate of 10% per annum until paid. See "Rights and Preferences of MidSouth Preferred Stock-Dividend Rights." Redemption. On or after the fifth anniversary of the date of issuance of the Preferred Stock, MidSouth may, at its option, redeem the whole, or from time to time, any part of the Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Preferred Stock to the date fixed for redemption, whether or not earned or declared and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Preferred Stock, if any. See "Rights and Preferences of MidSouth Preferred Stock-Redemption Rights." Conversion. At their option, holders of the shares of MidSouth Preferred Stock may convert such stock into shares of MidSouth Common Stock at a conversion rate of one share of common stock for each share of Preferred Stock converted at any time prior to redemption of the Preferred Stock. The conversion rate is subject to adjustment from time to time as further provided in MidSouth's Articles of Incorporation. See "Rights and Preferences of MidSouth Preferred Stock- Conversion Rights." Voting Rights. Except as otherwise required by law or in MidSouth's Articles of Incorporation, holders of MidSouth Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to notice of any meeting of shareholders of MidSouth. If at any time MidSouth falls in arrears in the payment of dividends on the Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full Board of Directors of MidSouth shall be automatically increased by two, and the holders of the Preferred Stock, voting separately as a single class, will be entitled to elect two directors of MidSouth to fill the two created directorships, at a special meeting called for the purpose, and thereafter at each shareholders meeting held for the purpose of electing directors of MidSouth, so long as there continues to be any arrearage in the payment of dividends on the Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. When all accumulated and unpaid dividends on the Preferred Stock for all past quarterly dividend periods, and the interest thereon, have been paid in full, the right of the holders of the Preferred Stock to elect directors will cease, the number of the directors of MidSouth shall automatically be reduced by two, and the term of office of all directors elected by the shareholders of the Preferred Stock will immediately terminate. See "Rights and Preferences of MidSouth Preferred Stock-Voting Rights." Liquidation Preference. The liquidation preference of the Preferred Stock will be $14.25 per share, plus an amount equal to accrued and unpaid dividends and accrued interest thereon. See "Rights and Preferences of MidSouth Preferred Stock - Liquidation Rights." Exchange of Certificates Upon consummation of the Mergers, a letter of transmittal, together with instructions for the exchange of certificates representing shares of Sugarland Common Stock for certificates representing shares of MidSouth Preferred Stock, will be mailed to each person who was a shareholder of record of Sugarland on the Effective Date. Shareholders are requested not to send in their Sugarland Common Stock certificates until they have received a letter of transmittal and further written instructions. Sugarland shareholders who cannot locate their certificates are urged to contact promptly Ronald R. Hebert, Sr., Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544, telephone number (318) 276-6307. A new certificate will be issued to replace the lost certificate(s) only upon execution by the shareholder of an affidavit certifying that his certificate(s) cannot be located and an agreement to indemnify Sugarland and MidSouth, as its successor, against any claim that may be made against Sugarland or MidSouth, as its successor, by the owner of the certificate(s) alleged to have been lost or destroyed. Sugarland or MidSouth, as its successor, may also require the shareholder to post a bond in such sum as is sufficient to support the shareholder's agreement to indemnify Sugarland and MidSouth. See "The Plan - Exchange of Certificates." Conditions to Consummation of the Mergers In addition to approval by the shareholders of MidSouth and Sugarland, consummation of the Mergers is conditioned upon (i) the accuracy on the date of closing of the representations and warranties and the compliance with covenants made in the Plan by each party, and the absence of any material adverse change in the financial condition, results of operations, business or prospects of the other party's consolidated group; (ii) the receipt of required regulatory approvals; (iii) the receipt of assurances from the Board of Governors of the Federal Reserve System ("FRB") or delegated authority satisfactory to MidSouth, that the Preferred Stock will be treated as Tier 1 Capital of MidSouth for the purpose of capital adequacy guidelines of the FRB and (iv) certain other conditions. The Plan further provides that if MidSouth does not receive assurance from the FRB that the Preferred Stock will be treated as Tier 1 Capital due to any term or provision of the Preferred Stock, MidSouth shall propose a revision of such form or provision so as to cause the Preferred Stock to be treated as Tier 1 Capital, and Sugarland shall have 15 days from the receipt of such proposal to accept it and permit this condition to be met. As of the date of the Joint Proxy Statement and Prospectus, MidSouth had received such assurances. The Companies intend to consummate the Mergers as soon as practicable after all of the conditions to the Mergers have been met or waived. See "The Plan - Regulatory Approvals and Other Conditions of the Mergers." On January 25, 1995, MidSouth filed an application seeking prior approval of the Bank Merger from the Office of the Comptroller of the Currency (the "OCC") and by letter dated January 30, 1995 requested a waiver of approval of the Holding Company Merger from the FRB. MidSouth received the approval from the OCC on March 22, 1995 and the waiver from the FRB on March 17, 1995; however, there is no assurance that the other conditions to consummation of the Mergers will be satisfied. See "The Plan - Regulatory Approvals and Other Conditions of the Mergers." Waiver, Amendment and Termination The Plan provides that each of the parties to the Plan may waive any of the conditions to its obligation to consummate the Mergers other than approval by shareholders, the receipt of all necessary regulatory approvals and the satisfaction of all requirements prescribed by law for consummation of the Mergers. The Plan may be amended at any time before or after its approval by Sugarland's shareholders by the mutual agreement of the Boards of Directors of the parties to the Plan; provided that, under the LBCL, any amendment made subsequent to such shareholder approval may not alter the amount or type of shares into which Sugarland Common Stock will be converted, or alter any term or condition of the Plan in a manner that would adversely affect any Sugarland shareholder. The Plan may be terminated at any time prior to the Effective Date by (i) the mutual consent of the Boards of Directors of MidSouth and Sugarland; (ii) the Board of Directors of either MidSouth or Sugarland in the event of a material breach by the other or its subsidiary of any representation, warranty or covenant in the Plan which cannot be cured by the earlier of ten days after written notice of such breach or June 30, 1995; (iii) the Board of Directors of either MidSouth or Sugarland if by June 30, 1995, all the conditions to closing required by the Plan have not been met or waived, cannot be met or the Mergers have not occurred; (iv) the Board of Directors of MidSouth if, at the time of the closing, the number of shares of Sugarland Common Stock as to which holders thereof are legally entitled to assert dissenters' rights exceeds five percent of the total number of shares of Sugarland Common Stock outstanding on the Closing Date; (v) the Board of Directors of MidSouth if Sugarland's Board of Directors (A) withdraws, modifies or changes its recommendation to its shareholders of the Plan or resolves to do so, (B) recommends to its shareholders (i) any other merger, consolidation, share exchange, business combination or other similar transaction, (ii) any sale, lease, transfer or other disposition of all or substantially all of the assets of Sugarland or the Bank or (iii) any acquisition by any person or group of the beneficial ownership of thirty-three and one-third percent or more of any class of Sugarland's capital stock or (C) makes any announcement of an intention or agreement to do any of the foregoing. See "The Plan - Waiver, Amendment and Termination." Interests of Certain Persons in the Mergers MidSouth and MidSouth Bank have agreed that, subject to certain conditions, they will indemnify each person who served as an officer or director of Sugarland or the Bank at any time from December 31, 1992, and who has executed a Joinder of Shareholders, from and against all damages, liabilities, judgments and claims and related expenses based upon or arising out of such person's service in such capacity to the same extent as he would have been indemnified under the applicable Articles of Incorporation or Bylaws of Sugarland or the Bank, as appropriate, as they were in effect on December 28, 1994. The aggregate amount of indemnification payments required to be made by MidSouth and MidSouth Bank to such persons is $1.2 million and any claim for such indemnification must be submitted in writing to the Chief Executive Officer of MidSouth prior to December 28, 1999. The Plan also provides for indemnification of Sugarland's and the Bank's officers, directors and controlling persons from and against any claims arising out of or based on an untrue statement or omission of a material fact required to be stated in the Registration Statement, of which this Joint Proxy Statement and Prospectus forms a part. This indemnification does not apply to statements made in reliance on information furnished to MidSouth by Sugarland. Joinder of Shareholders It is anticipated that MidSouth or MidSouth Bank will enter into employment contracts providing for employment following the Mergers of one or more executive officers of the Bank, including Mr. D.J. Tranchina, the President and a director of Sugarland and the Bank. The terms of any such employment contracts have not yet been determined. As a condition to the consummation of the Mergers, each director and executive officer of Sugarland and each shareholder who beneficially owns 5% or more of the outstanding shares of Sugarland Common Stock has executed an individual agreement pursuant to which such shareholder has agreed (i) to vote as a shareholder in favor of the Plan and against any other proposal relating to the sale or disposition of the Bank or Sugarland unless MidSouth or MidSouth Bank is in breach or default, in any material respect, with regard to any covenant, representation, or warranty as to it contained in the Plan to an extent that would permit Sugarland to terminate the Plan pursuant to the terms thereof; (ii) not to transfer any shares of Sugarland Common Stock, except under certain conditions and with respect to transfers by operation of law; (iii) prior to the Effective Date or until termination of the Plan, and except to the extent required to discharge properly his fiduciary duties as a director of Sugarland, not to solicit, encourage, initiate or participate in any negotiations or discussions concerning the acquisition of all or a substantial portion of the assets of, or of a substantial equity interest in, or any business combination with Sugarland or the Bank without the prior approval of the Chief Executive Officer of MidSouth or his designee, and to notify MidSouth immediately if any such proposal or inquiries are received by him; (iv) to release MidSouth and MidSouth Bank from any indemnification obligations that either of them may have to indemnify him in his capacity as an officer, director or employee of Sugarland or the Bank except as set forth in the Plan; (v) not to assume a significant proprietary position with or serve as a director, officer or employee of, or advisor to, a financial institution that competes in Iberia and Lafayette Parishes with the business of Bank as continued by MidSouth Bank for a period of two years following the Effective Date; and (vi) not to trade in MidSouth Common Stock until the Effective Time of the Holding Company Merger or until the Plan has been terminated. See "The Plan - Joinder of Shareholders." Employee Benefits Pursuant to the Plan, MidSouth has agreed that, from and after the Effective Date, MidSouth and MidSouth Bank will offer to all persons who were employees of Sugarland or the Bank immediately prior to the Effective Date and who become employees of MidSouth or MidSouth Bank following the Mergers, the same employee benefits as are offered by MidSouth or MidSouth Bank, as the case may be, to its employees, except that there will not be a waiting period for coverage under any of its plans, and no employee of Sugarland or the Bank who is an active employee on the Effective Date will be denied benefits under such plans for a pre-existing condition. Full credit will be given for prior service by such employees with Sugarland or the Bank for eligibility and vesting purposes under all of MidSouth's and MidSouth Bank's benefit plans and policies. All benefits accrued through the Effective Date under the benefit plans of Sugarland or the Bank will be paid by MidSouth or MidSouth Bank as the case may be to the extent such benefits are not otherwise provided to such employees through the benefit plans of MidSouth or MidSouth Bank, as the case may be. MidSouth and MidSouth Bank are not obligated to continue any employee benefit or ERISA plans maintained by Sugarland or the Bank prior to the Effective Date. See "The Plan - Employee Benefits." Certain Federal Income Tax Consequences Consummation of the Mergers is conditioned upon receipt by the Companies of an opinion from Deloitte & Touche LLP to the effect that, among other things, each of the Mergers will qualify as a tax-free reorganization under applicable law, and that each Sugarland shareholder who receives MidSouth Preferred Stock pursuant to the Holding Company Merger will not recognize gain or loss except with respect to the receipt of cash (i) in lieu of fractional shares of MidSouth Common Stock, or (ii) pursuant to the exercise of dissenters' rights. Because of the complexity of the tax laws, each shareholder should consult his tax advisor concerning the applicable federal, state and local income tax consequences of the Mergers. See "Certain Federal Income Tax Consequences." Dissenters' Rights Under certain conditions, and by complying with the specific procedures required by statute and described herein, shareholders of Sugarland will have the right to dissent from the Holding Company Merger, in which event, if the Holding Company Merger is consummated, they will be entitled to receive in cash the fair value of their shares of Sugarland Common Stock. See "Dissenters' Rights." Shareholders of MidSouth will not have dissenters' rights. Selected Financial Data of Sugarland The following selected financial data of Sugarland with respect to each year in the five-year period ended December 31, 1994, has been derived from Sugarland's consolidated financial statements and should be read in conjunction with Sugarland's consolidated financial statements, the notes thereto and "Sugarland Management's Discussion and Analysis of Financial Condition and Results of Operations" appearing elsewhere in this Joint Proxy Statement and Prospectus.
(In thousands of dollars, except per share data) Years Ended December 31, 1994 1993 1992 1991 1990 Average Balance Sheet Data: Total assets $ 17,188 $ 18,037 $ 17,125 $ 15,967 $ 15,117 Earning assets 14,715 15,625 14,563 13,544 12,862 Loans (net of unearned 8,296 8,22l 8,102 8,008 6,872 discount) Deposits 15,005 15,900 15,093 14,053 13,293 Shareholders' equity 2,120 2,056 1,932 1,840 1,746 Income Statement Data: Total interest income $ 1,219 $ 1,268 $ 1,295 $ 1,381 $ 1,357 Net interest income 853 860 793 716 638 Provision for possible -- -- -- -- -- loan losses Net income 162 188 137 121 114 Per Share Data: Net income $ 0.87 $ 1.01 $ 0.73 $ 0.64 $ 0.61 Cash dividends -- .20 .18 .15 .15 Book value (period end) 11.25 11.30 10.51 10.00 9.51 Selected Ratios: Net income as a percent 0.94% 1.04% 0.80% 0.76% 0.75% of average total assets Net income as a percent 7.64% 9.14% 7.09% 6.58% 6.53% of average equity Average equity as a 12.33% 11.40% 11.28% 11.52% 11.55% percent of average assets
Selected Financial Data of MidSouth The following selected financial data with respect to each of the fiscal years in the five-year period ended December 31, 1994, has been derived from MidSouth's consolidated financial statements and should be read in conjunction with MidSouth's 1994 Annual Report on Form 10-KSB, which has been incorporated by reference in this Joint Proxy Statement and Prospectus.
(In thousands of dollars, except per share data) Years Ended December 31 1994 1993 1992 1991 1990 Average Balance Sheet Data: Total assets $ 101,547 $ 86,482 $ 82,296 $ 82,296 $ 82,456 Earning assets 93,047 78,750 75,432 74,859 74,148 Loans and leases 55,60l 45,l24 39,95l 4l,956 44,984 Securities 33,7l6 28,655 32,ll2 27,l28 25,069 Deposits 94,l64 80,466 77,667 78,6l0 77,659 Long-term debt 1,196 786 954 983 1,039 Shareholders' equity 5,443 4,267 2,887 l,973 2,790 Income Statement Data: Total interest $ 7,388 $ 6,371 $ 6,683 $ 7,698 $ 8,300 income Net interest income 5,412 4,567 4,272 3,958 4,00l Provision for loan losses 210 306 365 518 2,318 Other income (exclusive of securities transactions) 1,422 1,161 1,046 1,000 1,012 Operating expense 4,882 4,653 4,106 4,103 4,301 Net income 1,142 1,245 905 44l (1,685) Per Share Data: Earnings per share $ 1.61 $ 1.93 $ l.46 $ 0.8l ($ 3.23) Cash dividends N/A N/A N/A N/A N/A Book value 7.53 8.15 5.73 4.21 3.16 (period ended) High stock price 12.50 9.52 N/A N/A N/A Low stock price 8.75 8.81 N/A N/A N/A Key ratios: Net income as a 1.12% 1.13% 1.10% .54% (2.03%) percent of average total assets Net income as a 20.98% 22.88% 31.33% 22.35% (60.44%) percent of average equity Net interest margin 5.81% 5.80% 5.66% 5.30% 5.43% Allowance for loan losses to loans and leases 1.45% 1.66% 2.09% 2.14% 3.11% Leverage ratio 6.45% 5.94% 5.06% 3.84% 2.78 Dividend payout N/A N/A N/A N/A N/A ratio
Notes: Actual figures have been provided for long- term debt obligations which include an ESOP borrowing and, in 1994, FHLB borrowings. Earnings per share have been adjusted for a 5% stock dividend paid by the Company on February 18, 1994. No market price information is available for the years 1992, 1991 and 1990. Exclusive of income taxes, extraordinary item and cumulative effect of accounting change for the year ended December 31, 1993. Comparative Per Share Data (Unaudited) The following table presents certain information for MidSouth and Sugarland on an historical, unaudited pro forma combined and unaudited pro forma equivalent basis. The unaudited pro forma combined information is based upon the historical financial condition and results of operations of the Companies and adjustments directly attributable to the proposed Holding Company Merger based on estimates derived from information currently available. They do not purport to be indicative of the results that would actually have been obtained if the Holding Company Merger had been in effect on the date or for the periods indicated below, or the results that may be obtained in the future.
Comparative Per Share Data (unaudited) December 31, 1994 Historical Pro Forma Sugarland MidSouth Sugarland Combined Equivalent Primary earnings per common $1.61 $0.87 $1.48 $1.48 share Fully diluted earnings per - - 1.42 1.42 common share Dividends declared per common share - - - - Book value per common share $7.53 $11.25 $8.92 8.92
______________________ Pro forma equivalent amounts are calculated by multiplying the combined pro forma amount by l.0, the number of shares of MidSouth Preferred Stock that each holder of Sugarland Common Stock will receive for each share of his Sugarland Common Stock upon consummation of the Mergers and assuming that each share of Preferred Stock has been converted into MidSouth Common Stock. Based on common shares outstanding and assuming conversion of MidSouth Preferred Stock into MidSouth Common Stock. Market Prices and Dividends The Plan provides that MidSouth will use its best efforts to cause the MidSouth Preferred Stock be listed for trading on the AMEX. Any such listing would not be effective until the Preferred Stock is issued, and there can be no assurance as to what the initial price of the Preferred Stock will be if and when listed. The holders of shares of the Preferred Stock have the right to convert all or any part of the Preferred Stock into shares of MidSouth Common Stock at the conversion rate of one share of MidSouth Common Stock for each share of Preferred Stock converted, subject to the effect of antidilution provisions in MidSouth's Articles of Incorporation. On December 27, 1994, the day preceding the date that the Companies entered into the Plan, the closing sales price for a share of MidSouth Common Stock, as quoted on the AMEX, was $11.25. On ____________, 1995, the closing sales price for a share of MidSouth Common Stock was _________. No assurance can be given as to the market price of MidSouth Common Stock on the Effective Date. Sugarland Common Stock is not actively traded, and there is no established trading market for the stock. There are no bid or asked prices available for Sugarland Common Stock. See "Information About Sugarland - Market Prices and Dividends." INTRODUCTORY STATEMENT General This Joint Proxy Statement and Prospectus is furnished to the shareholders of Sugarland Bancshares, Inc. ("Sugarland") and MidSouth Bancorp, Inc. ("MidSouth") in connection with the solicitation of proxies on behalf of the respective Boards of Directors of Sugarland and MidSouth for use at a special meeting of the shareholders of Sugarland (the "Special Meeting") and the annual meeting of the shareholders of MidSouth (the "Annual Meeting," which collectively with the Special Meeting are referred to herein as the "Meetings") to be held on the dates and at the times and places specified in the accompanying Notice of Special Meeting of Shareholders of Sugarland and Notice of Annual Meeting of Shareholders of MidSouth, or any adjournments thereof. Sugarland and MidSouth (collectively, the "Companies") have each supplied all information included herein with respect to it and its subsidiary. As of the date of this Joint Proxy Statement and Prospectus, Sugarland owns 99.8% of the outstanding common stock of Sugarland State Bank (the "Bank"). The Board of Directors of the Bank, and Sugarland as the Bank's 99.8% shareholder, have indicated that they intend to cause the Bank to effect a reverse stock split prior to consummation of the Mergers for the purpose of acquiring ownership of 100% of the Bank's common stock. As a result of the reverse stock split, each existing 125 shares of Bank common stock will be converted into one share of the Bank's post-reverse stock split common stock ("New Bank Stock"), cash will be paid in lieu of the issuance of fractional shares of New Bank Stock and the Bank will become a wholly-owned subsidiary of Sugarland, which is the only Bank stockholder currently owning in excess of 100 shares of Bank common stock. This Joint Proxy Statement and Prospectus was mailed to shareholders of Sugarland on approximately _________________, 1995, and to shareholders of MidSouth on approximately ______________, 1995. Purpose of the Meetings The purpose of the Special Meeting is to consider and vote upon a proposal to approve an Agreement and Plan of Merger between MidSouth and Sugarland and a related Agreement of Merger between MidSouth National Bank ("MidSouth Bank") and the Bank (the "Bank Merger Agreement," which collectively with the Agreement and Plan of Merger, is referred to as the "Plan"). Pursuant to the Plan, the Bank will be merged into MidSouth Bank (the "Bank Merger") and Sugarland will be merged into MidSouth (the "Holding Company Merger," which, collectively with the Bank Merger, are referred to as the "Mergers") with the result that the business and properties of Sugarland will become the business and properties of MidSouth and, except for shares of Sugarland's common stock to which dissenters' rights have been perfected, each outstanding share of Sugarland common stock ("Sugarland Common Stock") will be converted into one share of Series A Cumulative Convertible Preferred Stock of MidSouth (the "Preferred Stock") as described under the caption "The Plan - Conversion of Sugarland Common Stock." The purpose of the Annual Meeting is, among other things, to elect directors of MidSouth and to consider and vote upon a proposal to approve the issuance of up to 187,286 shares of Preferred Stock of MidSouth to be issued to shareholders of Sugarland in exchange for their Sugarland Common Stock in connection with the Mergers. See "Election of Directors of MidSouth." Shares Entitled to Vote; Quorum; Vote Required Only holders of record of MidSouth's common stock ("MidSouth Common Stock") at the close of business on ______________, 1995 are entitled to notice of and to vote at the Annual Meeting. On that date there were 736,375 shares of MidSouth Common Stock outstanding, each of which is entitled to one vote on each matter properly brought before the Annual Meeting. Only holders of record of Sugarland Common Stock at the close of business on _____________, 1995 are entitled to notice of and to vote at the Special Meeting. On that date there were 187,286 shares of Sugarland Common Stock outstanding, each of which is entitled to one vote on each matter properly brought before the Special Meeting. With respect to any matter properly brought before the Meetings, the presence at the Meetings, in person or by proxy, of the holders of a majority of the outstanding shares of the respective Companies' common stock is necessary to constitute a quorum. The Plan must be approved by the shareholders of Sugarland by the affirmative vote of two-thirds of the voting power present, in person or by proxy, at the Special Meeting. An abstention will have the effect of a vote against the Plan. However, unless the Plan is approved by the holders of at least 80% of the Sugarland Common Stock, dissenters' rights will apply and an abstention will cause a shareholder otherwise entitled to dissenters' rights to forfeit any claim to such rights. See "Dissenters' Rights." If brokers who do not receive instructions from beneficial owners as to granting or withholding of proxies may not or do not exercise discretionary power to grant a proxy with respect to such shares (a "broker non-vote") on a proposal, including the proposal to approve the Plan, shares not voted on such proposal will be counted as not present with respect to the proposal. Under the Louisiana Business Corporation Law (the "LBCL") and the Articles of Incorporation of MidSouth, the shareholders of MidSouth are not required to approve the Mergers. However, under the rules of the American Stock Exchange Emerging Company Market (the "AMEX") on which MidSouth Common Stock is listed, shareholder approval is required for the issuance of the Preferred Stock. The issuance of the Preferred Stock must be approved by the affirmative vote a majority of the votes cast at the Annual Meeting. Abstentions and broker non-votes will not be counted in the determination of the total number of votes cast. Directors, executive officers and certain principal shareholders of Sugarland beneficially owning an aggregate of 89,956 shares, or approximately 48.03% of the outstanding Sugarland Common Stock, have executed agreements pursuant to which they have agreed, among other things, to vote in favor of the Plan. The directors and executive officers of MidSouth owning an aggregate of 306,616 shares, or approximately 42.9% of the outstanding MidSouth Common Stock, have informed MidSouth that they intend to approve the issuance of the Preferred Stock. Solicitation, Voting and Revocation of Proxies In addition to soliciting proxies by mail, directors, officers and employees of the Companies, without receiving additional compensation therefor, may solicit proxies by telephone and in person. Arrangements will also be made with brokerage firms and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of shares of the Companies' stock, and the Companies will reimburse such parties for reasonable out-of-pocket expenses incurred in connection therewith. The cost to Sugarland of soliciting proxies is being paid for by Sugarland, and the cost to MidSouth of soliciting proxies is being paid for by MidSouth. The proxies that accompany this Joint Proxy Statement and Prospectus permit each holder of record of the Companies' common stock on the applicable record date to vote on all matters that properly come before the Special Meeting or Annual Meeting. When a share- holder of Sugarland specifies his choice on the proxy with respect to the proposal to approve the Plan, the shares represented by the proxy will be voted in accordance with such specification. If no such speci- fication is made, the shares represented by an executed proxy will be voted in favor of the proposal to approve the Plan. If a shareholder of Sugarland does not sign and return a proxy and specify on the proxy an instruction to vote against the Plan, he will not be able to exercise dissenters' rights with respect to the Holding Company Merger unless he attends the Special Meeting in person and votes against the Plan, and gives written notice of his dissent from the Plan at or prior to the Special Meeting. See "Dissenters' Rights." A shareholder of Sugarland may revoke his proxy by (i) giving written notice of revocation to Ronald R. Hebert, Sr., Secretary, Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544; or (ii) executing and delivering to Sugarland at any time before its exercise a later dated proxy or (iii) attending the Special Meeting and voting in person. Where a Shareholder of MidSouth specifies his choice on the proxy with respect to the approval of the issuance of the Preferred Stock, the shares represented by proxy will be voted in accordance with such specification. If no such specification is made, the shares represented by an executed proxy will be voted in favor of the issuance of the Preferred Stock and in favor of the election of the Directors of MidSouth named in the proxy. An abstention or broker non-vote will not be counted in the determination of the total number of votes cast. A shareholder of MidSouth may revoke his proxy by (i) giving written notice of revocation to Karen L. Hail, Secretary, MidSouth Bancorp, Inc., 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501; or (ii) executing and delivering to MidSouth at any time before its exer- cise a later dated proxy or (iii) attending the Annual Meeting and voting in person. No matters are expected to be considered at the Special Meeting other than the proposal to approve the Plan, and no matters are expected to be considered at the Annual Meeting other than the proposal to approve the issuance of the Preferred Stock and the election of directors of MidSouth. If any other matters should properly come before either of the meetings, it is intended that proxies in the form accompanying this Joint Proxy Statement and Prospectus will be voted on all such matters in accordance with the judgment of the person(s) voting such proxies. THE PLAN General The transactions contemplated by the Plan are to be effected in accordance with the terms and conditions set forth in the Plan, which is incorporated herein by reference. The following brief description does not purport to be complete and is qualified in its entirety by reference to the Plan. For information concerning obtaining a copy of the Plan, see "Available Information." The ultimate result of the transactions contemplated by the Plan will be that the business and properties of the Bank will become the business and properties of MidSouth Bank, the business and properties of Sugarland will become the business and properties of MidSouth, and the shareholders of Sugarland will become shareholders of Preferred Stock of MidSouth. The steps taken to achieve this result involve the following transactions: (i) the Bank will be merged into MidSouth Bank and the separate existence of the Bank will cease; (ii) Sugarland will be merged into MidSouth and the separate existence of Sugarland will cease; and (iii) shareholders of Sugarland will receive the consideration described below under the heading "The Plan - Conversion of Sugarland Common Stock." Background of and Reasons for the Plan Background. In 1987, C.R. Cloutier, President of MidSouth and MidSouth Bank, and D.J. Tranchina, President of Sugarland and the Bank, first discussed generally the possibility of a business combination between the Companies and the Banks. After preliminary discussions, the Companies and the Banks each determined not to pursue a business combination at that time. In September 1993, Messrs. Cloutier and Tranchina again discussed in general terms the possibility of a business combination between the Companies and the Banks and expressed interest in exploring fully such a transaction. On April 13, 1994, Will G. Charbonnet, Sr., Chairman of the Board of MidSouth and MidSouth Bank, and Mr. Cloutier presented to Sugarland's Board of Directors a written proposal to merge the Companies and the Banks. Representatives of the Companies and the Banks continued to discuss the terms of a business combination. On May 26, 1994, Sugarland retained Chaffe & Associates, Inc. ("Chaffe") as its financial advisor in connection with a possible business combination with MidSouth, and on August 19, 1994, the Companies agreed to a confidentiality agreement and exchanged certain confidential information concerning their respective companies as a means of exploring further a business combination between the Companies. Over the next several months, the Companies exchanged drafts of a proposed merger agreement and engaged in detailed negotiations concerning the terms of the proposed Mergers. On December 8, 1994, the Boards of Directors of Sugarland and the Bank held a special joint meeting to consider the proposed Mergers. At the meeting, Sugarland's Board of Directors, management and legal and financial advisors reviewed the background of, and rationale for, the proposed Mergers, the terms of the Plan, the potential risks and benefits of the Mergers and the financial and evaluation analyses of the transaction. Chaffe delivered its opinion to Sugarland's Board of Directors, subsequently confirmed in writing, that the exchange ratio in the proposed merger of Sugarland and MidSouth was fair to Sugarland's shareholders, from a financial point of view, as of such date. On December 14, 1994, MidSouth's Board of Directors met and approved the proposed Mergers and the Plan. Reasons for the Plan. The Board of Directors of Sugarland believes that approval of the Plan is in the best interest of Sugarland and its shareholders. In reaching its decision to recommend the Plan, Sugarland's Board of Directors consulted with its financial and other advisors, as well as with Sugarland's management, and considered a number of factors, including but not limited to the following: (a)The business, financial condition, results of operations and prospects of each of MidSouth and Sugarland; (b)The market for the Bank's services and the likelihood that the Bank would continue to face competitive pressures in its market area from banks and other financial institutions with greater financial resources capable of offering a broad array of financial services and operating on a narrower profit margin than the Bank; (c)The amount and type of consideration to be received by Sugarland's shareholders pursuant to the Plan; (d)The market price of MidSouth Common Stock; (e)The respective dividend policies of MidSouth and Sugarland; (f)Each of the Mergers is expected to qualify as a tax- free reorganization so that neither Sugarland nor its shareholders (except to the extent that cash is received in respect of their shares) will recognize any gain in the transaction (see "Certain Federal Income Tax Consequences"); and (g)The opinion received from Chaffe that the proposed Exchange Ratio (as defined in such opinion) is fair to Sugarland and its shareholders from a financial point of view (see "Opinion of Chaffe & Associates, Inc."). Sugarland's Board did not assign any specific or relative weight to the foregoing factors in its consideration of the Plan. Sugarland's Board of Directors believes that the Plan provides significant value to all Sugarland shareholders and will enable them to participate in opportunities for growth that Sugarland's Board of Directors believes the Mergers make possible. The Board of Directors of MidSouth believes that the Mergers are in the best interests of MidSouth and its shareholders. In addition to the financial terms, among the factors considered by the Board in approving the Plan were (i) the increased competitive advantages available to MidSouth Bank through the combined capital of the Banks and the economies of scale created as a result of the Mergers and (ii) the increased market share and additional markets available to MidSouth as a result of the Mergers. The financial and other terms of the Plan were arrived at through arm's length negotiations between representatives of the Companies. Determination of the consideration to be received by Sugarland's shareholders in exchange for their stock was based upon various factors considered by the Boards of the Companies, including primarily the comparative financial condition, historical results of operations, current business and future prospects of the Companies and the Banks, the market price and historical earnings per share of the common stock of the Companies, and the desirability of combining the financial and managerial resources of MidSouth Bank and the Bank to pursue available consumer and commercial banking business in Lafayette, Jefferson, Iberia and St. Martin Parishes and surrounding areas. The Board of Directors of Sugarland approved the Plan and recommends that its shareholders vote FOR approval of the Plan. The Board of Directors of MidSouth unanimously approved the Plan and recommends that its shareholders approve the issuance of the Preferred Stock. Opinion of Chaffe & Associates, Inc. General.Pursuant to an engagement letter dated as of May 26, 1994 (the "Engagement Letter"), Sugarland retained Chaffe to act as its financial advisor in connection with its evaluation of a possible business combination with MidSouth, including providing certain analyses of the financial terms of the Mergers. Chaffe is a recognized investment banking firm and is experienced in the securities industry, in investment analysis and appraisal and in related corporate finance and investment banking activities, including mergers and acquisitions, corporate recapitalizations and valuations for estate, corporate and other purposes. It regularly is retained to perform similar services for other banks and bank holding companies. Sugarland selected Chaffe as its financial advisor on the basis of its experience and expertise in transactions similar to the Mergers and its reputation in the banking and investment communities. In connection with its engagement as Sugarland's financial advisor with respect to the Mergers, Chaffe was instructed to evaluate the fairness to Sugarland shareholders, from a financial point of view, of the Exchange Ratio (as defined in Chaffe's opinion) in the Mergers. Sugarland did not place any limitations on the scope or manner of Chaffe's investigations and review, and instructed Chaffe to conduct such investigations as it deemed appropriate for purposes of its evaluation. Chaffe was also engaged to provide a valuation of Sugarland Common Stock and to advise Sugarland in its negotiations with MidSouth concerning the consideration to be received by Sugarland's shareholders pursuant to the Plan. Such consideration was determined by Sugarland and MidSouth in their negotiation of the terms of the Plan. At July 13 and August 10, 1994 meetings of Sugarland's Board of Directors, Chaffe made presentations and presented reports to the Board concerning the proposed Merger. On December 30, 1994, Chaffe delivered its written opinion that, based upon and subject to the assumptions made, the factors considered, the review undertaken and the limitations stated in such opinion and such other matters as Chaffe considered relevant, the Exchange Ratio in the Holding Company Merger was fair to Sugarland and its shareholders from a financial point of view, as of the date of such written opinion. The full text of Chaffe's written opinion to the Sugarland Board of Directors, which sets forth the assumptions made, matters considered, and limitations of the review by Chaffe, is attached hereto as Appendix A and is incorporated herein by reference. The opinion should be read carefully and in its entirety in connection with this Joint Proxy Statement and Prospectus. The following summary of Chaffe's opinion is qualified in its entirety by reference to the full text of the opinion. Chaffe's opinion is addressed to the Sugarland Board of Directors only and does not constitute a recommendation to any shareholder of Sugarland as to how such shareholder should vote at the Special Meeting. In connection with rendering its December 30, 1994 opinion, Chaffe reviewed materials relating to the Mergers and the financial and operating condition of the Companies, including, among other information: (i) the Plan; (ii) Sugarland's audited financial statements and other data for recent years and interim periods through September 30, 1994; (iii) the Bank's 1994 budget; (iv) MidSouth's audited financial statements and other data for recent years and interim periods through September 30, 1994; and (v) statistical and financial information for Sugarland and MidSouth and for comparable companies derived from various statistical services, as well as certain publicly available information and analyses relating to them. In addition, Chaffe reviewed certain historical market information for Sugarland Common Stock, for which no independent trading market exists, and certain historical market prices and trading volumes of MidSouth Common Stock on the AMEX. In reporting such information to Sugarland's Board of Directors, Chaffe noted that although there is an independent market for MidSouth Common Stock and there is expected to be an independent market for the Preferred Stock, such stocks are or will be, respectively, thinly traded. Set forth below is a brief summary of selected analyses performed by Chaffe in connection with its opinion and the reports presented by Chaffe to the Sugarland Board of Directors on July 13, 1994 and August 10, 1994 in connection therewith. The summary set forth below does not purport to be a complete description of the analyses performed by Chaffe. Chaffe's opinion was based on economic, market and other conditions existing as of the date of its opinion, and Chaffe expressed no opinion on the tax consequences of the Plan or the effect of any tax consequences on the value received by the holders of Sugarland Common Stock in the Mergers. Analysis of the Companies. Chaffe analyzed the historical performance of Sugarland and MidSouth, and considered the current financial condition, results of operations and prospects of each. Chaffe analyzed information and data provided by the management of each of Sugarland and MidSouth concerning such company's respective loans, other real estate owned, securities portfolio, fixed assets and operations. With respect to all information reviewed by it relating to the Companies, Chaffe relied, without independent verification, upon the accuracy and completeness of such information. Chaffe did not perform an independent review of the assets or liabilities of Sugarland or MidSouth, and relied solely on the Companies for information as to the condition of each company's loan portfolio, the adequacy of its loan loss reserve and the value of other real estate owned. Analysis of the Mergers. In connection with rendering its opinion and preparing its presentations to the Sugarland Board of Directors, Chaffe performed a variety of financial analyses. Chaffe compared certain financial and stock market data for peer groups of bank holding companies whose securities are publicly traded; reviewed the financial terms of business combinations in the commercial banking industry specifically and other industries generally; considered a number of valuation methodologies, including, among others, those that incorporate book value, deposit base premium and capitalization of earnings; and performed such other studies and analyses as Chaffe deemed relevant for purposes of its opinion. Chaffe also analyzed the terms of the MidSouth Preferred Stock. Analysis of Selected Merger Transactions. In connection with its July 13, 1994 meeting with Sugarland's Board of Directors, Chaffe analyzed premiums paid in acquisitions of selected banks and bank holding companies whose asset size, leverage ratio and return on average assets were comparable to Sugarland's (the "U.S. Peer Group"). Transactions considered in this analysis were those throughout the United States between March 31, 1993 and June 24, 1994, in which the seller's total assets were between $10 million and $50 million, leverage ratio was between 9.0% and 15.0%, and return on average assets was between 0.75% and 1.50%. Chaffe also analyzed premiums paid in acquisitions of selected banks and bank holding companies located in 16 states in the southern United States (the "Southern Peer Group"). Finally, Chaffe analyzed premiums paid in substantially all acquisitions of Louisiana banks from March 31, 1993 through July 12, 1994 (the "Louisiana Acquisitions"). For each bank acquired or to be acquired in such transactions, Chaffe compared the prices to be received by the shareholders of each institution being acquired as a multiple of its tangible equity, its earnings per share for the four quarters prior to such a transaction, its premium over tangible equity to core deposits, and its total assets. The figures for the U.S. Peer Group, Southern Peer Group and Louisiana Acquisitions produced: (i) median percentages of premium (purchase price in excess of tangible equity) to core deposits of 5.44%, 5.72% and 10.73%, respectively; (ii) median ratios of purchase price to tangible equity of 1.44x, 1.45x and 1.86x, respectively; (iii) median ratios of purchase price to earnings per share for the four quarters prior to transaction of 15.52x, 16.59x and 13.05x, respectively, and (iv) median percentages of purchase price to assets of 14.88%, 15.32% and 17.32%, respectively. In comparison, assuming the consideration to be paid in the Mergers for each share of Sugarland Common Stock equals that number of shares of MidSouth Preferred Stock with a stated value of $14.25, Chaffe determined that the consideration to be received by the holders of Sugarland Common Stock in the Mergers represented a percentage of premium to core deposits of 2.94%, a ratio of price to tangible equity of 1.20x, a ratio of price to Sugarland's earnings for the twelve months ended March 31, 1994 of 14.12x, and a percentage of price to assets of 14.34%. Prior to rendering its opinion, Chaffe updated the above- referenced analysis through November 25, 1994. With respect to each of the above-referenced groups of transactions and the proposed Merger, Chaffe compared the prices to be received by the peer groups in the manner described above, and such analysis yielded results substantially similar to those stated above. Conclusions based on the foregoing analysis are not mathematical; rather, an analysis of the foregoing necessarily involves complex considerations and judgments concerning differences in financial and operating characteristics of the companies and other factors that could affect the public trading value or the acquisition value of the companies to which Sugarland is being compared. Discounted Earnings Analysis. In connection with its July 13, 1994 meeting with Sugarland's Board of Directors, Chaffe calculated, using discounted earnings analysis, the present value of the stream of after-tax cash flows that Sugarland could produce in the future. Chaffe estimated the earnings stream through 2000 and a terminal value after 2000 based upon information provided by Sugarland management, and then discounted such values, using an estimated required rate of return for Sugarland of 12.0%. Additional earnings analyses were performed at the time of the December 30, 1994 opinion, applying similar methodology and discount rates to the above-described earnings analysis and yielding substantially similar results. Analysis of MidSouth Preferred Stock. In connection with its August 10, 1994 meeting with Sugarland's Board of Directors, Chaffe examined the proposed terms of the MidSouth Preferred Stock. By using discounted cash flow and option valuation models, Chaffe considered various factors that might affect the value of the Preferred Stock and that can be evaluated, including, but not limited to, the appropriate market rate for the Preferred Stock, certain information concerning MidSouth Common Stock and proposed conversion provisions for the MidSouth Preferred Stock. The foregoing summary does not purport to be a complete description of the analyses performed by Chaffe. The preparation of an opinion necessarily is not susceptible to partial analysis or summary description. Chaffe believes that the summary set forth above and Chaffe's analyses must be considered as a whole and that selecting only a portion of its analyses, without considering all of its analyses, creates an incomplete view of the process underlying Chaffe's opinion. The analyses performed by Chaffe are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. The analyses do not purport to be appraisals or to reflect the prices at which a company might actually be sold or the prices at which any securities may trade at the present time or any time in the future. Furthermore, Chaffe may have given certain analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the ranges of valuations resulting from any particular analysis described above should not be taken to be Chaffe's view of the actual value of Sugarland, MidSouth or the combined Companies. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis. To date, Sugarland has paid Chaffe $27,681.74 in fees and out-of-pocket expenses for the financial advisory services referred to above, including its ser- vices in rendering the opinion. For other services requested of Chaffe by Sugarland, Sugarland has agreed to pay Chaffe on an hourly basis. According to Chaffe, these amounts are insignificant when compared to Chaffe's total gross revenues. The fees received by Chaffe in connection with its services to Sugarland are not dependent upon consummation of the Mergers or any similar transaction, or shareholder or regulatory approval of the Plan. Prior to its retention in May 1994 as Sugarland's financial advisor, Chaffe had provided no services to Sugarland. Chaffe has not provided any services to MidSouth. Neither Chaffe nor any of its officers or employees has any interest in Sugarland Common Stock, MidSouth Common Stock or MidSouth Preferred Stock. Pursuant to the Engagement Letter, Sugarland has agreed to indemnify and hold harmless Chaffe, its subsidiaries and affiliates, the officers, directors, shareholders, employees, attorneys, agents and representatives of Chaffe and its subsidiaries and affiliates, and their respective heirs, legatees, legal representatives, successors and assigns from and against any and all damage, loss, cost, expense, obligation, claim or liability, including reasonable attorneys fees and expenses arising directly or indirectly from, or in any way related to, the opinion or any other services performed by Chaffe pursuant to the Engagement Letter, provided that Chaffe and its officers, directors, employees, agents and representatives have not been grossly negligent or guilty of reckless or willful misconduct in connection with the opinion or such other services. Conversion of Sugarland Common Stock In consideration of the Mergers, each share of Sugarland Common Stock outstanding on the date the Holding Company Merger becomes effective (the "Effective Date") will be converted into a number of shares of MidSouth Preferred Stock equal to the quotient of 187,286 divided by the number of shares of Sugarland Common Stock outstanding on the Effective Date. Assuming the number of shares of Sugarland Common Stock outstanding on the Effective Date remains the same, each share of Sugarland Common Stock will be exchanged for one share of MidSouth Preferred Stock, having the rights and preferences described below under the heading "Rights and Preferences of MidSouth Preferred Stock." Shareholders who perfect dissenters' rights will not receive MidSouth Preferred Stock but instead will be entitled to receive the "fair cash value" of their shares as determined under Section 131 of the Louisiana Business Corporation Law (the "LBCL"). See "Dissenters' Rights." In lieu of the issuance of any fractional share of MidSouth Preferred Stock to which a holder of Sugarland Common Stock may be entitled, each shareholder of Sugarland, upon surrender of the certificate or certificates which immediately prior to the Effective Date represented Sugarland Common Stock held by such shareholder, will be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by $14.25, the stated value of a share of Preferred Stock. For information regarding restrictions on the transfer of the Preferred Stock by certain Sugarland shareholders, see "Status under Federal Securities Laws; Certain Restrictions on Resales." Effective Date The Bank Merger Agreement has been filed with the Office of the United States Comptroller of the Currency (the "OCC"), and will be filed for recordation with the Louisiana Commissioner of Financial Institutions (the "Commissioner"), and the Bank Merger will be effective at the time and date specified in a certificate or other written record issued by the OCC, or in the Certificate of Merger issued by the Commissioner, whichever date is later. A Certificate of Merger with respect to the Holding Company Merger will be filed for recordation with the Louisiana Secretary of State as soon as practicable after shareholder approval is obtained and all other conditions to the consummation of the Mergers have been satisfied or waived, and the Holding Company Merger will be effective at the date and time specified in a certificate issued by the Secretary of State. It is intended that the Bank Merger will be consummated immediately after consummation of the Holding Company Merger. The Companies are not able to predict the Effective Date of the Bank Merger or the Holding Company Merger, and no assurance can be given that the transactions contemplated by the Plan will be effected at any time. See "The Plan - Regulatory Approvals and Other Condi- tions of the Mergers." Exchange of Certificates On the Effective Date, each Sugarland shareholder will cease to have any rights as a shareholder of Sugarland, and his sole rights will pertain to the shares of MidSouth Preferred Stock into which his shares of Sugarland Common Stock have been converted pursuant to the Holding Company Merger, except for any such shareholder who exercises statutory dissenters' rights and except for the right to receive cash for any fractional share. See "Dissenters' Rights." Upon the consummation of the Mergers, a letter of transmittal, together with instructions for the exchange of certificates representing shares of Sugarland Common Stock for certificates representing shares of MidSouth Preferred Stock will be mailed to each person who was a shareholder of record of Sugarland on the Effective Date of the Mergers. Shareholders are requested not to send in their Sugarland Common Stock certificates until they have received a letter of transmittal and further written instructions. After the Effective Date and until surrendered, certificates representing Sugarland Common Stock will be deemed for all purposes, other than the payment of dividends or other distributions, if any, in respect of MidSouth Preferred Stock, to represent the number of whole shares of MidSouth Preferred Stock into which such shares of Sugarland Common Stock have been converted. MidSouth, at its option, may decline to pay former shareholders of Sugarland who become holders of MidSouth Preferred Stock pursuant to the Holding Company Merger any dividends or other distributions that may have become payable to holders of record of MidSouth Preferred Stock following the Effective Date until they have surrendered their certificates evidencing ownership of shares of Sugarland Common Stock. Any dividends not paid after one year from the date that such dividends were eligible to be paid will revert in ownership to MidSouth, and MidSouth will have no further obligation to pay such dividends. Sugarland shareholders who cannot locate their certificates are urged to contact promptly Ronald A. Hebert, Sr., Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544, telephone number (318) 276-6307. A new certificate will be issued to replace the lost certificate(s) only upon execution by the shareholder of an affidavit certifying that his or her certificate(s) cannot be located and an agreement to indemnify Sugarland or MidSouth, as its successor, against any claim that may be made against them by the owner of the certificate(s) alleged to have been lost or destroyed. Either of the Companies may also require the shareholder to post a bond in such sum as is sufficient to support the shareholder's agreement to indemnify them. Regulatory Approvals and Other Conditions of the Mergers In addition to shareholder approvals, consummation of the Mergers will require the approval of the OCC, and approval or waiver of prior approval from the FRB. On January 25, 1995, MidSouth filed an application seeking the prior approval of the Bank Merger from the OCC and, by letter dated January 30, 1995, requested a waiver of prior approval from the FRB. MidSouth received OCC approval of the Mergers on March 22, 1995, and confirmation of waiver of prior approval from the FRB on March 17, 1995. The obligations of the parties to the Plan are also subject to other conditions set forth in the Plan, including, among others: (i) that no action or proceeding has been brought before a court or governmental body to restrain or prohibit the Mergers; (ii) that prior to the Effective Date there has not been a material adverse change in the financial condition, results of operations, business or prospects of the other party or its subsidiary; (iii) the receipt of customary legal opinions; (iv) that on the date of closing, the representations and warranties made in the Plan by each party are true and correct in all material respects; and (v) the receipt by MidSouth and Sugarland of an opinion from Deloitte & Touche LLP to the effect that the Mergers will constitute a reorganization within the meaning of Section 368(c) of the Internal Revenue Code and that the shareholders of Sugarland will not recognize gain or loss with respect to the shares of Preferred Stock received in the Holding Company Merger. The obligations of MidSouth and MidSouth Bank to consummate the Mergers are also conditioned upon, among other things, that MidSouth has received satisfactory assurance from the FRB or delegated authority that the Preferred Stock will be treated as Tier 1 Capital for the purpose of the capital adequacy guidelines of the FRB; and confir- mation from the directors, executive officers and certain principal shareholders of Sugarland as to representations and covenants previously made by them in a certain Joinder of Shareholders. See "The Plan - Joinder of Shareholders." The Companies intend to consummate the Mergers as soon as practicable after all of the conditions to the Mergers have been met or waived; however, there can be no assurance that the conditions to the Mergers will be satisfied. Conduct of Business Prior to the Effective Date Sugarland and the Bank have agreed pursuant to the Plan that, prior to the Effective Date, each will conduct its business only in the ordinary course and that, without the prior written consent of the Chief Executive Officer of MidSouth or his duly authorized designee, and except as otherwise provided in the Plan, Sugarland and the Bank will not, among other things, (a) declare or pay any dividend or change the number of outstanding shares of its capital stock; (b) amend its articles of incorporation or bylaws or adopt or amend any resolution or agreement concerning indemnification of its directors and officers; (c) merge or consolidate with another entity, or sell or dispose of a substantial part of its assets, or except in the ordinary course of business, sell any of its assets; (d) acquire or dispose of investment securities having an aggregate market value greater than 10% of the aggregate book value of its investment securities portfolio as of September 30, 1994; or acquire any investment securities that are less than investment grade, or acquire or dispose of investment securities except in the ordinary course of business; (e) charge off (except as may otherwise be required by law or regulatory authorities or generally accepted accounting principles consistently applied) or sell (except for a price not less than the book value thereof) any of its portfolio of loans, discounts or financing leases; or sell any asset held as other real estate or other foreclosed assets for an amount less than 100% of its book value as of September 30, 1994; or sell any asset held as other real estate or other foreclosed assets that had a book value at September 30, 1994 in excess of $25,000; (f) enter into or modify any agreement pertaining to compensation arrangements with its present or former directors, officers or employees or increase the compensation of such persons, except for budgeted bonuses or other incentive payments in amounts previously disclosed to the Chief Executive Officer of MidSouth; (g) except in the ordinary course of business consistent with past practices, place or suffer to exist on any of its assets any mortgage, pledge or other encumbrance (except as allowed under the Plan) or cancel any material indebtedness owing to it or any claims which it may possess, or waive any right of substantial value or discharge or satisfy any material noncurrent liability; (h) make any extension of credit which, together with all other extensions of credit to the borrower and its affiliates, would exceed $100,000, or, without reasonable prior notice to the Chief Executive Officer of MidSouth, or his designee, commit to make any extensions of new credit in excess of $50,000; (i) fail to pay, or make adequate provision in all material respects for the payment of, all taxes, interest payments and penalties due and payable, except those being contested in good faith by appropriate proceedings and for which sufficient reserves have been established; or (j) enter into any new line of business. In addition, Sugarland and the Bank have agreed that, without the prior approval of the Chief Executive Officer of MidSouth or his designee, they will not solicit or initiate inquiries or proposals with respect to, or, except as may be necessary as advised in writing by their counsel to discharge properly their fiduciary duties to Sugarland, the Bank and their Shareholders, furnish any information relating to, or participate in any negotiations or discussions concerning, any acquisition or purchase of all or a substantial portion of the assets of, or a substantial equity interest in, or any business combination with Sugarland or the Bank, other than as contemplated by the Plan. Each of Sugarland and the Bank has also agreed to instruct its officers, directors, agents and affiliates to refrain from doing any of the above and to notify MidSouth immediately if any such inquiries or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated with, it or any of its officers, directors, agents and affiliates. Further, Sugarland has committed that neither Sugarland's Board of Directors nor any committee thereof will (i) withdraw or modify or propose to with- draw or modify in a manner adverse to MidSouth the approval or recommendation to its shareholders of the Plan and the Mergers, (ii) approve or recommend, or propose to recommend any takeover proposal with respect to Sugarland or the Bank, except such action that its counsel advises in writing is necessary to discharge its fiduciary duties to Sugarland and its shareholders, or (iii) modify, or waive or release any party from any material provision of or fail to enforce any material provision of, if enforcement is requested by MidSouth, any confidentiality agreement entered into by Sugarland or the Bank with any prospective acquiror after the date of the Plan or during the two years prior to such date. Waiver, Amendment and Termination The Plan provides that the parties thereto may waive any of the conditions to their respective obligations to consummate the Mergers other than the receipt of necessary regulatory approvals, shareholder approvals of the Plan, the satisfaction of all conditions prescribed by law for consummation of the Mergers and certain other conditions that have already been satisfied. A waiver must be in writing and approved by the Board of Directors of the waiving party. The Plan, including all related agreements, may be amended or modified at any time, before or after shareholder approval, by the mutual agreement in writing of the Boards of Directors of the parties to the Plan; provided that, under the LBCL any amendment made subsequent to such shareholder approval may not alter the amount or type of shares into which Sugarland's Common Stock will be converted, or alter any term or condition of the Plan in a manner that would adversely affect any shareholder of Sugarland. Additionally, the Plan may be amended at any time by the sole action of the Chief Executive Officers of the respective parties to the Plan or their designees to correct typographical errors or other misstatements, or in any other manner, which is not material to the substance of the transactions contemplated by the Plan. The Plan may be terminated at any time prior to the Effective Date by (i) the mutual consent of the respective Boards of Directors of the Companies, (ii) the Board of Directors of either MidSouth or Sugarland in the event of a material breach by the other or its subsidiary of any representation, warranty or covenant contained in the Plan which cannot be cured by the earlier of 10 days after written notice of such breach or June 30, 1995; (iii) the Board of Directors of either MidSouth or Sugarland if by June 30, 1995 all conditions to consummating the Mergers required by the Plan have not been met or waived, cannot be met, or the Mergers have not occurred; (iv) the Board of Directors of MidSouth if the number of shares of Sugarland Common Stock as to which holders thereof are, at the time of the closing, legally entitled to assert dissenters' rights exceeds 5% of the total number of issued and outstanding shares of Sugarland Common Stock on the Effective Date; or (v) the Board of Directors of MidSouth if the Board of Directors of Sugarland (A) withdraws, modifies or changes its recommendation to its shareholders regarding the Plan and the Mergers or shall have resolved to do any of the foregoing, (B) recommends to its shareholders (1) any merger, consolidation, share exchange, business combination or other similar transaction (other than transactions contemplated by the Plan), (2) any sale, lease, transfer or other disposition of all or substantially all of the assets of Sugarland or the Bank, or (3) any acquisition, by any person or group, of beneficial ownership of one third or more of any class of Sugarland's capital stock, or (C) makes any announcement of a proposal, plan or intention to do any of the foregoing or agreement to engage in any of the foregoing. Interests of Certain Persons in the Mergers Pursuant to the Plan, MidSouth and MidSouth Bank have agreed that, following the Effective Date, they will indemnify each person who as of the Effective Date served as an officer or director of Sugarland or the Bank, or who has previously served as an officer or director of Sugarland or the Bank at any time since December 31, 1992 (an "Indemnified Person") from and against all damages, liabilities, judgments and claims, and related expenses, based upon or arising out of such person's service as an officer or director of Sugarland or the Bank, to the same extent as he would have been indemnified under the Articles or Bylaws of Sugarland or the Bank, as appropriate, as such Articles or Bylaws were in effect on December 28, 1994. The aggregate amount of indemnification payments required to be made by MidSouth and MidSouth Bank pursuant to the Plan is $1.2 million. Indemnification otherwise required to be paid by MidSouth or MidSouth Bank will be reduced by any amounts that the Indemnified Person recovers by virtue of the claim for which indemnification is sought, and no Indemnified Person is entitled to indemnification for any claim made prior to the closing date of which the Indemnified Person, Sugarland or the Bank was aware but did not disclose to MidSouth prior to the execution of the Plan (if such claim was known at such time) or prior to the closing date (if such claim became known after execution of the Plan). Receipt of the indemnification benefits set forth in the Plan by a director or officer of Sugarland and the Bank is conditioned upon his execution of an agreement described in more detail under the heading "Joinder of Shareholders." Any claim for indemnification pursuant to the Plan must be submitted in writing to MidSouth's Chief Executive Officer prior to December 28, 1999. MidSouth has also agreed to indemnify Sugarland, the Bank, and each of the directors, officers and controlling persons of Sugarland against any claim insofar as it arises from, or is based upon, an untrue statement or omission, or alleged untrue statement or omission, of a material fact in the Registration Statement or the Joint Proxy Statement and Prospectus to the extent that such untrue statement or omission was not made in reliance on, and in conformance with, information furnished to MidSouth by Sugarland. The $1.2 million limit on MidSouth's indemnification obligation discussed above does not apply to MidSouth's indemnification obligations with respect to the Registration Statement and Joint Proxy Statement and Prospectus. Any person making a claim for indemnification for damages arising from misstatements or omissions in the Registration Statement or Joint Proxy Statement and Prospectus must promptly notify MidSouth of any such claim. MidSouth shall have the right to assume the defense thereof and will not be liable for any expenses subsequently incurred by such person in connection with the defense thereof, except that if MidSouth does not assume such defense, or counsel for the person making a claim is advised in writing that there are material substantive issues that raise conflicts of interest between MidSouth and such person, the person claiming indemnification may retain counsel satisfactory to him and MidSouth shall pay all reasonable fees and expenses of such counsel, provided that (i) MidSouth shall be obligated to pay for only one counsel for all persons making a claim in any jurisdiction, (ii) all such persons will cooperate in the defense of their claims, and (iii) MidSouth will not be liable for any settlement effected without its prior written consent. Joinder of Shareholders It is anticipated that MidSouth or MidSouth Bank will enter into employment contracts providing for employment following the Mergers of one or more executive officers of the Bank, including Mr. D.J. Tranchina, the President and a director of Sugarland and the Bank. The terms of any such employment contracts have not yet been determined. As a condition to consummation of the Mergers, each Sugarland director and executive officer and each shareholder owning 5% or more of Sugarland Common Stock has executed an individual agreement (a "Joinder Agreement") pursuant to which he has agreed (i) solely in his capacity as a shareholder of Sugarland, to vote in favor of the Plan and against any other proposal relating to the sale or disposition of the Bank or Sugarland, unless MidSouth or MidSouth Bank is in breach or default in any material respect with regard to any covenant, representation or warranty as to it contained in the Plan to an extent that would permit Sugarland to terminate the Plan pursuant to the terms thereof; (ii) not to transfer any of the shares of Sugarland Common Stock over which he has dispositive power, or grant any proxy thereto not approved by MidSouth, until the earlier of the Effective Date or the date that the Plan has been terminated, except for transfers by operation of law or transfers in connection with which the transferee agrees to be bound by the Joinder Agreement; (iii) not to purchase, sell or otherwise deal in MidSouth Common Stock until the Effective Date or termination of the Plan; (iv) to release, as of the Effective Date, MidSouth and MidSouth Bank from any obligation that either of them may have to indemnify such shareholder for acts taken as an officer, director or employee of Sugarland or the Bank, except to the extent set forth in the Plan; (v) prior to the Effective Date or until termination of the Plan, and except to the extent required to discharge properly his fiduciary duties as a director of Sugarland, not to solicit, encourage, initiate or participate in any negotiations or discussions concerning the acquisition of all or a substantial portion of the assets of, or of a substantial equity interest in, or any business combination with, Sugarland or the Bank, without the prior approval of the Chief Executive Officer of MidSouth or his designees, and to notify MidSouth immediately if any such proposals or inquiries are received by him; and (vi) for a period of two years following the Effective Date, not to serve as a director, officer, employee or advisor of, or have any investment in any financial institution that competes with the business of Bank as continued by MidSouth Bank in Iberia and Lafayette Parishes; however, such person may continue to hold any investment that he held on the date of the Joinder Agreement and may make an investment in any such financial institution if the investment does not materially enhance the ability of such institution to compete with MidSouth Bank. Employee Benefits Pursuant to the Plan, MidSouth has agreed that, from and after the Effective Date, MidSouth and MidSouth Bank will offer to all persons who were employees of Sugarland or the Bank immediately prior to the Effective Date and who become employees of MidSouth or MidSouth Bank following the Mergers, the same employee benefits as are offered by MidSouth or MidSouth Bank, as the case may be, to its employees, except that there will not be a waiting period for coverage under any of its plans, and no employee of Sugarland or the Bank who is an active employee on the Effective Date will be denied such benefits for a pre- existing condition. Full credit will be given for prior service by such employees with Sugarland or the Bank for eligibility and vesting purposes under all of MidSouth's or MidSouth Bank's benefit plans and policies. In addition, all benefits accrued through the Effective Date under Sugarland's and the Bank's benefit plans will be paid by MidSouth or MidSouth Bank to the extent such benefits are not otherwise provided to such employees under the benefit plans of MidSouth or MidSouth Bank. Expenses The Plan provides that regardless of whether the Mergers are consummated, expenses incurred in connection with the Plan and the transactions contemplated thereby shall be borne by the party that has incurred them. If certain expenses incurred by Sugarland relating to the Mergers exceed $110,000, the amount of such expenses in excess of $110,000 will be deducted from the aggregate initial dividend payment and, if necessary, subsequent dividend payments due to holders of Preferred Stock, resulting in a pro rata reduction of the dividend payment due to each holder of Preferred Stock. See "Rights and Preferences of MidSouth Preferred Stock - Dividend Rights." Status Under Federal Securities Laws; Certain Restrictions on Resales The shares of MidSouth Preferred Stock to be is- sued to shareholders of Sugarland pursuant to the Plan have been registered under the Securities Act of 1933 (the "Securities Act") thereby allowing such shares to be freely transferred without restriction by persons who will not be "affiliates" of MidSouth or who were not "affiliates" of Sugarland, as that term is defined in the Securities Act. In general, affiliates of Sugarland include its executive officers and directors and any person who controls, is controlled by or is under common control with Sugarland. Rule 145, among other things, imposes certain restrictions upon the resale of securities received by affiliates in connection with certain reclassifications, mergers, consolidations or asset transfers. MidSouth Preferred Stock received by affiliates of Sugarland will be subject to the applicable resale limitations of Rule 145. Such persons will not be able to resell the MidSouth Preferred Stock received by them pursuant to the Holding Company Merger unless such stock is regis- tered for resale under the Securities Act or an exemption from the registration requirements of the Securities Act is available. All such persons should carefully consider the limitations imposed by Rules 144 and 145 under the Securities Act prior to effecting any resales of MidSouth Preferred Stock. Sugarland has agreed to use its best efforts to cause each of its directors and executive officers and each person who is a beneficial owner of 5% or more of the outstanding Sugarland Common Stock (each of whom may be deemed to be an "affiliate" under the Securities Act) to enter into an agreement not to sell shares of MidSouth Preferred Stock received by him in violation of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder. CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following discussion is a summary of material federal income tax consequences to holders of Sugarland Common Stock resulting from the Mergers. The discussion set forth below is based upon applicable federal law and judicial and administrative interpretations on the date hereof, any of which is subject to change at any time. Consummation of the Mergers is conditioned upon receipt by the Companies of an opinion from Deloitte & Touche LLP to the following effects, among others: (a) Each of the Mergers qualifies as a reorganization under Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended (the "Code"), and Sugarland and MidSouth each will be a "party to a reorganization" within the meaning of Section 368(b) of the Code. (b) No gain or loss will be recognized by Sugarland and MidSouth as a result of the Mergers. (c) No gain or loss will be recognized by a shareholder of Sugarland on the receipt solely of MidSouth Preferred Stock in exchange for his shares of Sugarland Common Stock. (d) The basis of the shares of MidSouth Preferred Stock to be received by Sugarland's shareholders pursuant to the Holding Company Merger will, in each instance, be the same as the basis of the shares of Sugarland Common Stock surrendered in exchange therefor, increased by any gain recognized on the exchange. (e) The holding period of the shares of MidSouth Preferred Stock to be received by Sugarland's shareholders pursuant to the Holding Company Merger will, in each instance, include the holding period of the respective shares of Sugarland Common Stock exchanged therefor, provided that the shares of Sugarland Common Stock are held as capital assets on the date of the Holding Company Merger. (f) The payment of cash to Sugarland's shareholders in lieu of fractional share interests of MidSouth Preferred Stock will be treated as if the fractional shares were distributed as part of the exchange and then redeemed by MidSouth. These cash payments will be treated as having been received as a distribution in redemption of that fractional share interest subject to the conditions and limitations of Section 302 of the Code. If a fractional share of MidSouth Preferred Stock would constitute a capital asset in the hands of a redeeming shareholder, any resulting gain or loss will be characterized as capital gain or loss in accordance with the provisions and limitations of Subchapter P of Chapter 1 of the Code. (g) A Sugarland shareholder who perfects his statutory right to dissent from the Holding Company Merger and who receives solely cash in exchange for his Sugarland Common Stock will be treated as having received such cash payment as a distribution in redemption of his shares of Sugarland Common Stock, subject to the provisions and limitations of Section 302 of the Code. After such distribution, if the former Sugarland shareholder does not actually or constructively own any Sugarland Common Stock, the redemption will constitute a complete termination of interest and be treated as a distribution in full payment in exchange for the Sugarland Common Stock redeemed. The opinion of Deloitte & Touche LLP is not binding on the Internal Revenue Service which could take positions contrary to the conclusions in such opinion. As a result of the complexity of the tax laws, and because the tax consequences to any particular shareholder may be affected by matters not discussed herein, it is recommended that each shareholder of Sugarland consult his personal tax advisor concerning the applicable federal, state and local income tax consequences of the Mergers to him. DISSENTERS' RIGHTS Unless the Plan is approved by the shareholders of Sugarland holding at least 80% of its total voting power, Section 131 of the LBCL allows a shareholder of Sugarland who objects to the Holding Company Merger and who complies with the provisions of that section to dissent from the Holding Company Merger and to have paid to him in cash the fair cash value of his shares of Sugarland Common Stock as of the day before the Special Meeting, as determined in each case by agreement between the shareholder and MidSouth or by the state district court for the Parish of Lafayette if the shareholder and MidSouth are unable to agree upon the fair cash value. MidSouth has the right to terminate the Plan if, at the time of closing, the number of shares of Sugarland Common Stock as to which the holders thereof are legally entitled to assert dissenters' rights exceeds 5% of the total number of outstanding shares of Sugarland Common Stock on the Closing Date. To exercise the right of dissent, a shareholder must (i) file with Sugarland, a written objection to the Plan prior to or at the Special Meeting and also (ii) vote his shares (in person or by proxy) against the Plan. Neither a vote against the Plan, nor a specification in a proxy to vote against the Plan, will, in and of itself, constitute the necessary written objection to the Plan. Moreover, by voting in favor of, or abstaining from voting on, the Plan, or by returning the enclosed proxy without instructing the proxy holders to vote against the Plan, a shareholder waives his rights under Section 131. The right to dissent may be exercised only by the record owners of the shares and not by persons who hold shares only beneficially. Beneficial owners who wish to dissent from the Holding Company Merger should have the record ownership of the shares transferred to their names or instruct the record owner to follow the Section 131 procedure on their behalf. If the Plan is approved by less than 80% of the total number of shares of Sugarland Common Stock outstanding, then promptly after the Effective Date written notice of the consummation of the Holding Company Merger will be given by MidSouth by registered mail to each shareholder of Sugarland who filed a written objection to the Plan and voted against it at such shareholder's last address on Sugarland's records. Within 20 days after the mailing of such notice, the shareholder must file with MidSouth a written demand for payment for his shares at their fair cash value as of the day before the Special Meeting and must state the amount demanded and a post office address to which MidSouth may reply. He must also deposit the certifi- cate(s) formerly representing his shares of Sugarland Common Stock in escrow with a bank or trust company located in Lafayette Parish, Louisiana. The certificates must be duly endorsed and transferred to MidSouth upon the sole condition that they be delivered to MidSouth upon payment of the value of the shares in accordance with Section 131. With the above-mentioned demand, the shareholder must also deliver to MidSouth the written acknowledgment of such bank or trust company that it holds the certificate(s), duly endorsed as described above. Unless the shareholder objects to and votes against the Holding Company Merger, demands payment, endorses and deposits his certificates and delivers the required acknowledgment in accordance with the procedures and within the time periods set forth above, the shareholder will conclusively be presumed to have acquiesced to the Mergers and will forfeit any right to seek payment pursuant to Section 131. If MidSouth does not agree to the amount demanded by the shareholder, or does not agree that payment is due, it will, within 20 days after receipt of such demand and acknowledgment, notify such shareholder in writing at the designated post office address of either (i) the value it will agree to pay or (ii) its belief that no payment is due. If the shareholder does not agree to accept the offered amount, or disagrees with MidSouth's assertion that no payment is due, he must, within 60 days after receipt of such notice, file suit against MidSouth in the 15th Judicial District Court for the Parish of Lafayette for a judicial deter- mination of the fair cash value of the shares. Any shareholder of Sugarland entitled to file such suit may, within such 60-day period but not thereafter, intervene as a plaintiff in any suit filed against MidSouth by another former shareholder of Sugarland for a judicial determination of the fair cash value of such other shareholder's shares. If a shareholder of Sugarland fails to bring or to intervene in such a suit against MidSouth within the applicable 60-day period, he will be deemed to have consented to accept MidSouth's statement that no payment is due or, if MidSouth does not contend that no payment is due, to accept the amount specified by MidSouth in its notice of disagreement. If upon the filing of any such suit or intervention, MidSouth deposits with the court the amount, if any, which it specified in its notice of disagreement, and if in that notice MidSouth offered to pay such amount to the shareholder on demand, then the costs (not including legal fees) of the suit or inter- vention will be taxed against the shareholder if the amount finally awarded to him, exclusive of interest and costs, is equal to or less than the amount so deposited; otherwise, the costs (not including legal fees) will be taxed against MidSouth. Upon filing a demand for the value of his shares, a shareholder ceases to have any rights of a shareholder except the rights created by Section 131. The shareholder's demand may be withdrawn voluntarily at any time before MidSouth gives its notice of disagreement, but thereafter only with the written con- sent of MidSouth. If his demand is properly withdrawn, or if the shareholder otherwise loses his dissenters' rights, he will be restored to his rights as a share- holder as of the time of filing of his demand for fair cash value. Prior to the Effective Date, shareholders of Sugarland who dissent from the Mergers should send any communications regarding their rights to Ronald R. Hebert, Sr., Secretary, Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544. On or after the Effective Date, dissenting shareholders of Sugarland should send any communications regarding their rights to Karen L. Hail, MidSouth Bancorp, Inc., 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501. All such communications should be signed by or on behalf of the dissenting shareholder in the form in which his shares are registered on the books of Sugarland. Shareholders of MidSouth are not entitled to vote on the Mergers under the LBCL or MidSouth's Articles and do not have dissenters' rights, although such shareholders must approve the issuance of the Preferred Stock. See "Introductory Statement - Shares Entitled to Vote; Quorum; Vote Required." INFORMATION ABOUT SUGARLAND Description of the Business Sugarland Bancshares, Inc., a business corporation organized under the laws of Louisiana and a registered bank holding company under the Bank Holding Company Act of 1956, was incorporated in 1981 to acquire the outstanding stock of the Bank. Sugarland owns all of the outstanding stock of the Bank and has no other subsidiaries. At December 31, 1994, Sugarland had total consolidated assets of approximately $17.5 million and shareholders' equity of approximately $2.1 million. Sugarland's principal executive office is located at 1527 West Main Street, Jeanerette, Louisiana, and its telephone number is (318) 276-6307. Sugarland State Bank, a Louisiana state bank organized in 1967, provides full-service consumer and commercial banking services in Jeanerette, Louisiana and surrounding areas of Iberia Parish, Louisiana, through its main banking office at 1527 West Main Street, Jeanerette, Louisiana, and a full service branch located in New Iberia, Louisiana. Deposits of the Bank are insured by the Federal Deposit Insurance Corporation ("FDIC") up to applicable legal limits. The Bank offers an array of deposit services, including demand accounts, NOW accounts, certificates of deposit, and money market accounts, and provides safe deposit boxes, night depository, individual retirement accounts, and drive-in banking services. The Bank's lending activities consist principally of real estate, consumer, and commercial loans. At December 31, 1994, the Bank had total deposits of approximately $15.3 million and total assets of approximately $17.5 million. The Bank's deposits represent a cross-section of the area's economy and there is no material concentration of deposits from any single customer or group of customers. Sugarland's loan portfolio contains a concentration of loans to the Iberia Parish farming industry. At December 31, 1994, Sugarland had approximately $2.5 million of loans outstanding to borrowers in the local farming industry, which represented approximately 110% of the Bank's Tier 1 Capital and 30% of the Bank's total outstanding loans on such date. Competition The Bank's general market area consists of Iberia Parish, which has an approximate population of 70,000 and in which there are numerous banks and other financial institutions. Competition among banks for loan customers is generally governed by such factors as loan terms, including interest charges, restrictions on borrowers and compensating balances, and other services offered by such banks. The Bank competes with numerous other commercial banks, savings and loan associations and credit unions for customer deposits, as well as with a broad range of financial institutions in consumer and commercial lending activities. In addition to thrift institutions, other businesses in the financial services industry compete with the Bank for retail and commercial deposit funds and for retail and commercial loan business. Competition for loans and deposits is intense among the financial institutions in the area. At present, Sugarland is experiencing competitive pressure on interest rates from other businesses in the financial services industry, including larger institutions whose size permits them to operate on a narrower profit margin than would be appropriate for Sugarland. See "Sugarland Management's Discussion and Analysis of Financial Condition and Results of Operations." Property The executive office of Sugarland and the Bank, located at 1527 W. Main Street, Jeanerette, Louisiana, is owned by the Bank. The Bank also owns the building and land where its New Iberia branch is located. None of the properties owned by the Bank is subject to a mortgage. Employees Sugarland and the Bank have, in the aggregate, approximately 15 full-time employees and one part-time employee and considers its relationship with its employees to be good. None of Sugarland's or the Bank's employees are subject to a collective bargaining agreement. Market Prices and Dividends Market Prices. Sugarland Common Stock is not traded on any exchange or in any other established public trading market. There are no bid or asked prices available for Sugarland Common Stock. At ___________, 1995, there were 307 shareholders of record of Sugarland. Cash Dividends. Sugarland declared cash dividends on Sugarland Common Stock of $.20 per share during the fiscal year ended December 31, 1993 and did not declare a dividend during the fiscal year ended December 31, 1994. Sugarland has agreed in the Plan that it will not make, declare, set aside or pay any dividend prior to the Effective Date of the Mergers without the written consent of MidSouth. Substantially all of the funds available to Sugarland to pay dividends to its shareholders are derived from dividends paid to it by the Bank. The Bank's payment of dividends is subject to certain legal restrictions applicable to all Louisiana state banks. The prior approval of the Louisiana Commissioner of Financial Institutions (the "Commissioner") is required if the total of all dividends declared in any one year will exceed the sum of the Bank's net profits of that year and net profits of the immediately preceding year. Additionally, dividends may not be declared or paid by a Louisiana state bank unless the bank has unimpaired surplus equal to 50% of the outstanding capital stock of the bank, and no dividend payment may reduce the bank's unimpaired surplus below 50%. At December 31, 1994, the Bank had approximately $358,000 available for the payment of dividends without prior approval of the Commissioner. Legal Proceedings Sugarland and the Bank normally are parties to and have pending routine litigation arising from their regular business activities of furnishing financial services, including providing credit and collecting secured and unsecured indebtedness. In some instances, such litigation involves claims or counterclaims against Sugarland and the Bank, or either of them. As of the date of this Joint Proxy Statement and Prospectus, neither Sugarland nor the Bank had any litigation pending. Security Ownership of Principal Shareholders and Management Ownership of Principal Shareholders. Except for Sugarland Common Stock, Sugarland has no other class of voting securities issued or outstanding. The following table provides information concerning all persons known to Sugarland to be beneficial owners, directly or indirectly, of more than 5% of the outstanding shares of Sugarland Common Stock, as of the Record Date. Unless otherwise noted, the named persons own the shares directly and have sole voting and investment power with respect to the shares indicated, subject to applicable community property laws. Number of Name and Address Shares Owned Percentage of Beneficial Owner Beneficially of Class ___________________ _____________ __________ J. Bryan Allain 9,516 5.08% 1519 Church Street Jeanerette, LA 70544 Ronald R. Hebert, Sr. 17,252 9.21% 3009 D'Albor Street Jeanerette, LA 70544 Adolphe A. Larroque 10,000 5.34% P.O. Box 111 Jeanerette, LA 70544 Pierre L. Larroque 11,864 6.33% 200 N. Druilhet Street Jeanerette, LA 70544 Herman J. Louviere 12,024 6.42% 2210 Hubertville Rd. Jeanerette, LA 70544 Lawrence L. Lewis, III 20,000 10.74% and Reverend H. Alexander Larroque, Trustees for The Larroque Family Trust 102 Versailles Blvd., Suite 600 Lafayette, LA 70502 __________________ Includes 1,000 shares held of record by Mr. Allain and 8,516 shares held of record by Insurance Trust Number Two of Mr. Allain and Suzanne Pole Allain, Mr. Allain's wife. Includes 2,000 shares held of record by Mr. Larroque, 4,000 shares held of record in two equal lots by Aqua-Kleen, Inc. and Dyna-Tec, Inc., corporations of which Mr. Larroque is a majority shareholder, President and director, and 5,864 shares held of record by Superior Fabricators, Inc., a corporation of which Mr. Larroque is a majority shareholder, President and director. Includes 5,212 shares held of record by Mr. Louviere and 5,212 shares held of record by Mr. Louviere, as usufructuary with respect to shares the naked ownership of which is held by Ronald, Eldridge and Farrell Louviere and Carolyn L. Clement. Also includes 1,600 shares held of record by Herman J. Louviere & Sons, Inc., a corporation of which Mr. Louviere is a principal shareholder, officer and director. ____________________________ Ownership of Directors and Executive Officers of Sugarland. The following table provides information concerning the shares of Sugarland Common Stock beneficially owned, directly or indirectly, by each director and executive officer of Sugarland, and all directors and executive officers as a group, as of the Record Date. Unless otherwise noted, the named persons have sole voting and investment power with respect to the shares indicated, subject to applicable community property laws. Number of Shares Owned Percentage Name of Beneficial Owner Beneficially of Class ________________________ ____________ ___________ J. Bryan Allain 9,516 5.08% Alton G. Barbin 4,500 2.40% Ronald R. Hebert, Sr. 17,252 9.21% Pierre L. Larroque 11,864 6.33% Herman J. Louviere 12,024 6.42% J.B. Pecot, M.D. 4,000 2.14% D.J. Tranchina 800 * All Directors and 59,956 32.01% Executive Officers as a Group (7 persons) __________________ *Less than one percent of class Includes 1,000 shares held of record by Mr. Allain and 8,516 shares held of record by Insurance Trust Number Two of Mr. Allain and Suzanne Pole Allain, Mr. Allain's wife. Includes 2,000 shares held of record by Mr. Larroque, 4,000 shares held of record in two equal lots by Aqua-Kleen, Inc. and Dyna-Tec, Inc., corporations of which Mr. Larroque is a majority shareholder, President and director, and 5,864 shares held of record by Superior Fabricators, Inc., a corporation of which Mr. Larroque is a majority shareholder, President and director. Includes 5,212 shares held of record by Mr. Louviere and 5,212 shares held of record by Mr. Louviere, as usufructuary with respect to shares the naked ownership of which is held by Ronald, Eldridge and Farrell Louviere and Carolyn L. Clement. Also includes 1,600 shares held of record by Herman J. Louviere & Sons, Inc., a corporation of which Mr. Louviere is a principal shareholder, officer and director. _____________________________ SUGARLAND MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview Sugarland reported net income of $162,000 for 1994, which represents a 13.83% decrease from the net income of $188,000 for 1993. Net income per share was $0.87 for 1994 and $1.01 for 1993. The primary reason for the decline in net income during 1994 over 1993 was an increase in income tax expense. Income tax expense for 1994 was $56,000, compared to $24,000 for 1993. The 133% increase in income tax expense for 1994 resulted from the use in 1993 of a net operating loss carryover, which resulted in a tax benefit of $44,000 in 1993. Pre-tax income in 1994 was $218,000, an increase of $6,000 over 1993 pre-tax income of $212,000. The slight increase in pre-tax income during 1994 was principally attributable to decreases in expenses. Improving loan quality resulted in no provision for loan losses during 1994 or 1993. Net interest income for 1994 decreased $7,000 to $853,000, which represents a .81% decrease over 1993. The primary reason for the decrease was a slight overall average interest rate reduction in the loan portfolio. At December 31, 1994, Sugarland had total assets and deposits of $17,473,000 and $15,320,000, respectively, which represented decreases of 4.15% and 4.68%, respectively, from amounts reported at December 31, 1993. Loans, net of the reserve for possible loan losses, were $8,226,000 at December 31, 1994, an increase of 2.21% from the amount reported at the end of 1993. The decrease in assets as of December 31, 1994 when compared to December 31, 1993 is principally due to a decrease in interest-bearing deposits, resulting in a decrease in funds available for investment and federal funds sold, partially offset by an increase in loan demand. Management attributes the decrease to increased competition from other businesses in the financial services industry, including larger institutions whose size permits them to pay higher interest rates and operate on a narrower profit margin than would be appropriate for Sugarland. See "Information about Sugarland - Competition." The following table sets forth certain information regarding Sugarland's results of operations for the periods indicated. Years Ended December 31, __________________ 1994 1993 ________ _______ (Dollars in thousands, except per share data) Net income $ 162 $ 188 Net income per share* $ 0.87 $ 1.01 Return on average assets 0.94% 1.04% Return on average equity 7.64% 9.14% Average equity to average assets 12.33% 11.40% Dividend pay-out ratio -- 19.80% * Per share data are based upon a weighted average number of shares outstanding of 187,286. A more detailed review of Sugarland's financial condition and results of operations for the years ended December 31, 1994 and 1993 follows. This discussion and analysis should be read in conjunction with Sugarland's financial statements and the notes thereto appearing elsewhere in this Joint Proxy Statement and Prospectus. Results of Operations Net Interest Income. The principal component of Sugarland's net earnings is net interest income, which is the difference between interest and fees earned on interest-earning assets and interest paid on deposits and borrowed funds. Net interest income, when expressed as a percentage of total average interest-earning assets, is referred to as net interest margin. 1994 net interest income of $853,000 represents a decrease of $7,000, or .81%, from net interest income of $860,000 reported for 1993. The slight decline in 1994 was primarily the result of decreases in overall average interest rates. Average interest-earning assets were $14,715,000 and $15,625,000 in 1994 and 1993, respectively. Average loans, the Company's highest yielding assets, rose .91% from 1993 to 1994. Net interest margin increased 30 basis points to 5.80% for the year ended December 31, 1994 from 5.50% recorded for 1993. Sugarland's net interest income is affected by the change in the amount and mix of interest-earning assets and interest-bearing liabilities, and by changes in yields earned on assets and rates paid on deposits and other borrowed funds. The following table sets forth certain information concerning average interest-earning assets and interest-bearing liabilities and the yields and rates thereon for the periods presented. Average balances are computed using daily average balances.
Year Ended December 31, 1994 Year Ended December 31, 1993 ____________________________ _____________________________ Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate _______ ________ _______ _______ ________ ________ (Dollars in thousands) Interest-Earning Assets: Loans $ 8,159 $ 868 10.64% $ 8,066 $ 885 10.97% Investment securities 4,240 263 6.20% 4,575 295 6.45% Federal funds sold 2,316 88 3.80% 2,984 88 2.95% ________ _______ _________ _______ Total interest- earning assets $ 14,715 $ 1,219 8.28% $ 15,625 $ 1,268 8.12% ________ _______ _________ _______ Interest-Bearing Liabilities: Deposits: Money market demand $ 2,565 $ 71 2.77% $ 2,439 $ 70 2.87% Savings and other interest- bearing demand 2,911 78 2.68% 2,931 85 2.90% Time deposits 5,838 217 3.72% 6,611 253 3.83% ________ _______ _________ _______ Total interest- bearing liabilities $ 11,314 $ 366 3.23% $ 11,981 $ 408 3.41% ________ _______ _________ _______ Net interest income $ 853 $ 860 _______ _______ Net interest margin 5.80% 5.50%
The following table sets forth changes in interest income and interest expense for each major category of interest-earning assets and interest-bearing liabilities and the amount of change attributable to volume change and rate change for the periods indicated.
1994 OVER 1993 1993 OVER 1992 _________________________________________________________________________ Total Change Change Change Total Change Change Change Increase in in in Increase in in in (Decrease) Volume Rate Rate/Vol (Decrease) Volume Rate Rate/Vol _________ ______ ______ ________ ________ ______ ____ ________ (Dollars in thousands) Earning Assets: Loans $ (17) $ 10 $ (27) $ -- $ (43) $ 12 $ (53) $ (2) Investment securities (32) (22) (10) -- 31 77 (35) (11) Federal funds sold -- (19) 25 (6) (15) (1) (14) -- ______ ______ _______ _______ _______ _______ _______ ______ Total $ (49) $ (31) $ (12) $ (6) $ (27) $ 88 $ (102) $ (13) Interest-Bearing Liabilities: Interest bearing deposits $ (42) $ (23) $ (22) $ 3 $ (94) $ 17 $ (109) $ (2) ______ ______ _______ _______ _______ _______ _______ ______ Total $ (42) $ (23) $ (22) $ 3 $ (94) $ 17 $ (109) $ (2) Net interest income before allocation of rate/volume $ (7) $ (8) $ 10 $ (9) $ 67 $ 71 $ 7 $ (11) Allocation or rate/volume -- (17) 8 9 -- (10) (1) 11 Changes in net interest income $ (7) $ (25) $ 18 $ - $ 67 $ 61 $ 6 $ --
Provision for Loan Losses. The provision for loan losses is the periodic charge to earnings for potential losses in the loan portfolio. The amounts provided for loan losses are determined by management after evaluations of the loan portfolio. This evaluation process requires that management apply various judgments, assumptions and estimates concerning the impact certain factors may have on amounts provided. Factors considered by management in its evaluation process include known and inherent losses in the loan portfolio, the current economic environment, the composition of and risk in the loan portfolio, prior loss experience and underlying collateral values. While management considers the amounts provided through December 31, 1994 to be adequate, subsequent changes in these factors and related assumptions may warrant significant adjustments in amounts provided, based on conditions prevailing at the time. In addition, various regulatory agencies, as an integral part of the examination process, review Sugarland's allowance for loan losses. Such agencies may require Sugarland to make additions to the allowance based on their judgments of information available to them at the time of their examinations. No provision for loan losses was made for 1994 and 1993. Non-interest Income. Non-interest income was $180,000 for the year ended December 31, 1994, compared to $199,000 for 1993. The decrease in non-interest income from 1993 to 1994 was due principally to a decrease in income from sales of other real estate owned. Non-interest Expense. Non-interest expense for the year ended December 31, 1994 and December 31, 1993 was $815,000 and $846,000, respectively, a 3.66% decrease. The decrease in non- interest expense was attributable principally to decreased general and administrative expenses, salaries and occupancy expenses. Income Taxes. Sugarland's provision for income taxes was $56,000 for the year ended December 31, 1994, compared to $24,000 for 1993. The 133% increase in income tax expense for 1994 resulted from the use in 1993 of a net operating loss carryover, which resulted in a tax benefit of $44,000 in 1993. Sugarland adopted a new standard for accounting for income taxes effective January 1, 1993. Under Statement of Financial Accounting Standards No. 109 ("SFAS 109"), deferred income taxes are provided for by the liability method. The adoption of SFAS 109 did not have a material effect on Sugarland's results of operations or financial condition. Financial Condition The following table sets forth the Company's average assets, liabilities and shareholders' equity and the percentage distribution of these items for the periods indicated.
Years Ended December 31, _________________________________________________ 1994 1993 _____________________ _____________________ Average Average Balance Percent Balance Percent _______ _______ _______ _______ (Dollars in thousands) Assets: Cash and due from banks $ 1,685 9.80% $ 1,552 8.60% Investment securities 4,240 24.67% 4,575 25.36% Federal funds sold 2,316 13.47% 2,984 16.54% Loans (net of allowance for credit losses) 8,159 47.48% 8,066 44.73% Other assets 788 4.58% 860 4.77% _______ _______ _______ _______ Total assets $17,188 100.00% $18,037 100.00% ======= ======= ======= ======= Liabilities and Shareholders' Equity: Demand deposits $ 3,691 21.47% $ 3,919 21.73% Interest-bearing deposits 11,314 65.83% 11,981 66.42% Other liabilities 63 .37% 81 .45% _______ _______ _______ _______ Total liabilities 15,068 87.67% 15,981 88.60% Shareholders' equity 2,120 12.33% 2,056 11.40% _______ _______ _______ _______ Total liabilities and shareholders' equity $17,188 100.00% $18,037 100.00% ======= ======= ======= =======
Total Assets. At December 31, 1994, total assets were approximately $17,473,000, compared to $18,230,000 at December 31, 1993. Total average assets for the year ended December 31, 1994 were $17,188,000, a decrease of 4.71%, from the $18,037,000 average for the year ended December 31, 1993. The decrease in assets as of December 31, 1994 when compared to December 31, 1993 is principally due to a decrease in interest-bearing deposits, resulting in a decrease in funds available for investment and federal funds sold, partially offset by an increase in loan demand. Management attributes the decrease to increased competition from other businesses in the financial services industry, including larger institutions whose size permits them to pay higher interest rates and operate on a narrower profit margin than would be appropriate for Sugarland. See "Information about Sugarland - Competition." Investment Securities. At December 31, 1994, Sugarland's investment securities portfolio aggregated $4,252,000, an increase of $332,000 from the $3,920,000 reported at December 31, 1993. The following table sets forth the composition of Sugarland's investment portfolio at the end of each period presented.
December 31, ___________________________________________________ 1994 1993 ________________________ ______________________ Amortized Fair Book Market Cost Value Value Value _________ _________ _______ ________ (Dollars in thousands) U.S. government agencies $ 1,901 $ 1,787 $ 1,407 $ 1,416 Government guaranteed mortgage backed securities 1,647 1,555 1,978 2,029 Government guaranteed & private issue CMO's & REMIC's 404 371 289 291 Mutual funds 200 132 146 146 Other equity securities 100 100 100 100 _______ _______ _______ _______ Total $ 4,252 $ 3,945 $ 3,920 $ 3,982 ======= ======= ======= =======
Effective January 1, 1994, Sugarland adopted Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"), which requires the classification of securities into one of three categories: Trading, Available-for-sale, or Held-to- maturity. Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates this classification periodically. Trading account securities are held for resale in anticipation of short-term market movements. Sugarland has not engaged in trading activities related to any of its investment securities and has no securities classified as Trading. Debt securities are classified as held-to-maturity when Sugarland has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities not classified as trading or held-to-maturity are classified as available-for- sale. All of the securities in Sugarland's portfolio at December 31, 1994 were classified as available-for sale. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. Sugarland may sell these securities in response to liquidity demands. Available-for-sale securities also may be used as a means of adjusting the interest rate sensitivity of Sugarland's balance sheet through sale and reinvestment. The following table presents selected contractual maturity data for the investment securities in Sugarland's portfolio at December 31, 1994. Dollar values are based upon the amortized cost of such securities at December 31, 1994.
After One Year Through Five After Five Years One Year or Less Years Through 10 Years After 10 Years ________________ _______________ ________________ __________________ Amount Yield Amount Yield Amount Yield Amount Yield ______ _____ ______ _____ ______ _____ ______ _____ (Dollars in thousands) U.S. government agencies $ -- $ 1,900 5.15% $ -- $ -- Government guaranteed mortgage backed securities -- 92 8.00% 476 6.00% 1,080 7.52% Government guaranteed & private issue CMO's REMIC's -- -- -- 404 5.58% Total -- $ 1,992 $ 476 $ 1,484
The following table presents selected contractual maturity data for the investment securities in Sugarland's portfolio at December 31, 1993. Dollar values are based upon the book value of such securities at December 31, 1993.
After One Year Through Five After Five Years One Year or Less Years Through 10 Years After 10 Years ________________ _______________ ________________ __________________ Amount Yield Amount Yield Amount Yield Amount Yield ______ _____ ______ _____ ______ _____ ______ _____ (Dollars in thousands) U.S. government agencies $ -- $ 1,407 6.47% $ -- $ -- Government guaranteed mortgage backed securities -- 177 8.00% 483 6.00% 1,318 7.57% Government guaranteed & private issue CMO's & REMIC's -- -- -- 289 6.09% ________ _______ ______ _______ Total $ -- $ 1,584 $ 483 $ 1,607 ======== ======= ======= ======= See Note 2 to Sugarland's Financial Statements appearing elsewhere in this Joint Proxy Statement and Prospectus for information concerning the amortized cost and estimated fair values of Sugarland's investment securities at December 31, 1994 and 1993. Loans. Sugarland engages in real estate lending through real estate construction and mortgage loans, and commercial and consumer lending. The lending activities of Sugarland are guided by the basic lending policy established by its Board of Directors. Each loan is evaluated based on, among other things, character and leverage capacity of the borrower, capital and investment in a particular property, if applicable, cash flow, collateral, market conditions for the borrower's business or project and prevailing economic trends and conditions. The following table sets forth the type and amount of loans outstanding as of the dates indicated: December 31, ____________________ 1994 1993 ______ _______ (Dollars in thousands) Commercial/Industrial/Agricultural $ 4,277 $ 4,127 Commercial Real Estate 849 1,056 Residential Real Estate 1,423 1,432 Consumer/Installment 1,907 1,676 Other 4 4 ________ ________ Total loans $ 8,460 $ 8,295 ======== ======== In addition to the matters set forth in the table above, as of December 31, 1994, Sugarland's loan portfolio contained a concentration of loans to borrowers engaged in the Iberia Parish agriculture industry. A concentration is defined as amounts loaned to a multiple number of borrowers engaged in similar activities, which would cause them to be similarly impacted by economic or other conditions, where the amount exceeds 10% of total outstanding loans. At December 31, 1994, Sugarland had approximately $2.5 million of loans outstanding to borrowers in the local farming industry, which represented approximately 30% of Sugarland's total outstanding loans. At December 31, 1994, loans, net of unearned discount and the allowance for possible loan losses, were $8,226,000, as compared to $8,048,000 at December 31, 1993. Average loans have increased over these periods as well, from $8,066,000 to $8,159,000, respectively, for 1993 and 1994. These increases in the amount of outstanding loans are attributable principally to increased loan demand in the market served by Sugarland as the local economy strengthened. Sugarland's average loan to deposit ratio was 54.4% for 1994 as compared to 50.7% for 1993. This increase is primarily the product of increased loan demand and decreased deposit base. At December 31, 1994, residential real estate, commercial real estate and commercial/industrial/agricultural loans comprised approximately 17%, 10% and 51%, respectively, of total outstanding loans. This compares to 17%, 13% and 50% categorized as residential real estate, commercial real estate and commercial/industrial/agricultural loans, respectively, at December 31, 1993. The following table provides information concerning loan portfolio maturity as of December 31, 1994. Loan portfolio maturity by type of loan as presented in the table above is not readily available. (Dollars in thousands) One year or less Floating interest rate $ 593 Fixed interest rate 2,762 After one year through five years: Floating interest rate 1,574 Fixed interest rate 1,494 After five years: Floating interest rate 1,199 Fixed interest rate 838 _______ Total $ 8,460 ======= Nonaccrual, Past Due and Modified Loans. The performance of Sugarland's loan portfolio is evaluated regularly by Senior Management and the Board of Directors. Interest on loans is accrued daily as earned. A loan is generally placed on nonaccrual status when principal or interest is past due 90 days or more, except when management determines the loan remains likely to be fully collectible. Upon being placed on nonaccrual status, the accrual of income from a loan is discontinued and previously accrued but unpaid interest is reversed against income. Each loan that is 90 days or more past due is evaluated to determine its collectibility and the adequacy of its collateral. The following table sets forth the amount of Sugarland's nonperforming loans (nonaccrual loans and loans past due 90 days or more and still accruing interest) and loans with modified terms as of the dates indicated: December 31, ______________________ 1994 1993 ________ ________ (Dollars in thousands) Nonaccrual loans $26 $72 Loans past due 90 days or more and still accruing interest 16 62 Renegotiated debt, still accruing interest -- -- As a percent of total loans, loans past due 90 days or more and not on nonaccrual status were .19% at December 31, 1994, compared to .75% of total loans at December 31, 1993. Nonaccrual loans were .31% of total loans at December 31, 1994, and .87% at year-end 1993. There were no loans with modified terms at year-end 1994 or 1993. As of December 31, 1994, Sugarland was not aware of any other loans where known information about possible credit problems of the borrower caused management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms. Sugarland's primary regulators and external auditors review the loan portfolio as part of their regular examinations and their assessment of specific credits, based on information available to them at the time of their examination, may affect the level of Sugarland's non-performing loans. Additionally, the loan portfolio is regularly monitored by Senior Management and the Board. Accordingly, there can be no assurance that other loans will not be placed on nonaccrual, become 90 days or more past due, or have terms modified in the future. In May 1993, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 114, "Accounting by Creditors for Impairment of a Loan" ("SFAS 114"). This standard requires the measurement of certain impaired loans based on the present value of expected future cash flows discounted at the loan's effective interest rate. Adoption of this new standard is required for fiscal years beginning after December 15, 1994. Sugarland will adopt this statement beginning January 1, 1995. The effect of adopting SFAS 114 on Sugarland's financial statements has not yet been determined, but is not expected to be material. Allowance for Loan Losses. A certain degree of risk is inherent in the extension of credit. Management has credit policies in place to monitor and attempt to control the level of loan losses and nonperforming loans. One product of Sugarland's credit risk management is the maintenance of the allowance for loan losses at a level considered by management to be adequate to absorb estimated known and inherent losses in the existing portfolio, including commitments and standby letters of credit. The allowance for loan losses is established through charges to operations in the form of provisions for loan losses. The allowance is based upon a regular review of current economic conditions, which might affect a borrower's ability to pay, underlying collateral values, risk in and the composition of the loan portfolio, prior loss experience and industry averages. In addition, Sugarland's primary regulators, as an integral part of their examination process, periodically review Sugarland's allowance for loan losses and may recommend additions to the allowance based on their assessment of information available to them at the time of their examination. Loans that are deemed to be uncollectible are charged- off and deducted from the allowance. The provision for loan losses and recoveries on loans previously charged-off are added to the allowance. The following table sets forth Sugarland's loan loss experience and certain information relating to its allowance for loan losses as of the dates and for the periods indicated.
Years Ended December 31, ______________________ 1994 1993 __________ ________ (Dollars in thousands) Average net loans outstanding $ 8,159 $ 8,066 Balance of allowance for credit losses at beginning of period 145 135 Charge offs: Commercial loans (15) -- Consumer loans (1) (6) Recoveries 5 16 ________ ________ Net recoveries (charge-offs) (11) 10 ________ ________ Provisions charged to expense -- -- ________ ________ Balance of allowance for credit losses at end of period $ 134 $ 145 ======== ======== Ratio of net charge-offs to average loans outstanding 0.13% (0.12%)
The allowance for loan losses was $134,000 or 1.64% of average loans, and $145,000 or 1.80% of average loans at December 31, 1994 and December 31, 1993, respectively. Net charged-off loans during this period were $11,000 for the year ended December 31, 1994 as compared to ($10,000) in 1993. The allowance for loan losses should not be interpreted as an indication of future charge-off trends. Management believes that the allowance for loan losses at December 31, 1994 was adequate to absorb the known and inherent risks in the loan portfolio at that time. However, no assurance can be given that future changes in economic conditions that might adversely affect Sugarland's principal market area, borrowers or collateral values, and other circumstances will not result in increased losses in Sugarland's loan portfolio in the future. The following table sets forth the approximate dollar amount of the allowance for loan losses allocable to the stated loan categories, and the percent of total loans in each such category for the periods presented.
Years Ended December 31, _____________________________________________ 1994 1993 ____________________ ____________________ Allow. Loan Allow. Loan ________ ______ ________ ______ (Dollars in thousands) Commercial/Industrial $ 94 50.56% $ 110 49.75% /Agricultural Real Estate 15 26.86% 10 30.00% Consumer/Installment/Other 25 22.58% 25 20.25% ________ _______ ________ _______ $ 134 100.00% $ 145 100.00% ======== ======= ======== =======
The allocation of the allowance for loan losses should not be interpreted as an indication of future credit trends or that losses will occur in these amounts or proportions. Furthermore, the portion allocated to each loan category is not the total amount available for future losses that might occur within such categories, since the total allowance is a general allowance applicable to the entire portfolio. In determining the adequacy of the allowance for credit losses, management considers such factors as known problem loans, evaluations made by bank regulatory agencies and external auditors, individual loan reviews for loans in excess of $40,000, collateral, assessment of economic and market conditions, concentrations and other appropriate data in order to identify the risks in the portfolio. The Loan Review Committee reviews on a quarterly basis the loan loss reserve of the Bank and makes recommendations to the Board of Directors of the Bank concerning the adequacy of the allowance. Additionally, the Bank's policy is to maintain a loan loss reserve equal to at least 1.0% of the total loans outstanding or an amount sufficient to cover all reasonably anticipated loan losses. If, following a review of the allowance, the allowance is determined to be inadequate or excessive, the amount of the allowance is adjusted accordingly. Deposits. Deposits are the primary source of funding for Sugarland's earning assets. Total deposits at December 31, 1994 and December 31, 1993 were approximately $15,320,000 and $16,072,000, respectively. Time certificates of deposit of $100,000 or more, which were approximately $501,000 at the end of 1994 and $703,000 at the end of 1993, had remaining maturities as follows: December 31, _____________________ 1994 1993 ________ _______ Maturing within: (Dollars in thousands) Three months or less $301 $503 Over three months to six months -- -- Over six months to twelve months 200 200 Over twelve months -- -- _____ _____ Total $501 $703 Average deposit balances are summarized for the periods indicated:
Years Ended December 31, _________________________________________ Average Average 1994 Rate 1993 Rate ______ _______ ______ _______ (Dollars in thousands) Demand deposits $ 3,691 0.00% $ 3,919 0.00% Money market demand 2,565 2.77% 2,439 2.87% Savings and other interest- bearing demand deposits 2,911 2.68% 2,931 2.90% Time deposits 5,838 3.72% 6,611 3.83% ________ ________ Total $ 15,005 3.23% $ 15,900 3.41% ======== ========
At December 31, 1994 and December 31, 1993, Sugarland had no brokered deposits. Interest Rate Sensitivity. Interest rate risk is the potential impact of changes in interest rates on net interest income and results from disparities in repricing opportunities of assets and liabilities over a period of time. Management estimates the effects of changing interest rates and various balance sheet strategies on the level of net interest income. Management may alter the mix of floating- and fixed-rate assets and liabilities, change pricing schedules, and adjust maturities through sales and purchases of securities available for sale as a means of limiting interest rate risk. The degree of interest rate sensitivity is not equal for all types of assets and liabilities. Sugarland's experience has indicated that the repricing of interest-bearing demand, savings and money market accounts does not move with the same magnitude as general market rates. Additionally, these deposit categories, along with non-interest demand, have historically been stable sources of funds to Sugarland, which indicates a much longer implicit maturity than their contractual availability. Sugarland's cumulative behavioral gap to total assets at December 31, 1994 was a positive 11.36% in the 0-1 year cumulative range. A positive gap implies that earnings would increase in a rising interest rate environment and decrease in a falling interest rate environment. Liquidity. Sugarland seeks to manage its liquidity position to attempt to ensure that sufficient funds are available to meet customers' needs for borrowing and deposit withdrawals. Liquidity is derived from both the asset and liability sides of the balance sheet. Asset liquidity arises from the ability to convert assets to cash and self-liquidation or maturity of assets. Liquid asset balances include cash, interest-bearing deposits with financial institutions, short-term investments and federal funds sold. Liability liquidity arises from a diversity of funding sources as well as from the ability of Sugarland to attract deposits of varying maturities. If Sugarland were limited to only one source of funding or all its deposits had the same maturity, its liquidity position would be adversely impacted. Sugarland's funding source is primarily its deposit base which is comprised of interest-bearing and noninterest-bearing accounts. Sugarland's non- interest bearing demand deposits are, by their very nature, subject to withdrawal upon demand. Declines in one form of funding source require Sugarland to obtain funds from another source. If Sugarland were to experience a decline in noninterest-bearing demand deposits and have a significant increase in loan volume without a commensurate increase in such deposits, it would utilize alternative sources of funds, probably at higher cost, to maintain its liquidity and to meet its loan funding needs. This would place downward pressure on Sugarland's net interest margin and might have a negative impact on Sugarland's liquidity position. Sugarland's liquidity expressed as a percentage of net liquid assets to net liabilities was 28.6% and 33.6% at December 31, 1994 and December 31, 1993, respectively. The decreased percentage at December 31, 1994 was due principally to a decrease in deposits. Capital Adequacy. At December 31, 1994, Sugarland's total shareholders' equity was $2,107,000, a decrease of .43% from $2,116,000 at December 31, 1993. The decrease was due principally to Sugarland's adoption of SFAS 115, which resulted in Sugarland's investment securities being stated at fair value and unrealized losses therein causing a reduction in shareholders' equity. Book value per common share is presented in the table below. Years Ended December 31, ________________________ 1994 1993 _________ _________ (Dollars in thousands, except per share amounts Shares outstanding 187,286 187,286 Shareholder's equity $ 2,107 $ 2,116 Book volue per common share $ 11.25 $ 11.30 Adequate levels of capital are necessary over time to sustain growth and absorb losses. In the case of banks and bank holding companies, capital levels must also meet minimum regulatory requirements. All risk-based and other capital ratios improved from year-end 1993 to 1994, and remain well above regulatory minimums. At December 31, 1994, the Bank's Tier 1 capital was 24.39% of risk-weighted assets and its total capital was 25.83% of risk-weighted assets, compared to the regulatory minimums of 4.0% and 8.0%, respectively. The Bank's regulatory leverage ratio, which compares Tier 1 capital to adjusted total assets, was 13.42% at December 31, 1994, compared to the regulatory minimum of 4.0%. Under present regulations, the Bank was classified as "well- capitalized" based upon its capital ratios at December 31, 1994 and 1993. The following table sets forth the Bank's risk based capital and capital ratios at year end 1994 and 1993. Regulatory December 31, Minimum _______________________ ____________ 1994 1993 ______ _______ (Dollars in thousands) Capital: Tier 1 $ 2,264 $ 2,176 Tier 2 134 145 ________ ________ Total capital $ 2,398 $ 2,321 Risk-weighted assets $ 9,284 $ 9,594 Ratios: Tier 1 Capital to risk- weighted assets 24.39% 22.68% 4.0% Tier 2 Capital to risk- weight assets 1.44% 1.51% -- Total capital to risk-weighted assets 25.83% 24.19% 8.0% Leverage Ratio 13.42% 12.13% 4.0% INFORMATION ABOUT MIDSOUTH A copy of MidSouth's Annual Report to Shareholders is being delivered to the Shareholders of MidSouth along with this Joint Proxy Statement and Prospectus. A copy of MidSouth's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1994, has been filed with the Commission, and is incorporated herein by reference. In addition, all other documents that will be filed by MidSouth with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") between the date of this Joint Proxy Statement and Prospectus and the date of the Meetings shall be deemed to be incorporated herein by reference from the date of filing. See "Available Information" for information with respect to obtaining copies of documents incorporated by reference in this Joint Proxy Statement and Prospectus. Any statement contained in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded to the extent that a statement contained herein or in any other document subsequently filed and incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Joint Proxy Statement and Prospectus. COMPARATIVE RIGHTS OF SHAREHOLDERS If the Mergers are subsequently consummated, all shareholders of Sugarland, other than those perfecting dissenters' rights, will become shareholders of MidSouth and their rights will be governed by and be subject to the Articles of Incorporation and Bylaws of MidSouth rather than the Articles of Incorporation and Bylaws of Sugarland. The following is a brief summary of certain of the principal differences between the rights of holders of MidSouth Preferred Stock and Sugarland Common Stock not described elsewhere herein. Preferred Stock The Board of Directors of MidSouth is authorized by the Company's Articles of Incorporation, without action of its shareholders, to issue preferred stock from time to time and to establish the designations, preferences and relative, optional or other special rights and qualifications, limitations and restrictions thereof, as well as to establish and fix variations in the relative rights as between holders of any one or more series of such preferred stock. The authority of the Board of Directors includes but is not limited to the determination or fixing of the following with respect to each series of preferred stock which may be issued: (i) the designation of such series; (ii) the number of shares initially constituting such series; (iii) the dividend rate and conditions, and the dividend preferences, if any, in respect of the preferred stock and among the series of preferred stock; (iv) whether, and upon what terms, the preferred stock would be convertible into or exchanged for shares of any other class or other series of the same class; (v) whether, and to what extent, holders of one or more shares of a series of preferred stock will have voting rights; and (vi) the restrictions, if any, that are to apply on the issue or reissue of any additional preferred stock. Shares of preferred stock that are authorized would be available for issuance in connection with the acquisition of other businesses, infusion of capital, or for other lawful corporate purposes, at the discretion of the Board of Directors. The Board of Directors could issue preferred stock to a person or persons who would support management in connection with a proxy contest to replace an incumbent director or in opposition to an unsolicited tender offer. As a result such proposals or tender offers could be defeated even though favored by the holders of a majority of MidSouth Common Stock. The Articles of Incorporation of Sugarland do not authorize the issuance of preferred stock. Directors The Articles of Incorporation of MidSouth provide that the Board of Directors shall be divided into three equal classes, with directors in each class holding office for a staggered term of three years. Accordingly, only one-third of the directors are subject to election each year. The Articles further provide that the affirmative vote of not less than 80% of the "Total Voting Power" is required to remove a director from office during his term of service, and that a director may only be removed for cause. The Articles define Total Voting Power as the total number of votes that shareholders and holders of any bonds, debentures or other obligations granted voting rights by the Corporation pursuant to La. R.S. 12:75(H) are entitled to cast with respect to the election of directors or, if such term is used in reference to any other particular matter properly brought before the shareholders for a vote, means the total number of such votes that are entitled to be cast with respect to such matter. Nominations for directors must comply with the nominating procedures set forth in Article IV(H), which requires, among other things, that a written notice of nomination be delivered to the Board prior to the shareholders' meeting at which the nomination will be considered, and that such notice must contain certain specific information about the candidate and the shareholder making the nomination, as required under the Securities Exchange Act of 1934. MidSouth's Articles also permit directors to vote by proxy. Provisions governing the election and powers of Sugarland's directors are contained in its Bylaws rather than its Articles, and the Bylaws do not contain any of the special provisions discussed above. Business Combinations With respect to a tender offer or offer to merge or consolidate, MidSouth's Articles permit its directors to consider: (i) the consideration offered in relation to the current market price of the stock versus the estimated future market price of the stock that could be achieved over several years; (ii) the social and economic effects of the transaction on the corporation, its subsidiaries, or their employees, customers, creditors and the communities in which the corporation and its subsidiaries do business; (iii) the business and financial condition and earning prospects of the acquiring party; and (iv) the competence, experience and integrity of the acquiring party and its management. These provisions are intended to give MidSouth's directors substantial discretion in evaluating an offer to merge or consolidate. Sugarland's Articles do not contain provisions on business combinations. Special Meetings of Shareholders MidSouth's Articles require that at least 80% of the total voting power of MidSouth is necessary for the shareholders to call a special meeting. Sugarland's Articles and Bylaws do not address the call of a special meeting by shareholders, so under the LBCL shareholders of Sugarland would be entitled to call a special meeting upon the written request of 20% of the outstanding stock of Sugarland. Bylaws Bylaws of MidSouth may be adopted only by a majority vote of all of the Continuing Directors. "Continuing Directors" is defined in the Articles as the persons who (1) are members of the Board of Directors of the Corporation on March 3, 1993 or (2) become members of the Board of Directors after March 3, 1993 upon the nomination of the Board of Directors at a time when a Majority of the Members are Continuing Directors. The Bylaws may be amended or repealed only by a majority vote of all of the Continuing Directors or by the affirmative vote of the holders of at least 80% of the Total Voting Power at any annual or special meeting of shareholders, the notice of which expressly states that the proposed amendment or repeal is to be considered at the meeting. Any purported amendment to the Bylaws which would add thereto a matter not covered in the Bylaws prior to such purported amendment shall be deemed to constitute the adoption of a Bylaw provision and not an amendment to the Bylaws. Sugarland's Articles provide that its Bylaws may be adopted, amended or repealed concurrently by the Board or the shareholders, and that the shareholders may provide that any alterations, amendments or repeal of a provision of the Bylaws by the shareholders may not be altered, amended, repealed or reinstated by the Board. Vote Required for Shareholder Action MidSouth's Articles provide that any proposal to approve a merger, consolidation, share exchange, disposition of all the corporation's assets, dissolution or an amendment to the Articles which has the recommendation and approval of a majority of the Continuing Directors need only be approved by the shareholders by a majority of the voting power present at a meeting to consider such matters. All other proposals submitted to the shareholders upon the recommendation and approval of a majority of the Continuing Directors need only be approved by a majority of the votes cast at any meeting to consider the proposal. Any matter submitted to the shareholders other than with the recommendation and approval of a majority of the Continuing Directors must be approved by the affirmative vote of 80% of the Total Voting Power. Sugarland's Articles provide that shareholder approval of any matter properly brought before the shareholders is effected by a majority of the votes actually cast, with the exception of directors, who are elected by a plurality vote. Limitation of Personal Liability and Indemnification of Directors and Officers The Articles of Incorporation of MidSouth contain a provision limiting the personal liability of MidSouth's directors and officers under certain circumstances (the "Limitation of Liability Provi- sion"). Pursuant to the Limitation of Liability Provision, the officers and directors of MidSouth have no personal liability to MidSouth or its shareholders for monetary damages for breach of their fiduciary duty as directors or officers of MidSouth except for (a) any breach of the director's or officer's duty of loyalty to MidSouth or its shareholders, (b) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) liability pertaining to acts related to an unlawful stock repurchase or payment of a dividend, or (d) any transaction from which the director or officer derived an improper personal benefit. The Articles also permit the Board to cause the Company to enter into contracts with its directors and officers to further limit an individual's liability to the fullest extent permitted by law, and to adopt similar limitation of liability and indemnification provisions with respect to the Company's subsidiaries. Sugarland's Articles contain indemnification provisions which provide indemnification to its directors and officers to the fullest extent permitted by the LBCL. Neither Sugarland's Articles nor its Bylaws contain provisions limiting the liability of its directors and officers. RIGHTS AND PREFERENCES OF MIDSOUTH PREFERRED STOCK Shareholders of Sugarland who receive MidSouth Preferred Stock in exchange for their shares of Sugarland Common Stock will have the rights and preferences described in the Form of Articles of Amendment of MidSouth attached hereto as Appendix B. Shareholders of Sugarland are urged to review the Form of Articles of Amendment of MidSouth at Appendix B for a complete description of the rights and preferences afforded to holders of MidSouth Preferred Stock. Dividend Rights Holders of record of the MidSouth Preferred Stock are entitled to receive, but only when as and if declared by the MidSouth Board of Directors, and out of the funds of MidSouth legally available for that purpose, cumulative cash dividends at an annual rate, fixed on December 31 of each year for the ensuing calendar year, equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum, and no more; provided that the annual dividend rate shall in no case be greater than 10% nor less than 6%, and that, from and after the tenth anniversary of the date of issuance of the Preferred Stock the annual dividend rate will be fixed at 10%. If more than one yield is shown for December maturities, the average will be applied. If no yield is quoted for December maturities, the yield for the next earlier available month will be applied. On the basis of the foregoing, from the date of issuance of the Preferred Stock through December 31, 1995, the annual dividend rate will be 8.28%. If any quarterly dividend is not paid when due, the unpaid amount will bear interest at a rate of 10% per annum until paid. Dividends payable on the Preferred Stock will be paid on the first day of April, July, October or January of each year or on such earlier dates as the MidSouth Board of Directors may from time to time fix as the dates for payment of quarterly dividends on MidSouth Common Stock. The initial dividend on the Preferred Stock will be payable on the first day of April, July, October, or January that is at least 91 days from the date of original issuance of the Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days, provided that the aggregate amount payable (A) will be increased by the amount by which certain expenses of Sugarland related to the Plan are less than $110,000 (the "Additional Amount"), or (B) will be reduced by the amount by which certain expenses (as defined in the Articles) exceed $110,000 (the "Subtracted Amount"). Such expenses include Sugarland's actual legal, accounting and financial advisory fees and expenses of printing and mailing this Joint Proxy Statement and Prospectus and holding the Special Meeting, and any other expenses in connection with the negotiation, execution, implementation and consummation of the Plan. In any case in which the Additional Amount is greater than the dividend that would have been paid for the 90 excluded days set forth above, such excess will be payable on the next succeeding dividend payment date. In any case in which the Subtracted Amount is greater than the amount otherwise payable under this paragraph, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. As long as any shares of MidSouth Preferred Stock are outstanding, MidSouth will not declare, pay or set apart for payment any dividend on any shares of its Common Stock or other capital stock ranking junior to the Preferred Stock as to dividends or liquidation rights (collectively, "Junior Securities") or make any payment on account of, or set apart for payment money for a sinking or other similar fund, for the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, or make any distribution in respect thereof, either directly or indirectly, whether in cash, other property, obligations or shares of MidSouth (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and will not permit any corporation or other entity directly or indirectly controlled by MidSouth to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless prior to or concurrently with the payment or setting apart for payment of any dividend on any of the Junior Securities, all accumulated and unpaid dividends on shares of Preferred Stock, and interest thereon, if any, have been or will be paid. Holders of Sugarland Common Stock are not entitled to any dividend preference. Redemption Rights On or after the fifth anniversary of the date of issuance of the Preferred Stock, MidSouth may, at its option, redeem the whole, or from time to time, any part of the Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Preferred Stock to the date fixed for redemption, whether or not earned or declared and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Preferred Stock, if any. Conversion Rights At their option, the holders of the shares of MidSouth Preferred Stock may convert such stock into shares of MidSouth Common Stock at the conversion rate of one share of MidSouth Common Stock for each share of Preferred Stock converted at any time prior to the redemption of the Preferred Stock. The conversion rate is subject to adjustment from time to time as further provided in MidSouth's Articles of Incorporation. Voting Rights Except as otherwise required by law or the MidSouth Articles of Incorporation, holders of MidSouth Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to notice of any meeting of shareholders of MidSouth. If at any time MidSouth falls in arrears in the payment of dividends on the Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full Board of Directors of MidSouth will be automatically increased by two, and the holders of the Preferred Stock, voting separately as a single class, will be entitled to elect two directors of MidSouth to fill the two created directorships, at a special meeting called for the purpose, and thereafter at each shareholders meeting held for the purpose of electing directors of MidSouth, so long as there continues to be any arrearage in the payment of dividends on the Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. When all accumulated and unpaid dividends on the Preferred Stock for all past quarterly dividend periods, and the interest thereon, have been paid in full, the right of the holders of the Preferred Stock to elect directors will cease, the number of directors of MidSouth will automatically be reduced by two, and the term of office of all directors elected by the holders of the Preferred Stock will immediately terminate. Liquidation Rights Upon the dissolution, liquidation or winding up of MidSouth, the holders of the shares of Preferred Stock will be entitled to receive upon liquidation, and to be paid out of the assets of MidSouth available for distribution to its shareholders before any payment or distribution may be made on the MidSouth Common Stock or on any other junior securities, the amount of $14.25 per share, plus a sum equal to all accrued and unpaid dividends, whether or not earned or declared on such shares, and accrued interest thereon, if any, to the date of final distribution. Neither the sale of all or substantially all of the property or business of MidSouth, nor the merger or consolidation of MidSouth into or with any other entity, or the merger or consolidation of any other entity into MidSouth will be considered a dissolution, liquidation or winding up, voluntary or involuntary, of MidSouth. Preemptive Rights Holders of shares of MidSouth Preferred Stock do not have preemptive rights. UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS The following unaudited pro forma combined financial statements are presented assuming the merger of Sugarland into MidSouth will be accounted for as a purchase, and subject to the purchase adjustments noted below regarding the Companies, reflect the combination of the historical consolidated financial statements of the respective companies for the following periods. The unaudited pro forma combined balance sheet assumes the Mergers were consummated on December 31, 1994. The unaudited pro forma financial statements give effect to (1) the issuance of 187,286 shares of Preferred Stock at $14.25 per share (2) the payment of preferred dividends at the rate effective December 31, 1994, (3) the amortization of restated goodwill, and (4) the adjustment of certain assets of Sugarland to fair market value. The unaudited pro forma information does not purport to represent what the Companies' combined results of operations actually would have been if the Mergers had occurred as of the dates indicated or will be for any future period. The unaudited pro forma combined financial statements should be read in conjunction with the historical financial statements and notes thereto of MidSouth and Sugarland contained elsewhere or incorporated by reference herein.
Bancorp, Inc. Unaudited Pro Forma Combined Balance Sheet December 31, 1994 Pro Forma MidSouth Sugarland MidSouth Bancorp, Inc. Bancshares, Inc. Combined Pro Forma Adjustments Bancorp, Inc. ASSETS DEBITS CREDITS Cash and Due From Banks $6,941,989 2,323,694 9,265,683 200,000(F) 9,065,683 Federal Funds Sold 1,700,000 2,075,000 3,775,000 3,775,000 _________ _________ _________ _________ Total Cash and Equivalents 8,641,989 4,398,694 13,040,683 12,840,683 Interest- Bearing Deposits in Banks 48,422 48,422 48,422 Securities Available for Sale 31,369,476 3,944,856 35,314,332 35,314,332 Investment Securities 370,946 370,946 370,946 Loans 60,432,275 8,359,628 68,791,903 68,791,903 Allowance for Possible Loan Losses (873,934) (133,853) (1,007,787) (1,007,787) Loans, Net 59,558,341 8,225,775 67,784,116 67,784,116 Bank Premises and Equipment, Net 2,117,512 493,338 2,610,850 287,000(B) 2,897,850 Other Real Estate Owned, Net 198,350 198,350 198,350 Accrued Interest Receivable and Other Asset 1,469,233 409,896 1,879,129 97,580(C) 1,976,709 Goodwill, Net 191,691 191,691 561,487(A) 287,000(B) 568,598 ___________ _________ _________ 200,000(F) 97,580(C) ________ TOTAL ASSETS $103,965,960 17,472,559 121,438,519 122,000,006 ============ ========== =========== =========== LIABILITIES Deposits $ 31,035,865 4,821,975 35,857,840 35,857,840 Non- Interest Bearing 65,454,490 10,497,969 75,952,459 75,952,459 ___________ __________ __________ __________ Total Deposits 96,490,355 15,319,944 111,810,299 111,810,299 Securities Sold Under Repurchase Agreements 301,730 301,730 301,730 Accrued Interest Payable 191,366 191,366 191,366 Notes Payable 1,195,917 1,195,917 1,195,917 Other Liabilities 413,246 45,277 458,523 458,523 __________ __________ ___________ ___________ Total Liabilities 98,592,614 15,365,221 113,957,835 113,957,835 __________ __________ ___________ ___________ Stockholders' Equity Preferred Stock 2,668,825A 2,668,825 Common Stock 71,399 1,161,430 1,232,829 1,161,430(A) 71,399 Capital Surplus 6,144,070 1,452,364 7,596,434 1,452,364(A) 6,144,070 Unearned ESOP Shares (73,021) (73,021) (73,021) Unrealized (Losses) Gains on Securities Available- For-Sale, Net of Tax (1,062,800) (225,360) (1,288,160) 225,360(A) (1,062,800) Retained Earnings 293,698 232,514 526,212 232,514(A) 293,698 Treasury Stock (513,610) (513,610) 513,610(A) __________ _________ __________ __________ Total Shareholders' Equity 5,373,346 2,107,338 7,480,684 8,042,171 __________ _________ __________ ___________ Total Liabilities and Shareholders' Equity 103,965,960 17,472,559 121,438,519 122,000,006 =========== ========== =========== =========== MidSouth Bancorp, Inc. Unaudited Pro Forma Combined Statement of Earnings December 31, 1994 Pro Forma MidSouth Sugarland MidSouth Bancorp, Inc. Bancshares, Inc. Combined Pro Forma Adjustments Bancorp, Inc. INTEREST DEBITS CREDITS INCOME Interest and Fees on Loans $ 5,463,501 868,282 6,331,783 6,331,783 Interest on Investment Securities 1,782,504 262,604 2,045,108 2,045,108 Interest on Federal Funds Sold 142,473 88,030 230,503 230,503 __________ _________ __________ ___________ Total Interest Income 7,388,478 1,218,916 8,607,394 8,607,394 __________ _________ __________ ___________ INTEREST EXPENSE Interest on Deposits 1,924,906 365,679 2,290,585 2,290,585 Interest on Notes Pay- able 51,195 51,195 51,195 __________ _________ __________ ___________ Total Interest Expense 1,976,101 365,679 2,341,780 2,341,780 __________ _________ __________ ___________ NET IN- TEREST INCOME 5,412,377 853,237 6,265,614 6,265,614 PROVISION FOR POSSIBLE LOAN LOSSES 210,000 210,000 210,000 __________ _________ __________ ___________ NET INTEREST INCOME AFTER PROVISION FOR POSSIBLE LOAN LOSSES 5,202,377 853,237 6,055,614 6,055,614 __________ _________ __________ ___________ NON- INTEREST INCOME Service Charges on Deposits 1,015,529 154,173 1,169,702 1,169,702 Other Service Charges and Fees 406,187 25,980 432,167 432,167 Securities Gains, Net 1,178 1,178 1,178 __________ _________ __________ ___________ TOTAL NON- INTEREST INCOME 1,422,894 180,153 1,603,047 1,603,047 NON- INTEREST EXPENSE Salaries and Employee Benefits 2,242,892 436,220 2,679,112 2,679,112 Occupancy and Equipment Expenses 822,615 205,824 1,028,439 1,028,439 Other Operating Expenses 1,816,623 173,118 1,989,741 32,000(D) 2,021,741 __________ _________ __________ ___________ TOTAL NON- INTEREST EXPENSE 4,882,130 815,162 5,697,292 5,729,292 __________ _________ __________ ___________ INCOME BEFORE INCOME TAXES 1,743,141 218,228 1,961,369 1,929,369 PROVISION FOR INCOME TAXES 601,500 55,685 657,185 657,185 NET INCOME 1,141,641 162,543 1,304,184 1,272,184 __________ _________ __________ ___________ PREFERRED DIVIDEND REQUIRE- MENT 220,979(E) 220,979 INCOME AVAILABLE TO COMMON SHARE- HOLDERS $ 1,141,641 162,543 1,304,184 1,051,205 =========== ======== ========= ========= (A) To record preferred stock (187,286 shares @ $14.25/share) and eliminate equity of Sugarland. (B) To adjust Bank Premises and Equipment to market. (C) To record deferred taxes for write-up of Bank Premises and Equipment. (D) To amortize adjusted goodwill for 1994. (E) To record payment of Preferred Stock dividends. ($2,668,825 a 8.28%). (F) To record estimated expenses relating to the Mergers as a purchase price adjustment. __________________________________ ELECTION OF DIRECTORS OF MIDSOUTH MidSouth's Articles provide that the number of directors will be set by the By-Laws, and the By- Laws currently provide for a Board of Directors of nine directors. The Articles also provide for three classes of directors, with one class to be elected at each annual meeting for a three-year term. At the Annual Meeting, Class II Directors will be elected to serve until the third succeeding annual meeting of shareholders and until their successors have been duly elected and qualified. Unless authority is withheld, the persons named in the enclosed proxy will vote the shares represented by the proxies they receive for the election of the three Class II director nominees named below. In the unanticipated event that one or more nominees cannot be a candidate at the Annual Meeting, the shares represented by the proxies will be voted in favor of such other nominees as may be designated by the Board. Directors will be elected by plurality vote. MidSouth's Articles provide that only persons who are nominated in accordance with the procedures set forth in Article IV(H) of the Articles are eligible for election as directors. Other than the Board of Directors, only shareholders of MidSouth entitled to vote at a meeting for the election of directors who have complied with the notice procedures set forth in the Articles may nominate a person for director. In order for such shareholder to timely nominate a person for election at the Annual Meeting, the shareholder must have provided written notice to MidSouth by January 15, 1995. The shareholders' notice must set forth the following: (1) as to each person whom the shareholder proposes to nominate for election or reelection as director, (a) the name, age, business address and residential address of such person, (b) the principal occupation or employment of such person, (c) the class and number of shares of capital stock of MidSouth of which such person is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 ("Rule 13d-3") and (d) any other information relating to such person that would be required to be disclosed in solicitations of proxies for the election of directors pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934; and (2) as to the shareholder of record giving the notice, (a) the name and address of such shareholder, (b) the class and number of shares of capital stock of MidSouth of which such shareholder is the beneficial owner (as defined in Rule 13d-3) and (c) a description of any agreements, arrangements or relationships between the shareholder giving the notice and each person the shareholder proposes to nominate. Two inspectors, not affiliated with MidSouth, appointed by MidSouth's secretary, will determine whether the notice provisions were met. If the inspectors determine that the Shareholder has not complied with Article IV(H), the defective nomination shall be disregarded. The following table sets forth certain information as of February 28, 1995 with respect to each director nominee and each director whose term as a director will continue after the Meeting. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years. The Board recommends a vote FOR each of the three nominees named below. Director Nominees for terms expiring in 1998 (Class II Directors)
Year First Became _________________ Name Age Principal Occupation Director of MidSouth ____ ___ ____________________ _____________________ Will G. Charbonnet, Sr. 47 President, Acadiana Fast Foods Inc. 1985 (owner/operator fast food stores); Chairman of the Board, MidSouth and MidSouth Bank Clayton Paul Hilliard 69 President, Badger Oil Corporation 1992(1) Robert Burke Keaty 45 Partner, Keaty & Keaty Law Firm 1985 Directors whose terms expire in 1996 (Class III Directors) Year First Became Name Age Principal Occupation Director of MidSouth ____ ___ _____________________ ____________________ James R. Davis, Jr. 42 Owner, Safe-America Security System 1991 (1994- present); Director of Gas Supply for Louisiana, Victoria Gas Corporation (October 1992 - 1993); President, Elsbury Production, Inc. (oil and gas exploration and production) (June 1982 - September 1992) Karen L. Hail 41 Chief Financial Officer and Secretary, 1988 MidSouth Milton B. Kidd, Jr. 75 Optometrist, Kidd Vision Centers 1984 ____________________________________
Mr. Hilliard also was a director of MidSouth Bancorp, Inc. and MidSouth National Bank from 1985 to 1987. Directors whose terms expire in 1997 (Class I Directors)
Name Age Principal Occupation Director of MidSouth ____ ___ _____________________ ____________________ C. R. Cloutier 48 President and C.E.O., MidSouth and 1984 MidSouth Bank J. B. Hargroder, M.D. 64 Physician, retired 1984 William M. Simmons 61 Private Investments 1984
During 1994 the Board held 17 meetings. Each incumbent director attended at least 75% of the aggregate number of meetings held during 1994 of the Board and committees of which he or she was a member, except Robert Burke Keaty and James R. Davis, who attended 41% and 74% respectively. The Board has an Executive Committee, an Audit and Loan Review Committee and a Personnel Committee. The members of the Executive Committee are Will G. Charbonnet, Sr., C. R. Cloutier, J. B. Hargroder, M.D. and Robert Burke Keaty. The Executive Committee's duties include nominations, shareholder relations, bank examination and Securities and Exchange Commission ("SEC") reporting. The Executive Committee will consider nominees that are proposed by shareholders in accordance with the procedures, described below, set forth in MidSouth's Articles. The Executive Committee did not meet in 1994 as such matters usually taken up by this Committee were brought to the full Board. The current members of the Audit and Loan Review Committee are James R. Davis, Jr., Milton B. Kidd, III, and Clayton Paul Hilliard. The Committee, which held 12 meetings in 1994, is responsible for maintaining a program of internal accounting controls and monitoring all loans and lines of credit for consistency with MidSouth Bank's loan policy. The current members of the Personnel Committee are Will G. Charbonnet, Sr., James R. Davis, Jr., J. B. Hargroder, Clayton Paul Hilliard and William M. Simmons. The Personnel Committee, which met one time in 1994, is responsible for evaluating the performance and setting the compensation of MidSouth's executive officers. Directors of MidSouth are also members of the Board of Directors of MidSouth Bank. With the exception that Milton B. Kidd, III, is a director of MidSouth only, and Milton B. Kidd, Jr., is a director of MidSouth and director emeritus of MidSouth Bank. Directors were entitled to fees of $200 per month for service on both boards, except for the Chairman of the Board of MidSouth and MidSouth Bank who receives an additional $400 per month. In addition to the monthly fee, each director receives $250 for each regular meeting, and $125 for each special meeting of the Board of MidSouth Bank and $75 for the first hour, and $25 per hour for each additional hour, of each committee meeting. Directors received fees only for meetings they attended. Section 16(a) of the Securities and Exchange Act of 1934 requires MidSouth's directors and executive officers and persons who own more than ten percent of a registered class of MidSouth's equity securities to file with the SEC initial reports of ownership, reports of changes in ownership, annual reports regarding certain transactions in common stock and other equity securities of MidSouth. Executive officers, directors and greater than ten-percent shareholders are required to furnish MidSouth with copies of all Section 16(a) reports they file. To MidSouth's knowledge, all such Section 16(a) filings were filed on a timely basis. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS OF MIDSOUTH Security Ownership of Management The following table sets forth certain information as of February 28, 1995, concerning the beneficial ownership of MidSouth's Common Stock by each director and nominee of MidSouth, by MidSouth's Chief Executive Officer, C. R. Cloutier (who is also a director) and by all directors and executive officers of MidSouth as a group, determined in accordance with Rule 13d-3 of the SEC. Unless otherwise indicated, the Common Stock is held with sole voting and investment power.
Amount and Nature of Beneficial Percent Name and Address Ownership of Class Will G. Charbonnet, Sr. 40,045 5.6% 1003 Hugh Wallis Road, South, Suite F Lafayette, LA 70508 C. R. Cloutier 47,866 6.6% P. O. Box 3745 Lafayette, LA 70502 James R. Davis, Jr. 15,618 2.2% 9151 Interline Ave., Ste. 1-B Lafayette, LA 70503 Karen L. Hail 22,200 3.1% P. O. Box 3745 Lafayette, LA 70502 J. B. Hargroder, M.D. 59,913 8.4% P. O. Box 1049 Jennings, LA 70546 Clayton Paul Hilliard 34,052 4.8% P. O. Box 52745 Lafayette, LA 70505 Robert Burke Keaty 34,566 4.8% 345 Doucet Road Suite 104 Lafayette, LA 70503 Milton B. Kidd, Jr., O.D. 17,221 2.4% 1500 N.W. Blvd. P. O. Box 1071 Franklin, LA 70538 William M. Simmons 23,282 3.3% P. O. Box 111 Avery Island, LA 70513 All directors and executive officers as a group (13 persons) 306,616 41.64% ______________________
MidSouth Common Stock held by MidSouth's Directors' Deferred Compensation Trust (the "Trust") is beneficially owned by the Plan Administrator, which has sole voting and investment power. Because the Plan Administrator is the Executive Committee of the Board of MidSouth, all directors of MidSouth could be deemed to share voting and investment power with respect to all MidSouth Common Stock held in the Trust (50,966 shares or 7.1% as of February 28, 1995). For each individual director, the table reflects the number of shares held for his or her account only. The group figure reflects all shares held in the Trust February 28, 1995. MidSouth Common Stock held by MidSouth's Employee Stock Ownership Plan (the "ESOP") is not included in the table, except that shares allocated to an individual's account are included as beneficially owned by that individual. Beneficial ownership of shares held in the ESOP is attributed to the ESOP, ESOP Trustees and ESOP Administrative Committee, as reflected in the table below. The Board has the power to appoint and remove the ESOP Trustees and Administrative Committee. Shares subject to options are deemed outstanding for purposes of computing the percentage of outstanding Common Stock owned by persons beneficially owning such shares and by all directors and executive officers as a group but are not deemed to be outstanding for the purpose of computing the ownership percentage of any other person. Includes 8,883 shares as to which he shares voting and investment power and 6,938 held for his account in the Trust. Includes 7,362 shares held by the ESOP for his account as to which he shares voting power, 19,038 shares as to which he shares voting and investment power, 6,861 shares held for his account in the Trust and 10,500 shares underlying stock options. Includes 10,131 shares as to which he shares voting and investment power and 5,487 shares held for his account in the Trust. Includes 5,234 shares held for her account in the ESOP as to which she shares voting power, 210 shares as to which she shares voting and investment power, 5,416 shares held for her account in the Trust and 10,500 shares underlying stock options. Includes 53,436 shares as to which he shares voting and investment power, and 5,772 held for his account in the Trust. Includes 30,992 shares as to which he shares voting and investment power and 2,204 shares held for his account in the Trust. Includes 262 shares as to which he shares voting and investment power, and 4,616 shares held for his account in the Trust. Includes 5,250 shares as to which he shares voting and investment power, and 4,173 shares held for his account in the Trust. Includes 570 shares as to which he shares voting and investment power and 5,447 shares held for his account in the Trust. Security Ownership of Certain Beneficial Owners The following table sets forth certain information as of February 28, 1995 concerning persons or groups, other than the directors listed in the table above, known to MidSouth to be the beneficial owner of more than five percent of MidSouth's Common Stock, determined in accordance with Rule 13d-3 of the SEC. Name and Address Amount and Nature Percent of Beneficial Owner of Beneficial Ownership of Class Robert C. Schumacher, M.D. 36,411 5.1% 16134 N. Gallaugher Jennings, LA 70546 Hilton B. Watson 36,855 5.2% 102 S. Cutting Avenue Jennings, LA 70546 MidSouth Bancorp, Inc. 67,120 9.4% Employee Stock Ownership Plan, ESOP Trustees and ESOP Administrative Committee P. O. Box 3745 Lafayette, LA 70502 The ESOP Administrative Committee directs the ESOP Trustees how to vote the approximately 6,065 unallocated shares of Common Stock held in the ESOP as of February 28, 1995. Voting rights of the shares allocated to ESOP participants' accounts are passed through to the participants. The ESOP Trustees have investment power with respect to the ESOP's assets, but must exercise this power in accordance with an investment policy established by the ESOP Administrative Committee. Thus, the ESOP Trustees share investment power with the ESOP Administrative Committee for all shares held pursuant to the ESOP. The ESOP Trustees are Donald R. Landry, an executive officer of MidSouth, and Russell Henson and Kim Cormier, MidSouth Bank employees. The ESOP Administrative Committee consists of Teri S. Stelly and Todd Kidder, executive officers of MidSouth, and Dailene Melancon, a MidSouth Bank employee. ___________________________ EXECUTIVE COMPENSATION AND CERTAIN TRANSACTIONS Summary of Executive Compensation The following table shows all compensation awarded to, earned by or paid to MidSouth's Chief Executive Officer, C. R. Cloutier, for all services rendered by him in all capacities to MidSouth and its subsidiaries for the year ended December 31, 1994. No other executive officer of MidSouth had total annual salary and bonus exceeding $100,000 for the year ended December 31, 1994.
Long Term Compensation ______________________________________________________________________________ Annual Compensation Awards Payouts Other ______________________________________________________________________________ Other Securities All Annual Restricted Under- Other Name Compen- Stock lying LTIP Compen- and Principal Year Salary($) Bonus($) sation Awards(s) Options/ Payouts sation Position ($) ($) SARs(#) ($) ($) __________________________________________________________________________________________________ C.R. Cloutier, 1994 99,617 15,071 0 0 0 0 21,065 Chief 1993 99,617 4,956 0 0 0 0 20,764 Executive 1992 90,405 0 0 0 0 0 14,705 Officer
Awarded pursuant to the Incentive Compensation Plan of MidSouth Bank. Consists of $11,900 in directors' fees, all of which were deferred by Mr. Cloutier pursuant to the Trust, an estimated $8,338 contributed by MidSouth to the ESOP for the account of Mr. Cloutier and $827 paid by MidSouth in insurance premiums for term life insurance for the benefit of Mr. Cloutier. Option Exercises and Holdings The following table sets forth information with respect to MidSouth's Chief Executive Officer, C. R. Cloutier, concerning his exercise of options during 1994 and unexercised options held as of December 31, 1994. As of December 31, 1994, as adjusted for a stock dividend paid February 18, 1994, other executive officers of MidSouth held options to purchase an aggregate of 10,500 shares of common stock exercisable at $9.52 per share and expiring on December 31, 1996. AGGREGATED OPTION EXERCISES IN 1994 AND OPTION VALUES AS OF DECEMBER 31, 1994
_______________________________________________________________________________________________________ No. of Shares Acquired on Value Number of Value of Name Exercise Realized Securities Unexercised Underlying In-the- Unexercised Money Options/SARs at Options/SARs at December 31, 1994 December 31, 1994 _______________________________________________________________________________________________________ Exercisable Unexercisable Exercisable Unexercisable _______________________________________________________________________________________________________ C. R. Cloutier 0 $0 10,500 0 $20,790 N.A. ________________________________________________________________________________________________________
As adjusted for a stock dividend paid February 18, 1994, Mr. Cloutier's options are exercisable at an exercise price of $9.52 per share and expire on December 31, 1996. Employment and Severance Contract Mr. Cloutier has a written employment agreement with MidSouth Bank for a term of one year, commencing February 15th of each year. The employment agreement is automatically extended for a period of one year every year thereafter commencing on the termination date, unless written notice of termination is given by any party to the agreement not later than 60 days before the termination date. Pursuant to the contract, Mr. Cloutier receives term life insurance equal to four times his annual salary payable to a beneficiary of his choice and disability insurance of not less than two-thirds of his annual salary. Mr. Cloutier's contract has a severance provision which entitles him to one year's salary if the agreement is terminated by MidSouth Bank, unless he is removed by a regulatory body. Certain Transactions Directors, nominees and executive officers of MidSouth and their associates have been customers of, and have had loan transactions with, MidSouth Bank in the ordinary course of business, and such transactions are expected to continue in the future. In the opinion of MidSouth's management, such transactions have been on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than the normal risk of collectibility or present other unfavorable features. ____________________________ RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS MidSouth's consolidated financial statements for the year ended December 31, 1994 were audited by the firm of Deloitte & Touche LLP and the Board has appointed such firm to audit MidSouth's financial statements for the year ending December 31, 1995. Representatives of Deloitte & Touche LLP are not expected to be present at the Annual Meeting. SHAREHOLDER PROPOSALS Eligible shareholders who desire to present a proposal qualified for inclusion in the proxy materials relating to the 1996 annual meeting of MidSouth must forward such proposals to the Secretary of MidSouth at the address listed on the first page of this Proxy Statement in time to arrive at MidSouth prior to ___________________. LEGAL MATTERS Correro, Fishman & Casteix, L.L.P., New Orleans, Louisiana, has rendered its opinion that the shares of MidSouth Preferred Stock to be issued in connection with the Holding Company Merger have been duly authorized and, if and when issued pursuant to the terms of the Plan, will be validly issued, fully paid and non-assessable. EXPERTS The audited consolidated financial statements of Sugarland and its subsidiary as of and for each of the years in the two year period ended December 31, 1994 and 1993 have been audited by Mixon, Roy, Metz & Mixon, independent public accountants, as indicated in their report with respect thereto, and have been included herein in reliance upon the authority of such firm as experts in accounting and auditing. The consolidated financial statements of MidSouth incorporated in this Joint Proxy Statement and Prospectus by reference from the MidSouth Annual Report on Form 10-KSB have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report which is incorporated herein by reference and has been so incorporated in reliance upon the report of such firm given upon authority as experts in accounting and auditing. ____________________________ OTHER MATTERS With respect to the Companies, at the time of the preparation of this Joint Proxy Statement and Prospectus, neither of them had been informed of any matters to be presented by or on behalf of the Companies or the management thereof for action at the Meetings other than those listed in the Notice of Special Meeting of Shareholders of Sugarland and Notice of Annual Meeting of Shareholders of MidSouth referred to herein. If any other matters come before the meeting or any adjournment thereof, the persons named in the enclosed proxy will vote on such matters according to their best judgment. Shareholders are urged to sign the enclosed proxy, which is solicited on behalf of the Board of Directors of Sugarland or MidSouth, and return it at once in the enclosed envelope. ANY SHAREHOLDER MAY BY WRITTEN REQUEST OBTAIN WITHOUT CHARGE A COPY OF MIDSOUTH'S ANNUAL REPORT ON FORM 10- KSB FOR THE YEAR ENDED DECEMBER 31, 1994, WITHOUT EXHIBITS. REQUESTS SHOULD BE ADDRESSED TO SALLY D. GARY, INVESTOR RELATIONS, MIDSOUTH BANCORP, INC., P. O. BOX 3745, LAFAYETTE, LOUISIANA 70502. BY ORDER OF THE BOARD OF DIRECTORS OF SUGARLAND Jeanerette, Louisiana ___________, 1995 __________________________________ RONALD R. HEBERT, SR., SECRETARY BY ORDER OF THE BOARD OF DIRECTORS OF MIDSOUTH Lafayette, Louisiana _____________, 1995 ____________________________________ KAREN L. HAIL, SECRETARY INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF SUGARLAND BANCSHARES, INC. Page Independent Auditors' Report ............................... F-2 Consolidated Balance Sheets as of December 31, 1994 and 1993 ........................... F-3 Consolidated Statements of Income for the Years Ended December 31, 1994 and 1993 ............................................. F-4 Consolidated Statements of Changes in Shareholders' Equity for the Years Ended December 31, 1993 and 1992 ........................... F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 1994 and 1993 ............................................. F-6 Notes to Consolidated Financial Statements ................ F-7 Independent Auditors' Report ____________________________ The Board of Directors and Shareholders Sugarland Bancshares, Inc. P.O. Box 71 Jeanerette, LA 70544 We have audited the accompanying consolidated balance sheets of Sugarland Bancshares, Inc. and Sugarland State Bank as of December 31, 1994 and 1993, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the years then ended. These financial statements are the responsibility of the Corporations' management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sugarland Bancshares, Inc. and Sugarland State Bank at December 31, 1994 and 1993, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with generally accepted accounting principles. MIXON, ROY, METZ & MIXON CERTIFIED PUBLIC ACCOUNTANTS March 1, 1995 Sugarland Bancshares, Inc. Consolidated Balance Sheets December 31, 1994 and 1993 1994 1993 ___________ ___________ Assets: ______ Cash and Due From Banks $ 2,323,694 $ 2,364,404 Federal Funds Sold 2,075,000 3,050,000 Securities Available for Sale 3,944,856 3,919,566 Loans, Net of Unearned Discount and Allowance for Possible Loan Losses 8,225,775 8,048,063 Bank Premises and Equipment, Net of Accumulated Depreciation 493,338 551,978 Accrued Income and Other Assets 409,896 295,698 ___________ ___________ Total Assets: $17,472,559 $18,229,709 ____________ =========== =========== Liabilities and Shareholders' Equity: ____________________________________ Liabilities: ___________ Deposits Demand $ 4,821,975 $ 4,614,157 Savings and NOW Deposits 5,090,390 5,324,182 Other Time Deposits 5,407,579 6,133,173 ___________ ___________ Total Deposits $15,319,944 $16,071,512 Accrued Interest on Deposits 17,194 15,805 Other Liabilities 28,083 25,927 ___________ ___________ Total Liabilities: $15,365,221 $16,113,244 _________________ =========== =========== Shareholders' Equity: ____________________ Common Stock, Par Value $5, 400,000 Shares Authorized, 232,286 Issued and 187,286 Shares Outstanding $ 1,161,430 $ 1,161,430 Capital Surplus 1,452,364 1,452,364 Retained Earnings 232,514 70,285 Net Unrealized Losses on Securities Available for Sale, Net of Tax of $81,131 (225,360) (54,004) Treasury Stock, 45,000 Shares (513,610) (513,610) ___________ ___________ Total Shareholders' Equity: $ 2,107,338 $ 2,116,465 __________________________ ___________ ___________ Total Liabilities and Shareholders' Equity: $17,472,559 $18,229,709 ___________________________________ =========== =========== The accompanying notes are an integral part of these consolidated financial statements. Sugarland Bancshares, Inc. Consolidated Statements of Income For The Years Ended December 31, 1994 and 1993 1994 1993 ___________ ___________ Interest Income: _______________ Interest and Fees on Loans $ 868,282 $ 885,008 Interest on Securities Available for Sale 262,604 295,127 Interest on Federal Funds Sold 88,030 87,614 ___________ ___________ Total Interest Income: $ 1,218,916 $ 1,267,749 _____________________ Interest Expense: ________________ Interest on Deposits 365,679 408,049 ___________ ___________ Net Interest Income: $ 853,237 $ 859,700 ___________________ Provision for Possible Loan Losses -0- -0- ___________ ___________ Net Interest Income After _________________________ Provision for Credit Losses: $ 853,237 $ 859,700 ___________________________ ___________ ___________ Other Income: ____________ Customer Service Charges $ 154,173 $ 153,034 Other Income 25,980 37,375 Net Investment Securities Gains -0- 8,297 ___________ ___________ Total Other Income: $ 180,153 $ 198,706 __________________ ___________ ___________ Other Expenses: ______________ Salaries and Employee Benefits $ 436,220 $ 444,628 Occupancy Expenses 148,649 153,133 Equipment Expenses 57,175 59,178 Other Expenses 173,118 189,324 ___________ ___________ Total Other Expenses: $ 815,162 $ 846,263 ____________________ ___________ ___________ Income Before Income Taxes: $ 218,228 $ 212,143 __________________________ Income Tax Expense: 55,685 23,826 __________________ ___________ ___________ Net Income: $ 162,543 $ 188,317 __________ =========== =========== Net Income Per Share of Common Stock $ .87 $ 1.01 =========== =========== Average Shares Outstanding 187,286 187,286 =========== =========== The accompanying notes are an integral part of these consolidated financial statements. Sugarland Bancshares, Inc. Consolidated Statements of Changes in Shareholders' Equity For The Years Ended December 31, 1994 and 1993
Unrealized Loss on Securities Common Capital Retained Available Treasury Stock Surplus Earnings for Sale Stock __________ __________ __________ ____________ _________ Balances at ___________ December 31, 1992: $1,161,430 $1,452,364 $(80,271) $(50,912) $(513,610) __________________ Net Income For Year 188,317 Unrealized Loss on Securities Available For Sale (3,092) Dividends (37,457) Minority Interest in Income of Subsidiary (304) __________ __________ __________ ____________ _________ Balances at ___________ December 31, 1993: $1,161,430 $1,452,364 $ 70,285 $(54,004) $(513,610) _________________ ========== ========== ========== ============ ========= Net Income For Year 162,543 Net Change in Unrealized Loss on Securities Available For Sale, Net Taxes of $81,131 (171,356) Minority Interest in Income of Subsidiary (314) __________ __________ __________ ____________ _________ Balances at ___________ December 31, 1994: $1,161,430 $1,452,364 $232,514 $(225,360) $(513,610) _________________ ========== ========== ========== ============ =========
The accompanying notes are an integral part of these consolidated financial statements. Sugarland Bancshares, Inc. Consolidated Statements of Cash Flows For The Years Ended December 31, 1994 and 1993 1994 1993 ________ ________ Cash Flows From Operating Activities: ____________________________________ Net Income $162,543 $188,317 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation 60,145 62,298 Increase in Accrued Income and Other Assets (14,932) (26,943) Increase/(Decrease) in Interest Payable 1,389 (7,378) Increase/(Decrease) in Other Liabilities 2,298 (10,008) Loss/(Gain) on Sale of Other Real Estate Owned 2,527 (12,500) __________ __________ Net Cash Provided by Operating ______________________________ Activities: $213,970 $193,786 ____________ __________ __________ Cash Flows From Investing Activities: ____________________________________ Proceeds From Maturities of Securities Available for Sale $520,923 $917,697 Purchases of Securities Available for Sale (799,156) (1,450,227) Net Decrease in Federal Funds Sold 975,000 2,600,000 Net Increase in Loans (177,712) (454,319) Purchase of Equipment (1,505) (21,022) Acquisition of Other Real Estate Owned (55,000) -0- Proceeds From Sale of Other Real Estate Owned 34,338 67,500 __________ __________ Net Cash Provided by Investing ______________________________ Activities: $496,888 $1,659,629 ____________ __________ __________ Cash Flows From Financing Activities: ____________________________________ Net Decrease in Demand Deposits, NOW and Savings Accounts $(25,974) $(792,775) Net Decrease in Time Deposits (725,594) (570,226) Dividends Paid -0- (37,457) __________ __________ Net Cash Used in Financing __________________________ Activities: $(751,568) $(1,400,458) ____________ _________ _________ Net (Decrease)/Increase in Cash and Cash Equivalents $(40,710) $452,957 _________ _________ Cash and Due from Banks at January 1 2,364,404 1,911,447 _________ _________ Cash and Due from Banks at December 31 $2,323,694 $2,364,404 ========= ========= Supplemental Disclosures: ________________________ 1. The Corporation paid interest costs of $364,290 and $415,427 in the years ended December 31, 1994 and 1993, respectively. 2. The Corporation made income tax payments of $49,894 and $26,653 for the years ended December 31, 1994 and 1993, respectively. The accompanying notes are an integral part of these consolidated financial statements. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements Note 1 - Summary of Significant Accounting Policies: ___________________________________________________ The Corporation _______________ Sugarland Bancshares, Inc., a Louisiana corporation (the Corporation), is a bank holding company. Sugarland State Bank (the Bank) is a state non-member banking institution and a 99.8% owned subsidiary of the Corporation. The Bank is located in Jeanerette, LA with a branch in New Iberia, LA and its customers are primarily from that area. Principles of Consolidation ___________________________ The consolidated financial statements include the accounts of Sugarland Bancshares, Inc. and its 99.8% owned subsidiary, Sugarland State Bank. Intercompany transactions and balances have been eliminated in consolidation. Cash and Cash Equivalents _________________________ For purposes of reporting cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption "Cash and Due From Banks". Investments in Securities _________________________ For 1993, investments in securities are stated at cost, adjusted for amortization of premium and accretion of discount, which are recognized as adjustments to interest income. Gain or losses on the sale of investment securities are based upon the adjusted cost of the specific security sold and the net proceeds. The investment marketable equity security is carried at the lower of cost or market value. Generally, the Corporation sells these securities only to meet liquidity needs. For 1994, the Corporation adopted SFAS No. 115 and classified all its U.S. Government Agency Bonds and Notes as securities available for sale. These securities are reflected at fair value, and unrealized holding gains and losses, net of tax on securities available for sale, are reported as a net amount in a separate component of shareholders' equity until realized. Loans _____ Loans are stated at the amount of unpaid principal, reduced by unearned discounts and an allowance for possible loan losses. Interest income on installment loans is recognized using the sum-of-the-digits method which is similar to the interest method. Income on other loans is credited to operations based on the principal amount outstanding using the simple interest method. Based upon the evaluation of individual loans, the Corporation does not recognize interest income where collection of interest is not expected. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 1 - Summary of Significant Accounting Policies: ___________________________________________________ Allowance for Possible Loan Losses __________________________________ The allowance for possible loan losses is established through a provision for loan losses charged to expenses. Loans are charged against the allowance for possible loan losses when management believes that the collectability of the principal is unlikely. The allowance is an amount that management believes will be adequate to absorb possible loan losses on existing loans that may become uncollectible, based on evaluation of the collectability of loans and prior loan loss experience. Off Balance Sheet Financial Instruments _______________________________________ In the ordinary course of business, the Bank has entered into off balance sheet financial instruments consisting of commitments to extend credit and standby letters of credit. Such financial instruments are recorded in the financial statements when they become payable. Net Income Per Share of Common Stock ____________________________________ Net income per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Premises and Equipment ______________________ The premises and equipment are carried at cost less accumulated depreciation. Depreciation of premises and equipment is provided over the estimated useful lives of the respective assets on the straight-line basis for financial reporting purposes and accelerated methods for income tax reporting purposes. Other Real Estate Owned _______________________ Other real estate owned is comprised of properties acquired through partial or total satisfaction of loans. These properties are carried at the lower of cost or market value. Loan losses arising from the acquisition of such properties are charged against the allowance for possible loan losses. Other expenses incurred are charged directly to operations. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 1 - Summary of Significant Accounting Policies: ___________________________________________________ Income Taxes ____________ Provisions for income taxes are based on amounts reported in the statement of income (after exclusion of non-taxable income such as interest on state and municipal securities) and include deferred income taxes on temporary differences in the recognition of income and expense for tax and financial statement purposes. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in SFAS No. 109, Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Corporation does not consider the allowance for possible loan losses as a timing difference since it believes the allowance will not reverse in the future. Compensated Absences ____________________ Employees of the Bank are entitled to paid vacation days and sick days depending on length of service. The amount of compensation for future absences is immaterial and, accordingly, no liability has been recorded in the financial statements. The Bank's policy is to recognize the costs of compensated absences when actually paid to employees. Post Retirement Benefits ________________________ The Bank presently offers no post retirement benefits which would be required to be recorded in the financial statements. The Bank has a nonqualified deferred compensation plan in which some of its directors participate. These fees were deducted in the financial statements but were not deducted for tax purposes. No deferrals have been made for a number of years. The economic liability is reflected in the financial statements. Fair Values of Financial Instruments ____________________________________ Cash and cash equivalents - The carrying amounts of cash and short-term instruments approximate their fair value. Securities available for sale - Fair values for investment securities, excluding restricted equity securities, are based on quoted market prices. The carrying value of restricted equity securities approximates fair value. Loans receivable - Fair values are based on carrying values. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 1 - Summary of Significant Accounting Policies (Continued): _______________________________________________________________ Deposit liabilities - The fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The carrying amounts of money market accounts and certificates of deposit approximate their fair values at the reporting date. Accrued interest - the carrying amount of accrued interest approximates their fair values. Note 2 - Investments in Securities: __________________________________ The carrying amounts of securities available for sale as shown in the consolidated balance sheets and their approximate fair values at December 31 were as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ___________ ___________ ___________ ___________ December 31, 1994: Mutual Fund $ 200,000 $ -0- $ 68,327 $ 131,673 U. S. Government and Agency Securities 3,951,803 930 239,550 3,713,183 Other Securities 100,000 -0- -0- 100,000 ___________ __________ __________ ___________ $ 4,251,803 $ 930 $ 307,877 $ 3,944,856 Gross Gross Book Unrealized Unrealized Market Value Gains Losses Value ___________ __________ __________ ___________ December 31, 1993: Mutual Fund $ 145,996 $ -0- $ -0- $ 145,996 U. S. Government and Agency Securities 3,673,570 63,888 1,454 3,736,004 Other Securities 100,000 -0- -0- 100,000 ___________ __________ __________ ___________ $ 3,919,566 $ 63,888 $ 1,454 $ 3,982,000
Securities carried at approximately $1,000,000 at December 31, 1994 and $800,000 at December 31, 1993, were pledged to secure public deposits and for other purposes required by law. "Mutual fund" is a marketable equity security with an original cost of $200,000 and market values of $131,673 at December 31, 1994 and $145,996 at December 31, 1993. "Other Securities" is stock in a nonpublicly traded corresponding bank. The maturities of securities available for sale at December 31, were as follows: 1994 1993 __________ __________ Due from one to five years $3,509,439 $3,193,512 Due over five years 442,364 480,058 __________ __________ $3,951,803 $3,673,570 ========== ========== Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 3 - Loans and Allowance for Possible Loan Losses: _____________________________________________________ The components of loans outstanding at December 31 were as follows: 1994 1993 __________ __________ Commercial and Real Estate Loans $7,757,393 $7,591,935 Installment Loans 698,375 699,436 Overdrafts 3,490 4,336 __________ __________ Gross Loans $8,459,258 $8,295,707 Less: Unearned Discounts (99,630) (102,252) Allowance for Possible Loan Losses (133,853) (145,392) __________ __________ Total Loans $8,225,775 $8,048,063 ========== ========== Nonperforming loans, which include loans contractually past due 90 days or more and those on nonaccrual, were $26,000 and $72,000 at December 31, 1994 and 1993, respectively. Approximately 30% of the Bank's loans were related to the farming industry of the Jeanerette, LA area. The maturities of fixed rate loans outstanding (excluding nonaccruals) at December 31 were as follows: 1994 1993 __________ __________ Less than one year $2,748,000 $2,614,000 One to five years $1,482,000 $1,244,000 Over five years $ 838,000 $ 732,000 The repricing frequencies of floating rate loans were as follows: 1994 1993 __________ __________ Annually or more frequent $2,692,000 $2,957,000 Less frequently than annually $ 674,000 $ 676,000 Changes in the Allowance for Possible Loan Losses for the years ended December 31 were as follows: 1994 1993 ________ ________ Balance at January 1 $145,392 $134,763 Provisions Charged to Operations -0- -0- Recoveries of Loans Previously Charged Off 4,646 16,582 Loans Charged Off (16,003) (5,953) ________ ________ Balance at December 31 $133,853 $145,392 ======== ======== Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 4 - Bank Premises and Equipment: ____________________________________ Components of properties and equipment were as follows: 1994 1993 __________ __________ Building - Main Office $ 469,788 $ 469,788 Furniture, Fixtures and Vehicles 713,760 712,255 Land - Jeanerette, LA 50,238 50,238 Land - New Iberia, LA 87,563 87,563 __________ __________ Total $1,321,349 $1,319,844 Less Accumulated Depreciation (828,011) (767,866) __________ __________ Fixed Assets (Net) $ 493,338 $ 551,978 ========== ========== Depreciation expense for the years ended December 31, 1994 and 1993 was $60,145 and $62,298, respectively. Note 5 - Treasury Stock: _______________________ Treasury stock is shown at cost. Note 6 - Commitments and Contingent Liabilities: _______________________________________________ In the normal course of business there are outstanding various commitments and contingent liabilities, such as guarantees and commitments to extend credit, which are not reflected in the accompanying financial statements until they become payable. In the opinion of management, these do not represent unusual risks. At December 31, 1994 and 1993 unused lines of credit totaled $1,565,000 and $2,104,000, respectively. At December 31, 1994 and 1993 letters of credit totaled $33,000 and $51,000, respectively. The Corporation and the Bank are also subject to claims and lawsuits which arise primarily in the ordinary course of business. Based on information presently available it is the opinion of management that such claims and lawsuits, if any, will not have a material adverse effect on the consolidated financial position of the Corporation. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 7 - Income Taxes: _____________________ The provision for income taxes at December 31 consisted of the following: 1994 1993 _______ _______ Currently Payable Federal $52,623 $22,173 State 3,062 1,653 _______ _______ $55,685 $23,826 ======= ======= As discussed in Note 1, no deferred taxes have been recorded in the financial statements for the components of allowance for possible loan losses. Writedowns of other real estate owned of $15,124 creates a benefit of $5,142, and the use of accelerated depreciation creates a liability of $1,905. Due to the immaterial benefit, no deferred asset or liability was recorded. The provision for federal income taxes is less than that computed by applying the federal statutory rate of 34% in 1994 and 1993, as indicated in the following analysis. 1994 1993 _______ _______ Tax based on statutory rate $74,198 $72,129 Effect on tax-exempt income -0- (3,844) Effect of net loan recoveries (losses) (3,923) 3,614 Deferred compensation paid (10,499) -0- Non deductible expenses 509 554 Contribution carryover -0- (481) Net operating loss carryover -0- (43,895) Depreciation 2,346 (4,251) Other (Net) (6,946) -0- _______ _______ $55,685 $23,826 ======= ======= Note 8 - Related Parties: ________________________ Some of the directors and executive officers of Sugarland State Bank and companies with which they are associated had banking transactions with the Bank in the ordinary course of business. Loans and commitments for loans to those individuals and their related companies were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Bank. The aggregate in indebtedness of those individuals and their related companies to the Bank at December 31, 1994 and 1993 was $1,388,000 and $1,100,000, respectively. During 1994, new loans to such related parties amounted to $1,000,000 and repayments amounted to $712,000. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 9 - Concentrations of Credit: _________________________________ All the Bank's loans, commitments, and standby letters of credit have been granted to customers in the Bank's market area. All such customers are depositors of the Bank. The concentrations of credit by type of loans are set forth in Note 3. The distribution of commitments to extend credit approximates the distribution of loans outstanding. Standby letters of credit were granted primarily to commercial borrowers. The Bank, as a matter of policy, does not extend credit to any single borrower or group of related borrowers in excess of $500,000. Note 10 - Regulatory Matters: ____________________________ The Bank is subject to various regulatory capital requirements administered by the state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, in those circumstances, could have a direct material effect on the institution's financial statements. The regulations require the Bank to meet specific capital adequacy guidelines that involve qualitative measures of the Bank's assets and liabilities as calculated under regulatory accounting principles. The regulations also require agencies to make qualitative judgments about the Bank. Those qualitative judgments could also effect the Bank's capital structure. Management believes that, as of December 31, 1994, the institution meets all such capital requirements to which it is subject. Note 11 - Subsequent Events: ___________________________ On December 28, 1994, MidSouth Bancorp, Inc. (MidSouth) and Sugarland Bancshares, Inc. issued a joint news release announcing an agreement under which Sugarland Bancshares, Inc. and its 99.8% owned subsidiary, Sugarland State Bank, would be acquired by MidSouth. This transaction is structured to qualify as a tax- free reorganization and will result in 187,286 shares of convertible preferred stock of Midsouth being issued to shareholders of the Corporation. The transaction is subject to receipt of federal and state regulatory approvals, the approval of the shareholders of MidSouth and the Corporation, and the satisfaction of certain other conditions. The transaction is expected to be consummated in the spring of 1995. Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 12 - Sugarland Bancshares, Inc. (Parent Only) Condensed _________________________________________________________________ Financial Statements: ____________________ The following condensed financial statements summarize the financial position and results of operations of Sugarland Bancshares, Inc. (parent company only) as of December 31, 1994 and 1993 and for the years then ended. (Parent Only) Sugarland Bancshares, Inc. Condensed Balance Sheets December 31, 1994 and 1993 Assets: 1994 1993 ______ __________ __________ Current Assets: ______________ Cash on Hand and in Banks $ 12,566 $ 6,046 Investments: ___________ Stock - Sugarland State Bank (Equity Basis) 2,102,549 2,172,028 Other Assets: ____________ Due From Sugarland State Bank 2,333 1,827 Merger Costs 54,739 -0- __________ __________ Total Assets: $2,172,187 $2,179,901 ____________ ========== ========== Liabilities and Shareholders' Equity: ____________________________________ Current Liabilities: ___________________ Income Taxes Payable $ 1,414 $ -0- __________ __________ Shareholders' Equity: ____________________ Common Stock, par value $5; 400,000 Shares Authorized, 232,286 Issued and 187,286 Shares Outstanding $1,161,430 $1,161,430 Capital Surplus 1,452,363 1,452,363 Retained Earnings 295,950 79,718 Unrealized Gains (Losses) on Available for Sale Securities (225,360) -0- Treasury Stock, 45,000 Shares at Cost (513,610) (513,610) __________ __________ Total Shareholders' Equity: $2,170,773 $2,179,901 __________________________ __________ __________ Total Liabilities and Shareholders' ___________________________________ Equity: $2,172,187 $2,179,901 ________ ========== ========== Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) (Parent Only) Sugarland Bancshares, Inc. Condensed Statements of Income and Retained Earnings For The Years Ended December 31, 1994 and 1993 1994 1993 _________ _________ Revenues: ________ Dividends $ 64,000 $ 37,457 _________ _________ Expenses: ________ Legal and Accounting $ 2,500 $ 2,500 Taxes and Assessments 375 885 Miscellaneous 45 302 _________ _________ Total Expenses: $ 2,920 $ 3,687 ______________ _________ _________ Income Before Taxes and Equity in _________________________________ Undistributed Income of Sugarland ___________________________________ State Bank: $ 61,080 $ 33,770 ____________ Income Taxes (729) 174 Equity in Earnings of Sugarland State Bank 102,193 154,372 _________ _________ Net Income: $ 162,544 $ 188,316 __________ Retained Earnings, Beginning: 79,718 (67,743) ____________________________ Dividends -0- (37,457) Unrealized Loss in Equity Securities -0- (3,086) Add Back Net Unrealized Loss on Mutual Funds as of 12/31/93 53,895 -0- Minority Interest in Income of Subsidiary (207) (312) _________ _________ Retained Earnings, Ending: $ 295,950 $ 79,718 _________________________ ========= ========= Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) Note 13 - Sugarland State Bank (Subsidiary Only) Condensed _________________________________________________________________ Financial Statements: ____________________ The following condensed financial statements summarize the financial position and results of operations of Sugarland State Bank (subsidiary only) as of December 31, 1994 and 1993 and for the years then ended. (Subsidiary Only) Sugarland State Bank Condensed Balance Sheets December 31, 1994 and 1993 1994 1993 ___________ ___________ Assets: ______ Cash and Due From Banks $ 2,311,128 $ 2,358,358 Federal Funds Sold 2,075,000 3,050,000 Investment Securities 3,944,856 3,919,566 Loans, Net 8,225,775 8,048,063 Bank Premises, Net 556,775 615,415 Other Real Estate Owned 60,000 41,865 Accrued Interest and Other Assets 295,175 253,832 ___________ ___________ Total Assets: $17,468,691 $18,287,099 ____________ =========== =========== Liabilities and Stockholders' Equity: ____________________________________ Liabilities: ___________ Deposits $15,319,944 $16,071,512 Accrued Interest and Other Liabilities 41,942 39,163 ___________ ___________ Total Liabilities: $15,361,886 $16,110,675 _________________ ___________ ___________ Stockholders' Equity: ____________________ Common Stock ($5 par Value; 50,000 Shares Issued and Outstanding) $ 250,000 $ 250,000 Capital Surplus 750,000 750,000 Unrealized Loss on Available for Sale Securities (157,489) -0- Unrealized Loss on Equity Securities (68,327) -0- Retained Earnings 1,332,621 1,176,424 ___________ ___________ Total Stockholers' Equity: $ 2,106,805 $ 2,176,424 _________________________ ___________ ___________ Total Liabilities and Stockholders' ___________________________________ Equity: $17,468,691 $18,287,099 ________ =========== =========== Sugarland Bancshares, Inc. Notes to the Consolidated Financial Statements (Continued) (Subsidiary Only) Sugarland State Bank Condensed Statements of Income and Retained Earnings For The Years Ended December 31, 1994 and 1993 1994 1993 __________ __________ Interest Income: _______________ Interest and Fees on Loans $ 868,282 $ 885,008 Interest on Investment Securities 262,604 295,127 Interest on Federal Funds Sold 88,030 87,614 __________ __________ Total Interest Income: $1,218,916 $1,267,749 _____________________ Interest Expense: ________________ Interest on Deposits 365,679 408,049 __________ __________ Net Interest Income: $ 853,237 $ 859,700 ___________________ Provision for Possible Loan Losses -0- -0- __________ __________ Net Interest Income After Provision ___________________________________ for Credit Losses: $ 853,237 $ 859,700 _________________ __________ __________ Other Income: ____________ Customer Service Charges $ 154,173 $ 153,034 Other 25,980 45,671 __________ __________ Total Other Income: $ 180,153 $ 198,705 __________________ __________ __________ Other Expense: _____________ Salaries $ 355,656 $ 362,101 Employee Benefits 80,564 82,527 Occupancy Expenses 148,649 153,123 Other Expenses 227,372 244,824 __________ __________ Total Other Expense: $ 812,241 $ 842,575 ___________________ __________ __________ Income Before Income Taxes: $ 221,149 $ 215,830 __________________________ Income Taxes 54,956 24,000 __________ __________ Net Income: $ 166,193 $ 191,830 __________ Retained Earnings, Beginning: 1,176,424 1,025,144 ____________________________ Dividends (64,000) (37,457) Unrealized Loss in Equity Securities 54,004 (3,093) __________ __________ Retained Earnings, Ending: $1,332,621 $1,176,424 _________________________ ========== ========== APPENDIX A Letterhead of Chaffe & Associates, Inc. Investment Bankers December 30, 1994 The Board of Directors Sugarland Bancshares, Inc. 1527 West Main Street Jeanerette, LA 70544-3527 Gentlemen: You have requested our opinion as to the fairness, from a financial point of view, to Sugarland Bancshares, Inc. ("Sugarland") and its shareholders, of the proposed acquisition of its common stock, $5.00 par value per share (the "Common Stock" or "Shares"), by MidSouth Bancorp, Inc. ("MidSouth"). The terms of the transaction contemplated are set forth in a Agreement and Plan of Merger dated December 29, 1994 (the "Agreement") and the related merger agreement (collectively, the "Plan"); and provide that Sugarland will merge into MidSouth (the "Company Merger"), and Sugarland State Bank ("Bank"), Sugarland's majority-owned subsidiary, will merge into MidSouth National Bank, MidSouth's wholly-owned subsidiary (together with the Company Merger, collectively called the "Mergers"). Under the terms of the Plan, on the date the holding company merger becomes effective, the shareholders of Sugarland will become preferred stock shareholders of MidSouth, as follows: Each issued and outstanding share of the Common Stock of Sugarland, except for the Shares as to which dissenters' rights of appraisal have been perfected and not withdrawn or forfeited in accordance with applicable law, shall be converted into a number of shares of Series A cumulative convertible preferred stock (the "Preferred Stock") of MidSouth, having the terms set forth in the form of Articles of Amendment attached as Exhibit C to the Agreement, equal to the quotient of (i) 187,286, divided by (ii) the number of outstanding Shares of Sugarland on the date the merger becomes effective (the "Exchange Ratio"). In lieu of the issuance of any fractional share of Preferred Stock to which a holder of Sugarland Common Stock may be entitled, each such shareholder of Sugarland shall be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by the state value of a share of Preferred Stock. Chaffe & Associates, Inc. ("Chaffe"), through its experience in the securities industry, investment analysis and appraisal, and in related corporate finance and investment banking activities, including mergers and acquisitions, corporate recapitalization, and valuations for estate, corporate and other purposes, states that it is competent to provide an opinion as to the fairness of the transaction contemplated herein. Neither Chaffe nor any of its officers or employees has an interest in the common stocks of Sugarland or MidSouth. During the past year, Chaffe has provided financial advisory services to Sugarland, including assistance in negotiating the proposed transaction ("Advisory Services"). The fee received for the preparation of this report is not, and fees received for Advisory Services were not, dependent or contingent upon any transaction. The Board of Directors December 30, 1994 Sugarland Bancshares, Inc. Page 2 In connection with this opinion, we have reviewed materials bearing upon the transaction and upon the financial and operating condition of Sugarland and the Bank, including, among other information: a) the Plan; b) Sugarland's audited financial statements with examination and opinion by Mixon, Roy & Romero, Certified Public Accountants, for the years 1988 through 1990; c) Sugarland's audited financial statements with examination and opinion by Mixon, Roy, Metz & Mixon, Certified Public Accountants, for the years 1991 through 1993; d) Sugarland's Federal Reserve Forms FR-Y6 dated December 31, 1992 and 1993, and Form FRY9-SP dated June 30, 1994; e) Sugarland's Income Tax Returns for the years 1992 and 1993, prepared by Mixon, Roy, Metz & Mixon, Certified Public Accountants; f) Bank CALL Reports for each quarter ended December 31, 1992 through September 30, 1994; g) Bank's Uniform Bank Performance Reports dated December 31, 1992 and 1993; h) Bank's 1994 Budget; i) Articles of Incorporation and By-Laws of both Sugarland and Bank; and j) various Sugarland and Bank reports, unaudited financial statements, information, documents and regulatory correspondence. In addition, we have reviewed materials bearing upon the financial and operating condition of MidSouth, including: a) MidSouth's audited financial statements for the years 1989 through 1993, with examination and opinion by Deloitte & Touche, and for the year 1988, with examination and opinion by Deloitte, Haskins & Sells; b) MidSouth's Proxy Statements for Annual Shareholders Meetings held in 1993 and 1994; c) MidSouth's Annual Reports on Form 10-K for the years 1988 through 1993 and quarterly reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 1993, and March 31, June 30, and September 30, 1994; d) MidSouth's Registration Statements on Form S-2 dated April 16, 1993, June 4, 1993, and March 31, 1994; and S.E.C. Forms 8-A dated March 23, 1993 and April 7, 1993; e) Articles of Incorporation and By-Laws of both MidSouth and MidSouth National Bank; f) MidSouth National Bank's CALL reports for each quarter ended March 31, 1993 through September 30, 1994; g) MidSouth National Bank's Uniform Bank Performance Reports dated December 31, 1993, and June 30, 1994; and, h) various MidSouth information and correspondence. We have also reviewed statistical and financial information derived from various statistical services for Sugarland, MidSouth, and comparable companies, as well as certain publicly-available information and analysis relating to them. We have reviewed certain historical market information for the Common Stock of Sugarland and note that no independent market exists for the Shares. We note that, at present, Sugarland has authorized 400,000 Shares, of which 232,286 Shares are issued, 187,286 Shares are outstanding and 45,000 Shares are held in its treasury. In addition, we have reviewed certain historical market information for the common stock of MidSouth. We note that at September 30, 1994, MidSouth had authorized 5,000,000 shares of MidSouth common stock, par value $0.10 per share, of which at such date 711,869 shares were issued and outstanding, and no shares were held as treasury stock. In addition, MidSouth had authorized 5,000,000 shares of preferred stock , no par value, of which none were issued and outstanding. We note that MidSouth's common stock is traded on the American Stock Exchange Emerging Company Marketplace, and we have been informed by the management of MidSouth that a market will be made in the Preferred Stock also. Further, we note that although there is an independent market for MidSouth's common stock, this stock is thinly traded and this condition will likely exist for the Preferred Stock as well. The Board of Directors December 30, 1994 Sugarland Bancshares, Inc. Page 3 We have analyzed the historical performance of Sugarland and MidSouth and have considered the current financial condition, operations and prospects for both companies. We have held discussions with the managements of both companies about these matters. We analyzed information and data provided by the management of Sugarland and MidSouth concerning the loans (including non-performing loans), other real estate, securities portfolio, fixed assets and operations, although we did not perform an independent review of Sugarland's or MidSouth's assets or liabilities. We have relied solely on Sugarland and MidSouth for information as to the condition of the loan portfolio, the adequacy of the loan loss reserve and the value of other real estate held. Also, we compared certain financial and stock market data for a peer group of bank holding companies, composed primarily of institutions with market share in Louisiana, whose securities are publicly traded; reviewed the financial terms of business combinations in the commercial banking industry specifically, using national, southern and Louisiana peer groups and other industries generally; considered a number of valuation methodologies, including among others, those that incorporate book value, deposit base premium and capitalization of earnings; and performed such other studies and analyses as we deemed appropriate to this analysis. This opinion is necessarily based upon market, economic and other conditions as they exist on, and can be evaluated as of, the date of this letter. We note that Chaffe was retained by Sugarland to assist the Board of Directors and senior management of Sugarland in its negotiations of this transaction with MidSouth. Chaffe was not asked to and did not participate in any efforts by Sugarland to market itself for sale; nor did Chaffe evaluate potential alternative transactions. The senior management of Sugarland has informed Chaffe that it is unaware of any transaction more favorable than the one contemplated by the Plan and that no other transaction has been proposed to Sugarland at this time. Management of Sugarland has instructed Chaffe to provide this opinion on that basis. In our review, we have relied, without independent verification, upon the accuracy and completeness of the historical and projected financial information and other information reviewed by us for purposes of this opinion, and we are relying on the tax opinion issued in connection with the transaction contemplated. We express no opinion on the tax consequences of the proposed transaction or the effect of any tax consequences on the value received by the holders of Sugarland Common Stock. Based upon and subject to the foregoing and based upon such other matters as we considered relevant, it is our opinion that the proposed Exchange Ratio is fair to Sugarland Bancshares, Inc., and its shareholders, from a financial point of view. Very truly yours, /s/ CHAFFE & ASSOCIATES, INC. CHAFFE & ASSOCIATES, INC. GFGL:mr APPENDIX B ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MIDSOUTH BANCORP, INC. MidSouth Bancorp, Inc., a Louisiana corporation (the "Corporation"), through its undersigned President and Secretary, hereby certifies that: 1. On ________, 1995, the Board of Directors of the Corporation adopted, pursuant to Section 33A of the Louisiana Business Corporation Law (the "LBCL"), the following amendment to Article III of its Amended and Restated Articles of Incorporation (the "Articles of Incorporation") to establish and fix the preferences, limitations and relative rights of a series of preferred stock, and authorized the delivery of these Articles of Amendment to the Secretary of State for filing pursuant to Section 32B of the LBCL. 2. Article III of the Articles of Incorporation is amended to add a new Section E to read in its entirety as follows: "E.Of the 5,000,000 shares of authorized no par value per share Preferred Stock, [187,286] shares shall constitute a separate series of Preferred Stock with the voting powers and the preferences and rights hereinafter set forth. (1)Designation. The series of Preferred Stock created hereunder is designated "Cumulative Convertible Preferred Stock, Series A" (the "Series A Preferred Stock"). (2)Stated Value. The stated value of each share of Series A Preferred Stock is $14.25. (3)Dividend Rights. (a)Except as provided in Subparagraph (ii), (i)the holders of record of the shares of Series A Preferred Stock are entitled to receive, but only when, as and if declared by the Board of Directors, and out of the funds of the Corporation legally available for that purpose, cumulative cash dividends at an annual rate, fixed on December 31 of each year for the ensuing calendar year, equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum, and no more; provided that, the annual dividend rate shall in no case be greater than 10% nor less than 6%; provided further that, from and after the tenth anniversary of the date of issuance of the Series A Preferred Stock the annual dividend rate shall be fixed at 10%. If more than one yield is shown for December maturities, the average shall be applied. If no yield is quoted for December maturities, the yeild for the next earlier available month shall be applied. From the date of issuance of the Series A Preferred Stock through December 31, 1995, the annual dividend rate shall be ________%. The Corporation by resolution of its Board of Directors shall, to the extent of Legally Available Funds, as defined below, declare a dividend on the Series A Preferred Stock payable quarterly on the first day of April, July, October, and January in each year, or on such earlier dates as the Board of Directors may from time to time fix as the dates for payment of quarterly dividends on the Common Stock, except that any dividend payable on a payment date that is a legal holiday shall be paid on the next succeeding business day. Dividends on each share of Series A Preferred Stock shall be cumulative from the date of original issuance thereof whether or not there shall be funds legally available for the payment of such dividends. Dividends payable on the Series A Preferred Stock (i) for any period other than a full year shall be computed on the basis of a 360-day year consisting of twelve 30- day months and (ii) for each full dividend period shall be computed by dividing the annual dividend rate by four. If any quarterly dividend is not paid when due, the unpaid amount shall bear interest at a rate of 10% per annum until paid. (ii)The first dividend payable on the Series A Preferred Stock shall be paid on the first day of April, July, October or January that is at least 91 days from the date of original issuance of the Series A Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days, provided that the aggregate amount payable (A) will be increased by the amount by which Expenses, as defined below, are less than $110,000 (the "Additional Amount"), or (B) will be reduced by the amount by which Expenses exceed $110,000 ("The Subtracted Amount"). In any case in which (A) the Additional Amount is greater than the dividend that would have been paid for the 90 excluded days set forth above, such excess will be payable on the next succeeding dividend payment date, or (B) the Subtracted Amount is greater than the amount otherwise payable under this paragraph, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. (iii) The term "Expenses" means the actual expenses of Sugarland Bancshares, Inc. ("Sugarland") in connection with the negotiation, execution, implementation and consummation of that certain agreement between Sugarland and the Corporation dated ______________, 1994 (the "Agreement"), including, without limitation, legal, accounting and financial advisory fees and expenses and expenses of printing and mailing Sugarland's proxy statement and holding its shareholders meeting to consider the Agreement. (iv) The term "Legally Available Funds" means such amount of the surplus of the Corporation that may be paid as dividends under the Business Corporation Law of Louisiana as may be provided in cash by MidSouth Bank to the Corporation as a dividend under applicable statutes and regulations of the U. S. Comptroller of the Currency and that would not result in the Corporation or MidSouth Bank having capital ratios, of less than the required regulatory minimum capital ratios, or failing to be "adequately-capitalized" within the meaning of applicable law and regulations or being in violation of any law, regulation or regulatory directive, agreement or order. (b)So long as any shares of the Series A Preferred Stock are outstanding, the Corporation shall not declare, pay or set apart for payment any dividend on any shares of capital stock of the Corporation ranking junior to the Series A Preferred Stock as to dividends or liquidation rights (collectively, "Junior Securities") or make any payment on account of, or set apart for payment money for a sinking or other similar fund, for the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, or make any distribution in respect thereof, either directly or indirectly, whether in cash, other property, obligations or shares of the Corporation (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless prior to or concurrently with the payment or setting apart for payment of any dividend on any of the Junior Securities, all accumulated and unpaid dividends on shares of Series A Preferred Stock, and interest thereon, if any, shall have been or shall be paid. (c)If dividends are paid in part and not in full upon the shares of Series A Preferred Stock and on any other Preferred Stock ranking on a parity, as to dividends, with the Series A Preferred Stock, such dividends must be divided pro rata among such parity shares in proportion to the respective dividends accrued and unpaid thereon as of the dividend payment date. (d)Except as otherwise expressly provided in this Section E, holders of shares of the Series A Preferred Stock are not entitled to any dividend, whether payable in cash, property or stock, or any interest, or sum of money in lieu of interest, in respect of any dividend on Series A Preferred Stock which may be in arrears. (4)Redemption. (a)On or after the fifth anniversary of the date of issuance of the Series A Preferred Stock, the Corporation may, at its option, and subject to appropriate approval by the Board of Governors of the Federal Reserve System or delegated authority, redeem the whole or, from time to time, any part of the Series A Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Series A Preferred Stock to the date fixed for redemption, whether or not earned or declared, and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Series A Preferred Stock, if any. (b)If the Corporation redeems fewer than all of the outstanding shares of Series A Preferred Stock, it must select the shares to be redeemed by lot or pro rata, in such manner as the Board of Directors may determine to be fair and appropriate. The Board of Directors has full power and authority, subject to the limitations and provisions herein contained, to prescribe the manner in which shares of the Series A Preferred Stock are to be redeemed. (c)Notice of redemption must be given by first class mail, postage prepaid, mailed not fewer than 30 nor more than 90 days before the redemption date, to each holder of record of shares to be redeemed, at the holder's address as it appears on the stock register of the Corporation. Each notice must state: (i) the redemption date; (ii) the total number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by the holder are to be redeemed, the number of shares to be redeemed from the holder; (iii) the redemption price; (iv) the place or places where certificates for the shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date; and (vi) that the holder has the right to convert the shares into Common Stock until the close of business on the fifth day preceding the redemption date at the Conversion Price then in effect and the place where certificates for the shares of the Series A Preferred Stock may be surrendered for conversion. (d)Unless the Corporation fails to pay the redemption price, the right to convert shares of the Series A Preferred Stock called for redemption shall expire at the close of business on the fifth day preceding the date fixed for redemption of such shares, and, from and after the redemption date, dividends on the shares of Series A Preferred Stock called for redemption shall cease to accrue, and such shares shall no longer be deemed to be outstanding, and all rights of the holders of such shares as shareholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender of the certificates for any shares so redeemed in accordance with the requirements of the notice of redemption (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation so requires and the notice so states), such shares shall be redeemed by the Corporation at the redemption price. If fewer than all the shares represented by any such certificates are redeemed, the Corporation is obligated to issue without cost to the holder a new certificate representing the shares not redeemed. (e)Any shares of Series A Preferred Stock converted under Subsection (5), or redeemed or otherwise acquired by the Corporation, shall have the status of authorized but unissued shares of Preferred Stock, without designation as to series, preferences, limitations or relative rights until the shares are once more designated as part of a particular series by the Board of Directors of the Corporation. (f)The Corporation may, before the redemption date specified in the notice of redemption, deposit in trust for the account of the holders of shares of the Series A Preferred Stock to be redeemed, with a bank or trust company organized under the laws of the United States of America or of the State of Louisiana and having capital, surplus and undivided profits aggregating at least $20,000,000, designated in the notice of redemption, all funds necessary for the redemption, together with irrevocable written instructions authorizing the bank or trust company, on behalf and at the expense of the Corporation, to have the notice of redemption mailed as provided in Paragraph (c) and to include in the notice of redemption a statement that all funds necessary for the redemption have been so deposited in trust and are immediately available. Immediately upon the mailing of such notice, notwithstanding that any certificate for shares of Series A Preferred Stock so called for redemption has not been surrendered for cancellation, all shares of Series A Preferred Stock with respect to which the deposit has been made shall cease to be outstanding and all rights with respect to such shares of Series A Preferred Stock shall terminate other than the right of the holders thereof to receive from the bank or trust company, at any time after the time of the deposit, the redemption price of the shares so to be redeemed, and the right, if any, to convert the shares into Common Stock until the close of business on the fifth day preceding the redemption date. (g)If the holder of any shares of the Series A Preferred Stock called for redemption does not, within one year after the redemption date, claim the redemption price thereof, the unclaimed amount shall then escheat and revert in full ownership to the Corporation in accordance with Article VII of these Articles of Incorporation, and if the funds to pay the redemption price have been deposited pursuant to paragraph (f), above, the depositary shall, upon the request of the Corporation expressed in a resolution of its Board of Directors, pay over to the Corporation the unclaimed amount. (h)Notwithstanding the foregoing provisions of this Subsection (4), so long as any dividends on the Series A Preferred Stock, or interest thereon, are in arrears, the Corporation may not redeem any shares of the Series A Preferred Stock unless all outstanding shares of the Series A Preferred Stock are simultaneously redeemed and may not purchase or otherwise acquire any shares of Series A Preferred Stock. The foregoing shall not, however, prevent the purchase or acquisition of shares of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock. (5)Conversion. The holders of shares of the Series A Preferred Stock have the right, at their option, to convert all or any part of such shares into shares of Common Stock of the Corporation at any time before the close of business on the fifth day preceding the date, if any, fixed for redemption of those shares, subject to the following terms and conditions: (a)The shares of Series A Preferred Stock shall be convertible into shares of Common Stock at the Conversion Rate of one share of Common Stock for each share of Series A Preferred Stock converted. Such Conversion Rate shall be subject to adjustment from time to time as provided in Paragraph (e). The Corporation shall pay all accrued but unpaid dividends, and interest thereon, on any shares of Series A Preferred Stock surrendered for conversion. If any shares of Series A Preferred Stock are called for redemption, the right of conversion shall expire as to the shares designated for redemption at the close of business on the fifth day immediately preceding the date fixed for redemption, unless default is made in the payment of the redemption price on such shares. (b)To convert any shares of Series A Preferred Stock into Common Stock, the holder must surrender the cer- tificate or certificates therefor, duly endorsed to the Corporation or in blank, at the principal office of the Corporation or at such other place or places as the Board of Directors may designate and must give written notice to the Corporation at that office or place that the holder elects to convert all or a part of such shares, setting forth the name or names (with the address or addresses) in which the shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, cause to be issued and delivered at that office or place to the holder, or the holder's designee or designees, a certificate or certificates for the number of whole shares of Common Stock to which such holder is entitled, together with a certificate or certificates representing any shares of Series A Preferred Stock which are not to be converted but constitute part of the shares of Series A Preferred Stock represented by the certificate or certificates surrendered and cash in lieu of the issuance of a fractional share. A conversion shall be effective as of the close of business on the date of the due surrender of the certificates for the shares to be converted, and the rights of the holder of such shares shall, to the extent of such conversion, cease at such time, and the person or persons entitled to receive shares of the Common Stock upon conversion of such shares of Series A Preferred Stock shall be treated for all purposes as having become the record holder or holders of the Common Stock at that time. (c)No fractional shares of Common Stock shall be issued on conversion. If any fractional interest in a share of Common Stock would, except for the provisions of this Paragraph (c), be deliverable upon conversion hereunder, the Corporation, in lieu of such fractional share shall pay cash to the converting shareholder in an amount equal to the product derived by multiplying such fraction of a share by the closing price per share of the Common Stock on the day next preceding the date of conversion. (d)In the case of any shares of Series A Preferred Stock converted after any record date for payment of a dividend on the Series A Preferred Stock but on or before the date for payment of the dividend, the dividend declared and payable on the dividend payment date shall continue to be payable on the dividend payment date to the holder of record of the shares as of such preceding record date notwithstanding their conversion. Shares of the Series A Preferred Stock surrendered for conversion during the period from the close of business on any such record date to the opening of business on the dividend payment date shall be accompanied by payment in full of an amount equal to the dividend payable on the dividend payment date on the shares of the Series A Preferred Stock surrendered for conversion. Except as provided in this Paragraph, no payment or adjustment shall be made upon any conversion on account of any dividends on shares of the Series A Preferred Stock surrendered for conversion or on account of any dividends on the shares of Common Stock issued upon conversion. (e)The Conversion Rate shall be adjusted from time to time as follows: (i)If the Corporation at any time (A) pays a dividend or makes a distribution to all holders of its Common Stock in shares of its Common Stock, (B) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (C) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then in each such case the Conversion Rate in effect immediately before that event shall be proportionately decreased or increased, as the case may be, so that the holder of any shares of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of whole shares of Common Stock that the holder would have owned or been entitled to receive immediately following such event if those shares of Series A Preferred Stock had been converted into Common Stock immediately before that event. An adjustment made under this Subparagraph (i) becomes effective immediately after the payment date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision or combination. No adjustment in the Conversion Rate shall be made if, at the same time the Corporation issues shares of Common Stock as a dividend or distribution on the outstanding shares of Common Stock which, as provided in this Subparagraph (i), would otherwise call for an adjustment in the Conversion Rate, the Corporation issues shares of Common Stock as a dividend or distribution on the outstanding shares of Series A Preferred Stock equivalent to the number of shares distributable on the shares of Common Stock into which the shares of Series A Preferred Stock is then convertible. (ii)No adjustment in the Conversion Rate shall be required unless the adjustment would require an increase or decrease in the Conversion Rate by more than one percent, but any adjustments not required to be made by reason of this Subparagraph shall be carried forward cumulatively and taken into account in any subsequent adjustments. All calculations under this Paragraph (e) shall be made to the nearest one-tenth of one percent. (iii)In case of any reclassification of the Common Stock (other than a subdivision or combination of outstanding shares of Common Stock for which adjustment is provided in Subparagraph (i) above), or a consolidation or merger of the Corporation with or into any other corporation (other than a consolidation or a merger in which the Corporation is the continuing corporation and the outstanding shares of the Corporation's Common Stock are not changed into or exchanged for stock or other securities of any other person or cash or any other property as a result of or in connection with such consolidation or merger) or a sale of the properties and assets of the Corporation as, or substantially as, an entirety to any other business organization, or a statutory share exchange in which all shares of Common Stock or any series or class of Common Stock are exchanged for shares of another corporation or other entity, each share of Series A Preferred Stock shall, after such reclassification, consolidation, merger, sale or exchange and upon the terms and conditions specified in this Subsection (5), be convertible into or represent the right to receive the number of shares of stock or other securities or property (including cash) to which the shares of Common Stock deliverable (at the time of such reclassifi- cation, consolidation, merger, sale or exchange) upon conversion thereof would have been entitled upon such reclassification, consolidation, merger, sale or exchange, if the conversion of the Series A Preferred Stock into Common Stock had taken place immediately before that event; and in any case, if necessary, the provisions set forth in this Subparagraph (iii) with respect to the rights and interests thereafter of the holders of the shares of Series A Preferred Stock shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any shares of stock or other securities or property (including cash) thereafter deliverable upon conversion of shares of Series A Preferred Stock. (iv)Whenever the Conversion Rate is adjusted as provided in this Paragraph (e): (A) The Corporation shall compute the adjusted Conversion Rate in accordance with this Paragraph (e) and shall prepare a certificate signed by the President or any Vice President of the Corporation setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and the certificate shall promptly be filed with the transfer agent for the Series A Preferred Stock, but such transfer agent shall have no duty with respect to any such certificate filed with it except to keep the same on file and available for inspection during reasonable hours; and (B)The Corporation shall cause to be mailed to each holder of shares of Series A Preferred Stock at his then registered address by first-class mail, postage prepaid, a notice stating that the Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate. (v) Without limiting the obligation of the Corporation to give the notices provided in Sub- paragraph (iv), the failure of the Corporation to give such notice shall not invalidate any corporate action by the Corporation. (f)The Corporation shall at all times reserve and keep available, free from preemptive rights for the purpose of effecting the conversion of the shares of Series A Preferred Stock, the full number of shares of Common Stock then deliverable upon the conversion of all shares of Series A Preferred Stock then outstanding. (g)The Corporation is not obligated to pay any tax payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and the Corporation is not obligated to make any such issue or delivery unless and until the person requesting such issue has paid to the Corporation the amount of any such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. (h) In the event that: (i)the Corporation declares a dividend or any other distribution on its Common Stock, payable otherwise than in cash out of surplus; or (ii)the Corporation grants to all the holders of its Common Stock rights to subscribe for or purchase any shares of capital stock of any class or any other rights; or (iii)any reclassification, consolidation, merger, sale or exchange of the type described in Subparagraph (iii) of Paragraph (e) occurs; or (iv)the voluntary or involuntary dissolution, exchange, liquidation or winding up of the Corporation occurs; the Corporation shall cause to be mailed to the holders of record of the Series A Preferred Stock at least 20 days before the applicable date hereinafter specified a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up is expected to take place, and the date, if any is to be fixed, as of which holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up. (6)Voting. (a)Except as otherwise expressly required by applicable law or by the terms of this Section E, the holders of shares of the Series A Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to no notice of any meeting of shareholders of the Corporation. (b)Except as otherwise provided herein, whenever the vote, approval or other action of holders of shares of the Series A Preferred Stock is required or permitted by applicable law or by the terms of this Section E, each share is entitled to one vote and the affirmative vote of a majority of shares of Series A Preferred Stock present or represented at the meeting at which a quorum is present is sufficient to constitute such vote, approval or other action. (c)If, at any time, the Corporation falls in arrears in the payment of dividends on the Series A Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full board of directors of the Corporation shall be automatically increased by two and the holders of Series A Preferred Stock, voting separately as a single class, shall be entitled to elect two directors of the Corporation to fill the two newly created directorships, at a special meeting called for that purpose in accordance with Paragraph (f) and thereafter at each meeting of the shareholders held for the purpose of electing directors, so long as there continues to be any arrearage in the payment of dividends on the Series A Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. (d)When all accumulated and unpaid dividends on the Series A Preferred Stock for all past quarterly dividend periods, and interest thereon, have been paid in full, the right of the holders of Series A Preferred Stock to elect directors shall cease (subject to revesting from time to time as provided in Paragraph (c)), the number of directors of the Corporation shall be automatically reduced by two and the term of office of all directors elected by the holders of the Series A Preferred Stock shall immediately terminate. (e)A director elected by the holders of Series A Preferred Stock shall hold office until the annual meeting next succeeding his election or until his successor, if any, is elected by such holders. A director so elected may be removed at any time with or without cause but only by the vote of holders of the Series A Preferred Stock at a meeting duly called for that purpose. So long as the holders of the Series A Preferred Stock have the right to elect two directors, any vacancy in the office of a director elected by those holders may be filled by the remaining director so elected or by the vote of the holders of Series A Preferred Stock at any annual meeting or any special meeting called for the purpose. (f)At any time when the power to elect directors vests in the holders of the Series A Preferred Stock, a proper officer of the Corporation shall, on the written request of record holders of at least 20 percent of the number of shares of Series A Preferred Stock then outstanding, addressed to the secretary of the Corporation at its principal office, call a special meeting of the holders of the Series A Preferred Stock for the purpose of electing directors. The meeting must be held at the earliest practicable date, not later than 45 days after receipt of the written request (subject to compliance with applicable proxy rules and rules of the American Stock Exchange), in the city in which the last preceding annual meeting of the shareholders of the Corporation was held, but may be held at the time and place of the annual meeting if the annual meeting is to be held within 60 days after the power to elect directors first vests in the holders of the Series A Preferred Stock. If the proper officer of the Corporation does not call the meeting within the required time, then the holders of record of 20 percent of the number of shares of Series A Preferred Stock then outstanding may, by written notice to the secretary of the Corporation at its principal office, designate any person to call such meeting, and the person so designated may call such meeting in the city above provided upon not fewer than 30 nor more than 45 days notice and for that purpose shall have access to the stock books of the Corporation. At any meeting so called for the election of directors by holders of the Series A Preferred Stock or at any annual meeting held while the holders of Series A Preferred Stock have the right to elect directors, holders of a majority of the shares of Series A Preferred Stock then outstanding is sufficient to constitute a quorum for the purpose of electing directors at such a meeting. If at any such meeting a quorum of the Series A Preferred Stock is not present, the election of directors shall not take place, and the meeting shall be adjourned from time to time for periods not exceeding 30 days until a quorum is obtained. (g)Approval of the holders of the Series A Preferred Stock, voting separately as a single class by a favorable vote of at least two-thirds of the number of shares of Series A Preferred Stock then outstanding, is required to adopt any proposed amendment to these Articles of Incorporation (including but not limited to any amendment adopted by resolution of the Board of Directors pursuant to Article III of these Articles of Incorporation) if the proposed amendment would affect shares of the Series A Preferred Stock in any one or more of the following ways: (i)Create or authorize any class or series of stock ranking senior to or on a parity with the Series A Preferred Stock in respect of dividends or distribution of assets on liquidation or otherwise alter or abolish the liquidation preferences or any other preferential right of such shares. (ii)Reduce the redemption price or otherwise alter or abolish any right with respect to redemption of the Series A Preferred Stock expressly provided by this Section E. (iii)Alter or abolish any right of such shares expressly provided by this Section E to receive dividends or interest thereon except as such right may be affected by dividend rights of new shares being authorized of another class or series of shares ranking on a parity with or junior to the Series A Preferred Stock. (iv)Alter or abolish any right of holders of shares of the Series A Preferred Stock under this Section E to convert such shares into shares of Common Stock. (v)Exclude, change or limit any voting rights of the Series A Preferred Stock conferred by this Section E. (h)Approval of the holders of the Series A Preferred Stock, voting separately as a single class by a favorable vote of at least two-thirds of the number of shares of Series A Preferred Stock then outstanding, is required to adopt any merger, consolidation, statutory share exchange or sale of all, or substantially all, of the assets of the Corporation or any of its banking subsidiaries unless either (i) the holders of the Series A Preferred Stock will receive in exchange for the Series A Preferred Stock a security with terms substantially identical to the terms of the Series A Preferred Stock, or (ii) provision is made for the complete redemption in cash of the Series A Preferred Stock on the date of consummation of such transaction and the Series A Preferred Stock may be redeemed at such time under these Articles of Incorporation. (7)Liquidation Rights. (a)Upon the dissolution, liquidation or winding up of the Corporation, the holders of the shares of Series A Preferred Stock shall be entitled to receive upon liquidation and to be paid out of the assets of the Corporation available for distribution to its shareholders, before any payment or distribution may be made on the Common Stock or on any other Junior Securities, the amount of $14.25 per share, plus a sum equal to all accrued and unpaid dividends (whether or not earned or declared) on such shares, and accrued interest thereon, if any, to the date of final distribution. (b)Neither the sale of all or substantially all the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other corporation or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Subsection (7). (c)Upon payment to the holders of the shares of Series A Preferred Stock of the full preferential amounts provided for in this Subsection (7), the holders of Series A Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. (d)If the assets of the Corporation available for distribution to the holders of shares of Series A Preferred Stock upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, are insufficient to pay in full all amounts to which such holders are entitled under Paragraph (a) of this Subsection (7), no such distribution may be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of Series A Preferred Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts are paid on account of the shares of Series A Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon dissolution, liquidation or winding up. (8)Ranking. For purposes of this Section E any stock of any class or classes of the Corporation shall be deemed to rank: (a)prior to the shares of Series A Preferred Stock, either as to dividends or upon liquidation, if the holders of such class or classes are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference or priority to the holders of shares of Series A Preferred Stock; (b)on a parity with shares of Series A Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share or sinking fund provisions, if any, are different from those of Series A Preferred Stock, if the holders of such class or classes are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in proportion to their respective liquidation preferences, without preference or priority, one over the other, as between the holders of such class or classes and the holders of shares of Series A Preferred Stock; and (c)junior to shares of Series A Preferred Stock, either as to dividends or upon liquidation, if such class or classes are Common Stock or if the holders of shares of Series A Preferred Stock are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference or priority to the holders of shares of such class or classes. (9)No Preemptive Rights. Holders of shares of Series A Preferred Stock have no preemptive rights. 3. Except as amended by these Articles of Amendment, the Articles of Incorporation of the Corporation shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned President and Secretary have executed these Articles of Amendment on ________, 1995 at Lafayette, Louisiana. MidSouth Bancorp, Inc. By: C. R. Cloutier, President By: Karen L. Hail, Secretary ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF LAFAYETTE BEFORE ME, the undersigned authority personally came and appeared C. R. Cloutier and Karen L. Hail to me known to be the persons who signed the foregoing instrument as President and Secretary, respectively, of MidSouth Bancorp, Inc. and who, having been duly sworn, acknowledged and declared, in the presence of the witnesses whose names are subscribed below, that they signed that instrument as their free act and deed for the purposes mentioned therein. IN WITNESS WHEREOF, the appearers and witnesses and I have signed below on this ______ day of ________, 1995. WITNESSES: ______________________________ _____________________________ C. R. Cloutier, President ______________________________ ______________________________ ____________________________ Karen L. Hail, Secretary ______________________________ ________________________________________ NOTARY PUBLIC PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20.Indemnification of Directors and Officers Section 83 of the Louisiana Business Corporation Law ("LBCL") permits a corporation to indemnify its directors and officers against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with any action, suit or proceeding to which he is or was a party or is threatened to be made a party (including any action by or in the right of the corporation) if such action arises out of the fact that he is or was a director, officer, employee or agent of the corporation and he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The indemnification provisions of Section 83 are not exclusive, but no corporation may indemnify any person for willful or intentional misconduct. A corporation has the power to obtain and maintain insurance, or to create a form of self-insurance on behalf of any person who is or was acting for the corporation, regardless of whether the corporation has the legal authority to indemnify the insured person against such liability. Section 10 of MidSouth's by-laws provides for mandatory indemnification for current and former directors and officers except to the extent that the director or officer fails to meet the Standard of Conduct, as defined in the bylaws. MidSouth's Articles of Incorporation permit MidSouth to enter into contracts with its directors and officers providing for indemnification to the fullest extent permitted by law, but no such contracts have been entered in. Item 21. Exhibits and Financial Statement Schedules (a) Exhibits The following Exhibits are filed as part of this Registration Statement: Exhibit No.Description 2 Agreement and Plan of Merger 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. are included as Exhibit 3.1 to MidSouth's Annual Report on Form 10-K for the Year Ended December 3l, l993 and is incorporated herein by reference. 3.2 Amended and Restated By-laws of MidSouth Bancorp, Inc. are included as Exhibit 3.2 to MidSouth's Annual Report on Form l0-K for the Year Ended December 3l, l993 and are incorporated herein by reference. 4.l MidSouth agrees to furnish to the Commission on request a copy of the instruments defining the rights of the holder of its long-term debt, which debt does not exceed l0% of the total consolidated assets of MidSouth. 4.2 Form of Amendment to Articles of Incorporation Defining Rights of Holders of MidSouth Cumulative, Convertible Preferred Stock, Series A. Exhibit No. Description 5 Opinion of Correro, Fishman & Casteix, L.L.P 8 Form of opinion of Deloitte & Touche LLP independent public accountants as to certain tax matters 9 Annual Report to security holders 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit 10.7 to MidSouth's Annual Report on Form 10-K for the Year Ended December 31, 1992 and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank, included as Exhibit l0.2 to MidSouth's Annual Report on Form l0K-SB for the Year Ended December 31, l994 and incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit 10.3 to MidSouth's Annual Report on Form 10-K for the year ended December 31, 1992 and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form l-A and are incorporated herein by reference. 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of Mixon, Roy, Metz & Mixon 23.3 Consent of Correro, Fishman & Casteix, L.L.P., included in Exhibit 5 23.4 Consent of Chaffe & Associates, Inc. 24 Powers of Attorney of directors of MidSouth Bancorp, Inc. 99.1 Form of Proxy of Sugarland Bancshares, Inc. 99.2 Form of Proxy of MidSouth Bancshares, Inc. ____________________ (b) Financial Statement Schedules None Item 22. Undertakings The undersigned Registrant hereby undertakes as follows: (1) To respond to requests for information that is incorporated by reference into the Prospectus pursuant to Items 4, 10(b), 11 or 13 of Form S-4 within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the Registration Statement through the date of responding to the request. (2) To supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the Registration Statement when it became effective. (3) That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this Registration Statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the Registrant undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other Items of the applicable form. (4) That every prospectus (i) that is filed pursuant to paragraph (3) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the Registration Statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in response to Item 20 of this Registration Statement, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. EXHIBIT INDEX 2 Agreement and Plan of Merger 3.1 Amended and Restated Articles of Incorporation of MidSouth Bancorp, Inc. are included as Exhibit 3.1 to MidSouth's Annual Report on Form 10-K for the Year Ended December 31, 1993 and is incorporated herein by reference 3.2 Amended and Restated By-laws of MidSouth Bancorp, Inc. are included as Exhibit 3.2 to MidSouth's Annual Report on Form 10-K for the Year Ended December 31, 1993 and is incorporated herein by reference 4.1 MidSouth agrees to furnish to the Commission on request a copy of the instruments defining the rights of the holder of its long-term debt, which debt does not exceed 10% of the total consolidated assets of MidSouth. 4.2 Form of Amendment to Articles of Incorporation Defining Rights of Holders of MidSouth Cumulative Convertible Preferred Stock Series A, included in Exhibit 2. 5 Opinion of Correro, Fishman & Casteix, L.L.P. 8 Form of opinion of Deloitte & Touche L.L.P., independent public accountants as to certain tax matters, included in Exhibit 2. 10.1 MidSouth National Bank Lease Agreement with Southwest Bank Building Limited Partnership is included as Exhibit l0.7 to MidSouth's Annual Report on Form l0-K for the Year Ended December 3l, l992 and is incorporated herein by reference. 10.2 First Amendment to Lease between MBL Life Assurance Corporation, successor in interest to Southwest Bank Building Limited Partnership in Commendam, and MidSouth National Bank, included as Exhibit 10.2 to MidSouth's Annual Report on Form l0K-SB for the Year Ended December 3l, l994 and incorporated herein by reference. 10.3 Amended and Restated Deferred Compensation Plan and Trust is included as Exhibit l0.3 to MidSouth's Annual Report on Form l0-K for the Year Ended December 3l, l992 and is incorporated herein by reference. 10.4 Employment Agreements with C. R. Cloutier and Karen L. Hail are included as Exhibit 5(c) to MidSouth's Form l-A and are incorporated herein by reference. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of Mixon, Roy, Metz & Mixon. 23.3 Consent of Correro, Fishman & Casteix, L.L.P., included in Exhibit 5. 23.4 Consent of Chaffe & Associates, Inc. 24 Powers of Attorney of Directors of MidSouth Bancorp, Inc. 99.1 Form of Proxy of Sugarland Bancshares, Inc. 99.2 Form of Proxy of MidSouth Bancorp, Inc. EX-2 2 EXHIBIT 2 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made December 28, 1994, between MidSouth Bancorp, Inc., a Louisiana corporation ("MidSouth") and its wholly owned subsidiary, MidSouth National Bank ("MidSouth Bank"), on the one hand; and Sugarland Bancshares, Inc., a Louisiana corporation ("Holding"), and its wholly owned subsidiary, Sugarland State Bank, a Louisiana state banking association ("Bank"), on the other. WHEREAS, the Board of Directors of MidSouth Bank and the Board of Directors of Bank have each determined that it is desirable and in the best interests of the institution and its sole shareholder that Bank merge into MidSouth Bank (the "Bank Merger") on the terms and subject to the conditions set forth in this Agreement and in the agreement of merger attached hereto as Exhibit A (the "Bank Merger Agreement"); and WHEREAS, the Board of Directors of MidSouth and the Board of Directors of Holding have each determined that it is desirable and in the best interests of the corporation and its shareholders that Holding merge into MidSouth (the "Company Merger" and, together with the Bank Merger, collectively called the "Mergers") on the terms and subject to the conditions set forth in this Agreement and in the certificate of merger attached hereto as Exhibit B (the "Company Merger Certificate"). NOW THEREFORE, in consideration of the representations, warranties, covenants and agreements herein contained, the parties hereto agree as follows: SECTION 1 Mergers and Closing 1.1 Bank Merger. Simultaneously with the execution of this Agreement, MidSouth Bank and Bank will enter into the Bank Merger Agreement, pursuant to which Bank will, subject to the conditions stated herein and therein, merge into MidSouth Bank, which shall be the surviving association. 1.2 Company Merger. Subject to the conditions stated in Section 6, at the Effective Time, as defined below, Holding will merge into MidSouth, which shall be the surviving corporation, and the separate existence of Holding will cease. The Company Merger will have the effects set forth in Section 115 of the Louisiana Business Corporation Law ("BCL"). 1.3 The Closing. The "Closing" of the transactions contemplated hereby will take place in the offices of MidSouth, 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501, at 10:00 a.m., local time, on a mutually agreeable date as soon as practicable following satisfaction of the conditions set forth in subparagraphs (a), (b) and (d) of subsection 6.1 hereof, or on any date specified by any party to the others upon ten days' notice following satisfaction of such conditions. The date on which the Closing is to occur is herein called the "Closing Date." If all conditions set forth in Section 6 hereof are satisfied or waived by the party entitled to grant such waiver, at the Closing (a) MidSouth and MidSouth Bank, on the one hand, and Holding and Bank, on the other hand, shall each provide to the other such proof or indication of satisfaction of the conditions set forth in Section 6 as the party whose obligations are conditioned upon such satisfaction may reasonably request, (b) the certificates, letters and opinions required by Section 6 shall be delivered, (c) the appropriate officers of the parties shall execute, deliver and acknowledge the Bank Merger Agreement and the Company Merger Certificate, and (d) the parties shall take such further action as is required to consummate the transactions contemplated by this Agreement and the Bank Merger Agreement. If on any date established for the Closing all conditions in Section 6 hereof have not been satisfied or waived by the party entitled to grant such waiver, then any party, on one or more occasions, may declare a delay of the Closing of such duration, not exceeding 10 business days, as the declaring party shall select, but no such delay shall extend beyond the date set forth in subparagraph (c) of subsection 7.1, and no such delay shall interfere with the right of any party to declare a termination pursuant to Section 7. 1.4 The Effective Date and Time. The Bank Merger Agreement shall be filed and recorded as provided by law with the Office of the Comptroller of the Currency (the "OCC") and the Louisiana Office of Financial Institutions (the "OFI") immediately following or concurrently with the Closing, and the Bank Merger will be effective at the time specified in a certificate or other written record issued by the OCC or the OFI, whichever date is later. The Company Merger Certificate shall be filed with and recorded by the Secretary of State of the State of Louisiana immediately following (or concurrently with) the Closing, and the Company Merger shall be effective at the date and time specified in the Company Merger Certificate. The date on which and the time at which the Company Merger becomes effective are herein referred to as the "Effective Date" and the "Effective Time," respectively. SECTION 2 Conversion of Stock of Holding 2.1 Conversion of Stock of Holding. Except for shares as to which dissenters' rights have been perfected and not withdrawn or otherwise forfeited under Section 131 of the BCL, on the Effective Date, by reason of the Company Merger, each issued and outstanding share of common stock, $1.25 par value per share, of Holding ("Holding Common Stock") shall be converted into a number of shares of Series A cumulative convertible preferred stock (the "Preferred Stock") of MidSouth, having the terms set forth in the form of Articles of Amendment attached hereto as Exhibit C, equal to the quotient of (i) 187,286, divided by (ii) the number of outstanding shares of Holding on the Effective Date. 2.2 Fractional Shares. In lieu of the issuance of any fractional share of Preferred Stock to which a holder of Holding Common Stock may be entitled (after aggregation of all fractional shares to which such holder is entitled), each shareholder of Holding, upon surrender of the certificate or certificates which immediately prior to the Effective Time represented Holding Common Stock held by such shareholder, shall be entitled to receive a cash payment (without interest) equal to such fractional share multiplied by the stated value of a share of Preferred Stock. 2.3 Exchange of Certificates. After the Effective Time, each holder of an outstanding certificate or certificates theretofore representing shares of Holding Common Stock (other than shares as to which dissenters' rights have been perfected and not withdrawn or otherwise forfeited under Section 131 of the BCL), upon surrender thereof to MidSouth, shall be entitled to receive the shares of Preferred Stock into which such shares have been converted as provided in Section 2.1 and cash in lieu of any fractional share as provided in Section 2.2. Until so surrendered, each outstanding certificate shall be deemed for all purposes, other than as provided below with respect to the payment of dividends or other distributions, if any, in respect of the Preferred Stock, to represent the number of whole shares of Preferred Stock into which the shares of Holding Common Stock theretofore represented thereby shall have been converted. MidSouth may, at its option, refuse to pay any dividend or other distribution, if any, payable to the holders of shares of Preferred Stock to the holders of certificates evidencing unsurrendered Holding Common Stock, provided, however, that upon surrender of such certificates there shall be paid to the record holders of the stock certificate or certificates issued in exchange therefor the amount, without interest, of dividends and other distributions, if any, which have become payable with respect to the number of whole shares of Preferred Stock into which the shares of Holding Common Stock theretofore represented thereby shall have been converted and which have not previously been paid, unless such distributions have reverted to MidSouth in full ownership pursuant to its Articles of Incorporation. Whether or not a stock certificate representing Holding Common Stock is surrendered, from and after the Effective Time such certificate shall under no circumstances evidence, represent or otherwise constitute any stock or other interest in Holding or any other person, firm or corporation (other than MidSouth). 2.4 Shares of MidSouth. The shares of capital stock of MidSouth outstanding immediately prior to the Effective Time shall not be changed or converted by virtue of the Company Merger. SECTION 3 Representations and Warranties of Holding and Bank Holding and Bank represent and warrant to MidSouth and MidSouth Bank that, except as set forth in the corresponding subsection of the Schedule of Exceptions that Holding and Bank have delivered to MidSouth and MidSouth Bank: 3.1 Consolidated Group; Organization; Qualification. Holding's "consolidated group", as such term is used in this Agreement, consists of Holding and Bank. Holding is a corporation duly organized and validly existing under the laws of the State of Louisiana and is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (the "Bank Holding Company Act"). Bank is a state chartered banking association duly organized and validly existing under the laws of the State of Louisiana. Each member of Holding's consolidated group has all requisite corporate power and authority to own and lease its property and to carry on its business as it is currently being conducted and is qualified and in good standing as a foreign corporation in all jurisdictions in which the failure to so qualify would have a material adverse effect on such member's financial condition, results of operations, business or prospects. 3.2 Capital Stock; Other Interests. The authorized capital stock of Holding consists of 400,000 shares of Holding Common Stock, of which 187,286 shares are issued and outstanding, and 45,000 shares are held in its treasury. The authorized capital stock of Bank consists of 50,000 shares of common stock, $5.00 par value per share, of which 50,000 shares are issued and outstanding and no shares are held in its treasury. All issued and outstanding shares of capital stock of each member of Holding's consolidated group have been duly authorized and are validly issued, fully paid and (except as provided in La. R.S. 6:262) non-assessable, and all of the outstanding shares of each such member (other than Holding) are owned by Holding, free and clear of all liens, charges, security interests, mortgages, pledges and other encumbrances. No member of Holding's consolidated group has outstanding any stock options or other rights to acquire any shares of its capital stock or any security convertible into such shares, or has any obligation or commitment to issue, sell or deliver any of the foregoing or any shares of its capital stock. The capital stock of each member of Holding's consolidated group has been issued in compliance with all legal requirements and in compliance with any pre-preemptive or similar rights. No member of Holding's consolidated group has a subsidiary or direct or indirect ownership interest exceeding 1% in any corporation, partnership or other business entity except for interests in any other such member. 3.3 Corporate Authorization; No Conflicts. Subject to the approval of this Agreement by the shareholders of Holding in accordance with the BCL, all corporate acts and other proceedings required of each member of Holding's consolidated group for the due and valid authorization, execution, delivery and performance of this Agreement and the Bank Merger Agreement and consummation of the Mergers have been validly and appropriately taken. Subject to such shareholder approval and to such regulatory approvals as are required by law, this Agreement and the Bank Merger Agreement are legal, valid and binding obligations of the members of Holding's consolidated group which are parties thereto, respectively, and are enforceable against such members in accordance with the respective terms of such instruments, except that enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws and court decisions relating to or affecting the enforcement of creditors' rights generally and by general equitable principles. With respect to each member of Holding's consolidated group, neither the execution, delivery or performance of this Agreement or the Bank Merger Agreement, nor the consummation of the transactions contemplated hereby or thereby will (i) violate, conflict with, or result in a breach of any provisions of, (ii) constitute a default (or event that, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination of or accelerate the performance required by, or (iv) result in the creation of any lien, security interest, charge or encumbrance upon any of its properties or assets under, any of the terms, conditions or provisions of its articles of incorporation or by-laws or any material note, bond, mortgage, indenture, deed of trust, lease, license, agreement or other instrument or obligation to or by which it or any of its assets is bound; or violate any order, writ, injunction, decree, statute, rule or regulation of any governmental body applicable to it or any of its assets. 3.4 Financial Statements, Reports and Proxy Statements. Holding has delivered to MidSouth true and complete copies of (a) the consolidated balance sheets as of December 31, 1993 and 1992 of Holding and its subsidiaries, the related consolidated statements of income, shareholders' equity and changes in financial position for the respective years then ended, the related notes thereto, and the report of its independent public accountants with respect thereto (collectively, the "Financial Statements"), (b) the unaudited consolidated balance sheets as of September 30, 1994 and September 30, 1993 of Holding and its subsidiaries, and the related unaudited statements of income, shareholders' equity and changes in financial position for the nine-month periods then ended (collectively, the "Interim Financial Statements"), (c) the annual report to the Board of Governors of the Federal Reserve System ("Federal Reserve Board") for the year ended December 31, 1993, of each member of Holding's consolidated group required to file such reports, (d) all call or similar reports made to the Federal Deposit Insurance Corporation ("FDIC") or the Federal Reserve Board, as the case may be, since December 31, 1991, of each member of Holding's consolidated group required to file such reports, (e) Holding's Annual Report to Shareholders for 1993 and all subsequent Quarterly Reports to Shareholders, and (f) all proxy statements or other reports disseminated to Holding's shareholders or the shareholders of any of its subsidiaries at any time since December 31, 1991. The Financial Statements and the Interim Financial Statements have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with prior periods, except as disclosed therein or in the accountant's report accompanying such statement or statements, and present fairly, in conformity with generally accepted accounting principles, except as disclosed therein or in the accountant's report accompanying such statement or statements, the consolidated results of operations of Holding's consolidated group for the respective periods covered thereby and the consolidated financial condition of its consolidated group as of the respective dates thereof. All call or similar reports referred to above have been filed on the appropriate form and prepared in accordance with such form's instructions and the applicable rules and regulations of the regulating federal agency. No member of Holding's consolidated group has, nor are any of any such member's assets subject to, any material liability, commitment, indebtedness or obligation (of any kind whatsoever, whether absolute, accrued, contingent, known, unknown, matured or unmatured) which is not reflected and adequately reserved against in the latest balance sheet forming part of the Interim Financial Statements (the "Latest Balance Sheet"). The Financial Statements and Interim Financial Statements are supported by and consistent with detailed trial balances of investment securities, loans and loan commitments, depositors' accounts and cash balances on deposit with other institutions, copies of which have been made available to MidSouth. 3.5 Loan and Investment Portfolios. All loans, discounts and financing leases (in which a member of Holding's consolidated group is lessor) reflected on the Latest Balance Sheet (a) have been made for good, valuable and adequate consideration in the ordinary course of business of its consolidated group, (b) are evidenced by notes, agreements or other evidences of indebtedness which are true, genuine and what they purport to be and (c) to the extent secured, have been secured by valid liens and security interests which have been perfected. Accurate lists of all such loans, discounts and financing leases as of the date of the Latest Balance Sheet, and of the investment portfolios of each member of Holding's consolidated group as of such date, have been made available to MidSouth. 3.6 Adequacy of Loan Loss Reserves. Each of the allowances for losses on loans, financing leases and other real estate owned shown on the Latest Balance Sheet is adequate in accordance with applicable regulatory guidelines and generally accepted accounting principles in all material respects, and there are no facts or circumstances known to any executive officer of Holding or Bank which are likely to require in accordance with applicable regulatory guidelines or generally accepted accounting principles a future material increase in any provisions for such losses or a material decrease in any of the allowances therefor reflected in the Latest Balance Sheet. Each of the allowances for losses on loans, financing leases and other real estate owned reflected on the books of Holding's consolidated group at all times from and after the date of the Latest Balance Sheet has been and will be adequate in accordance with applicable regulatory guidelines and generally accepted accounting principles in all material respects. 3.7 Examination Reports. To the extent permitted by applicable law, Holding has made available to MidSouth true and correct copies of all examination reports with respect to each member of Holding's consolidated group made by any federal or state bank or bank holding company regulatory authority since December 31, 1991. 3.8 Absence of Certain Changes or Events. Since the date of the Latest Balance Sheet, there has been no event or condition of any character (whether actual, threatened or contemplated) that has had, or can reasonably be anticipated to have, a material adverse effect on the financial condition, results of operations, business or prospects of any member of Holding's consolidated group. No such member has, since the date of the Latest Balance Sheet: (a) borrowed any money except for deposits or, except in the ordinary course of business consistent with past practices, (i) loaned any money or pledged any of its credit in connection with any aspect of its business, (ii) mortgaged or otherwise subjected to any lien, encumbrance or other liability any of its assets, (iii) sold, assigned or transferred any of its assets in excess of $25,000 in the aggregate, or (iv) incurred any material liability, commitment, indebtedness or obligation (of any kind whatsoever, whether accrued, contingent, known, unknown, matured or unmatured); (b) suffered any material damage, destruction or loss, whether or not covered by insurance; (c) experienced any material change in asset concentrations as to customers or industries or in the nature and source of its liabilities or in the mix of interest-bearing versus non-interest bearing deposits; (d) received notice or had knowledge or reasonable grounds to believe that any material labor unrest exists among any of its employees or that any group, organization or union has attempted to organize any of its employees; (e) received notice or had knowledge or reasonable grounds to believe that any of its substantial customers has terminated or intends to terminate such customer's relationship with it; (f) failed to operate its business in the ordinary course consistent with past practices, or failed to preserve its business organization intact or to preserve the goodwill of its customers and others with whom it has business relations; (g) incurred any material loss except for losses adequately reserved against on the date of this Agreement or waived any material right in connection with any aspect of its business, whether or not in the ordinary course of business; (h) cancelled any debt owed to it, or cancelled any of its claims, or paid any of its noncurrent obligations or liabilities; (i) made any capital expenditure or capital addition or betterment in excess of $25,000 each; (j) entered into any agreement requiring the payment, conditionally or otherwise, of any salary, bonus, extra compensation, pension or severance payment to any of its present or former directors, officers or employees, except such agreements as are terminable at will without any penalty or other payment by it, or increased the compensation (including salaries, fees, bonuses, profit sharing, incentive, pension, retirement or other similar payments) of any such person whose annual compensation would, following such increase, exceed $30,000; (k) changed any accounting practice followed or employed in preparing the Financial Statements or Interim Financial Statements; (l) made any loan, given any discount or entered into any financing lease which has not been (i) made for good, valuable and adequate consideration in the ordinary course of business, (ii) evidenced by notes or other evidences of indebtedness which are true, genuine and what they purport to be, and (iii) fully reserved against in an amount sufficient to provide for all charge-offs reasonably anticipated in the ordinary course of business after taking into account all recoveries reasonably anticipated in the ordinary course of business; or (m) entered into any agreement, contract or commitment to do any of the foregoing. 3.9 Taxes. Each member of Holding's consolidated group has timely filed all federal, state, foreign and local income, franchise, excise, real and personal property, employment and other tax returns, tax information returns and reports required to be filed, has paid all taxes, interest payments and penalties which have become due, has made (and will make) adequate provision for the payment of all taxes accruable for all periods ending on or before the date of this Agreement (and the Closing Date) to any city, parish, state, foreign country, the United States or any other taxing authority, and is not delinquent in the payment of any tax or governmental charge of any nature. The consolidated federal income tax returns of Holding's consolidated group have never been audited. No audit, examination or investigation is presently being conducted or, to the best of such member's knowledge, threatened, by any taxing authority, no material unpaid tax deficiencies or additional liabilities of any sort have been proposed by any governmental representative, and no agreements for extension of time for the assessment of any tax have been entered into by or on behalf of any member of Holding's consolidated group. Each such member has withheld from its employees (and timely paid to the appropriate governmental entity) proper and accurate amounts for all periods in compliance in all material respects with all tax withholding provisions of applicable federal, state, foreign and local laws (including, without limitation, income, social security and employment tax withholding for all forms of compensation). 3.10 Title to Assets. (a) On the date of the Latest Balance Sheet, each member of Holding's consolidated group had and, except with respect to assets disposed of for adequate consideration in the ordinary course of business since such date, now has, good and merchantable title to all real property and good and merchantable title to all other properties and assets reflected on the Latest Balance Sheet, free and clear of all mortgages, liens, pledges, restrictions, security interests, charges and encumbrances of any nature except for (i) mortgages and encumbrances which secure indebtedness which is properly reflected in the Latest Balance Sheet; (ii) liens for taxes accrued but not yet payable; (iii) liens arising as a matter of law in the ordinary course of business with respect to obligations incurred after the date of the Latest Balance Sheet, provided that the obligations secured by such liens are not delinquent or are being contested in good faith; (iv) such imperfections of title and encumbrances, if any, as do not materially detract from the value or interfere with the present use of any of such properties or assets or the potential sale of any of such owned properties or assets; and (v) capital leases and leases, if any, to third parties for fair and adequate consideration. Each member of Holding's consolidated group owns, or has valid leasehold interests in, all material properties and assets used in the conduct of its business. Any real property and other material assets held under lease by any such member are held under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use of such property by such member. (b) With respect to each lease of any real property or a material amount of personal property to which any member of Holding's consolidated group is a party, except for financing leases in which a member of such consolidated group is lessor, (i) such lease is in full force and effect in accordance with its terms; (ii) all rents and other monetary amounts that have become due and payable thereunder have been paid; (iii) there exists no default, or event, occurrence, condition or act, which with the giving of notice, the lapse of time or the happening of any further event, occurrence, condition or act would become a default under such lease; and (iv) neither the Company Merger nor the Bank Merger will constitute a default or a cause for termination or modification of such lease. (c) No member of Holding's consolidated group has any legal obligation, absolute or contingent, to any other person to sell or otherwise dispose of any substantial part of its assets; or to sell or dispose of any of its assets except in the ordinary course of business consistent with past practices. 3.11 Litigation, Pending Proceedings and Compliance with Laws. (a) There are no claims of any kind or any actions, suits, proceedings, arbitrations or investigations pending or threatened, nor does any member of Holding's consolidated group have knowledge of a basis for any claim, in any court or before any governmental agency or instrumentality or arbitration panel or otherwise, against any member of Holding's consolidated group. (b) Each member of Holding's consolidated group has complied with and is not in default in any material respect under (and has not been charged or threatened with or come under investigation with respect to any charge concerning any material violation of any provision of) any federal, state or local law, regulation, ordinance, rule or order (whether executive, judicial, legislative or administrative) or any order, writ, injunction or decree of any court, agency or instrumentality. (c) There are no material uncured violations, or violations with respect to which material refunds or restitution may be required, cited in any compliance report to any member of Holding's consolidated group as a result of examination by any bank or bank holding company regulatory authority. (d) No member of Holding's consolidated group is subject to any written agreement, memorandum or order with or by any bank or bank holding company regulatory authority. 3.12 Employee Benefit Plans. (a) Neither Holding nor Bank sponsors, maintains or contributes to, and neither has at any time sponsored, maintained or contributed to, any employee benefit plan or arrangement. (b) Except as contemplated by Section 5.15 hereof, the consummation of the transactions contemplated hereunder will not (i) result in the imposition of any obligation or liability on Holding, Bank, MidSouth or MidSouth Bank to any employee or former employee of Holding or Bank, or (ii) result in a prohibited transaction as such term is used in Code Section 4975 or ERISA Section 406. 3.13 Insurance Policies. Each member of Holding's consolidated group maintains in force insurance policies and bonds in such amounts and against such liabilities and hazards as are considered adequate. An accurate list of all such insurance policies has been delivered to MidSouth and MidSouth Bank. No member of Holding's consolidated group is now liable, nor will any such member become liable, for any material retroactive premium adjustment. All policies are valid and enforceable and in full force and effect, and no member of Holding's consolidated group has received any notice of a material premium increase or cancellation with respect to any of its insurance policies or bonds. Within the last three years, no member of Holding's consolidated group has been refused any insurance coverage sought or applied for, and no such member has reason to believe that its existing insurance coverage cannot be renewed as and when the same shall expire, upon terms and conditions as favorable as those presently in effect. 3.14 Agreements. No member of Holding's consolidated group is a party to: (a) any collective bargaining agreement; (b) any employment or other agreement or contract with or commitment to any employee except such agreements as are terminable at will without penalty by the employer; (c) any obligation of guaranty or indemnification except, if entered into in the ordinary course of business with respect to customers or any member of Holding's consolidated group, letters of credit, guaranties of endorsements and guaranties of signatures; (d) any agreement, contract or commitment which is or may be materially adverse to the financial condition, results of operations, business or prospects of any member of Holding's consolidated group; or (e) any agreement, contract or commitment containing any covenant limiting the freedom of any member of Holding's consolidated group to engage in any line of business or to compete with any person. The subsection of the Schedule of Exceptions that corresponds to this subsection contains a list of each material agreement, contract or commitment (except those entered into in the ordinary course of business with respect to loans, lines of credit, letters of credit, depositor agreements, certificates of deposit and similar banking activities) to which any member of Holding's consolidated group is a party or which affects any such member. No member of Holding's consolidated group has in any material respect breached, nor is there any pending or threatened claims that it has materially breached, any of the terms or conditions of any of its agreements, contracts or commitments. 3.15 Licenses, Franchises and Governmental Authorizations. Each member of Holding's consolidated group possesses all licenses, franchises, permits and other governmental authorizations necessary for the continued conduct of its business without interference or interruption. The deposits of each such member are insured by the FDIC to the extent provided by applicable law, and there are no pending or threatened proceedings to revoke or modify that insurance or for relief under 12 U.S.C. Section 1818. 3.16 Corporate Documents. Holding has delivered to MidSouth and MidSouth Bank, with respect to each member of Holding's consolidated group, true and correct copies of its articles of incorporation or articles of association, and its by- laws, all as amended. All of the foregoing and all of the corporate minutes and stock transfer records of each member of Holding's consolidated group are current, complete and correct in all material respects. 3.17 Certain Transactions. No past or present director, executive officer or five percent shareholder of any member of Holding's consolidated group has, since January 1, 1991, engaged in any transaction or series of transactions which, if such member had been subject to Section 14(a) of the Exchange Act at all times since that date, would be required to be disclosed in its proxy materials pursuant to Item 404 of Regulation S-K of the Rules and Regulations of the Securities and Exchange Commission ("SEC") without regard to the amount limitations of Item 404. 3.18 Brokers' or Finders' Fees. No agent, broker, investment banker, investment or financial advisor or other person acting on behalf of any member of Holding's consolidated group is entitled to any commission, broker's or finder's fee from any of the parties hereto in connection with any of the transactions contemplated by this Agreement, except for the financial advisor retained by Holding pursuant to a written agreement which has been delivered to MidSouth and MidSouth Bank. 3.19 Environmental Matters. (a) (i) Holding and each member of Holding's consolidated group has obtained all material permits, licenses and other authorizations that are required to be obtained by it under any applicable Environmental Law Requirements (as hereinafter defined) in connection with the operation of its businesses and ownership of its properties (collectively, the "Subject Properties"), including without limitation properties acquired by foreclosure or in settlement of loans; (ii) Holding and each member of its consolidated group is in compliance in all material respects with all terms and conditions of such permits, licenses and authorizations and with all applicable Environmental Law Requirements; (iii)There are no past or present events, conditions, circumstances, activities or plans by any member of Holding's consolidated group related in any manner to Holding or any member of its consolidated group or the Subject Properties that did or would, in any material respect, violate or prevent compliance or continued compliance with any of the Environmental Law Requirements, or give rise to any Environmental Liability, as hereinafter defined; (iv) There is no civil, criminal or administrative action, suit, demand, claim, order, judgment, hearing, notice or demand letter, notice of violation, investigation or proceeding pending or, to the knowledge of any executive officer of Holding or Bank, threatened by any person against Holding or any member of its consolidated group, or any prior owner of any of the Subject Properties and relating to the Subject Properties, and relating in any way to any Environmental Law Requirement or seeking to impose any Environmental Liability; and (v) No member of Holding's consolidated group is subject to or responsible for any material Environmental Liability that is not set forth and adequately reserved against on the Latest Balance Sheet. (b) "Environmental Law Requirement" means all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments and orders relating to the protection of human health or the environment, including without limitation: (A) all requirements, including but not limited to those (i) pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of Hazardous Materials (as such term is defined below), chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials, chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes, whether solid, liquid, or gaseous in nature; (B) all requirements pertaining to protection of the health and safety of employees or the public; and (C) all requirements pertaining to the (i) drilling, production, and abandonment of oil and gas wells, (ii) the transportation of produced oil and gas, and (iii) the remediation of sites related to that drilling, production or transportation. (c) "Hazardous Materials" shall mean: (A) Any "hazardous substance" as defined by either the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 USC Section 9601, et seq.) ("CERCLA") as amended from time to time, or regulations promulgated thereunder; (B) asbestos; (C) polychlorinated biphenyls; (D) any "regulated substance" as defined by 40 C.F.R. Section 280.12, or La. Admin. Code 33:XI. 103; (E) any naturally occurring radioactive material ("NORM"), as defined by La. Admin. Code 33:XV, Chapter 14, as amended from time to time, irrespective of whether the NORM is located in Louisiana or another jurisdiction; (F) any non-hazardous oilfield wastes ("NOW") defined under La. R.S. 30:1, et seq., and regulations promulgated thereunder, irrespective of whether those wastes are located in Louisiana or another jurisdiction; (G) any substance the presence of which on the Subject Properties is prohibited by any lawful rules and regulations of legally constituted authorities from time to time in force and effect relating to the Subject Properties; and (H) any other substance which by any such rule or regulation requires special handling in its collection, storage, treatment or disposal. (d) "Environmental Liability" shall mean (i) any liability or obligation (of any kind whatsoever, whether absolute or contingent, accrued or unaccrued, known or unknown) arising under any Environmental Law Requirement, or (ii) any liability or obligation (of any kind whatsoever, whether absolute or contingent, accrued or unaccrued, known or unknown) under any other theory of law or equity (including without limitation any liability for personal injury, property damage or remediation) that results from, or is based upon or related to, the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any Hazardous Materials, pollutant, contaminant, chemical, or industrial, toxic or hazardous substance or waste. 3.20 Community Reinvestment Act; Fair Lending. Bank has complied in all material respects with the provisions of the Community Reinvestment Act ("CRA") and the rules and regulations thereunder, has a CRA rating of not less than "satisfactory", and has received no material criticism from regulators with respect to discriminatory lending practices. 3.21 Accuracy of Statements. No warranty or representation made or to be made by any member of Holding's consolidated group in this Agreement, and no information furnished by any such member pursuant to this Agreement, contains or will contain, as of the date of this Agreement, the effective date of the Registration Statement (as defined in subsection 5.16 hereof) and the Closing Date, an untrue statement of a material fact or an omission of a material fact necessary to make the statements contained herein and therein, in light of the circumstances in which they are made, not misleading. SECTION 4 Representations and Warranties of MidSouth and MidSouth Bank MidSouth and MidSouth Bank represent and warrant to Holding and Bank that, except as set forth in the corresponding subsection of the Schedule of Exceptions that MidSouth has delivered to Holding: 4.1 Organization and Qualification. MidSouth's "consolidated group" consists of MidSouth and MidSouth Bank. MidSouth is a corporation duly organized and validly existing under the laws of the State of Louisiana and is a bank holding company within the meaning of the Bank Holding Company Act. MidSouth Bank is a national banking association duly organized and validly existing under the laws of the United States. Each of MidSouth and MidSouth Bank has all requisite corporate power and authority to own and lease its property and to carry on its business as it is currently being conducted and is qualified and in good standing as a foreign corporation in all jurisdictions in which the failure to so qualify would have a material adverse effect on its financial condition, results of operations, business or prospects. 4.2 Capital Stock; Other Interests. The authorized capital stock of MidSouth consisted at September 30, 1994, of 5,000,000 shares of common stock, $0.10 par value per share, of which at such date 709,687 shares were issued and outstanding and no shares were held in its treasury; and 5,000,000 shares of preferred stock, no par value per share, of which at such date no shares were issued and outstanding and no shares were held in its treasury. All issued and outstanding shares of capital stock of each member of MidSouth's consolidated group have been duly authorized and are validly issued, fully paid and (except as provided in 12 U.S.C. 62) non-assessable, and all of the outstanding shares of each such member (other than MidSouth) are owned by MidSouth, free and clear of all liens, charges, security interests, mortgages, pledges and other encumbrances. Except with respect to stock options pursuant to MidSouth's stock option plan, the shares of Preferred Stock to be issued pursuant to this Agreement and the shares of MidSouth Common Stock that may be issued upon conversion of the Preferred Stock, as of the date of this Agreement no member of MidSouth's consolidated group has outstanding any stock options or other rights to acquire any shares of its capital stock or any security convertible into such shares, or has any obligation or commitment to issue, sell or deliver any of the foregoing or any shares of its capital stock. The capital stock of each member of MidSouth's consolidated group has been issued in compliance with all legal requirements and in compliance with any pre-preemptive or similar rights. No member of MidSouth's consolidated group has a subsidiary or direct or indirect ownership interest exceeding 1% in any corporation, partnership or other business entity except for interests in any other such member. 4.3 Corporate Authorization; No Conflicts. Subject to the approval of this Agreement by the shareholders of MidSouth in accordance with the BCL or the rules of the American Stock Exchange, if required, and to the approval of this Agreement and the Bank Merger Agreement by MidSouth as sole shareholder of MidSouth Bank, all corporate acts and other proceedings required of MidSouth and MidSouth Bank for the due and valid authorization, execution, delivery and performance of this Agreement and the Bank Merger Agreement and consummation of the Mergers have been validly and appropriately taken. Subject to such shareholder approvals and to such regulatory approvals as are required by law, this Agreement and the Bank Merger Agreement are legal, valid and binding obligations of MidSouth and MidSouth Bank, as the case may be, and are enforceable against them in accordance with the respective terms of such instruments, except that enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws and court decisions relating to or affecting the enforcement of creditors' rights generally and by general equitable principles. With respect to each of MidSouth and MidSouth Bank, neither the execution, delivery or performance of this Agreement or the Bank Merger Agreement, nor the consummation of the transactions contemplated hereby or thereby will (i) violate, conflict with, or result in a breach of any provision of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination of or accelerate the performance required by, or (iv) result in the creation of any lien, security interest, charge or encumbrance upon any of its properties or assets under, any of the terms, conditions or provisions of its articles of incorporation or by-laws or any material note, bond, mortgage, indenture, deed of trust, lease, license, agreement or other instrument or obligation to or by which it or any of its assets is bound; or violate any order, writ, injunction, decree, statute, rule or regulation of any governmental body applicable to it or any of its assets. 4.4 MidSouth Corporate Documents. MidSouth and MidSouth Bank have delivered to Holding true and correct copies of their articles of incorporation or association, as amended, and by- laws, as amended. 4.5 Financial Statements, Reports and Proxy Statements. MidSouth has delivered to Holding true and complete copies of (a) the consolidated balance sheets as of December 31, 1993 and 1992 of MidSouth and its subsidiaries, the related consolidated statements of income, shareholders' equity and changes in financial position for the respective years then ended, the related notes thereto, and the report of its independent public accountants with respect thereto (collectively, the "Financial Statements"), (b) the unaudited consolidated balance sheets as of September 30, 1994 and September 30, 1993 of MidSouth and its subsidiaries, and the related unaudited statements of income, shareholders' equity and changes in financial position for the nine-month periods then ended (collectively, the "Interim Financial Statements"), (c) the annual report to the Board of Governors of the Federal Reserve System ("Federal Reserve Board") for the year ended December 31, 1993, of each member of MidSouth's consolidated group required to file such reports, (d) all call or similar reports made to the OCC or the Federal Reserve Board, as the case may be, since December 31, 1991, of each member of MidSouth's consolidated group required to file such reports, (e) MidSouth's Annual Report to Shareholders for 1993 and all subsequent Quarterly Reports to Shareholders, and (f) all proxy statements or other reports disseminated to MidSouth's shareholders or the shareholders of any of its subsidiaries at any time since December 31, 1991. The Financial Statements and the Interim Financial Statements have been prepared in conformity with generally accepted accounting principles applied on a basis consistent with prior periods, and present fairly, in conformity with generally accepted accounting principles, except as disclosed therein or in the accountant's report accompanying such statement or statements, the consolidated results of operations of MidSouth's consolidated group for the respective periods covered thereby and the consolidated financial condition of its consolidated group as of the respective dates thereof. All call or similar reports referred to above have been filed on the appropriate form and prepared in accordance with such form's instructions and the applicable rules and regulations of the regulating federal agency. No member of MidSouth's consolidated group has, nor are any of any such member's assets subject to, any material liability, commitment, indebtedness or obligation (of any kind whatsoever, whether absolute, accrued, contingent, known, unknown, matured or unmatured) which is not reflected and adequately reserved against in the latest balance sheet forming part of the Interim Financial Statements (the "Latest Balance Sheet"). The Financial Statements and Interim Financial Statements are supported by and consistent with detailed trial balances of investment securities, loans and loan commitments, depositors' accounts and cash balances on deposit with other institutions, copies of which have been made available to Holding. 4.6 Loan and Investment Portfolios. All loans, discounts and financing leases (in which a member of MidSouth's consolidated group is lessor) reflected on the Latest Balance Sheet (a) have been made for good, valuable and adequate consideration in the ordinary course of business of its consolidated group, (b) are evidenced by notes, agreements or other evidences of indebtedness which are true, genuine and what they purport to be and (c) to the extent secured, have been secured by valid liens and security interests which have been perfected. 4.7 Adequacy of Loan Loss Reserves. Each of the allowances for losses on loans, financing leases and other real estate owned shown on the Latest Balance Sheet is adequate in accordance with applicable regulatory guidelines and generally accepted accounting principles in all material respects, and there are no facts or circumstances known to any executive officer of MidSouth or MidSouth Bank which are likely to require in accordance with applicable regulatory guidelines or generally accepted accounting principles a future material increase in any provisions for such losses or a material decrease in any of the allowances therefor reflected in the Latest Balance Sheet. Each of the allowances for losses on loans, financing leases and other real estate owned reflected on the books of MidSouth's consolidated group at all times from and after the date of the Latest Balance Sheet has been and will be adequate in accordance with applicable regulatory guidelines and generally accepted accounting principles in all material respects. 4.8 Examination Reports. To the extent permitted by applicable law, MidSouth has made available to Holding true and correct copies of all examination reports with respect to each member of MidSouth's consolidated group made by any federal or state bank or bank holding company regulatory authority since December 31, 1991. 4.9 Absence of Certain Changes or Events. Since the date of the Latest Balance Sheet, there has been no event or condition of any character (whether actual, threatened or contemplated) that has had, or can reasonably be anticipated to have, a material adverse effect on the financial condition, results of operations, business or prospects of any member of MidSouth's consolidated group. No such member has, since the date of the Latest Balance Sheet: (a) borrowed any money except for deposits or, except in the ordinary course of business consistent with past practices, (i) loaned any money or pledged any of its credit in connection with any aspect of its business, (ii) mortgaged or otherwise subjected to any lien, encumbrance or other liability any of its assets, (iii) sold, assigned or transferred any of its assets in excess of $150,000 in the aggregate, or (iv) incurred any material liability, commitment, indebtedness or obligation (of any kind whatsoever, whether accrued, contingent, known, unknown, matured or unmatured); (b) suffered any material damage, destruction or loss, whether or not covered by insurance; (c) experienced any material change in asset concentrations as to customers or industries or in the nature and source of its liabilities or in the mix of interest-bearing versus non-interest bearing deposits; (d) received notice or had knowledge or reasonable grounds to believe that any material labor unrest exists among any of its employees or that any group, organization or union has attempted to organize any of its employees; (e) received notice or had knowledge or reasonable grounds to believe that any of its substantial customers has terminated or intends to terminate such customer's relationship with it; (f) failed to operate its business in the ordinary course consistent with past practices, or failed to preserve its business organization intact or to preserve the goodwill of its customers and others with whom it has business relations; (g) incurred any material loss except for losses adequately reserved against on the date of this Agreement or waived any material right in connection with any aspect of its business, whether or not in the ordinary course of business; (h) cancelled any debt owed to it, or cancelled any of its claims, or paid any of its noncurrent obligations or liabilities; (i) made any capital expenditure or capital addition or betterment in excess of $150,000 each; (j) changed any accounting practice followed or employed in preparing the Financial Statements or Interim Financial Statements; (k) made any loan, given any discount or entered into any financing lease which has not been (i) made for good, valuable and adequate consideration in the ordinary course of business, (ii) evidenced by notes or other evidences of indebtedness which are true, genuine and what they purport to be, and (iii) fully reserved against in an amount sufficient to provide for all charge-offs reasonably anticipated in the ordinary course of business after taking into account all recoveries reasonably anticipated in the ordinary course of business; or (l) entered into any agreement, contract or commitment to do any of the foregoing. 4.10 Taxes. Each member of MidSouth's consolidated group has timely filed all federal, state, foreign and local income, franchise, excise, real and personal property, employment and other tax returns, tax information returns and reports required to be filed, has paid all taxes, interest payments and penalties which have become due, has made (and will make) adequate provision for the payment of all taxes accruable for all periods ending on or before the date of this Agreement (and the Closing Date) to any city, parish, state, foreign country, the United States or any other taxing authority, and is not delinquent in the payment of any tax or governmental charge of any nature. The consolidated federal income tax returns of MidSouth's consolidated group have never been audited. No audit, examination or investigation is presently being conducted or, to the best of such member's knowledge, threatened, by any taxing authority, no material unpaid tax deficiencies or additional liabilities of any sort have been proposed by any governmental representative, and no agreements for extension of time for the assessment of any tax have been entered into by or on behalf of any member of MidSouth's consolidated group. Each such member has withheld from its employees (and timely paid to the appropriate governmental entity) proper and accurate amounts for all periods in compliance in all material respects with all tax withholding provisions of applicable federal, state, foreign and local laws (including, without limitation, income, social security and employment tax withholding for all forms of compensation). 4.11 Title to Assets. (a) On the date of the Latest Balance Sheet, each member of MidSouth's consolidated group had and, except with respect to assets disposed of for adequate consideration in the ordinary course of business since such date, now has, good and merchantable title to all real property and good and merchantable title to all other properties and assets reflected on the Latest Balance Sheet, free and clear of all mortgages, liens, pledges, restrictions, security interests, charges and encumbrances of any nature except for (i) mortgages and encumbrances which secure indebtedness which is properly reflected in the Latest Balance Sheet; (ii) liens for taxes accrued but not yet payable; (iii) liens arising as a matter of law in the ordinary course of business with respect to obligations incurred after the date of the Latest Balance Sheet, provided that the obligations secured by such liens are not delinquent or are being contested in good faith; (iv) such imperfections of title and encumbrances, if any, as do not materially detract from the value or interfere with the present use of any of such properties or assets or the potential sale of any of such owned properties or assets; and (v) capital leases and leases, if any, to third parties for fair and adequate consideration. Each member of MidSouth's consolidated group owns, or has valid leasehold interests in, all material properties and assets used in the conduct of its business. Any real property and other material assets held under lease by any such member are held under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use of such property by such member. (b) With respect to each lease of any real property or a material amount of personal property to which any member of MidSouth's consolidated group is a party, except for financing leases in which a member of such consolidated group is lessor, (i) such lease is in full force and effect in accordance with its terms; (ii) all rents and other monetary amounts that have become due and payable thereunder have been paid; (iii) there exists no default, or event, occurrence, condition or act, which with the giving of notice, the lapse of time or the happening of any further event, occurrence, condition or act would become a default under such lease; and (iv) neither the Company Merger nor the Bank Merger will constitute a default or a cause for termination or modification of such lease. (c) No member of MidSouth's consolidated group has any legal obligation, absolute or contingent, to any other person to sell or otherwise dispose of any substantial part of its assets; or to sell or dispose of any of its assets except in the ordinary course of business consistent with past practices. 4.12 Litigation, Pending Proceedings and Compliance with Laws. (a) Except as described in the list referred to in subparagraph (e) below, there are no claims of any kind or any actions, suits, proceedings, arbitrations or investigations pending or threatened, nor does any member of MidSouth's consolidated group have knowledge of a basis for any claim, in any court or before any governmental agency or instrumentality or arbitration panel or otherwise, against any member of MidSouth's consolidated group. (b) Each member of MidSouth's consolidated group has complied with and is not in default in any material respect under (and has not been charged or threatened with or come under investigation with respect to any charge concerning any material violation of any provision of) any federal, state or local law, regulation, ordinance, rule or order (whether executive, judicial, legislative or administrative) or any order, writ, injunction or decree of any court, agency or instrumentality. (c) There are no material uncured violations, or violations with respect to which material refunds or restitution may be required, cited in any compliance report to any member of MidSouth's consolidated group as a result of examination by any bank or bank holding company regulatory authority. (d) No member of MidSouth's consolidated group is subject to any written agreement, memorandum or order with or by any bank or bank holding company regulatory authority. (e) The subsection of the Schedule of Exceptions that corresponds to this subsection lists each claim, action, suit, proceeding, arbitration, or investigation, pending or known to be threatened, in which any material claim or demand is made or threatened to be made against any member of MidSouth's consolidated group. 4.13 Employee Benefit Plans. With respect to any employee benefit plans covered by ERISA ("Erisa Plans") all contributions required to be made by MidSouth or MidSouth Bank have been made, all insurance premiums required have been paid and each of the ERISA Plans has been maintained and administered in all material respects in compliance with its terms, the provisions of ERISA and all other applicable laws, and, where applicable, the provisions of the Internal Revenue Code of 1986, as amended (the "Code"). With respect to each of the ERISA Plans, no transaction has occurred that could result in the imposition of a tax or penalty on prohibited transactions or party-in-interest transactions pursuant to Section 4975 of the Code or Section 502(i) of ERISA; there is no matter relating to any of the ERISA Plans pending or, to the knowledge of Holding or Bank, threatened, nor, to the knowledge of MidSouth or MidSouth Bank, are there any facts or circumstances existing that could lead to (other than routine filings such as qualification determination filings) proceedings before, or administrative actions by, any governmental agency; there are no actions, suits or claims pending or, to the knowledge of MidSouth or MidSouth Bank, threatened (including, without limitation, breach of fiduciary duty actions, but excluding routine uncontested claims for benefits) against any of the ERISA Plans or the assets thereof, where applicable. MidSouth and MidSouth Bank have complied in all material respects with the reporting and disclosure requirements of ERISA and the Code. None of the ERISA Plans are multi-employer plans within the meaning of Section 3(37) of ERISA. Except as set forth on the Schedule of Exceptions, a favorable determination letter has been issued by the Internal Revenue Service with respect to each ERISA Plan that is intended to be qualified under Section 401(a) of the Code, the Internal Revenue Service has taken no action to revoke any such letter and nothing has occurred, whether by action or failure to act, which would cause the loss of such qualification. Neither MidSouth nor MidSouth Bank has sponsored, maintained or made contributions to any plan, fund or arrangement subject to Title IV of ERISA or the requirements of Section 412 of the Code or providing for post-retirement medical benefits. (b) All group health plans of MidSouth and MidSouth Bank to which Section 4980B(f) of the Code or Section 601 of ERISA applies are in full compliance in all material respects with the continuation coverage requirements of Section 4980B(f) of the Code and Section 601 of ERISA and any prior violations of such Sections have been cured prior to the date hereof. (c) Except as contemplated by Section 5.15 hereof, the consummation of the transactions contemplated hereunder will not (i) result in the imposition of any obligation or liability on Holding, Bank, MidSouth or MidSouth Bank to any employee benefit plan, fund or arrangement of, or to any employee or former employee of, MidSouth or MidSouth Bank, or (ii) result in a prohibited transaction as such term is used in Code Section 4975 or ERISA Section 406. (d) Each plan, fund or arrangement previously sponsored or maintained by MidSouth or MidSouth Bank or to which MidSouth or MidSouth Bank previously made contributions which has been terminated by MidSouth or MidSouth Bank was terminated in accordance with ERISA, the Code and the terms of such plan, fund or arrangement and no event has occurred and no condition exists that would subject Holding, Bank, MidSouth or MidSouth Bank to any tax, penalty, fine or other liability as a result of, directly or indirectly, the termination of such plan, fund or arrangement. 4.14 Insurance Policies. Each member of MidSouth's consolidated group maintains in force insurance policies and bonds in such amounts and against such liabilities and hazards as are considered adequate. No member of Holding's consolidated group is now liable, nor will any such member become liable, for any material retroactive premium adjustment. All policies are valid and enforceable and in full force and effect, and no member of MidSouth's consolidated group has received any notice of a material premium increase or cancellation with respect to any of its insurance policies or bonds. Within the last three years, no member of MidSouth's consolidated group has been refused any insurance coverage sought or applied for, and no such member has reason to believe that its existing insurance coverage cannot be renewed as and when the same shall expire, upon terms and conditions as favorable as those presently in effect. 4.15 Agreements. No member of MidSouth's consolidated group is a party to: (a) any collective bargaining agreement; (b) any obligation of guaranty or indemnification except, if entered into in the ordinary course of business with respect to customers or any member of MidSouth's consolidated group, letters of credit, guaranties of endorsements and guaranties of signatures; (c) any agreement, contract or commitment which is or may be materially adverse to the financial condition, results of operations, business or prospects of any member of MidSouth's consolidated group; or (d) any agreement, contract or commitment containing any covenant limiting the freedom of any member of MidSouth's consolidated group to engage in any line of business or to compete with any person. No member of MidSouth's consolidated group has in any material respect breached, nor is there any pending or threatened claims that it has materially breached, any of the terms or conditions of any of its agreements, contracts or commitments. 4.16 Licenses, Franchises and Governmental Authorizations. Each member of MidSouth's consolidated group possesses all licenses, franchises, permits and other governmental authorizations necessary for the continued conduct of its business without interference or interruption. The deposits of each such member are insured by the FDIC to the extent provided by applicable law, and there are no pending or threatened proceedings to revoke or modify that insurance or for relief under 12 U.S.C. Section 1818. 4.17 Environmental Matters. (a) (i) MidSouth and each member of MidSouth's consolidated group has obtained all material permits, licenses and other authorizations that are required to be obtained by it under any applicable Environmental Law Requirements (as hereinafter defined) in connection with the operation of its businesses and ownership of its properties (collectively, the "Subject Properties"), including without limitation properties acquired by foreclosure or in settlement of loans; (ii) MidSouth and each member of its consolidated group is in compliance in all material respects with all terms and conditions of such permits, licenses and authorizations and with all applicable Environmental Law Requirements; (iii)There are no past or present events, conditions, circumstances, activities or plans by any member of MidSouth's consolidated group related in any manner to MidSouth or any member of its consolidated group or the Subject Properties that did or would, in any material respect, violate or prevent compliance or continued compliance with any of the Environmental Law Requirements, or give rise to any Environmental Liability, as hereinafter defined; (iv) There is no civil, criminal or administrative action, suit, demand, claim, order, judgment, hearing, notice or demand letter, notice of violation, investigation or proceeding pending or, to the knowledge of any executive officer of MidSouth or MidSouth Bank, threatened by any person against MidSouth or any member of its consolidated group, or any prior owner of any of the Subject Properties and relating to the Subject Properties, and relating in any way to any Environmental Law Requirement or seeking to impose any Environmental Liability; and (v) No member of MidSouth's consolidated group is subject to or responsible for any material Environmental Liability that is not set forth and adequately reserved against on the Latest Balance Sheet. (b) "Environmental Law Requirement" means all applicable statutes, regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations, concessions, franchises, and similar items, of all governmental agencies, departments, commissions, boards, bureaus, or instrumentalities of the United States, states and political subdivisions thereof and all applicable judicial, administrative, and regulatory decrees, judgments and orders relating to the protection of human health or the environment, including without limitation: (A) all requirements, including but not limited to those (i) pertaining to reporting, licensing, permitting, investigation, and remediation of emissions, discharges, releases, or threatened releases of Hazardous Materials (as such term is defined below), chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials, chemical substances, pollutants, contaminants, or hazardous or toxic substances, materials or wastes, whether solid, liquid, or gaseous in nature; (B) all requirements pertaining to protection of the health and safety of employees or the public; and (C) all requirements pertaining to the (i) drilling, production, and abandonment of oil and gas wells, (ii) the transportation of produced oil and gas, and (iii) the remediation of sites related to that drilling, production or transportation. (c) "Hazardous Materials" shall mean: (A) Any "hazardous substance" as defined by either the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 USC Section 9601, et seq.) ("CERCLA") as amended from time to time, or re- gulations promulgated thereunder; (B) asbestos; (C) polychlorinated biphenyls; (D) any "regulated substance" as defined by 40 C.F.R. Section 280.12, or La. Admin. Code 33:XI.103; (E) any naturally occurring radioactive material ("NORM"), as defined by La. Admin. Code 33:XV, Chapter 14, as amended from time to time, irrespective of whether the NORM is located in Louisiana or another jurisdiction; (F) any non-hazardous oilfield wastes ("NOW") defined under La. R.S. 30 :1, et seq., and regulations promulgated thereunder, irrespec- tive of whether those wastes are located in Louisiana or another jurisdiction; (G) any substance the presence of which on the Subject Properties is prohibited by any lawful rules and re- gulations of legally constituted authorities from time to time in force and effect relating to the Subject Properties; and (H) any other substance which by any such rule or regulation requires special handling in its collection, storage, treatment or disposal. (d) "Environmental Liability" shall mean (i) any liability or obligation (of any kind whatsoever, whether absolute or contingent, accrued or unaccrued, known or unknown) arising under any Environmental Law Requirement, or (ii) any liability or obligation (of any kind whatsoever, whether absolute or contingent, accrued or unaccrued, known or unknown) under any other theory of law or equity (including without limitation any liability for personal injury, property damage or remediation) that results from, or is based upon or related to, the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any Hazardous Materials, pollutant, contaminant, chemical, or industrial, toxic or hazardous substance or waste. 4.18 Community Reinvestment Act; Fair Lending. MidSouth Bank has complied in all material respects with the provisions of the Community Reinvestment Act ("CRA") and the rules and regulations thereunder, has a CRA rating of not less than "satisfactory", and has received no material criticism from regulators with respect to discriminatory lending practices. 4.19 Legality of MidSouth Securities. All shares of Preferred Stock to be issued pursuant to this Agreement have been duly authorized and, when issued pursuant to this Agreement will be validly issued, fully paid and non-assessable. 4.20 Brokers' or Finders' Fees. No agent, broker, investment banker, investment or financial advisor or other person acting on behalf of MidSouth or MidSouth Bank is entitled to any commission, broker's or finder's fee from any of the parties hereto in connection with any of the transactions contemplated by this Agreement. 4.21 Accuracy of Statements. No warranty or representation made or to be made by any member of Holding's consolidated group in this Agreement, and no information furnished by any such member pursuant to this Agreement, contains or will contain, as of the date of this Agreement, the effective date of the Registration Statement (as defined in subsection 5.16 hereof) and the Closing Date, an untrue statement of a material fact or an omission of a material fact necessary to make the statements contained herein and therein, in light of the circumstances in which they are made, not misleading. SECTION 5 Covenants and Conduct of Parties Prior to the Effective Date The parties covenant and agree with each other as follows: 5.1 Cooperation and Best Efforts. Each of the parties will cooperate with the other parties and use its best efforts to (a) procure all necessary consents and approvals, (b) complete all necessary filings, registrations and certificates, (c) satisfy all requirements prescribed by law for, and all conditions set forth in this Agreement to, the consummation of the Mergers and the transactions contemplated hereby and by the Bank Merger Agreement, and (d) effect the transactions contemplated by this Agreement and the Bank Merger Agreement at the earliest practicable date. 5.2 Information for, and Preparation of, Proxy Statement. (a) Each of the parties will cooperate in the preparation of the Registration Statement referred to in subsection 5.16 and a proxy statement of Holding (the "Proxy Statement"), which complies with the requirements of the Securities Act of 1933 (the "Securities Act"), for the purpose of submitting this Agreement and the transactions contemplated hereby to MidSouth's and Holding's shareholders for approval. Each of the parties will as promptly as practicable after the date hereof furnish all such data and information relating to it and its subsidiaries as any of the other parties may reasonably request for the purpose of including such data and information in the Proxy Statement and the Registration Statement. (b) MidSouth will indemnify Holding and Bank, each of their directors and officers, and each controlling person of Holding within the meaning of the Securities Act against any claims insofar as they arise out of or are based upon an untrue statement or omission or alleged untrue statement or omission of material fact in the Registration Statement or the Proxy Statement, and will reimburse each such person for expenses reasonably incurred in connection with investigating or defending any such claim; provided, that MidSouth will not be liable to the extent that any such claim arises out of or is based upon any untrue statement or omission or alleged untrue statement or omission made in reliance on and in conformity with information furnished to MidSouth by Holding. (c) Any indemnified person wishing to claim indemnification under paragraph (b), upon learning of any claim, shall promptly notify MidSouth thereof. MidSouth shall have the right to assume the defense thereof and shall not be liable for any expenses subsequently incurred by such indemnified person in connection with the defense thereof, except that if MidSouth does not assume such defense, or counsel for the indemnified person advises in writing that there are material substantive issues that raise conflicts of interest between MidSouth and the indemnified person, the indemnified person may retain counsel satisfactory to him, and MidSouth shall pay all reasonable fees and expenses of such counsel, provided that (i) MidSouth shall be obligated to pay for only one counsel for all indemnified persons in any jurisdiction, (ii) the indemnified persons will cooperate in the defense of any such claim, and (iii) MidSouth shall not be liable for any settlement effected without its prior written consent. 5.3 Approval of Bank Merger Agreement. MidSouth, as the sole shareholder of MidSouth Bank, and Holding, as the sole shareholder of Bank, shall take all action necessary to effect shareholder approval of the Bank Merger Agreement. 5.4 Press Releases. MidSouth and Holding will cooperate with each other in the preparation of any press releases announcing the execution of this Agreement or the consummation of the transactions contemplated hereby. Without the prior written consent of the chief executive officer of MidSouth, no member of Holding's consolidated group will issue any press release or other written statement for general circulation relating to the transactions contemplated hereby, except as may otherwise be required by law. 5.5 [LEFT BLANK INTENTIONALLY] 5.6 Investigations; Planning. The parties shall continue to provide to each other and to their authorized representatives full access during all reasonable times to their premises, properties, books and records (including, without limitation, all corporate minutes and stock transfer records), and to furnish such financial and operating data and other information of any kind respecting their business and properties as the others shall from time to time reasonably request. Any investigation shall be conducted in a manner which does not unreasonably interfere with the operation of the business of a party. Each member of Holding's consolidated group agrees to cooperate with MidSouth and MidSouth Bank in connection with planning for the efficient and orderly combination of the parties and the operation of MidSouth and MidSouth Bank after consummation of the Mergers. In the event of termination of this Agreement prior to the Effective Date, each party shall return, without retaining copies thereof, all confidential or non-public documents, work papers and other materials obtained from the others in connection with the transactions contemplated hereby and, for a period of not less than two years following such termination, shall keep such information confidential, not disclose such information to any other person or entity except as may be required by legal process, and not use such information in connection with its business, in each case unless and until such information shall come into the public domain through no fault of such party. 5.7 Preservation of Business. Each party will use its best efforts to preserve the possession and control of all of its assets other than those consumed or disposed of for value in the ordinary course of business, to preserve the goodwill of customers and others having business relations with it and to do nothing knowingly to impair its ability to keep and preserve its business as it exists on the date of this Agreement. 5.8 Conduct of Business in the Ordinary Course. Each member of Holding's consolidated group shall conduct its business only in the ordinary course and, except as otherwise provided herein, it shall not, without the prior written consent of the chief executive officer of MidSouth or his duly authorized designee: (a) declare, set aside, increase or pay any dividend, or declare or make any distribution on, or directly or indirectly combine, redeem, reclassify, purchase, or otherwise acquire, any shares of its capital stock or authorize the creation or issuance of or issue any additional shares of its capital stock or any securities or obligations convertible into or exchangeable for its capital stock, provided that this subparagraph shall not apply to prevent dividends or distributions from any member of Holding's consolidated group to any other member of such consolidated group; (b) amend its articles of incorporation or association or by-laws or adopt or amend any resolution or agreement concerning indemnification of its directors or officers; (c) enter into or modify any agreement so as to require the payment, conditionally or otherwise, of any salary, bonus, extra compensation, pension or severance payment to any of its present or former directors, officers or employees or increase the compensation (including salaries, fees, bonuses, profit sharing, incentive, pension, retirement or other similar benefits and payments) of any such person except for budgeted bonuses or other incentive payments in amounts previously disclosed to the Chief Executive office of MidSouth; (d) except in the ordinary course of business consistent with past practices, place or suffer to exist on any of its assets or properties any mortgage, pledge, lien, charge or other encumbrance, except those of the character described in subsection 3.10 hereof, or cancel any material indebtedness owing to it or any claims which it may have possessed, or waive any right of substantial value or discharge or satisfy any material noncurrent liability; (e) merge or consolidate with another entity, or sell or otherwise dispose of a substantial part of its assets or, except in the ordinary course of business consistent with past practices, sell any of its assets; (f) commit or omit to do any act which act or omission would cause a breach of any covenant of Holding or Bank contained in this Agreement or would cause any representation or warranty of Holding or Bank contained in this Agreement to become untrue, as if each such representation and warranty were continuously made from and after the date hereof; (g) violate in any material respect any law, statute, rule, governmental regulation or order; (h) fail to maintain its books, accounts and records in the usual manner on a basis consistent with that heretofore employed; (i) fail to pay, or to make adequate provision for the payment of, all taxes, interest payments and penalties due and payable (and/or accruable for all periods up to the Effective Date, including that portion of its fiscal year to and including the Effective Date) to any city, parish, state, foreign country, the United States or any other taxing authority, except those being contested in good faith by appropriate proceedings and for which sufficient reserves have been established; (j) acquire or dispose of investment securities having an aggregate market value greater than 10% of the aggregate book value of its investment securities portfolio on the date of the Latest Balance Sheet; acquire any investment securities that are less than investment grade; or acquire or dispose of investment securities except in the ordinary course of business; (k) enter into any new line of business; (l) charge off (except as may otherwise be required by law or by regulatory authorities or by generally accepted accounting principles consistently applied) or sell (except for a price not less than the book value thereof) any of the its portfolio of loans, discounts or financing leases; or sell any asset held as other real estate or other foreclosed assets for an amount less than 100% of its book value at the date of the Latest Balance Sheet; or sell any asset held as other real estate or other foreclosed assets that had a book value at the date of the Latest Balance Sheet in excess of $25,000; or (m) make any extension of credit which, when added to all other extensions of credit to the borrower and its affiliates, would exceed $100,000 or, unless reasonable prior notice is provided to the chief executive officer of MidSouth or his authorized designee, commit or otherwise become obligated to make any extension of credit in excess of $50,000. 5.9 Additional Information. Each party will provide the other (a) with prompt written notice of any material adverse change in the financial condition, results of operations, business or prospects of any member of its consolidated group, (b) as soon as they become available, copies of any financial statements, reports and other documents of the type referred to in Section 3 or 4 with respect to each member of its consolidated group, and (c) promptly upon its dissemination, any report disseminated to its shareholders. 5.10 Holding Shareholder Approval. Holding's Board of Directors shall submit this Agreement to its shareholders for approval in accordance with the BCL at a special meeting of shareholders duly called and convened for that purpose as soon as practicable. 5.11 Loan Policy. No member of Holding's consolidated group will make any loans, or enter into any commitments to make loans, which vary from its written loan policies, a true and correct copy of which loan policies have been provided to MidSouth, provided that this covenant shall not prohibit Bank from extending or renewing credit or loans in connection with the workout or renegotiation of loans currently in its loan portfolio. 5.12 Prohibited Negotiations. (a) Prior to the Effective Date or until the termination of this Agreement, no member of Holding's consolidated group shall, without the prior approval of the chief executive officer of MidSouth or his designee, directly or indirectly, solicit, initiate or encourage inquiries or proposals with respect to, or furnish any information relating to, or participate in any negotiations or discussions concerning, any transaction of the type that is referred to in clauses (B)(i)(ii) and (iii) of subparagraph (e) of subsection 7.01 of this Agreement (and in no event will any such information be supplied except pursuant to a confidentiality agreement), and each such member shall instruct its officers, directors, agents and affiliates to refrain from doing any of the above, and will notify MidSouth immediately if any such inquiries or proposals are received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated with, it or any of its officers directors, agents and affiliates; provided, however, that nothing contained herein shall be deemed to prohibit any officer or director of Holding or Bank from taking any action that in the written opinion of counsel is required by law or is required to discharge his fiduciary duties to Holding's consolidated group and its shareholders. (b) Neither the Board of Directors of Holding nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to MidSouth, the approval or recommendation to shareholders of this Agreement or the Mergers, (ii) approve or recommend, or propose to recommend, any takeover proposal with respect to Holding or Bank, except such action that is required in the written opinion of its counsel to discharge his or her fiduciary duties to Holding's shareholders, or (iii) modify or waive or release any party from any provision of, or fail to enforce any provision of, if MidSouth requests such enforcement, any confidentiality agreement entered into by Holding or Bank with any prospective acquiror after the date of this Agreement or within two years prior to such date. 5.13 Operating Functions. Each member of Holding's consolidated group agrees to cooperate in the consolidation of appropriate operating functions with MidSouth and MidSouth Bank to be effective on the Effective Date, provided that the foregoing shall not be deemed to require any action which, in the opinion of such member's Board of Directors, would adversely affect its operations if the Mergers were not consummated. 5.14 Application to Regulatory Authorities. MidSouth shall prepare, as promptly as practicable, all regulatory applications and filings which are required to be made with respect to the Mergers. 5.15 Benefits Provided to Employees of Holding's Consolidated Group. From and after the Effective Date, MidSouth and MidSouth Bank shall offer to all persons who were employees of Holding or Bank immediately prior to the Effective Date and who become employees of MidSouth or MidSouth Bank immediately following the Effective Date, the same employee benefits (including benefits under MidSouth's retirement, 401(k), flexible benefit, vacation, severance and sick leave plans or policies) as are offered by MidSouth or MidSouth Bank, as the case may be, to its employees, except that there shall be no waiting period for coverage under any of its plans and no employee who is in an active employee on the Effective Date shall be denied benefits under such plans for a pre-existing condition. Full credit shall be given for prior service by such employees with Holding or Bank for eligibility and vesting purposes under all of their benefit plans and policies, except that credit for prior service shall not be given for eligibility, vesting or benefit accrual purposes under MidSouth's Retirement Plan. All benefits accrued through the Effective Date under benefit plans of Holding or Bank shall be paid by MidSouth or MidSouth Bank, as the case may be, to the extent such benefits are not otherwise provided to such employees through the benefit plans of MidSouth or MidSouth Bank, as the case may be. MidSouth and MidSouth Bank shall not be obligated to continue any employee benefit or ERISA Plan maintained by Holding or Bank. 5.16 MidSouth Registration Statement and Listing of Preferred Stock. MidSouth will prepare and file on Form S-4 a registration statement (the "Registration Statement") under the Securities Act (which will include the Proxy Statement) complying with all the requirements of the Securities Act applicable thereto, for the purpose, among other things, of registering the Preferred Stock which will be issued to the holders of Holding Common Stock pursuant to the Company Merger. MidSouth shall use its best efforts to cause the Registration Statement to become effective as soon as practicable, to qualify the Preferred Stock under the securities or blue sky laws of such jurisdictions as may be required and to keep the Registration Statement and such qualifications current and in effect for so long as is necessary to consummate the transactions contemplated hereby. MidSouth will use its best efforts to cause the Preferred Stock to be listed for trading on the American Stock Exchange Emerging Companies market. SECTION 6 Conditions of Closing 6.1 Conditions of All Parties. The obligations of each of the parties hereto to consummate the Mergers are subject to the satisfaction of the following conditions at or prior to the Closing: (a) Shareholder Approval. This Agreement shall have been duly approved by the shareholders of MidSouth and Holding, and this Agreement and the Bank Merger Agreement shall have been duly approved by Holding, as the sole shareholder of Bank and by MidSouth as sole shareholder of MidSouth Bank. (b) Effective Registration Statement. The Registration Statement shall have become effective prior to the mailing of the Proxy Statement, no stop order suspending the effectiveness of the Registration Statement shall have been issued, and no proceedings for that purpose shall have been instituted or, to the knowledge of any party, shall be contemplated, and MidSouth shall have received all state securities law permits and authorizations necessary to consummate the transactions contemplated hereby. (c) No Restraining Action. No action or proceeding shall have been threatened or instituted before a court or other governmental body to restrain or prohibit the transactions contemplated by the Bank Merger Agreement or this Agreement or to obtain damages or other relief in connection with the execution of such agreements or the consummation of the transactions contemplated hereby or thereby; and no governmental agency shall have given notice to any party hereto to the effect that consummation of the transactions contemplated by the Bank Merger Agreement or this Agreement would constitute a violation of any law or that it intends to commence proceedings to restrain consummation of either of the Mergers. (d) Statutory Requirements and Regulatory Approval. All statutory requirements for the valid consummation of the transactions contemplated by the Bank Merger Agreement and this Agreement shall have been fulfilled; all appropriate orders, consents and approvals from all regulatory agencies and other governmental authorities whose order, consent or approval is required by law for the consummation of the transactions contemplated by this Agreement and the Bank Merger Agreement shall have been received; and the terms of all requisite orders, consents and approvals shall then permit the effectuation of the Mergers without imposing any material conditions with respect thereto except for any such conditions that are acceptable to MidSouth and MidSouth Bank. (e) Accountant's Letters. The parties shall have received an opinion from DeLoitte & Touche, dated as of the Closing Date, to the effect that the Mergers will constitute a reorganization within the meaning of Section 368(c) of the Code and that the shareholders of Holding will recognize no gain or loss with respect to the shares of Preferred Stock received on consummation of the Company Merger. 6.2 Additional Conditions of MidSouth and MidSouth Bank. The obligation of MidSouth and MidSouth Bank to consummate the Mergers are also subject to the satisfaction of the following additional conditions at or prior to the Closing: (a) Representations, Warranties and Covenants. Each of the representations and warranties of Holding and Bank contained in this Agreement shall be true and correct on the Closing Date, with the same effect as though made at such date, except to the extent of changes permitted by the terms of this Agreement, and each of Holding and Bank shall have performed all obligations and complied with all covenants required by this Agreement and the Bank Merger Agreement to be performed or complied with by it at or prior to the Closing. In addition, each of Holding and Bank shall have delivered to MidSouth and MidSouth Bank its certificate dated as of the Closing Date and signed by its chief executive officer and chief financial officer to the effect that, except as specified in such certificate, such persons do not know, and have no reasonable grounds to know, of any material failure or breach of any representation, warranty or covenant made by it in this Agreement. (b) No Material Adverse Change. There shall not have occurred any material adverse change from the date of the Latest Balance Sheet to the Closing Date in the financial condition, results of operations, business or prospects of Holding's consolidated group. (c) Opinion of Counsel. MidSouth shall have received from McGlinchey Stafford Lang, A Law Corporation, counsel for Holding's consolidated group, an opinion dated as of the Closing Date, in form and substance satisfactory to MidSouth and MidSouth Bank, to the effect set forth in Exhibit D to this Agreement. (d) Joinder of Shareholders; Confirmation. Within 5 days prior to the mailing of the Proxy Statement a Joinder of Shareholders in the form of Exhibit E annexed hereto ("Joinder of Shareholders") shall have been executed by each person who serves as an executive officer or director of Holding or Bank or who owns 5% or more of the Holding Common Stock outstanding; and MidSouth shall have received from each person who executes a Joinder of Shareholders a written confirmation dated not earlier than 5 days prior to the Closing Date to the effect that each representation made by such person in the Joinder of Shareholders is true and correct as of the date of such confirmation and that such person has complied with all of his or her covenants therein through the date of such confirmation. (e) Accountants' Letters. MidSouth and MidSouth Bank shall have received letters from Mixon, Roy, Metz & Mixon, independent public accountants for Holding, dated, respectively, the date of the Proxy Statement and immediately prior to the Closing Date, in form and substance satisfactory to MidSouth and MidSouth Bank, to the effect set forth in Exhibit F to this Agreement. (f) Tier 1 Capital. MidSouth shall have received satisfactory assurances from the Federal Reserve Board or delegated authority that the Series A Preferred Stock will be treated as Tier 1 Capital of MidSouth for purposes of the capital adequacy guidelines of the Federal Reserve Board, provided that if this condition is not met as a result of any term or provision of the Series A Preferred Stock, MidSouth shall propose a revision of such term or provision that would cause the Series A Preferred Stock to be treated as Tier 1 Capital and Holding shall have 15 days from receipt of such proposal to accept it and permit this condition to be met. 6.3 Additional Conditions of Holding and Bank. The obligations of Holding and Bank to consummate the Mergers are also subject to the satisfaction of the following additional conditions at a prior to the Closing: (a) Representations, Warranties and Covenants. Each of the representations and warranties of MidSouth and MidSouth Bank contained in this Agreement shall be true and correct on the Closing Date, with the same effect as though made at such date, except to the extent of changes permitted by the terms of this Agreement, and MidSouth and MidSouth Bank shall have performed all obligations and complied with all covenants required by this Agreement and the Bank Merger Agreement to be performed or complied with by it at or prior to the Closing. In addition, MidSouth and MidSouth Bank shall have delivered to Holding and Bank its certificate dated as of the Closing Date and signed by its chief executive officer and chief financial officer to the effect that, except as specified in such certificate, such persons so not know, and have no reasonable grounds to know, of any material failure or breach of any representation, warranty or covenant made by it in this Agreement. (b) Opinion of Counsel. Holding shall have received from Correro, Fishman & Casteix, counsel for MidSouth and MidSouth Bank, an opinion, dated as of the Closing Date, in form and substance satisfactory to Holding and Bank, to the effect set forth in Exhibit G to annexed to this Agreement. 6.4 Waiver of Conditions. Any condition to a party's obligations hereunder may be waived by that party, other than the conditions specified in subparagraphs (a), (b) and (d) of subsection 6.1. The failure to waive any condition hereunder shall not be deemed a breach of subsection 5.2 hereof. SECTION 7 Termination 7.1 Termination. This Agreement may be terminated at any time before the time at which the Mergers become effective: (a) Mutual Consent. By the mutual consent of the Boards of Directors of MidSouth and Holding. (b) Material Breach. By the Board of Directors of either MidSouth or Holding in the event of a material breach by any member of the consolidated group of the other of them of any representation or warranty contained in this Agreement or of any covenant contained in this Agreement, which in either case cannot be cured within 10 days after written notice of such breach is given to the entity committing such breach, provided that the right to effect such cure shall not extend beyond the date set forth in subparagraph (c) below. (c) Abandonment. By the Board of Directors of either MidSouth or Holding if (i) all conditions to Closing required by Section 6 have not been met or waived by June 30, 1995, or (ii) any such condition cannot be met by such date and has not been waived by each party in whose favor such condition runs or (iii) the Mergers have not occurred by such date. (d) Dissenting Shareholders. By the Board of Directors of MidSouth, if the number of shares of Holding Common Stock as to which the holders thereof are, at the time of the Closing, legally entitled to assert dissenting shareholder's rights exceeds 5% of the total number of shares of Holding Common Stock issued and outstanding on the Closing Date. (e) Holding Recommendation. By the Board of Directors of MidSouth if the Board of Directors of Holding (A) shall withdraw, modify or change its recommendation to its shareholders of this Agreement or the Mergers or shall have resolved to do any of the foregoing; (B) shall have recommended to the shareholders of Holding (i) any merger, consolidation, share exchange, business combination or other similar transaction (other than the transactions contemplated by this Agreement), (ii) any sale, lease, transfer or other disposition of all or substantially all of the assets of any member of Holding's consolidated group, or (iii) any acquisition, by any person or group, of the beneficial ownership of one-third or more of any class of Holding capital stock; or (C) shall have made any announcement of a proposal, plan or intention to do any of the foregoing or agreement to engage in any of the foregoing. 7.2 Effect of Termination; Survival. Upon termination of this Agreement pursuant to this Section 7, the Bank Merger Agreement shall also terminate, and this Agreement and the Bank Merger Agreement shall be void and of no effect, and there shall be no liability by reason of this Agreement or the Bank Merger Agreement, or the termination thereof, on the part of any party or their respective directors, officers, employees, agents or shareholders except for any liability of a party hereto arising out of a breach of any representation, warranty or covenant in this Agreement prior to the date of termination or any covenant that survives pursuant to the following sentence. The following provisions shall survive any termination of this Agreement: the last sentence of subsection 5.6; subsection 7.2; and subsection 9.3. SECTION 8 Indemnification of Directors and Officers of Holding and Bank 8.1 From and after the Effective Time of the Mergers, MidSouth and MidSouth Bank agree to indemnify and hold harmless each person who is or was at any time since December 31, 1992 an officer or director of Holding or Bank (an "Indemnified Person") from and against all damages, liabilities, judgments and claims (and related expenses, including, but not limited to, attorneys' fees and amounts paid in settlement) based upon or arising from his capacity as an officer or director of Holding or Bank, to the same extent as he would have been indemnified under the articles of association (or articles of incorporation) or bylaws of Holding or Bank, as appropriate, as such articles of association (or articles of incorporation) or bylaws were in effect on the date of execution of this Agreement. 8.2 The rights granted to the Indemnified Persons hereby will be contractual rights inuring to the benefit of all Indemnified Persons and shall survive this Agreement and any merger, consolidation or reorganization of MidSouth or MidSouth Bank. 8.3 The rights to indemnification granted by this Section 8 are subject to the following limitations: (a) the total aggregate indemnification to be provided by MidSouth and MidSouth Bank pursuant to Section 8.1 hereof will not exceed, as to all of the Indemnified Persons described herein as a group, the sum of $1.2 million and MidSouth and MidSouth Bank will have no responsibility to any Indemnified Person for the manner in which such sum is allocated among that group (but the Indemnified Persons may seek reallocation among themselves); (b) a director of officer who would otherwise be an Indemnified Person under this Section 8 shall not be entitled to the benefits hereof unless such director or officer has executed a Joinder of Shareholders; (c) amounts otherwise required to be paid by MidSouth or MidSouth Bank to an Indemnified Person pursuant to this Section 8 will be reduced by any amounts that such Indemnified Person recovers by virtue of the claim for which indemnification is sought; (d) no Indemnified Person shall be entitled to indemnification for any claim made or threatened prior to the Closing Date of which such Indemnified Person, Holding or Bank was aware but did not disclose to MidSouth prior to the execution of this Agreement, if the claim or threatened claim was known on or before such time, or prior to the Closing Date, if such claim became known after execution of this Agreement; and (e) any claim for indemnification pursuant to this Section 8 must be submitted in writing to the Chief Executive Officer of MidSouth within five years of the date of this Agreement. 8.4 MidSouth and MidSouth Bank agree that the indemnification limits set forth in Section 8.3(a) will not apply to any damages, liabilities, judgments and claims (and related expenses, including, but not limited to, attorney's fees and amounts paid in settlement) insofar as they are subject to the provisions of subsections 5.2(b) and (c). SECTION 9 Miscellaneous 9.1 Notices. Any notice, communication, request, reply, advice or disclosure (hereinafter severally and collectively called "notice") required or permitted to be given or made by any party to another in connection with this Agreement or the Bank Merger Agreement or the transactions herein or therein contemplated must be in writing and may be given or served by depositing the same in the United States mail, postage prepaid and registered or certified with return receipt requested, or by delivering the same to the address of the person or entity to be notified, or by sending the same by a national commercial courier service (such as Federal Express, Emery Air Freight, Network Courier, Purolator or the like) for next-day delivery, provided such delivery is confirmed in writing by such courier. Notice deposited in the mail in the manner hereinabove described shall be effective 48 hours after such deposit, and notice delivered in person or by commercial courier shall be effective at the time of delivery. A party delivering notice shall endeavor to obtain a receipt therefor. For purposes of notice, the addresses of the parties shall, until changed as hereinafter provided, be as follows: If to MidSouth or MidSouth Bank: MidSouth Bancorp, Inc. 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 Attention: C. R. Cloutier With copies to: Correro, Fishman & Casteix, L.L.P. 47th Floor Place St. Charles New Orleans, Louisiana 70170 Attention: Anthony J. Correro, III If to Holding or Bank: Sugarland Bancshares, Inc. 1527 W. Main Street Jeanerette, Louisiana 70544 Attention: D. J. Tranchina With copies to: McGlinchey Stafford Lang 643 Magazine Street New Orleans, Louisiana 70130 Attention: Bennet S. Koren or such substituted persons or addresses of which any of the parties may give notice to the other in writing. 9.2 Waiver. The failure by any party to enforce any of its rights hereunder shall not be deemed to be a waiver of such rights, unless such waiver is an express written waiver which has been signed by the waiving party and expressly approved by its Board of Directors. Waiver of any one breach shall not be deemed to be a waiver of any other breach of the same or any other provision hereof. 9.3 Expenses. Regardless of whether the Mergers are consummated, all expenses incurred in connection with this Agreement and the Bank Merger Agreement and the transactions contemplated hereby and thereby shall be borne by the party incurring them, except as otherwise provided herein. 9.4 Headings. The headings in this Agreement have been included solely for reference and shall not be considered in the interpretation or construction of this Agreement. 9.5 Exhibits and Schedules. The exhibits and schedules to this Agreement are incorporated herein by this reference and expressly made a part hereof. 9.6 Integrated Agreement. This Agreement, the Bank Merger Agreement, the exhibits and schedules hereto and all other documents and instruments delivered in accordance with the terms hereon constitute the entire understanding and agreement among the parties hereto with respect to the subject matter hereof, and there are no agreements, understanding, restrictions, representations or warranties among the parties other than those set forth herein or therein or herein or therein provided for, all prior agreements and understandings being superseded hereby. 9.7 Choice of Law. The validity of this Agreement and the Bank Merger Agreement, the construction of their terms and the determination of the rights and duties of the parties hereto in accordance therewith shall be governed by and construed in accordance with the laws of the United States and those of the State of Louisiana applicable to contracts made and to be performed wholly within such State. 9.8 Parties in Interest. This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, except that this Agreement may not be transferred or assigned by any member of Holding's consolidated group without the prior written consent of MidSouth, including any transfer or assignment by operation of law. Nothing in this Agreement or the Bank Merger Agreement is intended or shall be construed to confer upon or to give any person other than the parties hereto any rights or remedies under or by reason of this Agreement or the Bank Merger Agreement, except as expressly provided for herein and therein. 9.9 Amendment. The parties may, by mutual agreement of their respective Boards of Directors, amend, modify or supplement this Agreement, the Bank Merger Agreement, or any exhibit or schedule of any of them, in such manner as may be agreed upon by the parties in writing, at any time before or after approval of this Agreement and the Bank Merger Agreement and the transactions contemplated hereby and thereby by the shareholders of the parties hereto. This Agreement and any exhibit or schedule to this Agreement may be amended at any time and, as amended, restated by the chief executive officers of the respective parties (or their respective designees) without the necessity for approval by their respective Boards of Directors or shareholders, to correct typographical errors or to change erroneous references or cross references, or in any other manner which is not material to the substance of the transactions contemplated hereby. 9.10 Counterparts. This Agreement may be executed by the parties in one or more counterparts, all of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. MIDSOUTH BANCORP, INC. SUGARLAND BANCSHARES, INC. By: By: C. R. Cloutier D. J. Tranchina President President MIDSOUTH NATIONAL BANK SUGARLAND STATE BANK By: By: C. R. Cloutier D. J. Tranchina President President EXHIBIT A AGREEMENT OF MERGER OF SUGARLAND STATE BANK INTO MIDSOUTH NATIONAL BANK This Agreement of Merger (this "Agreement") is made and entered into as of this ______ day of December, 1994, between Sugarland State Bank, a Louisiana state banking association domiciled at Jeanerette, Louisiana ("Bank"),and MidSouth National Bank, a national banking association domiciled at Lafayette, Louisiana ("MidSouth Bank" or the "Receiving Association"). WHEREAS, the respective Boards of Directors of Bank and MidSouth Bank (collectively called the "Merging Associations") deem it advisable that Bank be merged with and into MidSouth Bank (the "Bank Merger"), as provided in this Agreement and in the Agreement and Plan of Merger dated ________, 1994 (the "Plan"), among the Merging Associations, Sugarland Bancshares, Inc., a Louisiana corporation ("Holding") of which Bank is a wholly owned subsidiary, and MidSouth Bancorp, Inc., a Louisiana corporation, of which MidSouth Bank is a wholly owned subsidiary, which sets forth, among other things, certain representations, warranties, covenants and conditions relating to the Bank Merger; and WHEREAS, the respective Boards of Directors of the Merging Associations wish to enter into this Agreement and submit it to the respective shareholders of the Merging Associations for approval in the manner required by law and, subject to said approval and to approval by the Office of the Comptroller of the Currency being duly given and to such other approvals as may be required by law, to effect the Bank Merger, all in accordance with the provisions of this Agreement. NOW THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and the Bank Merger, the parties hereto agree as follows: 1. The Bank Merger. At the Effective Time (as defined in Section 2 hereof), Bank shall be merged with and into MidSouth Bank under the Articles of Association of MidSouth Bank, as amended, existing Charter No. 18484, pursuant to the provisions of, and with the effect provided in La. R.S. 6:351 et seq. At the Effective Time, MidSouth Bank, the Receiving Association, shall continue to be a national banking association, and its business shall continue to be conducted at its main office in Lafayette, Louisiana, and at its legally established branches (including, without limitation, the legally established offices from which Bank conducted business immediately prior to the Effective Time). The Articles of Association of MidSouth Bank shall not be altered or amended by virtue of the Bank Merger, and the incumbency of the directors and officers of MidSouth Bank shall not be affected by the Bank Merger nor shall any person succeed to such positions by virtue of the Bank Merger. 2. Effective Time. The Bank Merger shall become effective at the time specified in a certificate or other written record issued by the OCC or the OFI, whichever date is later (the "Effective Time"). 3. Cancellation of Capital Stock of Bank. At the Effective Time, by virtue of the Bank Merger, all shares of the capital stock of Bank, other than any such shares as to which dissenters' rights shall exist at the Effective Time, shall be cancelled. 4. Capital Stock of the Receiving Association. The shares of the capital stock of MidSouth Bank, the Receiving Association, issued and outstanding immediately prior to the Effective Time shall, at the Effective Time, continue to be issued and outstanding, and no additional shares of MidSouth Bank shall be issued as a result of the Bank Merger. Therefore, at the Effective Time, the amount of capital stock of MidSouth Bank, the Receiving Association, shall be $1,750,000, divided into 350,000 shares of common stock, par value $5.00 per share. 5. Assets and Liabilities of the Merging Associations. At the Effective Time, the corporate existence of each of the Merging Associations shall be merged into and continued in MidSouth Bank, the Receiving Association, and such Receiving Association shall be deemed to be the same corporation as each bank or banking association participating in the Bank Merger. All rights, franchises, and interests of the individual Merging Associations in and to every type of property (real, personal and mixed) and chooses in action shall be transferred to and vested in the Receiving Association by virtue of the Bank Merger without any deed or other transfer. The Receiving Association, upon the Bank Merger and without any order or other action on the part of any court or otherwise, shall hold and enjoy all rights of property, franchises, and interests, including appointments, designations, and nominations, and all other rights and interests as trustee, executor, administrator, registrar of stocks and bonds, guardian of estates, and in every other fiduciary capacity, in the same manner and to the same extent as such rights, franchises, and interests were held or enjoyed by any one of the Merging Associations at the time of the Bank Merger. The Receiving Association shall, from and after the Effective Time, be liable for all liabilities of the Merging Associations. 6. Shareholder Approval; Conditions; Filing. This Agreement shall be submitted to the shareholders of the Merging Associations for ratification and confirmation in accordance with applicable provisions of law. The obligations of the Merging Associations to effect the Bank Merger shall be subject to all the terms and conditions of the Plan. If the shareholders of the Merging Associations ratify and confirm this Agreement, then the fact of such approval shall be certified hereon by the Secretary of each of the Merging Associations and this Agreement, so approved and certified, shall, as soon as is practicable, be signed and acknowledged by the President or Vice-President of each of them. As soon as may be practicable thereafter, this Agreement, so certified, signed and acknowledged, shall be delivered to the OCC and the OFI for filing in the manner required by law. 7. Miscellaneous. This Agreement may, at any time prior to the Effective Time, be amended or terminated as provided in the Plan. This Agreement may be executed in counterparts, each of which shall be deemed to constitute an original but all of which taken together shall constitute one and the same agreement. This Agreement shall be governed and interpreted in accordance with federal law and the applicable laws of the State of Louisiana. This Agreement may be assigned only to the extent that the party seeking to assign it is permitted to assign its interests in the Plan, and subject to the same effect as any such assignment. The headings in this Agreement are inserted for convenience only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, this Agreement has been executed by a majority of the directors of each of the Merging Associations, as of the day and year first above written. FOR THE BOARD OF DIRECTORS OF SUGARLAND STATE BANK: ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ FOR THE BOARD OF DIRECTORS OF MIDSOUTH NATIONAL BANK: ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ ______________________________ CERTIFICATE OF SECRETARY OF SUGARLAND STATE BANK (a Louisiana state banking association) I hereby certify that I am the duly elected Secretary of Sugarland State Bank, a Louisiana state bank, presently serving in such capacity and that the foregoing Agreement was, in the manner required by law, duly approved, without alteration or amendment, by the sole shareholder of Sugarland State Bank. Certificate dated , 1995. ___________________________________ Secretary CERTIFICATE OF SECRETARY OF MIDSOUTH NATIONAL BANK (a national banking association) I hereby certify that I am the duly elected Secretary of MidSouth National Bank, a national banking association presently serving in such capacity, and that the foregoing Agreement was, in the manner required by law, duly approved, without alteration or amendment, by the sole shareholder of MidSouth National Bank. Certificate dated , 1995. ___________________________________ Secretary EXECUTION BY BANKS Considering the approval of this Agreement by the shareholders of the parties hereto, as certified above, this Agreement is executed by such parties, acting through their respective Presidents, this _____ day of _______________, 1995. SUGARLAND STATE BANK By: ___________________________________ President Attest: ___________________________________ Secretary MIDSOUTH NATIONAL BANK By: ___________________________________ President Attest: ___________________________________ Secretary ACKNOWLEDGMENT AS TO SUGARLAND STATE BANK STATE OF LOUISIANA PARISH OF _______________ BEFORE ME, the undesigned authority, personally came and appeared D. J. Tranchina, who, being duly sworn, declared and acknowledged before me that he is the President of Sugarland State Bank and that in such capacity he was duly authorized to and did execute the foregoing Agreement on behalf of such bank, for the purposes therein expressed and as his and such bank's free act and deed. ___________________________________ Appearer Sworn to and subscribed before me this _____ day of __________, 1995. ___________________________________ Notary Public ACKNOWLEDGMENT AS TO MIDSOUTH NATIONAL BANK STATE OF LOUISIANA PARISH OF LAFAYETTE BEFORE ME, the undersigned authority, personally came and appeared D. J. Tranchina who, being duly sworn, declared and acknowledged before me that he is the President of MidSouth National Bank and that in such capacity he was duly authorized to and did execute the foregoing Agreement on behalf of such bank, for the purposes therein expressed and as his and such bank's free act and deed. ___________________________________ Appearer Sworn to and subscribed before me this _____ day of __________, 1995. ___________________________________ Notary Public EXHIBIT B CERTIFICATE OF MERGER OF SUGARLAND BANCSHARES, INC. WITH AND INTO MIDSOUTH BANCORP, INC. The undersigned corporation, acting pursuant to Section 112F of the Louisiana Business Corporation Law, hereby certifies as follows: First: That the name and state of incorporation of each of the merging corporations is as follows: Name State of Incorporation ___________________ ______________________ Sugarland Bancshares, Inc. Louisiana MidSouth Bancorp, Inc. Louisiana Second: That an Agreement and Plan of Merger between the parties to the merger has been approved, adopted, certified, executed and acknowledged by each of the parties in accordance with the requirements of Section 112 of the Louisiana Business Corporation Law. Third: That the name of the surviving corporation of the merger is MidSouth Bancorp, Inc.. Fourth: That the Articles of Incorporation of MidSouth Bancorp, Inc. shall be the Articles of Incorporation of the surviving corporation. Fifth: That the executed Agreement and Plan of Merger is on file at the principal place of business of MidSouth Bancorp, Inc. located at 102 Versailles Boulevard, Versailles Centre, Lafayette, Louisiana 70501. Sixth: That a copy of the Agreement and Plan of Merger will be furnished by MidSouth on request and without cost to any shareholder of either party to the Merger. Seventh: This Certificate of Merger shall be effective immediately upon its filing with the Secretary of State of Louisiana. This Certificate of Merger is executed by each of the parties, acting through their respective Presidents, this _____ day of __________, 1995. SUGARLAND BANCSHARES, INC. ATTEST: _________________________ By: ______________________ D. J. Tranchina, President MIDSOUTH BANCORP, INC. ATTEST: _________________________ By: ____________________ C. R. Cloutier, President Acknowledgement as to Sugarland Bancshares, Inc. State of Louisiana) Parish of __________) BEFORE ME, the undesigned authority, personally came and appeared D. J. Tranchina, who, being duly sworn, declared and acknowledged before me that he is the President of Sugarland Bancshares, Inc. and that in such capacity he was duly authorized to and did execute the foregoing Certificate of Merger on behalf of such corporation, for the purposes therein expressed and as his and such corporation's free act and deed. _______________________________ Appearer Sworn to and subscribed before me this _____ day of __________, 1995. ___________________________________ NOTARY PUBLIC Acknowledgement as to MidSouth Bancorp, Inc. State of Louisiana) Parish of Lafayette) BEFORE ME, the undesigned authority, personally came and appeared C. R. Cloutier, who, being duly sworn, declared and acknowledged before me that he is the President of MidSouth Bancorp, Inc. and that in such capacity he was duly authorized to and did execute the foregoing Certificate of Merger on behalf of such corporation, for the purposes therein expressed and as his and such corporation's free act and deed. ________________________________ Appearer Sworn to and subscribed before me this _____ day of __________, 1995. ___________________________________ NOTARY PUBLIC EXHIBIT C ARTICLES OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF MIDSOUTH BANCORP, INC. MidSouth Bancorp, Inc., a Louisiana corporation (the "Corporation"), through its undersigned President and Secretary, hereby certifies that: 1. On ________, 1995, the Board of Directors of the Corporation adopted, pursuant to Section 33A of the Louisiana Business Corporation Law (the "LBCL"), the following amendment to Article III of its Amended and Restated Articles of Incorporation (the "Articles of Incorporation") to establish and fix the preferences, limitations and relative rights of a series of preferred stock, and authorized the delivery of these Articles of Amendment to the Secretary of State for filing pursuant to Section 32B of the LBCL. 2. Article III of the Articles of Incorporation is amended to add a new Section E to read in its entirety as follows: "E.Of the 5,000,000 shares of authorized no par value per share Preferred Stock, [187,286] shares shall constitute a separate series of Preferred Stock with the voting powers and the preferences and rights hereinafter set forth. (1)Designation. The series of Preferred Stock created hereunder is designated "Cumulative Convertible Preferred Stock, Series A" (the "Series A Preferred Stock"). (2)Stated Value. The stated value of each share of Series A Preferred Stock is $14.25. (3)Dividend Rights. (a)Except as provided in Subparagraph (ii), (i)the holders of record of the shares of Series A Preferred Stock are entitled to receive, but only when, as and if declared by the Board of Directors, and out of the funds of the Corporation legally available for that purpose, cumulative cash dividends at an annual rate, fixed on December 31 of each year for the ensuing calendar year, equal to the yield for Government Bonds and Notes maturing in December of the following year, as published in the Treasury Bonds, Notes and Bills Section of the last issue of the Wall Street Journal published each year, plus 1% per annum, and no more; provided that, the annual dividend rate shall in no case be greater than 10% nor less than 6%; provided further that, from and after the tenth anniversary of the date of issuance of the Series A Preferred Stock the annual dividend rate shall be fixed at 10%. If more than one yield is shown for December maturities, the average shall be applied. If no yield is quoted for December maturities, the yeild for the next earlier available month shall be applied. From the date of issuance of the Series A Preferred Stock through December 31, 1995, the annual dividend rate shall be ________%. The Corporation by resolution of its Board of Directors shall, to the extent of Legally Available Funds, as defined below, declare a dividend on the Series A Preferred Stock payable quarterly on the first day of April, July, October, and January in each year, or on such earlier dates as the Board of Directors may from time to time fix as the dates for payment of quarterly dividends on the Common Stock, except that any dividend payable on a payment date that is a legal holiday shall be paid on the next succeeding business day. Dividends on each share of Series A Preferred Stock shall be cumulative from the date of original issuance thereof whether or not there shall be funds legally available for the payment of such dividends. Dividends payable on the Series A Preferred Stock (i) for any period other than a full year shall be computed on the basis of a 360-day year consisting of twelve 30- day months and (ii) for each full dividend period shall be computed by dividing the annual dividend rate by four. If any quarterly dividend is not paid when due, the unpaid amount shall bear interest at a rate of 10% per annum until paid. (ii)The first dividend payable on the Series A Preferred Stock shall be paid on the first day of April, July, October or January that is at least 91 days from the date of original issuance of the Series A Preferred Stock and will be in an amount, at the applicable dividend rate, based on the number of days between the date of original issuance and the dividend payment date minus 90 days, provided that the aggregate amount payable (A) will be increased by the amount by which Expenses, as defined below, are less than $110,000 (the "Additional Amount"), or (B) will be reduced by the amount by which Expenses exceed $110,000 ("The Subtracted Amount"). In any case in which (A) the Additional Amount is greater than the dividend that would have been paid for the 90 excluded days set forth above, such excess will be payable on the next succeeding dividend payment date, or (B) the Subtracted Amount is greater than the amount otherwise payable under this paragraph, such excess will be deducted from the amount otherwise payable on the next succeeding dividend payment date. (iii) The term "Expenses" means the actual expenses of Sugarland Bancshares, Inc. ("Sugarland") in connection with the negotiation, execution, implementation and consummation of that certain agreement between Sugarland and the Corporation dated ______________, 1994 (the "Agreement"), including, without limitation, legal, accounting and financial advisory fees and expenses and expenses of printing and mailing Sugarland's proxy statement and holding its shareholders meeting to consider the Agreement. (iv) The term "Legally Available Funds" means such amount of the surplus of the Corporation that may be paid as dividends under the Business Corporation Law of Louisiana as may be provided in cash by MidSouth Bank to the Corporation as a dividend under applicable statutes and regulations of the U. S. Comptroller of the Currency and that would not result in the Corporation or MidSouth Bank having capital ratios, of less than the required regulatory minimum capital ratios, or failing to be "adequately-capitalized" within the meaning of applicable law and regulations or being in violation of any law, regulation or regulatory directive, agreement or order. (b)So long as any shares of the Series A Preferred Stock are outstanding, the Corporation shall not declare, pay or set apart for payment any dividend on any shares of capital stock of the Corporation ranking junior to the Series A Preferred Stock as to dividends or liquidation rights (collectively, "Junior Securities") or make any payment on account of, or set apart for payment money for a sinking or other similar fund, for the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, or make any distribution in respect thereof, either directly or indirectly, whether in cash, other property, obligations or shares of the Corporation (other than distributions or dividends in Junior Securities to the holders of Junior Securities), and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities, unless prior to or concurrently with the payment or setting apart for payment of any dividend on any of the Junior Securities, all accumulated and unpaid dividends on shares of Series A Preferred Stock, and interest thereon, if any, shall have been or shall be paid. (c)If dividends are paid in part and not in full upon the shares of Series A Preferred Stock and on any other Preferred Stock ranking on a parity, as to dividends, with the Series A Preferred Stock, such dividends must be divided pro rata among such parity shares in proportion to the respective dividends accrued and unpaid thereon as of the dividend payment date. (d)Except as otherwise expressly provided in this Section E, holders of shares of the Series A Preferred Stock are not entitled to any dividend, whether payable in cash, property or stock, or any interest, or sum of money in lieu of interest, in respect of any dividend on Series A Preferred Stock which may be in arrears. (4)Redemption. (a)On or after the fifth anniversary of the date of issuance of the Series A Preferred Stock, the Corporation may, at its option, and subject to appropriate approval by the Board of Governors of the Federal Reserve System or delegated authority, redeem the whole or, from time to time, any part of the Series A Preferred Stock at a redemption price per share payable in cash in an amount equal to the sum of (i) $14.25, (ii) all accrued and unpaid dividends on the Series A Preferred Stock to the date fixed for redemption, whether or not earned or declared, and (iii) interest accrued to the date of redemption on all accrued and unpaid dividends on the Series A Preferred Stock, if any. (b)If the Corporation redeems fewer than all of the outstanding shares of Series A Preferred Stock, it must select the shares to be redeemed by lot or pro rata, in such manner as the Board of Directors may determine to be fair and appropriate. The Board of Directors has full power and authority, subject to the limitations and provisions herein contained, to prescribe the manner in which shares of the Series A Preferred Stock are to be redeemed. (c)Notice of redemption must be given by first class mail, postage prepaid, mailed not fewer than 30 nor more than 90 days before the redemption date, to each holder of record of shares to be redeemed, at the holder's address as it appears on the stock register of the Corporation. Each notice must state: (i) the redemption date; (ii) the total number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by the holder are to be redeemed, the number of shares to be redeemed from the holder; (iii) the redemption price; (iv) the place or places where certificates for the shares are to be surrendered for payment of the redemption price; (v) that dividends on the shares to be redeemed will cease to accrue on the redemption date; and (vi) that the holder has the right to convert the shares into Common Stock until the close of business on the fifth day preceding the redemption date at the Conversion Price then in effect and the place where certificates for the shares of the Series A Preferred Stock may be surrendered for conversion. (d)Unless the Corporation fails to pay the redemption price, the right to convert shares of the Series A Preferred Stock called for redemption shall expire at the close of business on the fifth day preceding the date fixed for redemption of such shares, and, from and after the redemption date, dividends on the shares of Series A Preferred Stock called for redemption shall cease to accrue, and such shares shall no longer be deemed to be outstanding, and all rights of the holders of such shares as shareholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender of the certificates for any shares so redeemed in accordance with the requirements of the notice of redemption (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation so requires and the notice so states), such shares shall be redeemed by the Corporation at the redemption price. If fewer than all the shares represented by any such certificates are redeemed, the Corporation is obligated to issue without cost to the holder a new certificate representing the shares not redeemed. (e)Any shares of Series A Preferred Stock converted under Subsection (5), or redeemed or otherwise acquired by the Corporation, shall have the status of authorized but unissued shares of Preferred Stock, without designation as to series, preferences, limitations or relative rights until the shares are once more designated as part of a particular series by the Board of Directors of the Corporation. (f)The Corporation may, before the redemption date specified in the notice of redemption, deposit in trust for the account of the holders of shares of the Series A Preferred Stock to be redeemed, with a bank or trust company organized under the laws of the United States of America or of the State of Louisiana and having capital, surplus and undivided profits aggregating at least $20,000,000, designated in the notice of redemption, all funds necessary for the redemption, together with irrevocable written instructions authorizing the bank or trust company, on behalf and at the expense of the Corporation, to have the notice of redemption mailed as provided in Paragraph (c) and to include in the notice of redemption a statement that all funds necessary for the redemption have been so deposited in trust and are immediately available. Immediately upon the mailing of such notice, notwithstanding that any certificate for shares of Series A Preferred Stock so called for redemption has not been surrendered for cancellation, all shares of Series A Preferred Stock with respect to which the deposit has been made shall cease to be outstanding and all rights with respect to such shares of Series A Preferred Stock shall terminate other than the right of the holders thereof to receive from the bank or trust company, at any time after the time of the deposit, the redemption price of the shares so to be redeemed, and the right, if any, to convert the shares into Common Stock until the close of business on the fifth day preceding the redemption date. (g)If the holder of any shares of the Series A Preferred Stock called for redemption does not, within one year after the redemption date, claim the redemption price thereof, the unclaimed amount shall then escheat and revert in full ownership to the Corporation in accordance with Article VII of these Articles of Incorporation, and if the funds to pay the redemption price have been deposited pursuant to paragraph (f), above, the depositary shall, upon the request of the Corporation expressed in a resolution of its Board of Directors, pay over to the Corporation the unclaimed amount. (h)Notwithstanding the foregoing provisions of this Subsection (4), so long as any dividends on the Series A Preferred Stock, or interest thereon, are in arrears, the Corporation may not redeem any shares of the Series A Preferred Stock unless all outstanding shares of the Series A Preferred Stock are simultaneously redeemed and may not purchase or otherwise acquire any shares of Series A Preferred Stock. The foregoing shall not, however, prevent the purchase or acquisition of shares of Series A Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding shares of Series A Preferred Stock. (5)Conversion. The holders of shares of the Series A Preferred Stock have the right, at their option, to convert all or any part of such shares into shares of Common Stock of the Corporation at any time before the close of business on the fifth day preceding the date, if any, fixed for redemption of those shares, subject to the following terms and conditions: (a)The shares of Series A Preferred Stock shall be convertible into shares of Common Stock at the Conversion Rate of one share of Common Stock for each share of Series A Preferred Stock converted. Such Conversion Rate shall be subject to adjustment from time to time as provided in Paragraph (e). The Corporation shall pay all accrued but unpaid dividends, and interest thereon, on any shares of Series A Preferred Stock surrendered for conversion. If any shares of Series A Preferred Stock are called for redemption, the right of conversion shall expire as to the shares designated for redemption at the close of business on the fifth day immediately preceding the date fixed for redemption, unless default is made in the payment of the redemption price on such shares. (b)To convert any shares of Series A Preferred Stock into Common Stock, the holder must surrender the cer- tificate or certificates therefor, duly endorsed to the Corporation or in blank, at the principal office of the Corporation or at such other place or places as the Board of Directors may designate and must give written notice to the Corporation at that office or place that the holder elects to convert all or a part of such shares, setting forth the name or names (with the address or addresses) in which the shares of Common Stock are to be issued. The Corporation shall, as soon as practicable thereafter, cause to be issued and delivered at that office or place to the holder, or the holder's designee or designees, a certificate or certificates for the number of whole shares of Common Stock to which such holder is entitled, together with a certificate or certificates representing any shares of Series A Preferred Stock which are not to be converted but constitute part of the shares of Series A Preferred Stock represented by the certificate or certificates surrendered and cash in lieu of the issuance of a fractional share. A conversion shall be effective as of the close of business on the date of the due surrender of the certificates for the shares to be converted, and the rights of the holder of such shares shall, to the extent of such conversion, cease at such time, and the person or persons entitled to receive shares of the Common Stock upon conversion of such shares of Series A Preferred Stock shall be treated for all purposes as having become the record holder or holders of the Common Stock at that time. (c)No fractional shares of Common Stock shall be issued on conversion. If any fractional interest in a share of Common Stock would, except for the provisions of this Paragraph (c), be deliverable upon conversion hereunder, the Corporation, in lieu of such fractional share shall pay cash to the converting shareholder in an amount equal to the product derived by multiplying such fraction of a share by the closing price per share of the Common Stock on the day next preceding the date of conversion. (d)In the case of any shares of Series A Preferred Stock converted after any record date for payment of a dividend on the Series A Preferred Stock but on or before the date for payment of the dividend, the dividend declared and payable on the dividend payment date shall continue to be payable on the dividend payment date to the holder of record of the shares as of such preceding record date notwithstanding their conversion. Shares of the Series A Preferred Stock surrendered for conversion during the period from the close of business on any such record date to the opening of business on the dividend payment date shall be accompanied by payment in full of an amount equal to the dividend payable on the dividend payment date on the shares of the Series A Preferred Stock surrendered for conversion. Except as provided in this Paragraph, no payment or adjustment shall be made upon any conversion on account of any dividends on shares of the Series A Preferred Stock surrendered for conversion or on account of any dividends on the shares of Common Stock issued upon conversion. (e)The Conversion Rate shall be adjusted from time to time as follows: (i)If the Corporation at any time (A) pays a dividend or makes a distribution to all holders of its Common Stock in shares of its Common Stock, (B) subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (C) combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then in each such case the Conversion Rate in effect immediately before that event shall be proportionately decreased or increased, as the case may be, so that the holder of any shares of Series A Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of whole shares of Common Stock that the holder would have owned or been entitled to receive immediately following such event if those shares of Series A Preferred Stock had been converted into Common Stock immediately before that event. An adjustment made under this Subparagraph (i) becomes effective immediately after the payment date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision or combination. No adjustment in the Conversion Rate shall be made if, at the same time the Corporation issues shares of Common Stock as a dividend or distribution on the outstanding shares of Common Stock which, as provided in this Subparagraph (i), would otherwise call for an adjustment in the Conversion Rate, the Corporation issues shares of Common Stock as a dividend or distribution on the outstanding shares of Series A Preferred Stock equivalent to the number of shares distributable on the shares of Common Stock into which the shares of Series A Preferred Stock is then convertible. (ii)No adjustment in the Conversion Rate shall be required unless the adjustment would require an increase or decrease in the Conversion Rate by more than one percent, but any adjustments not required to be made by reason of this Subparagraph shall be carried forward cumulatively and taken into account in any subsequent adjustments. All calculations under this Paragraph (e) shall be made to the nearest one-tenth of one percent. (iii)In case of any reclassification of the Common Stock (other than a subdivision or combination of outstanding shares of Common Stock for which adjustment is provided in Subparagraph (i) above), or a consolidation or merger of the Corporation with or into any other corporation (other than a consolidation or a merger in which the Corporation is the continuing corporation and the outstanding shares of the Corporation's Common Stock are not changed into or exchanged for stock or other securities of any other person or cash or any other property as a result of or in connection with such consolidation or merger) or a sale of the properties and assets of the Corporation as, or substantially as, an entirety to any other business organization, or a statutory share exchange in which all shares of Common Stock or any series or class of Common Stock are exchanged for shares of another corporation or other entity, each share of Series A Preferred Stock shall, after such reclassification, consolidation, merger, sale or exchange and upon the terms and conditions specified in this Subsection (5), be convertible into or represent the right to receive the number of shares of stock or other securities or property (including cash) to which the shares of Common Stock deliverable (at the time of such reclassifi- cation, consolidation, merger, sale or exchange) upon conversion thereof would have been entitled upon such reclassification, consolidation, merger, sale or exchange, if the conversion of the Series A Preferred Stock into Common Stock had taken place immediately before that event; and in any case, if necessary, the provisions set forth in this Subparagraph (iii) with respect to the rights and interests thereafter of the holders of the shares of Series A Preferred Stock shall be appropriately adjusted so as to be applicable, as nearly as may reasonably be, to any shares of stock or other securities or property (including cash) thereafter deliverable upon conversion of shares of Series A Preferred Stock. (iv)Whenever the Conversion Rate is adjusted as provided in this Paragraph (e): (A) The Corporation shall compute the adjusted Conversion Rate in accordance with this Paragraph (e) and shall prepare a certificate signed by the President or any Vice President of the Corporation setting forth the adjusted Conversion Rate and showing in reasonable detail the facts upon which such adjustment is based, and the certificate shall promptly be filed with the transfer agent for the Series A Preferred Stock, but such transfer agent shall have no duty with respect to any such certificate filed with it except to keep the same on file and available for inspection during reasonable hours; and (B)The Corporation shall cause to be mailed to each holder of shares of Series A Preferred Stock at his then registered address by first-class mail, postage prepaid, a notice stating that the Conversion Rate has been adjusted and setting forth the adjusted Conversion Rate. (v) Without limiting the obligation of the Corporation to give the notices provided in Sub- paragraph (iv), the failure of the Corporation to give such notice shall not invalidate any corporate action by the Corporation. (f)The Corporation shall at all times reserve and keep available, free from preemptive rights for the purpose of effecting the conversion of the shares of Series A Preferred Stock, the full number of shares of Common Stock then deliverable upon the conversion of all shares of Series A Preferred Stock then outstanding. (g)The Corporation is not obligated to pay any tax payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and the Corporation is not obligated to make any such issue or delivery unless and until the person requesting such issue has paid to the Corporation the amount of any such tax, or has established, to the satisfaction of the Corporation, that such tax has been paid. (h) In the event that: (i)the Corporation declares a dividend or any other distribution on its Common Stock, payable otherwise than in cash out of surplus; or (ii)the Corporation grants to all the holders of its Common Stock rights to subscribe for or purchase any shares of capital stock of any class or any other rights; or (iii)any reclassification, consolidation, merger, sale or exchange of the type described in Subparagraph (iii) of Paragraph (e) occurs; or (iv)the voluntary or involuntary dissolution, exchange, liquidation or winding up of the Corporation occurs; the Corporation shall cause to be mailed to the holders of record of the Series A Preferred Stock at least 20 days before the applicable date hereinafter specified a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or rights or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up is expected to take place, and the date, if any is to be fixed, as of which holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up. Failure to give such notice, or any defect therein, shall not affect the legality or validity of such dividend, distribution, reclassification, consolidation, merger, sale, exchange, dissolution, liquidation or winding up. (6)Voting. (a)Except as otherwise expressly required by applicable law or by the terms of this Section E, the holders of shares of the Series A Preferred Stock are not entitled to any vote on any matter, including but not limited to any merger, consolidation or transfer of assets, or statutory share exchange, and to no notice of any meeting of shareholders of the Corporation. (b)Except as otherwise provided herein, whenever the vote, approval or other action of holders of shares of the Series A Preferred Stock is required or permitted by applicable law or by the terms of this Section E, each share is entitled to one vote and the affirmative vote of a majority of shares of Series A Preferred Stock present or represented at the meeting at which a quorum is present is sufficient to constitute such vote, approval or other action. (c)If, at any time, the Corporation falls in arrears in the payment of dividends on the Series A Preferred Stock for two consecutive quarterly dividend periods, the number of directors constituting the full board of directors of the Corporation shall be automatically increased by two and the holders of Series A Preferred Stock, voting separately as a single class, shall be entitled to elect two directors of the Corporation to fill the two newly created directorships, at a special meeting called for that purpose in accordance with Paragraph (f) and thereafter at each meeting of the shareholders held for the purpose of electing directors, so long as there continues to be any arrearage in the payment of dividends on the Series A Preferred Stock for any past quarterly dividend period or of interest on such accumulated and unpaid dividends. (d)When all accumulated and unpaid dividends on the Series A Preferred Stock for all past quarterly dividend periods, and interest thereon, have been paid in full, the right of the holders of Series A Preferred Stock to elect directors shall cease (subject to revesting from time to time as provided in Paragraph (c)), the number of directors of the Corporation shall be automatically reduced by two and the term of office of all directors elected by the holders of the Series A Preferred Stock shall immediately terminate. (e)A director elected by the holders of Series A Preferred Stock shall hold office until the annual meeting next succeeding his election or until his successor, if any, is elected by such holders. A director so elected may be removed at any time with or without cause but only by the vote of holders of the Series A Preferred Stock at a meeting duly called for that purpose. So long as the holders of the Series A Preferred Stock have the right to elect two directors, any vacancy in the office of a director elected by those holders may be filled by the remaining director so elected or by the vote of the holders of Series A Preferred Stock at any annual meeting or any special meeting called for the purpose. (f)At any time when the power to elect directors vests in the holders of the Series A Preferred Stock, a proper officer of the Corporation shall, on the written request of record holders of at least 20 percent of the number of shares of Series A Preferred Stock then outstanding, addressed to the secretary of the Corporation at its principal office, call a special meeting of the holders of the Series A Preferred Stock for the purpose of electing directors. The meeting must be held at the earliest practicable date, not later than 45 days after receipt of the written request (subject to compliance with applicable proxy rules and rules of the American Stock Exchange), in the city in which the last preceding annual meeting of the shareholders of the Corporation was held, but may be held at the time and place of the annual meeting if the annual meeting is to be held within 60 days after the power to elect directors first vests in the holders of the Series A Preferred Stock. If the proper officer of the Corporation does not call the meeting within the required time, then the holders of record of 20 percent of the number of shares of Series A Preferred Stock then outstanding may, by written notice to the secretary of the Corporation at its principal office, designate any person to call such meeting, and the person so designated may call such meeting in the city above provided upon not fewer than 30 nor more than 45 days notice and for that purpose shall have access to the stock books of the Corporation. At any meeting so called for the election of directors by holders of the Series A Preferred Stock or at any annual meeting held while the holders of Series A Preferred Stock have the right to elect directors, holders of a majority of the shares of Series A Preferred Stock then outstanding is sufficient to constitute a quorum for the purpose of electing directors at such a meeting. If at any such meeting a quorum of the Series A Preferred Stock is not present, the election of directors shall not take place, and the meeting shall be adjourned from time to time for periods not exceeding 30 days until a quorum is obtained. (g)Approval of the holders of the Series A Preferred Stock, voting separately as a single class by a favorable vote of at least two-thirds of the number of shares of Series A Preferred Stock then outstanding, is required to adopt any proposed amendment to these Articles of Incorporation (including but not limited to any amendment adopted by resolution of the Board of Directors pursuant to Article III of these Articles of Incorporation) if the proposed amendment would affect shares of the Series A Preferred Stock in any one or more of the following ways: (i)Create or authorize any class or series of stock ranking senior to or on a parity with the Series A Preferred Stock in respect of dividends or distribution of assets on liquidation or otherwise alter or abolish the liquidation preferences or any other preferential right of such shares. (ii)Reduce the redemption price or otherwise alter or abolish any right with respect to redemption of the Series A Preferred Stock expressly provided by this Section E. (iii)Alter or abolish any right of such shares expressly provided by this Section E to receive dividends or interest thereon except as such right may be affected by dividend rights of new shares being authorized of another class or series of shares ranking on a parity with or junior to the Series A Preferred Stock. (iv)Alter or abolish any right of holders of shares of the Series A Preferred Stock under this Section E to convert such shares into shares of Common Stock. (v)Exclude, change or limit any voting rights of the Series A Preferred Stock conferred by this Section E. (h)Approval of the holders of the Series A Preferred Stock, voting separately as a single class by a favorable vote of at least two-thirds of the number of shares of Series A Preferred Stock then outstanding, is required to adopt any merger, consolidation, statutory share exchange or sale of all, or substantially all, of the assets of the Corporation or any of its banking subsidiaries unless either (i) the holders of the Series A Preferred Stock will receive in exchange for the Series A Preferred Stock a security with terms substantially identical to the terms of the Series A Preferred Stock, or (ii) provision is made for the complete redemption in cash of the Series A Preferred Stock on the date of consummation of such transaction and the Series A Preferred Stock may be redeemed at such time under these Articles of Incorporation. (7)Liquidation Rights. (a)Upon the dissolution, liquidation or winding up of the Corporation, the holders of the shares of Series A Preferred Stock shall be entitled to receive upon liquidation and to be paid out of the assets of the Corporation available for distribution to its shareholders, before any payment or distribution may be made on the Common Stock or on any other Junior Securities, the amount of $14.25 per share, plus a sum equal to all accrued and unpaid dividends (whether or not earned or declared) on such shares, and accrued interest thereon, if any, to the date of final distribution. (b)Neither the sale of all or substantially all the property or business of the Corporation, nor the merger or consolidation of the Corporation into or with any other corporation or the merger or consolidation of any other corporation into or with the Corporation, shall be deemed to be a dissolution, liquidation or winding up, voluntary or involuntary, for the purposes of this Subsection (7). (c)Upon payment to the holders of the shares of Series A Preferred Stock of the full preferential amounts provided for in this Subsection (7), the holders of Series A Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation. (d)If the assets of the Corporation available for distribution to the holders of shares of Series A Preferred Stock upon any dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, are insufficient to pay in full all amounts to which such holders are entitled under Paragraph (a) of this Subsection (7), no such distribution may be made on account of any shares of any other class or series of Preferred Stock ranking on a parity with the shares of Series A Preferred Stock upon such dissolution, liquidation or winding up unless proportionate distributive amounts are paid on account of the shares of Series A Preferred Stock, ratably, in proportion to the full distributable amounts for which holders of all such parity shares are respectively entitled upon dissolution, liquidation or winding up. (8)Ranking. For purposes of this Section E any stock of any class or classes of the Corporation shall be deemed to rank: (a)prior to the shares of Series A Preferred Stock, either as to dividends or upon liquidation, if the holders of such class or classes are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference or priority to the holders of shares of Series A Preferred Stock; (b)on a parity with shares of Series A Preferred Stock, either as to dividends or upon liquidation, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share or sinking fund provisions, if any, are different from those of Series A Preferred Stock, if the holders of such class or classes are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in proportion to their respective liquidation preferences, without preference or priority, one over the other, as between the holders of such class or classes and the holders of shares of Series A Preferred Stock; and (c)junior to shares of Series A Preferred Stock, either as to dividends or upon liquidation, if such class or classes are Common Stock or if the holders of shares of Series A Preferred Stock are entitled under these Articles of Incorporation to the receipt of dividends or of amounts distributable upon dissolution, liquidation or winding up of the Corporation, as the case may be, in preference or priority to the holders of shares of such class or classes. (9)No Preemptive Rights. Holders of shares of Series A Preferred Stock have no preemptive rights. 3. Except as amended by these Articles of Amendment, the Articles of Incorporation of the Corporation shall remain in full force and effect. IN WITNESS WHEREOF, the undersigned President and Secretary have executed these Articles of Amendment on ________, 1995 at Lafayette, Louisiana. MidSouth Bancorp, Inc. By: C. R. Cloutier, President By: Karen L. Hail, Secretary ACKNOWLEDGMENT STATE OF LOUISIANA PARISH OF LAFAYETTE BEFORE ME, the undersigned authority personally came and appeared C. R. Cloutier and Karen L. Hail to me known to be the persons who signed the foregoing instrument as President and Secretary, respectively, of MidSouth Bancorp, Inc. and who, having been duly sworn, acknowledged and declared, in the presence of the witnesses whose names are subscribed below, that they signed that instrument as their free act and deed for the purposes mentioned therein. IN WITNESS WHEREOF, the appearers and witnesses and I have signed below on this ______ day of ________, 1995. WITNESSES: ______________________________ _____________________________ C. R. Cloutier, President ______________________________ ______________________________ ____________________________ Karen L. Hail, Secretary ______________________________ ________________________________________ NOTARY PUBLIC EXHIBIT D The opinion letter referred to in subparagraph (c) of subsection 6.2 of the Agreement from counsel for Holding's consolidated group shall state that except as described in the Schedule of Exceptions: (i) each member of Holding's consolidated group is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, each has all requisite corporate power and authority to own and lease its property and to carry on the business described as being carried on by it in the Registration Statement and each is qualified and in good standing as a foreign corporation in any jurisdictions in which the character of the property owned or leased by it or the nature of the activities conducted by it make such qualification necessary, except where the failure to so qualify would not have a material adverse affect on the financial condition or results of operations or business of Holding's consolidated group. (ii) the execution, delivery and performance of the Agreement and the Bank Merger Agreement have been duly authorized by the Boards of Directors and shareholders of each member of Holding's consolidated group that is a party thereto, and all corporate acts and other corporate proceedings required on the part of each member of Holding's consolidated group for the due and valid authorization, execution, delivery and performance of this Agreement and the Bank Merger Agreement, and the consummation of the Mergers, have been validly and appropriately taken. Upon the filing of the executed Bank Merger Agreement with the OCC and the OFI, the Bank Merger will be effective as of the time referred to in subsection 1.4 of the Agreement; and upon the filing of the executed Company Merger Certificate with the Secretary of State of Louisiana, the Company Merger will be effective as of the Effective Time; (iii) this Agreement and the Bank Merger Agreement are the legal, valid and binding obligations of Holding and Bank, as the case may be, and are enforceable against them in accordance with their terms, except as such enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws and court decisions relating to or affecting the enforcement of creditors' rights generally and except as to the availability of specific performance or other equitable remedies; (iv) neither the execution, delivery or performance of the Agreement or the Bank Merger Agreement by Holding and Bank, nor the consummation of the transactions contemplated hereby or thereby, will (A) violate, conflict with or result in a breach of any provision of, constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under, result in the termination of or accelerate the performance required by, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of any member of Holding's consolidated group under, any of the terms, conditions or provisions of the articles of incorporation, articles of association or by-laws of any member of Holding's consolidated group or of any note, bond, mortgage, indenture, deed of trust, lease, license, agreement or other instrument or obligation known to such counsel which binds any of them or any of their assets, or (B) to the knowledge of such counsel, violate any order, writ, injunction, decree, statute, rule or regulation of any governmental body applicable to any member of Holding's consolidated group or any of their assets; (v) the authorized capital stock of each member of Holding's consolidated group is as set forth in subsection 3.2 of the Agreement, and all shares described therein as issued and outstanding have been duly authorized and validly issued, and are fully paid and (except as provided in La. R.S. 6:262) non- assessable. To such counsel's knowledge, except as contemplated in the Agreement there are no outstanding options, warrants, contracts or commitments entitling any person to purchase or otherwise acquire from any member of Holding's consolidated group any shares of its capital stock; nor to such counsel's knowledge has any member of Holding's consolidated group any outstanding obligation with respect to its unissued capital stock or treasury stock, nor any outstanding obligation to repurchase, redeem or otherwise acquire any of its outstanding shares of capital stock; (vi) to such counsel's knowledge, (A) no audit, examination or investigation is presently being conducted or is threatened by any taxing authority with respect to any member of Holding's consolidated group, (B) no unpaid tax deficiencies or additional liabilities of any sort have been proposed by any governmental representative and (C) no agreement for extension of time for the assessment of any amounts of tax has been entered into by or on behalf of any member of Holding's consolidated group; (vii) to such counsel's knowledge, there are no material claims of any kind or any material actions, suits, proceedings, arbitrations or investigations pending or threatened, in any court or before any governmental agency or instrumentality or arbitration panel or otherwise against, by or affecting any member of Holding's consolidated group or the business, financial condition or assets of any such member or which would prevent the performance of the Agreement or the Bank Merger Agreement or any of the transactions contemplated hereby or thereby or declare the same unlawful or cause the rescission thereof; (viii) to such counsel's knowledge, each member of Holding's consolidated group has complied with and is not in default in any respect under (and has not been charged with, threatened with or come under investigation with respect to any charge concerning any material violation of any provision of) any federal, state or local law, regulation, ordinance, rule or order (whether executive, judicial, legislative or administrative) or any order, writ, injunction or decree of any court, agency or instrumentality, which default or violation could have a material adverse affect on the financial condition, results of operations or business of Holding's consolidated group taken as a whole; and (ix) such counsel has no reason to believe that the employee benefit plans of Holding's consolidated group are not qualified under Section 401(a) of the Code, or that the related trusts are not exempt from tax under Section 501(a) of the Code or that each of such plans is not in material compliance with the applicable provisions of ERISA, the Code and other applicable laws. In addition, such counsel shall state that they have participated in conferences with representatives of the parties to the Agreement and their respective accountants and counsel in connection with the preparation of the Registration Statement and the Proxy Statement and have considered the matters required to be stated therein and the statements contained therein, and based on the foregoing (in certain circumstances relying as to materiality on the opinions of officers and representatives of the parties to the Agreement) nothing has come to the attention of such counsel that would lead them to believe that the Registration Statement and the Proxy Statement, as amended or supplemented, if they have been amended or supplemented (in the case of the Registration Statement), or at the time distributed to shareholders (in the case of the Proxy Statement), contained any untrue statement of a material fact or omitted a material fact required to be stated therein or necessary to make the statements therein not misleading (except in each such case for the financial statements and other financial and statistical data included therein, as to which no statement need be made). Such opinion shall also cover such other matters incident to the transactions herein contemplated as MidSouth may reasonably request, including the form of all documents and the validity of all proceedings. In connection with such opinion such counsel may rely as to factual matters on certificates of officers of members of Holding's consolidated group, and such counsel's knowledge shall mean its actual knowledge as such counsel. EXHIBIT E FORM OF JOINDER OF SHAREHOLDERS The undersigned shareholder of Sugarland Bancshares, Inc. ("Holding"), in consideration of the benefits to be derived by Holding and its shareholders pursuant to an Agreement and Plan of Merger dated ________, 1994, (the "Agreement") among Holding, Sugarland State Bank ("Bank"), MidSouth Bancorp, Inc. ("MidSouth") and MidSouth National Bank (the defined terms in which are used herein as defined therein) and the expenses to be incurred by MidSouth in connection therewith, hereby agrees with MidSouth as follows: (1)Such shareholder, acting solely in such shareholder's capacity as such, agrees and undertakes to vote or cause to be voted all shares of Holding Common Stock as to which such shareholder has voting power at any meeting or meetings (including any and all adjournments thereof) before which the Agreement or any similar agreement may come for consideration by Holding's shareholders, in favor of the approval of the Agreement, and against any similar agreement, unless MidSouth or MidSouth Bank then is in breach or default in any material respect with respect to any covenant, representation or warranty as to it contained in the Agreement to an extent that would permit Holding to terminate the Agreement pursuant to Section 7 of the Agreement. Such shareholder further agrees not to transfer any of the shares of Holding Common Stock over which such shareholder has dispositive power or grant any proxy thereto (except any such proxy approved by MidSouth) until the earlier of the Effective Date or the date that the Agreement has been terminated pursuant to its provisions, except (i) for transfers by operation of law and (ii) for transfers in connection with which the transferee shall agree in writing with MidSouth to be bound by this Joinder as fully as the undersigned. In the case of any transfer by operation of law, the provisions of this Joinder of Shareholders are intended to be binding upon and to inure to the benefit of such transferee, and such transferee shall be bound thereby. (2)Such shareholder (i) will not, prior to the Effective Date or until the termination of the Agreement, without the prior approval of the chief executive officer of MidSouth or his designee, solicit, encourage, initiate or participate in any inquiries, proposals or bids with respect to, or except to the extent required in the opinion of Holding's counsel to discharge properly his fiduciary duties in his capacity as a director to Holding and its shareholders, furnish any information relating to or participate in any negotiations or discussions concerning any acquisition or purchase of all or a substantial part of the assets of, or of a substantial equity interest in, or any business combination with, Holding's consolidated group, other than as contemplated by the Agreement and (ii) will notify MidSouth immediately if any such inquiries or proposals are received by him, any such information is requested from him or any such negotiations or discussions are sought to be initiated with him; provided, however, that nothing contained herein shall be deemed to prohibit him from taking any action that in the opinion of counsel to Holding is required by law or is required to discharge properly his fiduciary duties in his capacity as a director to Holding and its shareholders. (3) Except as provided in Section 8 of the Agreement, such shareholder hereby releases, effective at the Effective Time of the Company Merger, MidSouth and MidSouth Bank from any obligation that either may have (including any obligation as successors to Holding's consolidated group) to indemnify such shareholder for acts taken by such shareholder as an officer and/or director and/or employee of any member of Holding's consolidated group; provided that MidSouth and MidSouth Bank does in fact provide such shareholder with the indemnification provided for in Section 8 of the Agreement. (4) Such shareholder will not, for a period of two years from and after the Effective Date of the Company Merger, serve a director, officer or employee of, or advisor to, or have an investment in, any financial institution that competes with the business being conducted by Bank (as continued by MidSouth Bank as successor to Bank) in Lafayette or Iberia Parishes, provided that this paragraph shall not prevent such shareholder from (i) making any investment in such an institution if such investment does not materially enhance the ability of such institution to compete with Bank's business (as continued by MidSouth Bank as successor to Bank), or (ii) continuing to hold any investment which such shareholder holds on the date of this Joinder of Shareholders. (5)Such shareholder will not, and will cause such shareholders' affiliates not to, until the Effective Time of the Company Merger or until the Agreement has been terminated, whichever shall first occur, purchase or sell or otherwise deal in MidSouth Common Stock. (6) The provisions of this Joinder of Shareholders shall be enforceable through an action by MidSouth for damages at law or a suit for specific performance or other appropriate extraordinary relief, the signatory shareholder acknowledging that remedies at law for breach or default under this Joinder of Shareholders might be or become inadequate. The provisions of Sections 3, 4 and 6 hereof shall survive the Effective Date of the Mergers. This Joinder of Shareholders is dated __________________, 1995. _______________________________________ EXHIBIT F The letters referred to in subparagraph (c) of subsection 6.2 of the Agreement from Holding's independent public accountants shall be to the effect that: (i) It is a firm of independent public accountants with respect to Holding's consolidated group within the meaning of the Securities Act and the rules and regulations of the SEC thereunder; (ii) in its opinion the audited consolidated financial statements of Holding's consolidated group examined by it and included in the Registration Statement comply as to form in all material respects with the applicable requirements of the Securities Act and the applicable published rules and regulations of the SEC thereunder with respect to registration statements on Form S-4; and (iii) on the basis of specified procedures (which do not constitute an examination in accordance with generally accepted auditing standards) consisting of a reading of the unaudited consolidated financial statements of Holding's consolidated group included in the Registration Statement and of the latest available unaudited consolidated financial statements of Holding's consolidated group, discussions with officers of Holding and Bank responsible for financial and accounting matters and a reading of the minutes of meetings of shareholders and the Board of Directors, and the Audit and Executive Committees of the Board of Directors, of the members of Holding's consolidated group, nothing has come to its attention which caused it to believe (A) that the unaudited consolidated financial statements of Holding's consolidated group included in the Registration Statement or delivered to MidSouth were not presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the latest audited consolidated financial statements of Holdings's consolidated group, or that the unaudited net income amounts, if any, set forth in the Registration Statement were not determined on a basis substantially consistent with that of the corresponding accounts in the audited statement of consolidated income of Holding's consolidated group, (B) during the period from the date of the latest balance sheet of Holding included in the Registration Statement to a specified date not more than five business days prior to the date of such letter there was any change in the capital stock or long-term debt of Holding's consolidated group or any decrease in consolidated net assets as compared with amounts shown in such consolidated balance sheet, except for changes or decreases which the Registration Statement discloses have occurred or may occur, or they shall state any specific changes or decreases therein, or that during the period from the date of said balance sheet to such specified date there was any decrease, as compared with the corresponding period in the prior year, in consolidated net income of Holding's consolidated group except for any decrease which the Registration Statement discloses has occurred or may occur, or they shall state any specific decrease therein, and (C) that the unaudited consolidated financial statements, if any, of Holding's consolidated group included in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the published rules and regulations of the SEC thereunder. EXHIBIT G The opinion letter referred to in subparagraph (c) of subsection 6.2 of the Agreement from counsel for MidSouth and MidSouth Bank shall state that: (i) MidSouth and MidSouth Bank are each duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, each has all requisite corporate power and authority to own and lease its property and to carry on the business described as being carried on by it in the Registration Statement and each is qualified and in good standing as a foreign corporation in any jurisdictions in which the character of the property owned or leased by it or the nature of the activities conducted by it make such qualification necessary; (ii) the execution, delivery and performance of the Agreement and the Bank Merger Agreement have been duly authorized by the Boards of Directors of MidSouth and MidSouth Bank which are parties thereto, and by MidSouth as the sole shareholder of MidSouth Bank, and all corporate acts and other corporate proceedings required on the part of MidSouth and MidSouth Bank for the due and valid authorization, execution, delivery and performance of the Agreement and the Bank Merger Agreement, and the consummation of the Mergers, have been validly and appropriately taken. Upon the filing of the executed Bank Merger Agreement with the Office of Comptroller of the Currency and the Louisiana Office of Financial Institutions, the Bank Merger will be effective as of the time referred to in subsection 1.4 of the Agreement, and upon the filing of the executed Company Merger Certificate with the Secretary of State of Louisiana, the Company Merger will be effective as of the Effective Time; (iii) the Agreement and the Bank Merger Agreement are the legal, valid and binding obligations of MidSouth and MidSouth Bank, as the case may be, and are enforceable against MidSouth and MidSouth Bank, as the case may be, in accordance with their terms, except as such enforcement may be limited by bankruptcy, reorganization, insolvency and other similar laws and court decisions relating to or affecting the enforcement of creditors' rights generally, and except as to the availability of specific performance or other equitable remedies; (iv) neither the execution, delivery or performance of the Agreement or the Bank Merger Agreement by MidSouth or MidSouth Bank, nor the consummation of the transactions contemplated hereby or thereby, will (A) violate, conflict with or result in a breach of any provision of, constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, result in the termination of or accelerate the performance required by, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of MidSouth or MidSouth Bank under, any of the terms, conditions or provisions of the articles of incorporation, articles of association or by-laws of MidSouth or MidSouth Bank or any note, bond, mortgage, indenture, deed of trust, lease, license, agreement or other instrument or obligation known to such counsel which binds either of them or any of their assets or (B) to the knowledge of such counsel, violate any order, writ, injunction, decree, statute, rule or regulation of any governmental body applicable to MidSouth or MidSouth Bank or any of their assets; (v) the authorized capital stock of MidSouth is as set forth in subsection 4.2 of the Agreement, and all shares of Preferred Stock to be issued to holders of Holding Common Stock will be, when issued as described in the Agreement and the Registration Statement, duly authorized and validly issued, fully paid and non-assessable; (vi) the Registration Statement has become effective, and to such counsel's knowledge, no stop order suspending its effectiveness has been issued nor have any proceedings for that purpose been instituted. In addition, such counsel shall state that they have participated in conferences with representatives of the parties hereto and their respective accountants and counsel in connection with the preparation of the Registration Statement and the Proxy Statement and have considered the matters required to be stated therein and the statements contained therein, and based on the foregoing (in certain circumstances relying as to materiality on the opinion of officers and representatives of the parties hereto) nothing has come to the attention of such counsel that would lead them to believe that the Registration Statement and the Proxy Statement, as amended or supplemented if they have been amended or supplemented (in the case of the Registration Statement), or at the time distributed to shareholders (in the case of the Proxy Statement), contained any untrue statement of a material fact or omitted a material fact required to be stated therein or necessary to make the statements therein not misleading (except in each such case for the financial statements and other financial and statistical data included therein; as to which no statement need be made). Such opinion shall also cover such other matters incident to the transactions herein contemplated as Holding may reasonably request, including the form of all documents and the validity of all proceedings. In connection with such opinion such counsel may rely as to factual matters on certificates of officers of MidSouth and MidSouth Bank, and such counsel's knowledge shall mean its actual knowledge as such counsel. EX-5 3 April 5, 1995 MidSouth Bancorp, Inc. 102 Versailles Boulevard Versailles Centre Lafayette, Louisiana 70501 Gentlemen: We have acted as counsel for MidSouth Bancorp, Inc. a Louisiana corporation (the "Company"), in connection with the Company's Registration Statement on Form S-4 (the "Registration Statement") covering up to 187,286 shares of Series A Cumulative Convertible Preferred Stock (the "Preferred Stock") of the Company (the "Shares") which the Company proposes to issue to shareholders of Sugarland Bancshares, Inc. in accordance with the Agreement and Plan of Merger (the "Plan") described in the Registration Statement. For the purposes of the opinion expressed below, we have examined the Registration Statement, the Plan, the Articles of Incorporation, as amended, and By-laws, as amended, of the Company, resolutions adopted by the Board of Directors of the Company and such other documents and sources of law as we considered necessary to render the opinions hereinafter expressed. On the basis of the foregoing, we are of the opinion that the proposed issuance of the Shares has been duly authorized by all necessary corporate action, and such Shares, if and when issued in accordance with the terms of the Plan, will be validly issued, fully paid and non-assessable. We hereby consent (i) to be named in the Registration Statement under the heading "Legal Matters" as counsel for the Company and (ii) to the filing of this opinion as an Exhibit to the Registration Statement. In so doing we do not admit that we are "experts" within the meaning of the Securities Act of 1933. Yours sincerely, Anthony J. Correro, III AJC/jgo EX-23 4 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Midsouth Bancorp, Inc. in Form S-4 of our report dated January 27, 1995, appearing in the Annual Report on Form 10-KSB of MidSouth Bancorp, Inc. for the year ended December 31, 1994, and to the reference to us under the headings "Certain Federal Tax Consequences", "Experts" and "Relationship with Independent Public Accountants" in the Prospectus, which is part of this Registration Statement. DELOITTE & TOUCHE LLP New Orleans, Louisiana April 5, 1995 EX-23 5 EXHIBIT 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports and to all references to our Firm included in or made a part of this registration statement. New Iberia, Louisiana April 4, 1995 Mixon, Roy, Metz & Mixon EX-23 6 EXHIBIT 23.4 Letterhead of Chaffe & Associates, Inc. Investment Bankers April 4, 1995 Mr. D. J. Tranchina President and CEO Sugarland Bancshares, Inc. 1527 W. Main Street Jeanerette, LA 70544 Dear D. J.: We hereby consent to the use by Sugarland Bancshares, Inc. of our opinion dated December 30, 1994, addressed to the Board of Directors of the Sugarland Bancshares, Inc. of Jeanerette, Louisiana in your Proxy Statement and to the references to us in the Proxy Statement. Sincerely yours, CHAFFE & ASSOCIATES, INC. /s/ G. F. Gay LeBreton G. F. Gay LeBreton Vice President GFGL:mr cc: Sherwood G. Briggs Larry Mandala Carla Michel EX-24 7 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints Karen L. Hail his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on behalf of MidSouth Bancorp, Inc., and on his behalf, MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or her substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 C. R. Cloutier President, Chief Executive Officer and Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints C. R. Cloutier and Karen L. Hail, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on his behalf MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 J B. Hargroder, M.D.Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints C. R. Cloutier and Karen L. Hail, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on his behalf MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 Will G. Charbonnet, Sr. Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints C. R. Cloutier and Karen L. Hail, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on his behalf MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 Clayton Paul Hilliard Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints C. R. Cloutier and Karen L. Hail, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on his behalf MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 Robert Burke Keaty Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints C. R. Cloutier and Karen L. Hail, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on his behalf MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 James R. Davis, Jr. Director POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears immediately below constitutes and appoints C. R. Cloutier and Karen L. Hail, or either of them, his true and lawful attorney-in-fact and agent, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign on his behalf MidSouth Bancorp, Inc.'s Registration Statement on Form S-4 relating to the proposed offering of its preferred stock, and any and all amendments (including post-effective amendments) thereto, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Date: March 8, 1995 Milton B. Kidd, Jr., O.D. Director EX-99 8 PROXY MIDSOUTH BANCORP, INC. _____________, 1995 ANNUAL MEETING OF SHAREHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned hereby appoints Raymond F. Mikolayezk, Rodney J. Poche, and Natalee F. Wood, or any of them, proxies of the undersigned, with full power of substitution, to represent the undersigned and to vote all of the shares of Common Stock of MidSouth Bancorp, Inc. (the "Company") that the undersigned is entitled to vote at the annual meeting of the shareholders of the Company to be held on ________________, 1995 and at any and all adjournments thereof. 1. A proposal to approve the issuance of up to 187,286 shares of Series A Cumulative Convertible Preferred Stock ("Preferred Stock") in connection with an Agreement and Plan of Merger (the "Plan") pursuant to which, among other things, Sugarland Bancshares, Inc. ("Sugarland") will merge into the Company (the "Merger") and, on the effective date of the Merger, each outstanding share of common stock of Sugarland will be converted into a number of shares of Preferred Stock as determined in accordance with the terms of the Plan. FOR ____ AGAINST ____ ABSTAIN ____ 2. Election of Class II Directors Will G. Charbonnet, Sr. Clayton Paul Hilliard Robert Burke Keaty *For all nominees Withhold authority for listed above all nominees listed ______ except as marked to the contrary ______ *If you wish to withhold authority to vote for certain of the nominees listed, strike through the nominee(s) names. 3. In their discretion, to vote upon such other business as may properly come before the meeting or any adjournment thereof. THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 SET FORTH HEREIN AND FOR EACH OF THE NOMINEES NAMED ABOVE. [REVERSE SIDE] PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD TO THE COMPANY PROMPTLY USING THE ENCLOSED ENVELOPE. Please sign exactly as name appears on the certificate or certificates representing shares to be voted by this proxy. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized persons. If a partnership, please sign in partnership name by authorized persons. Dated: _______________, 1995 ____________________________ Signature of Shareholder Insert Mailing Label ____________________________ Signature (if jointly owned) EX-99 9 PROXY SUGARLAND BANCSHARES, INC. SPECIAL MEETING OF SHAREHOLDERS _________________, 1995 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. The undersigned hereby constitutes and appoints J. Bryan Allain, D.J. Tranchina and Bennet S. Koren, or any of them, the proxies of the undersigned, with full power of substitution, to represent the undersigned and to vote all of the shares of Common Stock of Sugarland Bancshares, Inc. (the "Company"), that the undersigned is entitled to vote at the Special Meeting of Shareholders of the Company to be held on ________________, 1995, and any adjournment thereof. 1. To consider and vote upon a proposal to approve an Agreement and Plan of Merger, dated as of December 28, 1994, and related merger agreement (collectively, the "Plan"), pursuant to which, among other things: (a) the Company will be merged into MidSouth Bancorp, Inc. ("MidSouth") (the "Holding Company Merger"), (b) Sugarland State Bank (the "Bank"), the subsidiary of the Company, will be merged into MidSouth National Bank, the wholly-owned subsidiary of MidSouth and (c) on the effective date of the Holding Company Merger, each outstanding share of common stock of the Company will be converted into MidSouth Series A Cumulative Convertible Preferred Stock as determined in accordance with the Plan. FOR AGAINST ABSTAIN 2. In their discretion, to vote upon such other business as may properly come before the Special Meeting or any adjournment thereof. THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSAL 1 SET FORTH HEREIN. [REVERSE SIDE] PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE TO: Sugarland Bancshares, Inc., 1527 W. Main Street, Jeanerette, Louisiana 70544, Attention: Ronald R. Hebert, Sr., Secretary. Please sign exactly as the name appears on the certificate or certificates representing shares to be voted by this proxy. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized person. If a partnership, please sign in partnership name by authorized persons. Dated: ____________________ ___________________________ Insert Mailing Label Signature of Shareholder ___________________________ Signature (if jointly owned) -----END PRIVACY-ENHANCED MESSAGE-----