As filed with the Securities and Exchange Commission on April 11, 1997
Registration No. 333-_____
-------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FIRST COMMERCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Arkansas 6711 71-0540166
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or organization) Industrial Classi- Identification
fication Code No.) No.)
400 West Capitol Avenue, Little Rock, Arkansas 72201
(501) 371-7000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Barnett Grace, Chairman of the Board
First Commercial Corporation
400 West Capitol Avenue
Little Rock, Arkansas 72201
(501) 371-7000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copy to:
John Clayton Randolph
Friday, Eldredge & Clark
400 West Capitol Avenue, Suite 2000
Little Rock, Arkansas 72201-3493
Approximate date of commencement of proposed sale of the
securities to the public: Upon the effective date of the
merger 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, check the
following box.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------
Proposed
Title of Each Proposed Maximum
Class of Maximum Aggregate Amount of
of Securities to Amount to be Offering Price Offering Registration
be Registered Registered Per Unit Price Fee*
- --------------------------------------------------------------------------
Common Stock,
par value $3.00
per share 1,650,000 $17.88 $29,502,000 $8,940.00
- ---------------------------------------------------------------------------
*Calculated pursuant to Rule 457(f)(2) on the basis of the book
value, as of March 31, 1997, of 71,926 shares of common stock of
First Central Corporation to be received by the registrant
pursuant to the merger described in this registration statement.
On that date, the book value of such common stock was $410.27
per share.
The registrant hereby amends this registration statement on
such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Securities and
Exchange Commission, acting pursuant to said Section 8(a), may
determine.
[First Central Corporation Letterhead]
Dear Stockholder:
A Special Meeting of the Stockholders of First Central
Corporation ("First Central") will be held on __________, 1997,
at _____ a.m., local time, at _____________________________,
Searcy, Arkansas.
The purpose of the meeting is to ask you to approve the merger
of First Central into First Commercial Corporation, Little
Rock, Arkansas ("First Commercial") (the "Merger"). The Merger
is subject, among other things, to the approval of the holders
of two-thirds (2/3) of the outstanding shares of common stock
of First Central ("First Central Stock"). If the Merger is
consummated, each holder of First Central Stock will receive
22.94024 shares of First Commercial common stock (with cash
payments in lieu of fractional shares) for each outstanding
share of First Central Stock held at the effective date of the
Merger.
FIRST CENTRAL'S BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND
APPROVAL OF THE MERGER.
Enclosed with this letter are a Notice of Special Meeting, a
Proxy Form and return envelope and a Joint Proxy
Statement/Prospectus, which contains a detailed description of
the entire transaction. Please read the enclosed material
carefully. Because your vote is important, we urge you to
complete, date, sign and return the Proxy Form in the enclosed
envelope.
Sincerely,
Searcy, Arkansas
____________, 1997
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To The Stockholders of First Central Corporation:
Notice is hereby given that a Special Meeting of the
Stockholders of First Central Corporation ("First Central")
will be held on ________, 1997, at _____ a.m., local time, at
_____________________, Searcy, Arkansas, for the following
purposes:
1. To consider and act upon a proposal to approve a
plan of merger providing for the merger of First
Central into First Commercial Corporation,
Little Rock, Arkansas ("First Commercial") (the
"Merger"), as a result of which each outstanding
share of common stock of First Central ("First
Central Stock") will be converted into 22.94024
shares of First Commercial common stock (with
cash payments in lieu of fractional shares).
Such approval, if voted, shall be deemed to
constitute the ratification, confirmation and
approval of the execution and delivery by First
Central of the Plan and Agreement of Merger
("Agreement") dated February 5, 1997, between
First Commercial and First Central.
2. To transact such other business as may properly
be brought before the Special Meeting or at any
adjournment thereof.
Information regarding the matters to be acted upon at the
meeting is contained in the accompanying Joint Proxy
Statement/Prospectus.
Consummation of the Merger is conditioned upon approval by the
holders of two-thirds (2/3) of the outstanding shares of First
Central Stock. Only those holders of First Central Stock of
record at the close of business on _______________, 1997, are
entitled to notice of, and to vote at, the Special Meeting and
any adjournment thereof.
Dissenting shareholders who comply with the procedural
requirements of Section 4-26-1007 of the Arkansas Business
Corporation Act will be entitled to receive payment of the
cash value of their shares if the Merger is approved.
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.
By Order of the Board of Directors
____________________________________
Secretary
Searcy, Arkansas
____________, 1997
JOINT PROXY STATEMENT/PROSPECTUS
PROSPECTUS FOR
FIRST COMMERCIAL CORPORATION
1,650,000 Shares
Common Stock
($3.00 par value per share)
PROXY STATEMENT FOR
FIRST CENTRAL CORPORATION
First Commercial Corporation ("First Commercial") has filed a
registration statement pursuant to the Securities Act of 1933,
as amended, covering a maximum of 1,650,000 shares of First
Commercial Common Stock, $3.00 par value per share, to be
offered in connection with a proposed transaction in which
First Central Corporation ("First Central") will be merged into
First Commercial, with the result that First National Bank,
Searcy, Arkansas will be a wholly-owned subsidiary of First
Commercial. This document constitutes a proxy statement of
First Central in connection with the proposed transaction
described herein and a prospectus of First Commercial with
respect to the offering of its shares of common stock.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT
ACCOUNTS AND ARE NOT INSURED BY THE SAVINGS ASSOCIATION
INSURANCE FUND OR THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Joint Proxy Statement/Prospectus is _________,
1997.
No person is authorized to give any information or to make any
representation not contained in this Prospectus and, if given
or made, such information or representation should not be
relied upon as having been authorized. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer
to purchase, the securities offered hereby, or the solicitation
of a proxy, in any jurisdiction in which, or to any person to
whom, it is unlawful to make such offer or solicitation of an
offer or proxy solicitation. Neither the delivery of this
Prospectus nor any distribution of the securities offered
hereby shall, under any circumstances, create an implication
that there has been no change in the affairs of First
Commercial or First Central since the date hereof.
AVAILABLE INFORMATION
First Commercial is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and in accordance therewith files reports and
other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other
information concerning First Commercial may be inspected and
copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the
Commission: Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
New York Regional Office, Seven World Trade Center, Suite 1300,
New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. Additionally, such material may be accessed at the
Commission's Web site (http://www.sec.gov).
First Commercial has filed with the Commission a registration
statement on Form S-4 (herein, together with all amendments and
exhibits, referred to as the "Registration Statement") under
the Securities Act of 1933, as amended. This Joint Proxy
Statement/Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made
to the Registration Statement.
__________
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
AS IS MORE FULLY SET FORTH UNDER "INFORMATION CONCERNING FIRST
COMMERCIAL" ELSEWHERE HEREIN, THIS JOINT PROXY
STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. FIRST
COMMERCIAL HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH
PERSON TO WHOM A COPY OF THIS JOINT PROXY STATEMENT/PROSPECTUS
HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS RELATING TO FIRST
COMMERCIAL THAT HAVE BEEN INCORPORATED BY REFERENCE HEREIN,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE THEREIN. REQUESTS FOR
DOCUMENTS RELATING TO FIRST COMMERCIAL SHOULD BE DIRECTED TO J.
LYNN WRIGHT, CHIEF FINANCIAL OFFICER, FIRST COMMERCIAL
CORPORATION, POST OFFICE BOX 1471, LITTLE ROCK, ARKANSAS
72203, TELEPHONE (501) 371-7000. IN ORDER TO INSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY [5
BUSINESS DAYS PRIOR TO SHAREHOLDER MEETING DATE], 1997.
TABLE OF CONTENTS
Page
----
AVAILABLE INFORMATION i
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE i
SUMMARY v
The Companies v
The Special Meeting v
Purpose of the Special Meeting v
Vote Required vi
Reasons for the Merger vi
Regulatory Approval vi
Dissenting Stockholders vi
Federal Income Tax Consequences vii
Selected Financial Data - First Commercial viii
Pro Forma Selected Financial Data - First Commercial ix
Comparative Per Share Data x
INTRODUCTORY STATEMENT 1
General 1
Purpose of the Special Meeting 1
Shares Entitled to Vote; Vote Required 2
Solicitation, Voting and Revocation of Proxies 2
THE MERGER 2
General 2
Reasons for the Merger 3
Federal Income Tax Consequences 4
Rights of Dissenting First Central Stockholders 6
Conditions of the Merger 7
Regulatory Approval 7
Termination of the Merger 8
Effective Date 8
Distribution of First Commercial Stock Certificates 8
Fractional Shares 9
Dilution 9
Accounting Treatment 9
Registration of First Commercial Stock
Under the Securities Act 10
INFORMATION CONCERNING FIRST CENTRAL 11
First Central Stock
11
Security Ownership of Certain Beneficial Owners
12
Security Ownership of Management
13
Selected Financial Data 14
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS 15
1996 Compared to 1995 15
1995 Compared to 1994 15
1994 Compared to 1993 16
Allowance for Loan Losses 16
Non-Accrual and Past Due Loans 16
INFORMATION CONCERNING FIRST COMMERCIAL 17
Information Incorporated by Reference 17
Management and Additional Information 17
COMPARATIVE RIGHTS OF SHAREHOLDERS 17
General 17
Voting Rights 18
Voting Requirements for Extraordinary Corporate Matters 18
Voting for Election of Directors 18
Amendment of Articles of Incorporation 19
Amendment of Bylaws 20
Removal of Directors 20
Limitation of Director Liability 20
Filling Vacancies on the Board of Directors 21
Nomination of Director Candidates and Advance
Notice of Matters to be Brought Before an
Annual Meeting by Stockholders 21
Fair Price Provision 22
Shareholder Rights Plan 23
LEGAL OPINIONS 24
EXPERTS 25
First Central
25
First Commercial
25
CONSOLIDATED FINANCIAL STATEMENTS OF FIRST CENTRAL F-1
Attachment I - Section 4-26-1007 of the Arkansas A-1
Business Corporation Act
SUMMARY
The following summary is qualified in its entirety by the more
detailed information appearing elsewhere herein and in the
appendices hereto.
The Companies
First Commercial Corporation ("First Commercial") is a multi-
bank holding company headquartered in Little Rock, Arkansas.
The Company offers a broad range of bank and bank-related
services through 15 commercial banking institutions in
Arkansas, seven in Texas, one in each of Louisiana and
Tennessee, and a 50% interest in each of two commercial banking
institutions in Oklahoma. In addition, subsidiaries of the
Company provide trust and fiduciary services, discount
brokerage services, offer first mortgage loans and perform
mortgage loan servicing operations. First Commercial is
incorporated under the laws of the State of Arkansas. The
executive offices of the Company are located at 400 West
Capitol Avenue, Little Rock, Arkansas 72201, telephone number:
(501) 371-7000. See "Information Concerning First Commercial."
First Central Corporation ("First Central"), is a bank holding
company headquartered in Searcy, Arkansas. First Central's
subsidiary is First National Bank, Searcy, Arkansas ("FNB").
First Central is incorporated under the laws of the State of
Arkansas. Executive offices of First Central are located at
200 West Race Street, Searcy, Arkansas 72143, telephone number:
(501)268-4211. See "Information Concerning First Central."
The Special Meeting
A special meeting of the stockholders of First Central (the
"Special Meeting") will be held on ________, 1997, at the time
and place set forth in the accompanying Notice of Special
Meeting of Stockholders. Only record holders of the common
stock, $1.00 par value per share, of First Central (the "First
Central Stock"), on ____________, 1997 are entitled to notice
of and to vote at the Special Meeting. On that date there were
71,926 shares of First Central Stock outstanding, each of which
is entitled to one vote at the Special Meeting.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote upon
a proposal to approve the merger of First Central with and into
First Commercial (the "Merger") pursuant to the terms of a Plan
and Agreement of Merger between First Commercial and First
Central dated February 5, 1997 (the "Merger Agreement"). As a
result of the Merger, FNB will become a wholly-owned subsidiary
of First Commercial. Under the terms of the Merger Agreement,
each outstanding share of First Central Stock will be converted
into a right to receive 22.94024 shares of common stock, $3.00
par value per share, of First Commercial (the "First Commercial
Stock"). Cash will be paid by First Commercial in lieu of
issuing fractional shares. The First Commercial Stock and cash
to be delivered to the First Central stockholders are
hereinafter referred to as the "Merger Consideration." First
Central will have the right to terminate the Merger Agreement
in the event the price of a share of First Commercial Stock
drops below $30.50 for a period of time and if First Commercial
does not agree to amend the Merger Agreement so that the Merger
Consideration will include a number of shares of First
Commercial Stock having a value equal to $50,325,000. If the
price of a share of First Commercial Stock rises above $45.75
for a period of time, First Commercial may amend the Merger
Agreement so that the Merger Consideration will include a
number of shares of First Commercial Common Stock having a
value equal to $75,487,500. See "Introductory Statement -
Purpose of the Special Meeting."
Vote Required
The affirmative vote of the holders of two-thirds of the
outstanding shares of First Central Stock is required to
approve the Merger. Directors, executive officers and their
affiliates who own or control approximately 79.5% of the
outstanding shares of First Central Stock entitled to vote at
the Special Meeting have indicated that they will vote in favor
of the Merger. See "Introductory Statement - Shares Entitled
to Vote; Vote Required."
Stockholders of First Commercial are not required to vote on
the Merger.
Reasons for the Merger
The Boards of Directors of First Commercial and First Central
have unanimously determined that the Merger, pursuant to the
terms of the Merger Agreement, is desirable and in the best
interest of each organization and its respective stockholders.
The Board of Directors of First Central has recommended that
First Central stockholders vote for the approval, ratification
and confirmation of the Merger. See "The Merger - Background
of and Reasons for the Merger."
Regulatory Approval
Consummation of the Merger requires the prior approval of the
Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"). An application for such regulatory approval
was filed on March 19, 1997. The Department of Justice will
have the opportunity, within 30 days after approval of the
Merger by the Federal Reserve Board, to commence litigation
against First Commercial and First Central under the antitrust
laws of the United States to enjoin the Merger, in the event it
shall elect to do so. See "The Merger - Regulatory Approval."
Dissenting Stockholders
Stockholders of First Central who comply with the specific
procedures required by Section 4-26-1007 of the Arkansas
Business Corporation Act, which are described elsewhere herein,
will have the right to dissent from the Merger, in which event,
if the Merger is consummated, they may be entitled to receive
in cash the fair value of their shares of First Central Stock.
See "The Merger - Rights of Dissenting First Central
Stockholders."
Federal Income Tax Consequences
The Merger will qualify as a tax-free corporate reorganization
for federal income tax purposes if it satisfies the specific
requirements of the Internal Revenue Code of 1986, as amended,
the Treasury regulations promulgated thereunder and pertinent
judicial decisions. The most important of these requirements
are that: (i) the transaction must qualify as a merger under
applicable state or federal law and (ii) the stockholders of
First Central must maintain a "continuity of interest" in First
Commercial after the Merger. The Internal Revenue Service
takes the position that this "continuity of interest" test will
be satisfied if the former First Central stockholders receive,
in the Merger, a number of shares of common stock of First
Commercial having a value, as of the effective date, equal to
at least fifty percent (50%) of the value of all the
outstanding stock of First Central as of such date. In general
this requires the stockholders of First Central to collectively
surrender at least 50% of their First Central Stock in exchange
for First Commercial Stock in the Merger. Based upon the
representation that these requirements will be satisfied in
connection with the Merger, and subject to certain other
assumptions and representations set forth in its opinion,
Friday, Eldredge & Clark, special tax counsel to First
Commercial, will render its opinion to the effect that, among
other things, no taxable gain or loss will be recognized for
federal income tax purposes by the stockholders of First
Central solely upon receipt of First Commercial Stock in
exchange for their shares of First Central Stock in connection
with the Merger. However, no ruling will be sought from the
Internal Revenue Service regarding the federal income tax
consequences of the Merger, and the tax opinion of counsel
referenced above is not binding on the Internal Revenue Service
or any court. See "The Merger - Certain Federal Income Tax
Consequences."
Selected Financial Data - First Commercial
The following selected financial data should be read in
conjunction with the more detailed information and financial
statements, including the notes thereto, set forth in this
document and incorporated herein by reference. See
"Information Concerning First Commercial."
FIRST COMMERCIAL CONSOLIDATED SELECTED FINANCIAL DATA
(In thousands, except per share data)
Year Ended December 31,
----------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Period Ended:
Net Interest
Income $ 217,208 $ 184,550 $ 159,445 $ 144,574 $ 133,408
Provision for
Possible
Loan and Lease
Losses 7,452 3,059 (3,092) 4,416 8,941
Net Income 68,562 56,910 50,308 45,965 39,967
Per Common Share
Data(1):
Net Income 2.37 2.07 1.87 1.66 1.44
Cash Dividends .84 .74 .64 .51 .40
Book Value 16.49 15.06 12.85 12.06 10.65
Average Assets 5,283,525 4,652,368 4,235,586 3,812,409 3,313,162
Average Common
Equity 454,299 378,807 337,557 310,252 271,598
Average Total
Equity 454,299 378,807 339,244 320,872 282,218
Ratios(%)
Return on:
Average Assets 1.30 1.22 1.19 1.21 1.21
Average Common
Equity 15.09 15.02 14.87 14.43 14.27
Average Total Equity
to Average Assets 8.60 8.14 8.01 8.42 8.52
(1) All per share data has been restated to reflect the 3 for 2 stock
split declared November 1993, the 5% stock dividend declared November
1994, the 7% stock dividend declared November 1995, and the 5%
stock dividend declared October 1996.
Pro Forma Selected Financial Data - First Commercial
The following table summarizes on a pro forma basis the effect of the
Merger, accounted for as a pooling of interests, as if it had been
consummated during the period ended December 31, 1996:
FIRST COMMERCIAL PRO FORMA SELECTED FINANCIAL DATA
(In thousands, except per share data)
Years Ended December 31,
-------------------------------
1996 1995 1994
---- ---- ----
Period Ended:
Net Interest Income $226,824 $192,957 $167,710
Provision for Possible
Loan and Lease Losses 7,687 3,204 (3,015)
Net Income 72,823 60,622 53,821
Per Common Share Data(1):
Net Income 2.38 2.08 1.89
Cash Dividends .79 .70 .60
Book Value 16.55 15.13 13.05
(1) All per share data has been restated to reflect the 7% stock
dividend declared November 1995 and the 5% stock dividend
declared October 1996.
Comparative Per Share Data
Information presented below may not be indicative of the results that
actually would have occurred if the combination had been in effect on
the dates indicated or indicative of future results.
Years Ended December 31,
--------------------------
1996 1995 1994
---- ---- ----
Earnings Per Common Share:
Historical:
First Commercial(1) $ 2.37 $ 2.07 $ 1.87
First Central 59.18 51.56 48.79
Pro Forma - First Commercial 2.38 2.08 1.89
Pro Forma Equivalent Share Basis -
First Central(2) 54.60 47.72 43.36
Cash Dividends Per Common Share:
Historical:
First Commercial(1) .84 .74 .64
First Central 30.00 28.00 28.00
Pro Forma - First Commercial .79 .70 .60
Pro Forma Equivalent Share Basis -
First Central(2) 18.12 16.06 13.76
Book Value Per Common Share (period
end):
Historical:
First Commercial(1) 16.49 - -
First Central 402.37 - -
Pro Forma - First Commercial 16.55 - -
Pro Forma Equivalent Share Basis -
First Central(2) 379.66 - -
(1) All First Commercial Corporation historical and pro forma per share
data has been restated to reflect the 7% stock dividend declared
November 1995 and the 5% stock dividend declared October 1996.
(2) The pro forma equivalent share amounts are computed by multiplying
First Commercial's pro forma share information by 22.94024.
INTRODUCTORY STATEMENT
General
This Joint Proxy Statement/Prospectus is furnished to the
stockholders of First Central Corporation ("First Central")
in connection with the solicitation of proxies on behalf of
its Board of Directors for use at a special meeting of
stockholders of First Central (the "Special Meeting") to be
held on the date and at the time and place specified in the
accompanying Notice of Special Meeting of Stockholders or
any adjournment thereof.
First Central and First Commercial Corporation ("First
Commercial") have each supplied all information included
herein with respect to itself. As used in this Joint Proxy
Statement/Prospectus, the term "First Central" means First
Central and its consolidated subsidiary and the term "First
Commercial" means First Commercial Corporation and its
consolidated subsidiaries.
This Joint Proxy Statement/Prospectus was first mailed to
shareholders of First Central on ___________, 1997.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote
upon a proposal to approve the merger of First Central with
and into First Commercial (the "Merger") pursuant to the
terms of a Plan and Agreement of Merger between First
Commercial and First Central dated February 5, 1997 (the
"Merger Agreement"). As a result of the Merger, First
National Bank, Searcy, Arkansas ("FNB") will become a
wholly-owned subsidiary of First Commercial. Under the
terms of the Merger Agreement, each outstanding share of
common stock of First Central, $1.00 par value per share
("First Central Stock"), will be canceled and converted
into the right to receive 22.94024 shares of First
Commercial common stock, $3.00 par value per share ("First
Commercial Stock"), with cash payment due in lieu of any
fractional shares. The First Commercial Stock and cash in
lieu of fractional shares to be delivered to First Central
stockholders are hereinafter referred to as the "Merger
Consideration." See "The Merger - Distribution of First
Commercial Stock Certificates."
First Central may terminate the Merger Agreement if the
average of the individual averages of the bid and asked
prices for shares of First Commercial Stock as reported on
the Nasdaq National Market as of the close of business on
each of the twenty (20) trading days immediately preceding
the Closing Date (the "Pre-Closing Period Average Price")
shall be less than $30.50 per share and if First Commercial
does not agree to amend the Merger Agreement so that the
Merger Consideration will include a number of shares of
First Commercial Stock having a value, based on the Pre-
Closing Period Average Price, equal to $50,325,000. If the
Pre-Closing Period Average Price shall be greater than
$45.75, First Commercial may amend the Merger Agreement so
that the Merger Consideration will include a number of
shares of First Commercial Stock having a value, based on
the Pre-Closing Period Average Price, equal to $75,487,500.
The average of the bid and asked price of a share of First
Commercial Stock on _________, 1997, was $_____.
Shares Entitled to Vote; Vote Required
Only holders of record of First Central Stock at the close
of business on _________, 1997 (the "Record Date") are
entitled to notice of and to vote at the Special Meeting.
On that date, the number of outstanding shares of First
Central Stock was 71,926, each of which is entitled to one
vote on each matter to come before the Special Meeting.
Under First Central's Articles of Incorporation and the
Arkansas Business Corporation Act of 1965, approval of the
Merger requires the affirmative vote of the holders of two-
thirds (2/3) of the outstanding shares of First Central
Stock. Abstentions will not be counted as affirmative
votes. Directors, executive officers and their affiliates
who own or control approximately 79.5% of the outstanding
shares of First Central Stock entitled to vote have
indicated that they will vote in favor of the Merger.
Solicitation, Voting and Revocation of Proxies
In addition to soliciting proxies by mail, directors,
officers and employees of First Central, 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 First Central Stock, and First Central
will reimburse such parties for reasonable out-of-pocket
expenses incurred in connection therewith. The cost of
soliciting proxies is being paid by First Central.
The proxies that accompany this Joint Proxy
Statement/Prospectus permit each holder of First Central
Stock on the Record Date to vote on all matters that come
before the Special Meeting. When a stockholder specifies
his choice on the proxy with respect to a matter being
voted upon, the shares represented by the proxy will be
voted in accordance with such specification. If no such
specification is made, the shares will be voted in favor of
approval of the Merger. A proxy may be revoked by (i)
giving written notice of revocation at any time before its
exercise to Judy Kubisiak, Secretary, First Central
Corporation, 200 West Race Street, Searcy, Arkansas 72143,
(ii) executing and delivering to Judy Kubisiak at any time
before its exercise a proxy bearing a subsequent date or
(iii) attending the Special Meeting and voting in person.
The Board of Directors of First Central is not aware of any
business to be acted upon at the Special Meeting other than
consideration of the Merger. If, however, other proper
matters are brought before the Special Meeting, or any
adjournments thereof, the persons appointed as proxies will
have discretion to vote or abstain from voting thereon
according to their best judgment.
THE MERGER
General
On February 18, 1997, and February 5, 1997, the Boards of
Directors of First Commercial and First Central,
respectively, approved the Merger Agreement. The
description of the Merger Agreement herein does not purport
to be complete and is qualified in its entirety by
reference to the Merger Agreement, which is made an exhibit
to the Registration Statement of which this Joint Proxy
Statement/Prospectus is a part and is incorporated herein
by reference.
Under the Merger Agreement, First Central will be merged
into First Commercial, and each share of First Central
Stock outstanding on the Effective Date, as defined in "The
Merger - Effective Date," will be converted into the right
to receive 22.94024 shares of First Commercial Stock. The
exchange ratio was based upon historical and projected
earnings of First Central, the amounts of First Central
assets and liabilities, and the market value of First
Commercial Stock. Projected earnings were based primarily
on historical trends.
First Commercial is an Arkansas corporation and a multi-
bank holding company registered under the Bank Holding
Company Act of 1956, as amended ("BHCA"). First Central is
an Arkansas corporation and a bank holding company
registered under the BHCA.
Stockholders of First Central will exchange their stock
certificates for new certificates evidencing shares of
First Commercial Stock. After the Merger, and until so
exchanged, the shares of First Central Stock will represent
the right to receive the number of shares of First
Commercial Stock into which such shares of First Central
Stock will be converted. See "The Merger - Distribution of
First Commercial Stock Certificates."
Reasons for the Merger
Several factors were important in the First Central Board's
decision to pursue this opportunity for affiliation with
First Commercial. First, based on the market price of
First Commercial's Stock at the time the negotiations
began, it was apparent that the value of the proposed
transaction was in the best interest of shareholders. A
second important consideration of the Board of Directors
was that First Commercial's Stock prices are quoted on the
Nasdaq National Market and there is apparently sufficient
market volume in the stock to afford shareholders of First
Central an opportunity for liquidity. A third important
consideration was First Commercial's sound record of
dividend payout. A fourth and extremely important
consideration in the decision was the financial soundness
of First Commercial. Based on the financial information
provided to First Central directors concerning the
financial performance of First Commercial over the
preceding two years, it was apparent that First Commercial
met or exceeded all soundness criteria comparable with its
peer group. Additionally, its profitability performance
had been at or above levels of peer financial institutions.
A fifth important consideration was the general environment
of the commercial banking industry in this country and the
substantially enhanced activity of merger and acquisition
opportunities in the industry. Finally, the First Central
Board was impressed with First Commercial's commitment to
make each of its affiliates an independent community bank
responsive to the local community's needs. The combined
resources of the two companies will allow them to offer an
even greater array of products and services to meet those
needs.
The merger of First Central and First Commercial will
enhance First Commercial's ability to compete in the
Central Arkansas markets. The Merger also will provide
First Commercial with a larger business base over which to
spread the cost of developing new and innovative services.
In summary, the Board of Directors of First Central
believes that the proposed merger with First Commercial is
in the best interests of its shareholders.
Federal Income Tax Consequences
The following is a discussion of certain material federal
income tax considerations in connection with the Merger and
of the tax opinion of Friday, Eldredge & Clark, special tax
counsel to First Commercial. This discussion does not
address all aspects of federal income taxation that may be
relevant to particular shareholders of First Central and
may not be applicable to shareholders who are not citizens
or residents of the United States, or who may acquire First
Commercial common stock pursuant to the exercise or
termination of employee stock options or otherwise as
compensation, nor does the discussion address the effect of
any applicable foreign, state, local or other tax laws.
This discussion assumes that the First Central shareholders
hold their First Central common stock as capital assets
within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the "Code"). EACH FIRST CENTRAL
SHAREHOLDER SHOULD CONSULT HIS OR HER OWN TAX ADVISOR AS TO
THE PARTICULAR TAX CONSEQUENCES TO HIM OR HER OF THE
MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF FOREIGN,
STATE, LOCAL AND OTHER TAX LAWS.
The Merger will qualify as a tax-free corporate
reorganization for federal income tax purposes under
Section 368(a)(1)(A) of the Code, if it satisfies the
specific requirements of the Code, the regulations
promulgated thereunder, and pertinent judicial decisions.
The most important of these requirements are (i) the
transaction must qualify as a merger under applicable state
or federal law and (ii) the stockholders of First Central
must maintain a "continuity of interest" in the surviving
corporation after the Merger. The Internal Revenue Service
takes the position that this "continuity of interest" test
will be satisfied if the former First Central stockholders
receive, in the Merger, a number of shares of common stock
of First Commercial having a value, as of the Effective
Date (as defined herein), equal to at least fifty percent
(50%) of the value of all the outstanding stock of First
Central as of such date, and acquire such stock without a
present intent to sell, transfer or otherwise dispose of
such stock in a manner that would cause the fifty percent
(50%) continuity of interest threshold to be violated. In
general, this requires the stockholders of First Central to
collectively surrender at least 50% of their First Central
Stock in exchange for First Commercial Stock in the Merger,
without a present intent to sell, transfer or otherwise
dispose of such stock in violation of the fifty percent
(50%) continuity of interest requirement.
The Merger has been structured in a manner to qualify as a
statutory merger under the law of the State of Arkansas.
In addition, it is expected that the stockholders of First
Central will collectively exchange a sufficient number of
shares of First Central Stock for First Commercial Stock so
that the 50% "continuity of interest" test initially should
be satisfied in connection with the Merger.
Accordingly, assuming these tests are satisfied, and
provided other specific requirements contained in the Code,
the regulations promulgated thereunder, and pertinent
judicial decisions are met, the transaction should qualify
as a tax-free corporate reorganization for federal income
tax purposes pursuant to the provisions of Section
368(a)(1)(A) of the Code.
If the Merger qualifies as a tax-free corporate
reorganization, the material federal income tax
consequences of the Merger will be as follows: (i) no
material gain or loss will be recognized by First Central
or First Commercial as a result of the Merger; (ii) no gain
or loss will be recognized by the stockholders of First
Central upon the receipt of First Commercial Stock received
solely in exchange for their shares of First Central Stock
in connection with the Merger; (iii) the tax basis of the
shares of First Commercial stock received by the
stockholders of First Central in the Merger will, in each
instance, be the same as the basis of the shares of First
Central Stock surrendered in exchange therefor; (iv) the
holding period of the shares of First Commercial Stock
received by the stockholders of First Central in the Merger
will, in each instance, include the holding period of the
shares of First Central Stock exchanged therefor, provided
that the shares of First Central Stock were held as capital
assets on the date of the Merger; and (v) the payment of
cash to stockholders of First Central in lieu of fractional
shares of First Commercial Stock will be a taxable
transaction and will be treated as if the fractional shares
were distributed as part of the exchange and then redeemed
by First Commercial for cash, and any such cash payments
will be treated as having been received by the stockholder
as a distribution in redemption of the fractional share
interest, subject to the provisions of Section 302 of the
Code.
Stockholders of First Central who exercise dissenters'
rights and receive cash for their shares of First Central
Stock will have engaged in a taxable transaction and will
be treated as having received such cash as a distribution
in redemption of such stockholders' First Central Stock,
subject to the conditions and limitations of Section 302 of
the Code.
If the Merger does not qualify as a tax-free corporate
reorganization for federal income tax purposes, it will
constitute a taxable transaction to the stockholders of
First Central. In such circumstances, gain or loss will be
recognized by the stockholders of First Central to the
extent of the difference between the fair market value, on
the Effective Date, of the shares of First Commercial Stock
received in connection with the Merger, and the adjusted
basis of the shares of First Central Stock surrendered in
the transaction. The fair market value of the First
Commercial Stock on the Effective Date may be determined on
the basis of the average high and low selling prices of
such stock on the day of the transaction. If the
transaction is taxable, the holding period for the shares
of First Commercial Stock to be received by the
stockholders of First Central will commence on the day
following the date of the transaction.
Because the tax consequences to any particular stockholder
may be affected by matters not pertaining to the Merger, it
is recommended that each stockholder of First Central
consult his or her own personal tax advisor concerning the
specific income tax consequences of the Merger, including
the applicability and effect of foreign, state, local and
other tax laws.
Rights of Dissenting First Central Stockholders
Pursuant to Section 4-26-1007 of the Arkansas Business
Corporation Act of 1965, any stockholder of First Central
may dissent from the Merger by filing with First Central,
prior to or at the meeting of stockholders at which the
proposed Merger is submitted to a vote, a written objection
to the proposed Merger. If the Merger is approved and the
dissenting stockholder shall not have voted in favor
thereof (a failure to vote against the proposed Merger will
not constitute a waiver of the stockholder's dissenter's
rights if all other statutory requisites are satisfied, and
a vote against the proposed Merger will not itself satisfy
the notice requirements of the dissenter's rights statute),
the stockholder shall, within ten days thereafter, make
written demand to First Central for payment of the fair
value of the stockholder's shares. The ten day period for
making such written demand begins on the day following the
date of the meeting at which the proposed Merger is
approved. Other than the "Notice of Special Meeting of
Stockholders" accompanying this Joint Proxy
Statement/Prospectus, which specifies the date on which
such vote will be taken, no further notice with regard to
the ten day period for making written demand upon First
Central will be provided to First Central stockholders. If
the proposed Merger is effected as provided, First Central
will pay the stockholder upon surrender of the certificate
or certificates representing his shares, the fair value of
his shares as of the day prior to the date on which the
vote was taken approving the Merger, excluding any
appreciation or depreciation in anticipation of the Merger.
Any stockholder failing to make demand within the ten day
period from the date of stockholder vote will be bound by
the terms of the Merger.
Within ten days after the Merger is effected as provided,
First Commercial will give written notice thereof to each
dissenting stockholder who has made the required demand and
will make a written offer to each such stockholder to pay
for his shares at a specified price deemed by First
Commercial to be their fair value. If the fair value is
agreed upon between a dissenting stockholder and First
Commercial within thirty days after the date on which the
Merger is effected, payment therefor will be made within
ninety days after the date upon which the Merger is
effected upon surrender of the certificate or certificates
representing such shares. Upon payment of the agreed
value, the dissenting stockholder will cease to have any
interest in his or her shares in First Central.
If an agreement is not reached as to the fair value of the
shares within said thirty day period, the dissenting
stockholder, within sixty days after the expiration of the
thirty day period, may file a petition in the Circuit Court
of White County, Arkansas, requesting that the fair value
of the shares be found and determined.
The foregoing summary of the rights of dissenting
stockholders is qualified in its entirety by reference to
Attachment I which sets forth in full the provisions of
Section 4-26-1007 of the Arkansas Business Corporation Act
of 1965.
Conditions of the Merger
Consummation of the Merger is conditioned upon the
occurrence of certain events on or prior to the Effective
Date including, among other things, the following: (i)
approval of the Merger by the stockholders of First
Central; (ii) confirmation by First Commercial and First
Central of the truth of their respective representations
and warranties and compliance with their respective
covenants as set forth in the Merger Agreement; (iii) the
absence of any court or governmental proceeding undertaken
or threatened to restrain, enjoin, prohibit, or obtain
damages for the transaction contemplated by the Merger
Agreement which, in the opinion of either First Commercial
or First Central, would make the consummation of the Merger
inadvisable; (iv) the absence of any suit, action or
proceedings pending or threatened against First Commercial
or First Central or any of each other's officers or
directors which, if successful, would, in the reasonable
judgment of First Central or First Commercial, have a
material adverse effect on the financial condition of First
Commercial or First Central, respectively; (v) receipt by
First Commercial and First Central of letters, as
considered necessary, from each other's independent
certified public accountants relating to certain financial
statements and information of the other and an opinion from
Ernst & Young LLP that the pooling of interests method of
accounting applies to the Merger; (vi) receipt by First
Commercial and First Central of certain opinions from First
Central's and First Commercial's counsel, respectively;
(vii) receipt by First Commercial from affiliates of First
Central of an agreement restricting disposition of First
Commercial Stock for a certain period of time; (viii)
receipt by First Commercial and First Central of an opinion
from tax counsel addressing the tax consequences of the
contemplated Merger; and (ix) the absence of any material
adverse change in the financial condition, business or
operations of either First Commercial or First Central.
All of these conditions are expected to be met.
Any of the conditions set forth above may be waived at the
discretion of the respective institutions except as
otherwise provided by law. However, neither First
Commercial nor First Central will waive any condition if
such waiver, in the judgment of its Board of Directors,
would result in materially adverse consequences to it or
its stockholders.
Regulatory Approval
Consummation of the Merger requires the prior written
approval of the Federal Reserve Board. An application for
such approval was filed on March 19, 1997. Under the BHCA,
subsequent to approval of the Merger by the Federal Reserve
Board, the United States Department of Justice will have
the opportunity, within 30 days after such approval, to
commence litigation against First Commercial and First
Central under the antitrust laws of the United States to
enjoin the Merger, in the event it shall elect to do so.
Although no assurance can be provided, First Commercial and
First Central currently expect the Merger to be consummated
on or before June 30, 1997. See "The Merger - Termination
of the Merger."
Termination of the Merger
The Merger Agreement provides that it may be terminated by
mutual consent of the Boards of Directors of First
Commercial and First Central at any time before the Closing
(as defined in the Merger Agreement). Either First
Commercial or First Central, at its option, may terminate
the Merger Agreement (unless such terminating party has
breached a covenant under the Merger Agreement) if the
Closing Date shall not have occurred on or before September
30, 1997, or such later date agreed to in writing by the
parties. Either First Commercial or First Central may
terminate the Merger Agreement if any of the conditions
precedent to their obligation to consummate the Merger have
not been met at or prior to the Closing. See "The Merger -
Conditions of the Merger." Under certain circumstances,
First Central may terminate the Merger Agreement following
a drop in the price of a share of First Commercial Stock.
See "Introductory Statement - Purpose of the Special
Meeting." First Central may terminate the Merger Agreement
in the event that prior to the Effective Date First
Commercial enters into an agreement in which it either will
be acquired or will be merged out of existence or another
person publicly announces the intent to acquire 25% or more
of the outstanding equity securities of First Commercial.
Effective Date
The Merger Agreement provides that the Merger shall become
effective at 5:00 p.m. on the date of filing appropriate
Articles of Merger with the Secretary of State of the State
of Arkansas (the "Effective Date"). Although no assurance
can be given, the Effective Date is expected to be on or
before June 30, 1997.
Distribution of First Commercial Stock Certificates
After the Effective Date, each holder of certificates
previously evidencing shares of First Central Stock will be
required to surrender such certificates for transfer and
cancellation. Upon surrender each holder will receive
certificate(s) representing the number of shares of First
Commercial Stock which the holder of such shares of First
Central Stock will have the right to receive (except for
any fractional share interests as described in "The Merger
- Fractional Shares"), together with any dividends which
have been declared on such shares of First Commercial Stock
and to which such holder is entitled.
Holders of First Central Stock on the Effective Date shall
be entitled to receive dividends declared by First
Commercial subsequent to the Effective Date, but payment of
such dividends will not be required of First Commercial
until such persons have delivered their certificates
representing shares of First Central Stock in exchange for
certificates representing shares of First Commercial Stock.
As soon as practicable after consummation of the Merger,
transmittal forms will be sent to stockholders of First
Central for use in forwarding to First Commercial's
transfer agent certificates previously evidencing First
Central Stock for surrender and exchange for certificates
evidencing First Commercial Stock. Until so surrendered,
certificates formerly evidencing First Central Stock will
be deemed for all corporate purposes (except for payment of
dividends to First Central stockholders which may be
withheld pending exchange of certificates) to evidence the
right to receive the number of whole shares of First
Commercial Stock and the right to receive cash in lieu of
fractional shares which the holder thereof would be
entitled to receive upon surrender. Stockholders of First
Central are requested not to submit stock certificates for
exchange until they have received written instructions to
do so.
If outstanding certificates for shares of First Central
Stock are not surrendered, or if payment for them is not
claimed prior to such date on which such payment would
otherwise escheat to or become the property of any
governmental unit or agency, the unclaimed item shall, to
the extent permitted by the abandoned property and/or any
other applicable law, become the property of First
Commercial (and to the extent not in its possession shall
be paid over to it), free and clear of all claims or
interests of any person previously entitled to such items.
Notwithstanding the foregoing, neither First Commercial's
transfer agent nor any party to the Merger shall be liable
to any holder of First Central Stock for any amount paid to
any governmental unit or agency having jurisdiction of such
unclaimed items pursuant to the abandoned property or other
applicable law of such jurisdiction.
Fractional Shares
No fractional shares of First Commercial Stock will be
issued for shares of First Central Stock. In lieu of
fractional interests, First Commercial shall pay to such
persons who would otherwise receive fractional shares cash
in an amount equal to the market value of such fractional
shares based on the average of the bid and asked prices for
a share of First Commercial Stock on the Closing Date. See
"The Merger - Federal Income Tax Consequences."
Dilution
Each common stockholder of First Central who exchanges his
stock will receive a voting interest exactly in proportion
to his relative voting common stock interest in relation to
other First Central stockholders before the combination is
effected. Each share of First Central Stock presently held
by First Central stockholders will represent less of a
percentage voting interest in the total number of
outstanding shares of First Commercial (subsequent to the
Merger) than it now represents as a percentage of the total
outstanding shares of First Central.
Accounting Treatment
The Merger will be accounted for as a pooling of interests
under generally accepted accounting principles. The assets
and liabilities of First Central will be reflected in the
consolidated financial statements of First Commercial at
their book value as reflected in First Central's financial
statements. Expenses incurred in connection with the
Merger will be considered as an expense of First
Commercial.
A condition of consummating the Merger is that First
Commercial receive an opinion from Ernst & Young LLP that
the pooling of interests method of accounting applies to
the Merger. Management of First Commercial expects this
condition to be met.
Registration of First Commercial Stock Under the Securities
Act
The shares of First Commercial Stock to be issued to First
Central stockholders in the Merger have been registered
under the Securities Act of 1933, as amended (the
"Securities Act"), thereby allowing such shares to be
freely traded without restriction by persons who were not
affiliates of First Central, as that term is defined in the
Securities Act.
Directors and certain officers and stockholders of First
Central may be deemed to be "affiliates" of First Central
within the meaning of the Securities Act. Accordingly,
resales by such persons of any shares of First Commercial
Stock received by them in the Merger are restricted and may
be made only if such stock is registered 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 promulgated under the Securities Act
("Rule 144" and "Rule 145") prior to effecting any resales
of such First Commercial Stock.
Pursuant to Rule 145, the sale of First Commercial Stock
held by those persons who are affiliates of First Central
will be subject to certain restrictions. For one year
following the Effective Date, such persons may sell the
First Commercial Stock only if (i) First Commercial has
filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), during the preceding twelve months,
(ii) such First Commercial Stock is sold in "brokers'
transactions" as that term is defined in Section 4(4) of
the Securities Act, (iii) the person selling such First
Commercial Stock does not solicit or arrange for the
solicitation of orders to buy such First Commercial Stock
in anticipation of or in connection with such transaction
nor make any payment in connection with the offer or sale
of such First Commercial Stock to any person other than the
broker who executes the order to sell, and (iv) sales made
by such person within the preceding three months do not
exceed 1% of the outstanding shares of that class. Such
shares of First Commercial Stock held for more than one
year but less than two years after the Effective Date may
be sold freely if First Commercial is in compliance with
the above discussed Exchange Act reporting requirements.
Once the shares of such First Commercial Stock have been
held for two years after the Effective Date, they may be
sold free from the restrictions of Rules 144 and 145.
It is a condition to First Commercial's obligation to
consummate the Merger that First Commercial shall have
received an agreement in form and substance satisfactory to
it, executed and delivered by each holder of First Central
Stock who is determined to be an affiliate of First
Central, providing, among other things, that such holder
will not sell, transfer or in any way reduce his risk with
respect to his shares of First Commercial Stock until such
time as First Commercial shall have published financial
results covering at least 30 days of post-Merger combined
operations. In addition to the above, each First Central
stockholder who owns more than five percent (5%) of the
First Central Stock shall deliver an agreement to First
Commercial representing that he has no present intent to
sell any of the First Commercial Stock to be received by
him, nor will he sell more than fifty percent (50%) of such
stock for a period of at least one (1) year following the
Closing.
INFORMATION CONCERNING FIRST CENTRAL
First Central Corporation, an Arkansas corporation, is a
one-bank holding company having 100% ownership in First
National Bank, Searcy, Arkansas ("FNB"). FNB was
originally chartered in 1904 as an Arkansas state bank
under the name Searcy Bank. Its name was changed in 1906
to Bank of Searcy and again in 1943 to The Searcy Bank. In
1967 it was converted to a national bank and given its
current name. Its main office is in Searcy (White County)
with branches in Bald Knob, Beebe and Rose Bud. The
principal office is located at 200 West Race Street,
Searcy, Arkansas, with five branch locations in the city
limits of Searcy.
First Central Stock
As of March 31, 1997, there were 80,000 authorized shares
of First Central Stock with 71,926 shares issued and
outstanding. The approximate number of holders of First
Central Stock on that date was 43. There is no established
public trading market for shares of First Central Stock.
On February 4, 1997, the date preceding the announcement of
the First Central Merger, there was no independent basis
for establishing a per share cash market price for First
Central Stock. Book value of First Central Stock equaled
$406.98 per share on January 31, 1997, the month end
preceding that date.
First Central's dividends for the three years ended
December 31, 1996, 1995, and 1994 are as follows:
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Dividend
Dividend Dividend Dividend Dividend Declared
-------- -------- -------- -------- --------
1996:
Per Share $ 5 $ 5 $ 5 $ 15 $ 30
Total Declared 359,630 359,630 359,630 1,078,890 2,157,780
1995:
Per Share $ 5 $ 5 $ 5 $ 13 $ 28
Total Declared 359,630 359,630 359,630 935,038 2,013,928
1994:
Per Share $ 5 $ 5 $ 5 $ 13 $ 28
Total Declared 359,630 359,630 359,630 935,038 2,013,928
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of March 31, 1997, the identity and
total number of shares of First Central Common Stock owned by persons
known by management of First Central to own more than five percent (5%)
of the total outstanding shares.
First Commercial
First Central Common Stock to be
Common Stock Owned Upon
Name and Address of Beneficially Owned on Consummation of
Beneficial Owner March 31, 1997 Merger(1)
___________________ __________________ ____________________
Shares % of Class Shares % of Class
Sarah Pyeatt Black 3,928 5.47 90,109 *
2060 Shadowwood Cove
Memphis, TN 38119
Phillip H. Pyeatt(2) 18,654 25.93 427,927 1.34
P. O. Box 1425
Searcy, AR 72145
Robert E. Pyeatt 4,384 6.10 100,570 *
6554 Pidgeon Hull
Memphis, TN 38119
Wayne W. Pyeatt(3) 16,182 22.50 371,218 1.17
349 Inkberry Lane
Memphis, TN 38117
*Denotes less than 1%
__________
(1) Assumes an exchange ratio of 22.94024 First Commercial
shares for each outstanding First Central share.
(2) Represents shares owned individually, as general partner
of The Pyeatt Family Limited Partnership, and Phillip H.
Pyeatt Trust, of which he is trustee.
(3) Represents shares owned individually and as trustee of
the Wayne W. Pyeatt Trust.
Security Ownership of Management
The following table sets forth the beneficial ownership of
shares of First Central Common Stock by each director of
First Central and by all directors and executive officers
of First Central as a group as of March 31, 1997. The
number of shares shown as being beneficially owned by each
director are those over which he or she has either sole or
shared voting and/or investment powers.
First Central First Commercial
Common Stock Common Stock to be
Beneficially Owned on Owned Upon
March 31, 1997 Consummation of the
Name of Director Merger(1)
_________________ ___________________ _____________________
Shares % of Shares % of
Class Class
Shell Blakely 1,200 1.67 27,528 *
Logan Cothern 80 .11 1,835 *
Wayne Hartsfield 1,200 1.67 27,528 *
Edwin Hubach 1,000 1.39 22,940 *
Jerry Moore 452 .63 10,368 *
Jack Powell 560 .78 12,846 *
Phillip H.
Pyeatt(2) 18,654 25.93 427,927 1.34
Robert E. Pyeatt 4,384 6.10 100,570 *
Phyllis Pyeatt
Webb 2,000 2.78 45,880 *
Wayne W.
Pyeatt(3) 16,182 22.50 371,218 1.17
All Directors and 45,920 63.84 1,053,415 3.31
Executive
Officers as a
Group (a total of
12 individuals)
*Denotes less than 1%
__________
(1) Assumes an exchange ratio of 22.94024 First Commercial
shares for each outstanding First Central share.
(2) Includes shares owned by Phillip H. Pyeatt,
individually, The Pyeatt Family Limited Partnership
and Phillip H. Pyeatt Trust.
(3) Includes shares owned by Wayne W. Pyeatt,
individually, and Wayne W. Pyeatt Trust.
Selected Financial Data - First Central Corporation
The following selected financial data should be read in conjunction
with the financial statements, including the notes thereto, set forth
in this document. See "Consolidated Financial Statements of First
Central."
FIRST CENTRAL SELECTED FINANCIAL DATA
(In thousands, except per share data)
Year Ended December 31,
-----------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Summary of Operating
Results:
Net Interest Income $ 9,616 $ 8,407 $ 8,265 $ 8,407 $ 8,121
Provision for Possible
Loan and Lease Losses 235 145 77 60 60
Net Income 4,260 3,712 3,512 3,839 3,675
Period End Balance Sheet
Data:
Total Assets 260,636 243,019 224,433 213,325 206,194
Total Deposits 228,953 213,602 197,318 187,137 182,951
Long Term Debt -0- -0- -0- -0- -0-
Shareholder's Equity 28,940 26,942 24,094 23,442 23,412
Per Common Share Data:
Net Income 59.18 51.56 48.79 53.33 51.01
Cash Dividend 30.00 28.00 28.00 26.00 19.00
Book Value 402.37 374.58 335.00 325.92 297.70
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion provides certain information
concerning First Central Corporation s financial condition
and results of operations. For a more complete
understanding of the following discussion, reference should
be made to the financial statements of First Central
Corporation and Subsidiary and related notes thereto
presented elsewhere in this Joint Proxy
Statement/Prospectus.
1996 Compared to 1995
1996 was a period of excellent growth for First Central
Corporation. Loans increased by $12,367,870 or 9.74%,
deposits increased by $15,351,587 or 7.19%, and total
assets increased by $17,616,607 or 7.25%. The increase in
loans and deposits was prompted by continued growth in the
local economy.
Dividends of $2,157,780 were paid in 1996 and stockholders
equity increased $1,998,784 or 7.42%. In addition to the
increase in loans the deposit growth was used to increase
investments by $4,494,529. First Central Corporation
concluded the year with a return on assets of 1.63% and a
return on equity of 14.72%.
Net income for 1996 was $4,260,774 compared to $3,712,166
in 1995. The $1,888,200 increase in interest income was
offset by a $679,298 increase in interest expense creating
an increase of .22% in net interest margin. The
$15,617,823 increase in deposit accounts yielded a $57,738
increase in deposit fee income. The increase in other
income resulted mainly from increases in income from
fiduciary activities.
1995 Compared to 1994
1995 was also a period of growth for First Central
Corporation. Loans increased by $13,806,514 or 12.21%,
deposits increased by $16,283,764 or 8.25% and total assets
increased by $18,586,701 or 8.28%. The increase in loans
and deposits was prompted by substantial growth in the
local economy.
Dividends of $2,013,928 were paid in 1995 and stockholders
equity increased $2,847,158 or 11.82%. In addition to the
increase in loans, the deposit growth was used to increase
investments $4,135,950. First Central Corporation
concluded the year with a return on assets of 1.53% and a
return on equity of 13.78%.
Net income for 1995 was $3,712,166 compared to $3,512,672
in 1994. The $2,570,685 increase in interest income was
offset by a $2,428,432 increase in interest expense
creating a slight decrease in the net interest margin of
.26%. The increase in deposit accounts of $16,283,764
yielded a $92,331 increase in deposit fee income.
Decreases in other service charges and securities losses
reduced the net increase in other income to $62,650.
1994 Compared to 1993
1994 was also a period of growth for First Central
Corporation even though net income for the year was down
$326,772. Loans increased $20,479,470 or 22.11%, deposits
increased $10,180,682 or 5.44%, and total assets increased
$11,108,112 or 5.21%.
Dividends of $2,013,928 were paid in 1994 and stockholders
equity increased $652,802 or 2.78%. Stockholders equity
was reduced by net unrealized depreciation on securities
available for sale totaling $1,027,857.
With the increase in deposits being relatively low, the
additional loans were funded by investments. Investments
decreased by $10,648,023 or 9.72%. First Central
Corporation used a portion of its resources by adding
approximately $700,000 to building and equipment. Return
on assets and return on equity were 1.57% and 14.58%,
respectively.
Net income fell by $326,772 or 8.51% from 1993 to
$3,512,672. The $437,999 increase in interest income was
offset by a $580,447 increase in interest expense creating
a decrease in net interest margin of .18%. The $10,180,682
increase in deposit accounts resulted in a $93,380 or
12.57% increase in deposit fee income. The increase in
other income totaled $97,650 or 9.20%.
Allowance for Loan Losses
A summary of the changes in the allowance for loan losses
for each of the past two years is presented below.
1996 1995
---- ----
Balance at beginning of period $712,551 $608,997
Amounts charged-off (100,721) (56,611)
Recoveries of amounts previously
charged-off 22,043 15,165
------- -------
Net charge offs (78,678) (41,446)
Provision for loan losses 235,000 145,000
------- -------
Balance at end of period $868,873 $712,551
======= =======
The provision for loan losses is charged to expenses as a
cost of doing business. Bank management constantly
monitors this provision and a least quarterly recommends to
the board a provision for loan losses. Historic data, past
dues, problem loans, and other factors that might affect
the area s economic condition are taken into consideration
in making the final decision by the Board of Directors.
Non-Accrual and Past Due Loans
It is the policy of First National Bank to review the loans
on a loan by loan basis to determine if they should be
placed on non-accrual status. It is based on the ability
to pay and the amount of collateral and is at the
discretion of the loan committee. The total amount in non-
accrual loans at December 31, 1996 and 1995 was $18,579 and
$4,681, respectively.
INFORMATION CONCERNING FIRST COMMERCIAL
Information Incorporated by Reference
The following documents, or the indicated portions thereof,
have been filed by First Commercial with the Commission
under the Exchange Act and are incorporated by reference in
this Joint Proxy Statement/Prospectus:
1. Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The description of First Commercial's common
stock contained in the Registration Statement on
Form 10 filed April 30, 1981 and any amendment or
report filed for the purpose of updating such
description; and
3. Registration Statement on Form 8-A for the
preferred share purchase rights as filed on
January 9, 1991.
In addition, all other reports filed by First Commercial
under the Exchange Act between the date of this Joint Proxy
Statement/Prospectus and the date of the Special Meeting
are incorporated herein by reference from date of filing.
Any statement contained in any document incorporated or
deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this
Joint Proxy Statement/Prospectus to the extent that a
statement contained herein or in any other subsequently
filed document which is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Joint Proxy
Statement/Prospectus. See "Incorporation of Certain
Documents by Reference" for information with respect to
securing copies of documents incorporated by reference in
this Joint Proxy Statement/Prospectus.
Management and Additional Information
Certain information relating to the executive compensation,
various benefit plans, voting securities and the principal
holders thereof, certain relationships and related
transactions and other related matters as to First
Commercial is incorporated by reference or set forth in the
First Commercial Annual Report on Form 10-K for the year
ended December 31, 1996, incorporated herein by reference.
See "Incorporation of Certain Documents by Reference" for
information with respect to securing copies of documents
incorporated by reference in this Joint Proxy
Statement/Prospectus.
COMPARATIVE RIGHTS OF SHAREHOLDERS
General
If the stockholders of First Central approve the Merger,
and if the Merger is subsequently consummated, all
stockholders of First Central, other than those exercising
dissenters' rights, will become stockholders of First
Commercial. The rights of stockholders of First Commercial
are governed by and subject to the Arkansas Business
Corporation Act of 1987 and First Commercial's Second
Amended and Restated Articles of Incorporation, as amended
("First Commercial's Articles"), and Bylaws rather than the
Arkansas Business Corporation Act of 1965 and the Articles
of Incorporation and Bylaws of First Central, which govern
the rights of stockholders of First Central. The following
is a brief summary asserting some of the principal
differences between the rights of First Commercial
stockholders and the rights of First Central stockholders
not described elsewhere herein.
Voting Rights
Holders of First Commercial Stock are entitled to one vote
for each share held on all matters brought to a vote before
the stockholders of First Commercial. Stockholders of
First Central Stock also are entitled to one vote for each
share held on all matters brought to a vote before the
stockholders of First Central.
Under First Commercial's Articles, the Board of Directors
of First Commercial is authorized to issue preferred stock.
In the event a series of preferred stock is issued, the
holders of such preferred stock shall be entitled to vote
on the election of two directors in the event of a default
in preference dividends on the preferred stock and shall
have such other voting rights as may be prescribed by First
Commercial's Board of Directors in the articles of
amendment creating such series of preferred stock, which
articles of amendment may be adopted by the Board of
Directors without further stockholder action.
Voting Requirements for Extraordinary Corporate Matters
The corporate law governing First Central requires with
respect to mergers, consolidations, sales of all or
substantially all of a corporation's assets outside the
normal course of business, or voluntary dissolution of a
corporation ("extraordinary corporate matters"), that such
extraordinary corporate matters be approved by the
affirmative vote of the holders of at least two-thirds
(2/3) of the outstanding shares entitled to vote.
The corporate law governing First Commercial generally
requires the affirmative vote of the holders of a majority
of the votes entitled to be cast to approve extraordinary
corporate matters. First Commercial's Articles provide,
however, that if a transaction is contemplated with an
Interested Stockholder (as defined herein) of First
Commercial, then pursuant to the Fair Price Provision,
which is defined and described in greater detail below, the
transaction must be approved by the holders of at least 80%
of the votes entitled to be cast by the holders of First
Commercial Stock. If, on the other hand, the transaction
is approved by a majority of disinterested directors or if
the price paid to all stockholders in connection with the
transaction meet certain standards of fairness set forth in
the Fair Price Provision, the 80% vote requirement does not
apply.
Voting for Election of Directors
Corporate law governing First Central provides that a
stockholder entitled to vote for the election of directors
may vote the number of shares owned for as many candidates
as a stockholder is entitled to elect, or the stockholder
may cumulate his votes and distribute them among any
candidate or candidates as he sees fit. The right of First
Central's stockholders to cumulate their votes cannot be
revoked or restricted by the Articles of Incorporation or
Bylaws of First Central. Such cumulative voting rights
afford minority stockholders some assurance of
representation on a corporation's board of directors.
Under the law governing First Commercial, however,
cumulative voting is authorized only if affirmatively
stated in a corporation's articles of incorporation. First
Commercial's Articles do not grant cumulative voting
rights. Accordingly, any stockholder who obtains a
majority of the outstanding shares of First Commercial
Common Stock will have the power to elect all directors.
The directors of First Central are elected for a term of
one year. Pursuant to First Commercial's Articles, its
board of directors is divided into three classes of
approximately equal size. Such a board is referred to as a
classified or staggered board of directors. Each director
of First Commercial is elected for a term of three years,
and the terms are staggered in such a way that
approximately one-third of the terms expire at each annual
meeting. The staggering of terms of directors has the
potential effect of increasing the difficulty of changing
the composition of First Commercial's board of directors to
the extent that at least two annual meetings, rather than
one, will be required in order for First Commercial
stockholders to effect a change in the majority control of
its board of directors.
Amendment of Articles of Incorporation
Amendments to the Articles of Incorporation of First
Central ("First Central's Articles") must be approved by
two-thirds (2/3) of the outstanding shares entitled to vote
thereon. Amendments to First Commercial's Articles are
deemed approved if the number of votes cast in favor of the
amendment exceed the votes cast against the amendment,
provided that a quorum of those entitled to vote is
represented at the meeting; provided, however, if the
amendment creates dissenters' rights for a voting group,
the amendment must be approved by a majority of the votes
entitled to be cast by such voting group. The reduced
voting requirement for stockholder approval may make
stockholder approval for amendments to First Commercial's
Articles easier to obtain and thus more difficult for
minority stockholders to defeat. However, First
Commercial's Articles require the approval of at least 80%
of the shares entitled to vote with regard to the
amendment, modification or repeal of provisions dealing
with a classified Board of Directors, advance notice from
stockholders of nominations for election of First
Commercial directors, the filling of vacancies on the First
Commercial Board of Directors, removal of First Commercial
Directors, action of stockholders without a meeting, and an
amendment of parallel provisions in First Commercial's
Bylaws.
First Commercial's Board of Directors has the power to
amend First Commercial's Articles with respect to matters
of a routine nature without shareholder approval. Such
types of amendment include those: (i) to change each issued
and unissued authorized share of an outstanding class into
a greater number of whole shares if only shares of that
class are outstanding; (ii) to change the corporate name in
limited fashion; or (iii) to adopt any other amendment
allowed to be adopted without shareholder approval under
the corporate law governing First Commercial.
First Commercial stockholders, to the extent they comply
with the appropriate dissenting stockholder provisions,
obtain certain rights when amendments are approved that (i)
alter or abolish a preferential right of the shares; (ii)
create, alter or abolish a right in respect of redemption;
(iii) alter or abolish preemptive rights; (iv) exclude or
limit the rights of shares to vote on any matter or
cumulative voting rights; or (v) reduce the number of
shares of any holder to a fractional share if such
fractional share is to be acquired for cash.
Amendment of Bylaws
Stockholders of First Central have the power to amend the
Bylaws of First Central. Stockholders of First Commercial
have the power to amend the Bylaws of First Commercial with
the exception that Bylaw provisions relating to the
nomination of directors by stockholders, notice from
stockholders of matters to be brought by stockholders
before an annual meeting, special meetings, the taking of
action by stockholders without a meeting, the number,
election and terms of directors, the removal of directors,
and the filling of vacancies may be amended or repealed
only with the consent of the holders of at least 80% of the
First Commercial Stock entitled to vote.
Removal of Directors
Stockholders of First Central may remove a director, either
with or without cause, by a vote of the majority of the
shares entitled to vote at an election of directors. The
stockholders of First Commercial may remove a director only
for cause.
Limitation of Director Liability
Under the corporate law governing First Central, First
Central's Articles are not permitted to include provisions
limiting the liability of directors to First Central or its
stockholders. First Commercial's Articles provide that to
the extent permitted by the Arkansas Business Corporation
Act of 1987 no director of First Commercial shall be
personally liable to First Commercial or its stockholders
for monetary damages for or with respect to any acts or
omissions in the performance of his duties. These
provisions do not extend protection to directors for claims
by third parties, but only eliminate personal liability of
a director to First Commercial or its stockholders for
monetary damages for a breach of his fiduciary duty as a
director. A director is personally liable for monetary
damages to First Commercial or its stockholders (i) for
breach of a duty of loyalty to First Commercial or its
stockholders, (ii) for an act of omission not in good faith
or involving intentional misconduct or a knowing violation
of law, (iii) for the payment of unlawful dividends or
unlawful stock repurchases or redemptions in violation of
Arkansas law, or (iv) for a transaction in which the
director received an improper personal benefit. The
provisions do not eliminate or limit the liability of a
director arising in connection with causes of action
brought under federal or state securities laws or under
federal or state banking laws. Furthermore, since these
director liability provisions only eliminate money damage
awards, they do not affect the availability of equitable
relief, such as an injunction or rescission (although in a
given situation such relief may not be available or as
effective as personal liability for monetary damages). The
provisions do not eliminate or limit liability for acts or
omissions by an officer or employee of First Commercial,
even though such person may also be a director, if the act
or omission in question was performed by such person while
acting in a capacity other than that of a director.
Under certain circumstances, the director liability
provisions of First Commercial's Articles could have an
anti-takeover effect with respect to First Commercial.
Because of the decreased likelihood of being held
accountable for monetary damages for a breach of fiduciary
duty as directors, the directors of First Commercial may
have a greater tendency to reject takeover proposals
benefiting stockholders of First Commercial which the
directors might have accepted absent such statutory
protection provided by First Commercial's Articles.
Filling Vacancies on the Board of Directors
Under the corporate law governing First Central, vacancies
on its Board of Directors created by the removal of a
director by stockholders can only be filled by the vote of
its stockholders. Under First Commercial's Articles,
vacancies on its board of directors shall be filled solely
by the affirmative vote of a majority of the remaining
directors then in office. This provision precludes the
holder of a majority of First Commercial Stock from
removing incumbent directors and simultaneously gaining
control of the Board of Directors by filling the vacancies
created by removal with his own nominees.
Nomination of Director Candidates and Advance Notice of
Matters to be Brought Before an Annual Meeting by
Stockholders
First Commercial's Articles provide that nominations for
the election of directors and placement of matters before
the stockholders at an annual meeting must be made as
provided by the First Commercial Bylaws. The pertinent
bylaw provisions provide that stockholders intending to
nominate director candidates for election must deliver
written notice thereof to the Secretary of First Commercial
not later than (i) with respect to an election to be held
at an annual meeting of stockholders, ninety (90) days
prior to the anniversary date of the immediately preceding
annual meeting of stockholders, and (ii) with respect to an
election to be held at a special meeting of stockholders,
the close of business on the tenth day following the date
on which notice of such meeting is first given to
stockholders. The Bylaws further provide that the notice
shall set forth certain information concerning such
stockholder and his nominee(s), including their names and
addresses, a representation that the stockholder is
entitled to vote at such meeting and intends to appear in
person or by proxy at the meeting to nominate the person or
persons specified in the notice, a description of all
arrangements or understandings between the stockholder and
each nominee, such other information as would be required
to be included in a proxy statement soliciting proxies for
the election of the nominees of such stockholder and the
consent of each nominee to serve as a director of First
Commercial if so elected.
The First Commercial Bylaws further provide that for
business properly to be brought before an annual meeting by
a stockholder, the stockholder must deliver written notice
of such matter to the Secretary of First Commercial not
less than ninety (90) days prior to the anniversary date of
the immediately preceding annual meeting of stockholders
and the notice must set forth as to each matter the
stockholder proposes to bring before the annual meeting (i)
a brief description of the business, (ii) the name and
address of the stockholder proposing such business, (iii)
the class and number of shares of First Commercial
beneficially owned by the stockholder, and (iv) any
material interest of the stockholder in such business.
The advance notice requirements, by regulating stockholder
nominations and matters to be brought before an annual
meeting by stockholders, afford the board of directors of
First Commercial the opportunity to consider the
qualifications of proposed nominees and the importance of
matters proposed to be brought before an annual meeting
and, to the extent deemed necessary or desirable by the
Board, to inform stockholders about the qualifications of
nominees and issues important to the consideration of
matters brought before an annual meeting. There is the
chance that these provisions may discourage or deter a
third party from conducting a solicitation of proxies to
elect its own slate of directors or to adopt a matter which
serves its own interest, without regard to whether such
might be harmful or beneficial to First Commercial and its
stockholders.
Fair Price Provision
The following summary of the Fair Price Provision in First
Commercial's Articles (the "Fair Price Provision") is
qualified in its entirety by reference to the Fair Price
Provision found in Article EIGHTH of First Commercial's
Articles, which appear as an exhibit to the Registration
Statement of which this Joint Proxy Statement/Prospectus is
a part.
First Commercial's Articles require approval by holders of
eighty percent (80%) of the votes entitled to be cast as a
condition for mergers and certain other Business
Combinations (as hereinafter more fully defined, "Business
Combination") involving First Commercial and any person or
group holding five percent (5%) or more of the First
Commercial Stock (an "Interested Shareholder"), unless the
transaction is approved by a majority of the members of the
First Commercial Board who are unaffiliated with the
Interested Shareholder and who were directors before the
Interested Shareholder became an Interested Shareholder, or
certain minimum price and procedural requirements are met.
A Business Combination includes (a) a merger or
consolidation of First Commercial with an Interested
Shareholder, (b) the sale or other disposition by First
Commercial or a subsidiary of assets of $10,000,000 or more
if an Interested Shareholder is a party to the transaction,
(c) the issuance of stock or other securities of First
Commercial or of a subsidiary to a person that, immediately
prior to such issuance, is an Interested Shareholder in
exchange for cash or property of $10,000,000 or more, (d)
the adoption of any plan or proposal for the liquidation or
dissolution of First Commercial proposed by or on behalf of
an Interested Shareholder, or (e) any reclassification of
securities, recapitalization, merger with a subsidiary or
other transaction which has the effect, directly or
indirectly, of increasing the proportionate shares of the
outstanding stock of any class of First Commercial or a
subsidiary owned by an Interested Shareholder.
The 80% affirmative stockholder vote contemplated by the
Fair Price Provision is not required if (1) the transaction
is approved by a majority of the disinterested directors or
(2) all of the various minimum price criteria and
procedural requirements are satisfied.
The minimum price criteria referred to above require that
when cash or other consideration is being paid to First
Commercial stockholders in connection with a Business
Combination, the consideration to be paid would be required
to be either cash or the same type of consideration used by
the Interested Shareholder in acquiring the largest portion
of its common stock prior to the first public announcement
of the terms of the proposed Business Combination. In the
case of payments of First Commercial Stock to stockholders,
the per share fair market value of such payments would have
to be at least equal in value to the higher of (i) the
highest per share price paid by an Interested Shareholder
in acquiring any shares during the two years prior to
announcement of the Business Combination or in the
transaction in which it became an Interested Shareholder
(whichever is higher) or (ii) the fair market value per
share of common stock on the date of the announcement of
the Business Combination or on the date on which the
Interested Shareholder became an Interested Shareholder
(whichever is higher), in either case appropriately
adjusted for any stock dividend, stock split or combination
of shares.
The Fair Price Provision provides that a vote of the
holders of eighty percent (80%) or more of the votes
entitled to be cast by the holders of First Commercial
Stock is required in order to amend, alter or repeal, or
adopt any provisions inconsistent with, the Fair Price
Provision.
Because of the higher percentage requirement for
stockholder approval of any Business Combination not
meeting the price and procedural requirements described
above, and the possibility of having to pay a higher price
than would otherwise be the case to other stockholders in
such a Business Combination, it may become more costly for
a purchaser to acquire control of First Commercial. The
Fair Price Provision may therefore decrease the likelihood
that a tender offer will be made for less than 80% of the
voting power of First Commercial Stock and, as a result,
may adversely affect those stockholders who would desire to
participate in such a tender offer. The Fair Price
Provision also has the effect of giving veto power to the
holders of a minority of the voting power of First
Commercial Stock with respect to a Business Combination
that is opposed by the Board of Directors but which a
majority of the stockholders may believe to be desirable
and beneficial. In addition, since only the disinterested
directors will have the authority to eliminate the 80%
stockholder vote required for a Business Combination, the
Fair Price Provision may have the effect of insulating
current management against the possibility of removal in
the event of a takeover bid.
Shareholder Rights Plan
Preferred share purchase rights ("Rights") are attached to
shares of First Commercial Stock, including the shares
offered hereby, pursuant to a Shareholder Rights Plan of
First Commercial (the "Rights Plan"). The following
description of the Rights is qualified in is entirety by
reference to the Rights Plan, which is incorporated herein
by reference. See "Information Concerning First Commercial
- Information Incorporated by Reference."
The Rights trade automatically with shares of First
Commercial Stock, and become exercisable and will trade
separately from the First Commercial Stock on the tenth day
after public announcement that a person or group has
acquired, or has the right to acquire, beneficial ownership
of 20% or more of the outstanding shares of First
Commercial Stock, or on the tenth day following
commencement or announcement of intent to make a tender
offer for 20% or more of the outstanding shares of First
Commercial Stock, in either case without prior written
consent of the First Commercial Board. When exercisable,
one Right entitles the holder to buy 1/100 of a share of
Junior Participating Preferred Stock of First Commercial at
an exercise price of $75 per Right. The exercise price
payable, and the number of shares of Junior Participating
Preferred Stock issuable, upon exercise of the Rights are
subject to adjustment from time to time upon the occurrence
of certain events in order to prevent dilution. In
addition, the number of outstanding Rights are also subject
to adjustment in the event of a stock dividend on First
Commercial Stock payable in shares of First Commercial
Stock, subdivisions of the First Commercial Stock, or
combinations of shares of First Commercial Stock into a
smaller number of shares.
In the event a person acquires a beneficial ownership of
20% or more of First Commercial Stock, holders of Rights
(other than the acquiring person or group) may purchase
First Commercial Stock having a market value of twice the
then current exercise price of each Right or, under certain
circumstances, holders of Rights may purchase stock of the
acquiring company having a market value of twice the
current exercise price of each Right.
The Rights are designed to protect the interests of First
Commercial and its shareholders against coercive takeover
tactics. The purpose of the Rights is to encourage
potential acquirors to negotiate with First Commercial's
Board of Directors prior to attempting a takeover and to
give the Board leverage in negotiating on behalf of all
shareholders the terms of any proposed takeover. The
Rights may deter certain takeover proposals. The Rights,
which can be redeemed by First Commercial's Board of
Directors in certain circumstances, expire by their terms
on September 28, 2000.
LEGAL OPINIONS
The validity of the shares of First Commercial Stock
offered hereby will be passed upon for First Commercial by
Friday, Eldredge & Clark, Little Rock, Arkansas. Legal
opinions relating to tax matters will be furnished by
Friday, Eldredge & Clark, special tax counsel to First
Commercial. Paul B. Benham III, a partner of Friday,
Eldredge & Clark, beneficially owns, individually and
through various retirement plans, 1,945 shares of First
Commercial Stock. Certain legal matters will be passed
upon for First Central by Lightle, Beebe, Raney and Bell,
Searcy, Arkansas.
EXPERTS
First Central
The consolidated financial statements of First Central and
subsidiaries as of December 31, 1996 and 1995, and for each
of the years in the three-year period ended December 31,
1996, are included and incorporated herein by reference in
reliance upon the report of Angel, Humphrey, Hamilton &
Company, Ltd., independent auditors, which is included and
incorporated herein by reference, and upon the authority of
said firm as experts in accounting and auditing.
First Commercial
The consolidated financial statements of First Commercial
incorporated by reference in First Commercial's Annual
Report (Form 10-K) for the year ended December 31, 1996,
have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated
by reference therein and incorporated herein by reference.
Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and
auditing.
CONSOLIDATED FINANCIAL STATEMENTS OF FIRST CENTRAL
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF FIRST CENTRAL
Page
----
Financial Statements
Independent Auditor's Report - 1/17/97
Consolidated Balance Sheets - 12/31/1996 and 1995
Consolidated Statements of Income - 12/31/1996 and 1995
Consolidated Statements of Changes in Stockholders'
Equity - 12/31/1996 and 1995
Consolidated Statements of Cash Flows - 12/31/1996 and 1995
Notes to Consolidated Financial Statements
Independent Auditor's Report - 2/26/1996
Consolidated Balance Sheets - 12/31/1995 and 1994
Consolidated Statements of Income - 12/31/1995 and 1994
Consolidated Statements of Changes in Stockholders'
Equity - 12/31/1995 and 1994
Consolidated Statements of Cash Flows - 12/31/1995 and 1994
Notes to Consolidated Financial Statements
FIRST CENTRAL CORPORATION AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996 and 1995
Angel, Humphrey, Hamilton & Co., Ltd.
Certified Public Accountants
Bob Humphrey, CPA Ph: (501) 268-5353
Mitchell Hamilton, CPA Fax: (501) 268-5351
--------------- --------------
Jay W. Cherry, CPA 405 North Spring
David L. Spradlin, CPA P.O. Box 310
Debra T. Scaife, CPA Searcy, AR 72145
James D. Bellcock, CPA
Independent Auditors' Report
To the Board of Directors and Stockholders
First Central Corporation
Searcy, Arkansas
We have audited the accompanying consolidated balance sheets
of First Central Corporation and its wholly owned subsidiary First
National Bank of Searcy as of December 31, 1996 and 1995, and the
related consolidated statements of income, changes in
stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly in all material respects the
financial position of First Central Corporation and its wholly
owned subsidiary First National Bank of Searcy at December 31,
1996 and 1995, and the results of its operations and its cash
flows for the years then ended in conformity with generally
accepted accounting principles.
Searcy, Arkansas
January 17, 1997
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
------ ------
Cash and due from banks $7,880,387 $7,390,315
Interest-bearing deposits in banks 299,000 99,000
Federal funds sold 4,750,000 7,400,000
Securities available for sale 42,984,820 43,684,645
Securities to be held to maturity 59,386,676 51,742,322
Loans, net of allowance for credit losses 139,290,352 126,922,482
Properties and equipment 3,072,656 3,268,168
Accrued income and other assets 2,972,525 2,512,877
----------- -----------
Total Assets $ 260,636,416 $ 243,019,809
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $47,879,924 $46,150,724
Savings and NOW deposits 47,189,924 44,163,778
Other time deposits 133,883,930 123,287,689
----------- -----------
Total Deposits 228,953,778 213,602,191
Federal funds purchased and securities
sold under agreements to repurchase 166,000 0
Accrued expenses and other liabilities 2,575,845 2,475,609
----------- -----------
Total Liabilities 231,695,623 216,077,800
----------- -----------
Stockholders' equity
Common stock, par value $1;
Authorized -80,000 shares
Outstanding -72,000 shares 72,000 72,000
Capital surplus 7,365,942 7,365,942
Retained earnings 21,499,873 19,396,879
Net unrealized appreciation on securities
available for sale, net of deferred
tax effects 16,853 121,063
---------- ----------
28,954,668 26,955,884
Treasury stock at cost -74 shares 13,875 13,875
---------- ----------
Total Stockholders' Equity 28,940,793 26,942,009
----------- -----------
Total Liabilities and Stockholders'
Equity $ 260,636,416 $ 243,019,809
============ ============
See accompanying notes and accountants' report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
December 31, 1996 and 1995
1996 1995
------ ------
Interest income
Interest and fees on loans $12,569,000 $10,966,666
Interest on securities 5,875,678 5,617,958
Interest on federal funds sold 245,915 224,597
Interest on deposits with banks 8,554 1,726
---------- ----------
Total Interest Income $18,699,147 $16,810,947
----------- -----------
Interest expense
Interest on deposits 9,072,829 8,336,523
Interest on federal funds purchased
and securities sold under agreements
to repurchase 9,982 66,990
---------- ----------
Total Interest Expense 9,082,811 8,403,513
---------- ----------
Net interest income 9,616,336 8,407,434
Provision for credit losses 235,000 145,000
--------- ---------
Net Interest Income After Credit Losses 9,381,336 8,262,434
---------- ----------
Other income
Income from fiduciary activities 80,895 36,652
Service charges on deposit accounts 986,293 928,555
Other service charges & fees 149,903 158,976
Securities gains and losses 31,449 17,911
Other income 87,325 79,447
--------- ---------
Total Other Income 1,335,865 1,221,541
---------- ----------
Other expense
Salaries and employee benefits 2,506,856 2,293,627
Occupancy expense 301,211 245,737
Equipment expense 167,444 129,044
Other expense 1,708,032 1,720,244
---------- ----------
Total Other Expense 4,683,543 4,388,652
---------- ----------
Income before income taxes 6,033,658 5,095,323
Income tax provision 1,772,884 1,383,157
---------- ----------
Net Income $ 4,269,774 $ 3,712,166
========== ==========
Net Income Per Share of Common Stock $ 59.18 $ 51.56
========= =========
See accompanying notes and accountants' report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1996 and 1995
Net
Unrealized
(Depreciation)
Appreciation
Common Capital Retained Available-for-
Stock Surplus Earnings Sale Securities Total
------ ------- -------- --------------- -----
Balance, 1/1/95 $72,000 $7,365,942 $17,698,641 $(1,027,857) $24,108,726
Net Income, 1995 3,712,166 3,712,166
Cash dividend
declared, $28.00
per share (2,013,928) (2,013,928)
Net change in
unrealized
depreciation on
securities
available for
sale, net of
deferred taxes 1,148,920 1,148,920
-------- --------- ---------- --------- ----------
Balance, 1/1/96 72,000 7,365,942 19,396,879 121,063 26,955,884
Net Income, 1996 4,260,774 4,260,774
Cash dividends
declared, $30.00
per share (2,157,780) (2,157,780)
Net change in
unrealized
appreciation on
securities
available for
sale, net of
deferred taxes (104,210) (104,210)
------- --------- ----------- --------- -----------
Balance, 12/31/96 $72,000 $7,365,942 $21,499,873 $16,853 $28,954,668
======= ========= ========== ====== ==========
See accompanying notes and accountants' report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1996 and 1995
1996 1995
------ -------
Cash Flows From Operating Activities
Net Income $ 4,260,774 $ 3,712,166
--------- ---------
Adjustments to reconcile net income
to net cash provided by operating
activities 296,320 240,834
Provision for credit losses 235,000 145,000
Deferred income tax (benefit) (54,000) 6,089
Net realized gain on securities
available for sale (31,449) (17,911)
Accrued income and other assets (459,648) (284,984)
Accrued expense and other liabilities 154,236 413,718
------- -------
Total adjustments 140,459 502,746
------- --------
Net Cash Provided by Operating
Activities 4,401,233 4,214,912
--------- ---------
Cash Flows From Investing Activities
Net (increase) decrease in interest
bearing deposits with banks (200,000) 397,884
Net (increase) decrease in federal
funds sold 2,650,000 (6,550,000)
Purchases of securities (68,603,882) (40,603,670)
Proceeds from sale of securities 61,585,965 44,378,535
Net increase in loans (12,602,870) (13,951,514)
Purchases of property and equipment (100,181) (349,303)
---------- ----------
Net Cash Used By Investing
Activities (17,270,968) (16,678,068)
---------- ----------
Cash Flows From Financing Activities
Net increase in demand savings and
NOW accounts 4,755,346 1,128,011
Net increase in time deposits 10,596,241 15,155,753
Net increase (decrease) in
securities sold under agreements
to repurchase 166,000 (1,026,466)
Dividends paid (2,157,780) (2,013,928)
Net Cash Provided By Financing
Activities 13,359,807 13,243,370
---------- ----------
Net Increase In Cash And Due From Banks 490,072 780,214
Cash And Due From Banks At January 1 7,390,315 6,610,101
---------- ----------
Cash And Due From Banks At December 31 $ 7,880,387 $ 7,390,315
=========== ===========
Interest Paid $ 9,061,737 $ 8,117,755
=========== ===========
Income Taxes Paid $ 1,826,851 $ 1,472,841
=========== ===========
See accompanying notes and accountants report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996
Note A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements of First Central
Corporation (the Holding Company) include the accounts
of the Holding Company and its wholly owned subsidiary
First National Bank. Significant intercompany
transactions and amounts have been eliminated.
Investments in Securities
The Bank's investments in securities are classified
in three categories and accounted for as follows:
Trading Securities
Government bonds held principally for resale in the
near term and mortgage-backed securities held for
sale in conjunction with the Bank's mortgage banking
activities are classified as trading securities and
recorded at their fair values. Unrealized gains
and losses on trading securities when applicable are
included in other income. No securities were held in
this category during 1996 or 1995.
Securities to be Held to Maturity. Bonds, notes and
debentures for which the Bank has the positive intent
and ability to hold to maturity are reported at cost,
adjusted for amortization of premiums and accretion of
discounts which are recognized in interest income using
the interest method over the period to maturity.
Securities Available for Sale. Securities available for
sale consist of bonds, notes, debentures, and certain
equity securities not classified as trading securities
nor as securities to be held to maturity.
When applicable, declines in the fair value of individual
held-to-maturity and available-for-sale securities below
their cost that are other than temporary have resulted in
write-downs of the individual securities to their fair
value. The related writedowns have been included in
earnings as realized losses.
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.
Gains and losses on the sale of securities available for
sale are determined using the specific-identification
method.
Allowance for Credit Losses
The allowance is maintained at a level adequate
to absorb probable losses. Management determines
the adequacy of the allowance based upon reviews
of individual credits, recent loss experience, current
economic conditions, the risk characteristics of the
various categories of loans and other pertinent
factors. Credits deemed uncollectible are charged
to the allowance. Provisions for credit losses and
recoveries on loans previously charged off are added to
the allowance.
Properties and Equipment
Properties and equipment are stated at cost, less
accumulated depreciation. The provision for depreciation
is computed principally by the straight-line method.
Interest Income on Loans
Interest on loans is accrued and credited to income based
on the principal amount outstanding. The accrual of
interest on loans is discontinued when, in the opinion
of management, there is an indication that the borrower may
be unable to meet payments as they become due. Upon such
discontinuance, all unpaid accrued interest is reversed.
Pension Costs
Pension costs are charged to salaries and employee
benefits expense and are funded as accrued.
Income Taxes
Provisions for income taxes are based on taxes payable or
refundable for the current year (after exclusion of
non-taxable income such as interest on state and
municipal securities) and deferred taxes on temporary
differences between the amount of taxable income and
pretax financial income and between the tax bases of
assets and liabilities and their reported amounts
in the financial statements. 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 FASB Statement 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.
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,
after giving retroactive effect to stock dividends if
any occurred.
Trust Fees
Trust fees are recorded on the accrual basis except for
estates.
Off-Balance-Sheet Instruments
In the ordinary course of business the Bank has entered
into off balance sheet financial instruments consisting
of commitments to extend credit, commercial letters of
credit and standby letters of credit. Such financial
instruments are recorded in the financial statements
when they are funded or related fees are incurred or
received.
Fair Values of Financial Instruments
The following methods and assumptions were used by
the Bank in estimating fair values of financial
instruments as disclosed herein:
Cash and cash equivalents - The carrying amounts of
cash and short-term instruments approximate their
fair value.
Trading securities - The Bank does not maintain a
trading account for securities.
Securities to be held to maturity and securities
available for sale - Fair values for investment
securities are based on quoted market prices.
Loans receivable - Fair values for certain mortgage
loans (e.g., one-to-four family residential), and
other consumer loans are based on quoted market
prices of similar loans sold in conjunction with
securitization transactions. Fair values for
commercial real estate and commercial loans are
estimated using discounted cash flow analyses,
using interest rates currently being offered for
loans with similar terms to borrowers of similar
credit quality. Fair values for impaired loans are
estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
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 variable-rate, fixed-term money market
accounts and certificates of deposit approximate
their fair values at the reporting date. Fair
values for fixed-rate certificates of deposit are
estimated using a discounted cash flow calculation
that applies interest rates currently being offered
on certificates to a schedule of aggregated
expected monthly maturities on time deposits.
Accrued interest - The carrying amounts of accrued
interest approximate their fair values.
Off-balance-sheet instruments - Fair values for
off-balance-sheet lending commitments are based on
fees currently charged to enter into similar
agreements, taking into account the remaining terms
of the agreements and the counterparties' credit
standing.
Cash and Cash Equivalents
For the purpose of presentation in the Statements of
Cash Flows, cash and cash equivalents are defined as those
amount included in the balance sheet caption "Cash and Due
from Banks".
Note B INVESTMENT SECURITIES
The carrying amounts of investment securities as shown
in the consolidated balance sheets of the Bank and their
approximate fair values at December 31, 1996 were as
follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------ ------- ------ -----
Securities Available
For Sale -
U.S. Agency securities $22,773,579 $ 32,760 $156,315 $22,650,023
U.S. Government
securities 19,133,171 58,197 4,380 19,186,988
State & municipal
securities 0 0 0 0
Other 1,052,534 95,425 151 1,147,809
---------- ------ ------- ---------
$42,959,284 $186,382 $160,846 $42,984,820
=========== ======== ======== ===========
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------- ------- ------ ----
Securities to be held
to maturity -
U.S. Agency securities $33,735,960 $ 44,270 $285,155 $33,495,075
U.S. Government
securities 0 0 0 0
State & municipal
securities 23,155,503 498,847 230,146 23,424,204
Other
securities 2,495,213 4,608 10,645 2,489,176
---------- ------ ------- ----------
$59,386,676 $547,725 $525,946 $59,408,455
========== ======= ======= ==========
Assets, principally securities, carried at approximately $23,570,000 at
December 31, 1996 and $21,025,000 at December 31, 1995 were pledged to
secure public deposits and for other purposes required or permitted by law.
Gross realized gains and gross realized losses on sales of securities
available for sale were:
1996
------
Gross realized gains:
U.S. Government and agency securities $24,462
State and municipal securities 7,550
------
$32,012
=======
Gross realized losses:
U.S. Government and agency securities $ 0
State and municipal securities 563
-------
$ 563
=======
Note C LOANS
The components of loans in the consolidated balance sheets
were as follows:
1996 1995
---- ----
Commercial $10,314,076 $18,092,006
Construction 21,247,115 7,493,603
Mortgage 83,775,845 78,946,757
Other 24,822,189 23,102,667
----------- -----------
$140,159,225 $127,635,033
============ ============
Note D ALLOWANCE FOR CREDIT LOSSES
An analysis of the change in the allowance for credit
losses follows:
1996 1995
---- ----
Balance at January 1 $ 712,551 $ 608,998
-------- --------
Credits charged off (100,721) (56,611)
Recoveries 22,043 15,164
-------- --------
Net credits charged off ( 78,678) ( 41,447)
--------- ---------
Provision for credit losses 235,000 145,000
--------- ---------
Balance at December 31 $ 868,873 $ 712,551
========= =========
Note E PROPERTIES AND EQUIPMENT
Components of properties and equipment included in the
consolidated balance sheets at December 31, 1996 and
1995 were as follows:
1996 1995
---- ----
Land $ 289,547 $ 289,547
Bank premises 3,488,420 3,488,420
Furniture & equipment 2,336,866 2,249,865
Leasehold improvements 304,702 291,523
--------- ---------
Total cost 6,419,535 6,319,355
Less accumulated depreciation (3,346,879) (3,051,187)
---------- ----------
Net book value $ 3,072,656 $ 3,268,168
=========== ===========
Certain bank facilities and equipment are leased under
various operating leases. Rental expense was $71,681 in
1996 and $51,970 in 1995. Future minimum rental
commitments under noncancelable leases are:
1997 $ 73,951
1998 73,951
1999 73,951
2000 39,301
2001 39,301
--------
$ 300,455
=========
Note F EMPLOYEE BENEFITS
The bank has a non-contributory single employer defined
benefit pension plan covering substantially all of its
employees. The frozen initial liability method was used
to determine funding requirements of $130,902 for 1996
and $111,253 for 1995. Under this method, the first
year's normal cost for each participant is the level
contribution which would have been required from the
participant's age at original entry into the employer's
service in order to fund the participant's benefit at
retirement age. The frozen unfunded actuarial liability
represents the reserve which would have been on hand if
the normal cost had been paid in all prior years, less
plan assets. Each year the frozen unfunded actuarial
liability is increased by interest plus the normal cost
with interest, and decreased by the company contribution
with interest. The normal cost for any year after the
first year is equal to the present value of benefit less
the actuarial value of plan assets less the current
value of the frozen unfunded actuarial liability,
divided by an average temporary annuity factor. The
average temporary annuity factor is calculated based on
the present value of each participant's future
compensation. Any actuarial gains or losses which arise
from plan experience which differ from the actuarial
assumptions are spread over future years' normal costs.
However, any gains or losses resulting from plan
amendment or assumption changes are considered new
pieces of unfunded liability and must be funded over no
more than thirty years. A summary of the plan's funding
standard account for plan years 1996 and 1995 is as
follows:
1996 1995
---- ----
Reconciliation of Funded Status
Actuarial present value of
accumulated benefit obligations:
a. Vested portion ($1,070,035) ($1,033,544)
b. Non-vested portion ( 47,029) ( 58,531)
---------- ----------
Accumulated Benefit Obligation ( 1,117,064) ( 1,092,075)
Effect of estimated future
pay growth ( 168,342) ( 109,053)
---------- ----------
Projected Benefit Obligation ( 1,285,406) ( 1,201,128)
Plan assets at fair value 1,561,964 1,464,995
---------- ---------
Funded Status 276,558 263,867
Unrecognized net (gain) or loss ( 91,502) ( 70,643)
Unrecognized prior service cost ( 143,307) ( 149,278)
Unrecognized net obligation or (net
asset) ( 41,749) ( 43,946)
---------- ----------
(Accrued) Prepaid Cost $ 0 $ 0
========== ==========
Determination of Pension Cost
Service Cost $ 76,765 $ 73,528
Interest Cost 89,146 92,020
Expected return on assets ( 102,243) ( 86,769)
Expected return on assets
Amortization of:
Unrecognized net (gain) or loss 0 3,013
Unrecognized prior service cost ( 5,971) ( 5,971)
Unrecognized net obligation or
(net asset) ( 2,197) ( 2,197)
--------- ---------
Net Periodic Pension Cost $ 55,500 $ 73,624
========= =========
The funding calculation was based on a weighted average
assumed discount of 6% and an annual rate of increase
in compensation of 4.5%.
The bank also has a non-contributory defined
contribution profit sharing plan covering substantially
all of its employees. The contributions for 1996 and
1995 were provided based on 10% of eligible employee's
covered compensation. These contributions were
$164,329 and $153,521 for 1996 and 1995 respectively.
Note G INCOME TAXES
The consolidated provision for income taxes consisted of the
following:
1996 1995
----- -----
Currently payable
Federal $1,698,884 $1,299,287
State 128,000 77,781
--------- ---------
$1,826,884 $1,377,068
Deferred tax expense (benefit) ( 54,000) 6,089
--------- ---------
$1,772,884 $1,383,157
========= =========
The provision for federal income taxes is less than
that computed by applying the federal statutory rate of
34% in 1996 and 1995, as indicated in the following
analysis:
1996 1995
---- ----
Statutory rate 34.0% 34.0%
Decrease resulting from:
Effect of tax-exempt income ( 7.9%) ( 9.6%)
Interest and other nondeductible
expenses 2.0% 1.6%
----- ------
28.1% 26.0%
===== =====
The cumulative totals of each type of significant item
that gave rise to deferred taxes are:
1996 1995
---- ----
Net unrealized appreciation
on securities available
for sale ($ 25,535) ( $183,429)
Depreciation ( 375,329) ( 376,260)
---------- ---------
Total ($ 400,864) ($ 559,689)
========== ==========
Note H RELATED PARTIES
The Bank has entered into transactions with its directors,
significant shareholders and their affiliates (related
parties). Such transactions were made in the ordinary
course of business on substantially the same terms and
conditions, including interest rates and collateral, as
those prevailing at the same time for comparable
transactions with other customers, and did not, in the
opinion of management, involve more than normal credit
risk or present other unfavorable features. The aggregate
amount of loans to such related parties at December 31,
1996 was $1,805,203. During 1996, new loans to such
related parties amounted to $987,701 and repayments
amounted to $1,116,888.
Note I CONTINGENT LIABILITIES AND COMMITMENTS
The Bank's consolidated financial statements do not
reflect various commitments and contingent liabilities
which arise in the normal course of business and which
involve elements of credit risk, interest rate risk and
liquidity risk. These commitments and contingent
liabilities are described in Note K Financial Instruments.
Note J CONCENTRATIONS OF CREDIT
All of the Bank's loans, commitments, and commercial and
standby letters of credit have been granted to customers
in the Bank's market area. All such customers are
depositors of the Bank. Investments in state and
municipal securities also involve governmental entities
within the Bank's market area. The distribution of
commitments to extend credit approximates the distribution
of loans outstanding. Commercial and standby letters of
credit were granted primarily to commercial borrowers.
Note K FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-
balance-sheet risk in the normal course of business to
meet the financing needs of its customers and to reduce
its own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit
and standby letters of credit. Those instruments involve,
to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the statement
of financial position.
The contract or notional amounts of those instruments
reflect the extent of the Bank's involvement in particular
classes of financial instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial
instrument for commitments to extend credit and standby
letters of credit, is represented by the contractual
notional amount of those instruments. The Bank uses the
same credit policies in making commitments and conditional
obligations as it does for on-balance-sheet instruments.
Commitments to Extend Credit and Financial Guarantees. At
December 31, 1996, the Bank was exposed to credit risk on
commitments to extend credit having contract amounts of
$6,318,933 and standby letters of credit of $282,100.
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have
fixed expiration dates or other termination clauses and
may require payment of a fee. Since many of the
commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily
represent future cash requirements. The Bank evaluates
each customer's credit worthiness on a case-by-case basis.
The amount of collateral obtained, if it is deemed
necessary by the Bank upon extension of credit, is based
on management's credit evaluation of the counter party.
Collateral held varies but may include accounts
receivable, inventory, property, plant, and equipment; and
income-producing commercial properties.
The estimated fair values of the Bank's financial
instruments were as follows:
December 31, 1996 December 31, 1995
------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- ------ -----
Financial Assets:
Cash and short-term
investments 8,179,387 8,179,387 7,489,315 7,489,315
Investment securities 102,371,496 102,393,275 95,426,967 95,744,811
Loans, net of allowance 139,290,352 133,105,285 126,922,482 119,866,946
----------- ----------- ----------- -----------
249,841,235 243,677,947 229,838,764 223,101,072
=========== =========== =========== ===========
Financial Liabilities:
Demand deposits 95,069,848 95,069,848 90,314,502 90,314,502
Certificates of deposit 133,883,930 134,110,583 123,287,689 123,716,227
Unrecognized financial
instruments: N/A N/A N/A N/A
Note L SALE OF BANK
On February 5, 1997, First Central Corporation, the
holding company of First National Bank, agreed to sell
in a stock for stock swap to First Commercial
Corporation. Pending regulatory approval, First Central
Corporation will swap 71,926 shares for 1,650,000 shares
of First Commercial Corporation. The approximate value
of the First Commercial Corporation shares at February
5, 1997 totaled $61,500,000. The deal will be
consummated as is, if the value of First Commercial
Corporation shares at the point they receive regulatory
approval, is between $30.50 - $45.75 per share. If the
per share value is above or below this range, the
agreement will be renegotiated.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995 and 1994
Angel, Humphrey, Hamilton & Co., Ltd.
Certified Public Accountants
Bob Humphrey, CPA Ph: (501) 268-5353
Mitchell Hamilton, CPA Fax: (501) 268-5351
R. Mark Story, CPA 405 North Spring
Jay W. Cherry, CPA P.O. Box 310
David L. Spradlin, CPA Searcy, AR 72145
Independent Auditors' Report
To the Board of Directors and Stockholders
First Central Corporation
Searcy, Arkansas
We have audited the accompanying consolidated balance
sheets of First Central Corporation and its wholly owned
subsidiary First National Bank of Searcy as of December 31,
1995 and 1994, and the related consolidated statements of
income, changes in stockholders' equity, and cash flows for
the years then ended. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly in all material respects the
financial position of First Central Corporation and its
wholly owned subsidiary First National Bank of Searcy at
December 31, 1995 and 1994, and the results of its operations
and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
Searcy, Arkansas
February 26, 1996
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
ASSETS
1995 1994
---- ----
Cash and due from banks $7,390,315 $6,610,101
Interest-bearing deposits in banks 99,000 496,884
Federal funds sold 7,400,000 850,000
Securities available for sale 43,684,645 39,444,219
Securities to be held to maturity 51,742,322 57,998,914
Loans, net of allowance for credit
losses 126,922,482 113,115,968
Properties and equipment 3,268,168 3,159,699
Accrued income and other assets 2,512,877 2,757,395
----------- -----------
Total Assets $243,019,809 $244,433,108
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $46,150,724 $46,241,632
Savings and NOW deposits 44,163,778 42,944,859
Other time deposits 123,287,689 108,131,936
----------- -----------
Total Deposits 213,602,191 197,318,427
Federal funds purchased and
securities sold under agreements
to repurchase 0 1,026,466
Accrued expenses and other
liabilities 2,475,609 1,993,436
---------- ---------
Total Liabilities 216,077,800 200,338,329
----------- -----------
Stockholders' equity
Common stock, par value $1;
Authorized -80,000 shares
Outstanding -72,000 shares 72,000 72,000
Capital surplus 7,365,942 7,365,942
Retained earnings 19,396,879 17,698,641
Net unrealized appreciation
(depreciation) on securities
available for sale, net of
deferred tax effects 121,063 (1,027,857)
---------- ---------
26,955,884 24,108,726
Treasury stock at cost -74 shares 13,875 13,875
---------- ----------
Total Stockholders' Equity 26,942,009 24,094,851
---------- ----------
Total Liabilities and
Stockholders' Equity $243,019,809 $224,433,180
============ ============
See accompanying notes and accountants' report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
December 31, 1995 and 1994
1995 1994
---- ----
Interest income
Interest and fees on loans $10,966,666 $8,581,973
Interest on securities 5,617,958 5,541,362
Interest on federal funds sold 224,597 96,395
Interest on deposits with banks 1,726 20,532
---------- ----------
Total Interest Income $16,810,947 $14,240,262
---------- ----------
Interest expense
Interest on deposits 8,336,523 5,933,569
Interest on federal funds
purchased and securities sold
under agreements to repurchase 66,990 41,512
--------- ---------
Total Interest Expense 8,403,513 5,975,081
--------- ---------
Net interest income 8,407,434 8,265,181
Provision for credit losses 145,000 77,000
--------- ---------
Net Interest Income After Credit
Losses 8,262,434 8,188,181
--------- ---------
Other income
Income from fiduciary activities 36,652 38,663
Service charges on deposit accounts 928,555 836,224
Other service charges & fees 158,976 167,439
Securities gains and losses 17,911 38,368
Other income 79,447 78,197
--------- ---------
1,221,541 1,158,891
--------- ---------
Other expense
Salaries and employee benefits 2,293,627 2,175,278
Occupancy expense 245,737 253,459
Equipment expense 129,044 160,642
Other expense 1,720,244 1,834,562
--------- ---------
4,388,652 4,423,941
--------- ---------
Income before income taxes 5,095,323 4,923,131
Income tax provision 1,383,157 1,410,459
--------- ---------
Net Income $3,712,166 $3,512,672
========= =========
Net Income Per Share of Common Stock $ 51.56 $ 48.79
========= =========
See accompanying notes and accountants' report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1995 and 1994
Net
Unrealized
(Depreciation)
Appreciation
Common Capital Retained Available-for-
Stock Surplus Earnings Sale Securities Total
----- ------- -------- ------------- -----
Balance, 1/1/94 $72,000 $7,365,942 $16,017,982 N/A $ 23,455,924
Net Income, 1994 3,512,672 3,512,672
Correction of
prior year
depreciation
provisions 181,915 181,915
Cash dividends
declared,
$28.00 per share (2,013,928) (2,013,928)
Net change in
unrealized
depreciation on
securities
available for
sale, net of
deferred taxes (1,027,857) (1,027,857)
------ --------- --------- --------- ---------
Balance, 1/1/95 72,000 7,365,942 17,698,641 (1,027,857) 24,108,726
Net Income, 1995 3,712,166 3,712,166
Cash dividends
declared, $28.00
per share (2,013,928) (2,013,928)
Net change in
unrealized
appreciation
on securities
available for
sale, net of
deferred taxes 1,148,920 1,148,920
------ --------- ---------- --------- ----------
Balance, 12/31/95 $72,000 $7,365,942 $19,396,879 $ 121,063 $26,955,884
====== ========= ========== ========= ==========
See accompanying notes and accountants' report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1995 and 1994
1995 1994
---- ----
Cash Flows From Operating Activities
Net Income $3,712,166 $3,512,672
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 240,834 227,364
Provision for credit losses 145,000 77,000
Deferred income taxes 6,385 8,261
Net realized gain on securites
available for sale ( 17,911) ( 38,368)
Accrued income and other assets ( 284,984) ( 97,894)
Accrued expense and other liabilites 413,422 137,404
--------- ---------
Total adjustments 502,746 313,767
--------- ---------
Net Cash Provided by Operating
Activities 4,214,912 3,826,439
--------- ---------
Cash Flows From Investing Activities
Net (increase) decrease in interest
bearing deposits with banks 397,884 ( 5,133)
Net (increase) decrease in federal
funds sold ( 6,550,000) 2,550,000
Purchases of securites ( 40,603,670) ( 47,393,838)
Proceeds from sale of secruites 44,378,535 53,978,004
Net increase in loans ( 13,951,514) ( 20,556,470)
Purchases or property and equipment ( 349,303) ( 648,001)
----------- -----------
Net Cash Used By Investing Activites ( 16,678,068) ( 12,075,438)
----------- -----------
Cash Flows From Financing Activities
Net increase in demand savings and
NOW accounts 1,128,011 6,292,225
Net increase in time deposits 15,155,753 3,888,457
Net increase (decrease) in
securities sold under agreements
to repurchase ( 1,026,466) 35,247
Dividends paid ( 2,013,928) ( 2,013,928)
----------- -----------
Net Cash Provided By Financing
Activites 13,243,370 8,202,001
---------- ---------
Net Increase (Decrease) In Cash And
Due from Banks 780,214 ( 46,998)
Cash And Due From Banks At January 1 6,610,101 6,657,099
---------- ----------
Cash And Due From Banks At December 31 $ 7,390,315 $ 6,610,101
=========== ===========
Interest Paid $ 8,117,755 $ 5,789,965
=========== ===========
Income Taxes Paid $ 1,253,396 $ 1,472,841
=========== ===========
See accompanying notes and accountants report.
FIRST CENTRAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
Note A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The consolidated financial statements of First
Central Corporation (the Holding Company) include
the accounts of the Holding Company and its wholly
owned subsidiary First National Bank. Significant
intercompany transactions and amounts have been
eliminated.
Investments in Securities
The Bank's investments in securities are classified
in three categories and accounted for as follows:
Trading Securities - Government bonds held
principally for resale in the near term and
mortgage-backed securities held for sale in
conjunction with the Bank's mortgage banking
activities are classified as trading securities
and recorded at their fair values. Unrealized
gains and losses on trading securities when
applicable are included in other income. No
securities were held in this category during
1995 or 1994.
Securities to be Held to Maturity - Bonds,
notes and debentures for which the Bank has the
positive intent and ability to hold to maturity
are reported at cost, adjusted for amortization
of premiums and accretion of discounts which
are recognized in interest income using the
interest method over the period to maturity.
Securities Available for Sale - Securities
available for sale consist of bonds, notes,
debentures, and certain equity securities not
classified as trading securities nor as
securities to be held to maturity.
When applicable, declines in the fair value of
individual held-to-maturity and available-for-sale
securities below their cost that are other than
temporary have resulted in write-downs of the
individual securities to their fair value. The
related writedowns have been included in earnings as
realized losses.
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.
Gains and losses on the sale of securities available
for sale are determined using the specific-
identification method.
Allowance for Credit Losses
The allowance is maintained at a level adequate
to absorb probable losses. Management determines
the adequacy of the allowance based upon reviews
of individual credits, recent loss experience, current
economic conditions, the risk characteristics of the
various categories of loans and other pertinent factors.
Credits deemed uncollectible are charged to the
allowance. Provisions for credit losses and recoveries
on loans previously charged off are added to the allowance.
Properties and Equipment
Properties and equipment are stated at cost, less
accumulated depreciation. The provision for
depreciation is computed principally by the straight-
line method.
Interest Income on Loans
Interest on loans is accrued and credited to income
based on the principal amount outstanding. The accrual
of interest on loans is discontinued when, in the opinion
of management, there is an indication that the
borrower may be unable to meet payments as they become
due. Upon such discontinuance, all unpaid accrued interest
is reversed.
Pension Costs
Pension costs are charged to salaries and employee benefits
expense and are funded as accrued.
Income Taxes
Provisions for income taxes are based on taxes payable
or refundable for the current year (after exclusion of
non-taxable income such as interest on state and
municipal securities) and deferred taxes on temporary
differences between the amount of taxable income and
pretax financial income and between the tax bases of
assets and liabilities and their reported amounts
in the financial statements. 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
FASB Statement 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.
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,
after giving retroactive effect to stock dividends if
any occurred.
Trust Fees
Trust fees are recorded on the accrual basis.
Off-Balance-Sheet Instruments
In the ordinary course of business the Bank has
entered into off balance sheet financial instruments
consisting of commitments to extend credit, commercial
letters of credit and standby letters of credit. Such
financial instruments are recorded in the financial
statements when they are funded or related fees are incurred
or received.
Fair Values of Financial Instruments
The following methods and assumptions were used by the
Bank in estimating fair values of financial instruments
as disclosed herein:
Cash and cash equivalents - The carrying
amounts of cash and short-term instruments
approximate their fair value.
Trading securities - The Bank does not maintain
a trading account for securities.
Securities to be held to maturity and
securities available for sale - Fair values for
investment securities are based on quoted
market prices.
Loans receivable - Fair values for certain
mortgage loans (e.g., one-to-four family
residential), and other consumer loans are
based on quoted market prices of similar loans
sold in conjunction with securitization
transactions. Fair values for commercial real
estate and commercial loans are estimated using
discounted cash flow analyses, using interest
rates currently being offered for loans with
similar terms to borrowers of similar credit
quality. Fair values for impaired loans are
estimated using discounted cash flow analyses
or underlying collateral values, where
applicable.
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 variable-
rate, fixed-term money market accounts and
certificates of deposit approximate their fair
values at the reporting date. Fair values for
fixed-rate certificates of deposit are
estimated using a discounted cash flow
calculation that applies interest rates
currently being offered on certificates to a
schedule of aggregated expected monthly
maturities on time deposits.
Accrued interest - The carrying amounts of
accrued interest approximate their fair values.
Off-balance-sheet instruments - Fair values for
off-balance-sheet lending commitments are based
on fees currently charged to enter into similar
agreements, taking into account the remaining
terms of the agreements and the counterparties'
credit standing.
Cash and Cash Equivalents
For the purpose of presentation in the Statements
of Cash Flows, cash and cash equivalents are defined
as those amount included in the balance sheet caption
"Cash and Due from Banks".
Note B INVESTMENT SECURITIES
The carrying amounts of investment securities as
shown in the consolidated balance sheets of the Bank
and their approximate fair values at December 31,
1995 were as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------- -------- -------- -------
Securities available for
sale -
U.S. Agency securities $20,470,527 $ 54,093 $145,461 $20,379,159
U.S. Government
securities 21,147,279 140,384 23,810 21,263,853
State & municipal
securites 0 0 0 0
Other securities 1,883,409 159,284 1,060 2,041,633
---------- ------- ------- ---------
$43,501,215 $353,761 $170,331 $43,684,645
========== ======= ======= ==========
Securities to be held
to maturity -
U.S. Agency securities $24,073,836 $ 80,662 $236,355 $23,918,143
U.S. Government
securities 2,000,000 0 0 2,000,000
State & municipal
securities 24,068,995 692,063 221,560 24,539,498
Other securities 1,599,491 14,412 11,378 1,602,525
---------- ------- ------- ----------
$51,742,322 $787,137 $469,293 $52,060,166
========== ======= ======= ==========
Assets, principally securities, carried at approximately
$21,025,000 at December 31, 1995 and $16,470,000 at
December 31, 1994 were pledged to secure public deposits
and for other purposes required or permitted by law.
Gross realized gains and gross realized losses on
sales of securities available for sale were:
1995
----
Gross realized gains:
U.S. Government and agency securities $ 34,662
State and municipal securities 11,730
-------
$ 46,392
=======
Gross realized losses:
U.S. Government and agency securities $ 28,481
State and municipal securities 0
-------
$ 28,481
=======
Note C LOANS
The components of loans in the consolidated balance
sheets were as follows:
1995 1994
---- ----
Commercial $ 18,092,006 $ 17,491,411
Construction 7,493,603 6,583,557
Mortgage 78,946,757 69,879,440
Other 23,102,667 19,770,558
----------- -----------
$127,635,033 $113,724,966
=========== ===========
Note D ALLOWANCE FOR CREDIT LOSSES
An analysis of the change in the allowance for credit
losses follows:
1995 1994
---- ----
Balance at January 1 $ 608,998 $ 561,424
-------- --------
Credits charged off ( 56,611) ( 40,549)
Recoveries 15,164 11,123
-------- --------
Net credits charged off ( 41,447) ( 29,426)
-------- --------
Provision for credit losses 145,000 77,000
-------- --------
Balance at December 31 $ 712,551 $ 608,998
======== ========
Note E PROPERTIES AND EQUIPMENT
Components of properties and equipment included in
the consolidated balance sheets at December 31, 1995
and 1994 were as follows:
1995 1994
---- ----
Land $ 289,547 $ 289,547
Bank premises 3,488,420 3,474,359
Furniture & equipment 2,249,865 2,088,169
Leasehold improvements 291,523 127,642
--------- ---------
Total cost 6,319,355 5,979,717
Less accumulated
depreciation (3,051,187) (2,820,948)
3,268,168 3,158,769
Construction in progress 0 930
--------- ---------
Net book value $3,268,168 $3,159,699
========= =========
Certain bank facilities and equipment are leased
under various operating leases. Rental expense was
$51,970 in 1995 and $49,895 in 1994. Future minimum
rental commitments under noncancelable leases are:
1996 $ 73,951
1997 73,951
1998 73,951
1999 73,951
2000 39,301
-------
$ 335,105
=======
Note F EMPLOYEE BENEFITS
The bank has a non-contributory single employer
defined benefit pension plan covering substantially
all of its employees. The frozen initial liability
method was used to determine funding requirements of
$111,253 for 1995 and $120,092 for 1994. Under this
method, the first year's normal cost for each
participant is the level contribution which would
have been required from the participant's age at
original entry into the employer's service in order
to fund the participant's benefit at retirement age.
The frozen unfunded actuarial liability represents
the reserve which would have been on hand if the
normal cost had been paid in all prior years, less
plan assets. Each year the frozen unfunded actuarial
liability is increased by interest plus the normal
cost with interest, and decreased by the company
contribution with interest. The normal cost for any
year after the first year is equal to the present
value of benefit less the actuarial value of plan
assets less the current value of the frozen unfunded
actuarial liability, divided by an average temporary
annuity factor. The average temporary annuity factor
is calculated based on the present value of each
participant's future compensation. Any actuarial
gains or losses which arise from plan experience
which differ from the actuarial assumptions are
spread over future years' normal costs. However, any
gains or losses resulting from plan amendment or
assumption changes are considered new pieces of
unfunded liability and must be funded over no more
than thirty years. A summary of the plan's funding
standard account for plan years 1995 and 1994 is as
follows:
1995 1994
---- ----
Reconciliation of Funded Status
Actuarial present value of
accumulated benefit obligations:
a. Vested portion ($1,033,544) ( 879,903)
b. Non-vested protion ( 58,531) ( 26,042)
--------- --------
Accumulated Benefit Obligation (1,092,075) ( 905,945)
Effect of estimated future pay growth ( 109,053) ( 339,478)
--------- ---------
Projected Benefit Obligation (1,201,128) (1,245,423)
Plan assets at fair value 1,464,995 1,243,937
--------- ---------
Funded status 263,867 ( 1,486)
Unrecognized net (gain) or loss ( 70,643) 202,878
Unrecognized prior service cost ( 149,278) ( 155,249)
Unrecognized net obligation or (net
asset) ( 43,946) ( 46,143)
(Accrued) Prepaid Cost $ 0 $ 0
========= ========
1995 1994
---- ----
Determination of Pension Cost
Service cost $ 73,528 $ 60,364
Interest cost 92,020 89,791
Expected return on assets ( 86,769) ( 76,158)
Amortization of:
Unrecognized net (gain)
or loss 3,013 2,310
Unrecognized prior service
cost ( 5,971) 0
Unrecognized net obligation
or (net asset) ( 2,197) ( 2,197)
--------- ---------
Net Periodic Pension Cost $ 73,634 $ 74,110
========= =========
The funding calculation was based on a weighted average
assumed discount of 6% and an annual rate of increase
in compensation of 4.5%.
The bank also has a non-contributory defined
contribution profit sharing plan covering substantially
all of its employees. The contributions for 1995 and
1994 were provided based on 10% of eligible employee's
covered compensation. These contributions were
$153,521 and $151,617 for 1995 and 1994 respectively.
Note G INCOME TAXES
The consolidated provision for income taxes consisted
of the following:
1995 1994
---- ----
Currently payable
Federal $1,299,287 $1,188,615
State 77,781 212,761
--------- ---------
$1,377,068 $1,401,376
========= =========
Deferred tax 6,089 9,083
--------- ---------
$1,383,157 $1,410,459
========= =========
The provision for federal income taxes is less than
that computed by applying the federal statutory rate of
34% in 1995 and 1994, as indicated in the following
analysis:
1995 1994
---- ----
Statutory rate 34.0% 34.0%
Increase (decrease) resulting from:
Effect of tax-exempt income ( 9.6%) ( 10.2%)
Interest and other nondeductible
expenses 1.6% 1.1%
Other 0.0% .5%
---- ----
26.0% 25.4%
===== =====
The cumulative totals of each type of significant item
that gave rise to deferred taxes are:
1995 1994
---- ----
Net unrealized (appreciation) depreciation
on securities available for sale ($ 591,868) $ 529,502
Depreciation ( 6,089) ( 145,799)
--------- ---------
Net deferred tax effect ($ 597,957) ($ 383,703)
======== ========
Note H RELATED PARTIES
The Bank has entered into transactions with its
directors, significant shareholders and their
affiliates (related parties). Such transactions
were made in the ordinary course of business on
substantially the same terms and conditions,
including interest rates and collateral, as those
prevailing at the same time for comparable
transactions with other customers, and did not, in
the opinion of management, involve more than normal
credit risk or present other unfavorable features.
The aggregate amount of loans to such related
parties at December 31, 1995 was $1,934,390. During
1995, new loans to such related parties amounted to
$2,525,659 and repayments amounted to $1,947,752.
Note I CONTINGENT LIABILITIES AND COMMITMENTS
The Bank's consolidated financial statements do not
reflect various commitments and contingent
liabilities which arise in the normal course of
business and which involve elements of credit risk,
interest rate risk and liquidity risk. These
commitments and contingent liabilities are described
in Note K Financial Instruments.
Note J CONCENTRATIONS OF CREDIT
All of the Bank's loans, commitments, and commercial
and standby letters of credit have been granted to
customers in the Bank's market area. All such
customers are depositors of the Bank. Investments
in state and municipal securities also involve
governmental entities within the Bank's market area.
The distribution of commitments to extend credit
approximates the distribution of loans outstanding.
Commercial and standby letters of credit were
granted primarily to commercial borrowers.
Note K FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of
business to meet the financing needs of its
customers and to reduce its own exposure to
fluctuations in interest rates. These financial
instruments include commitments to extend credit and
standby letters of credit. Those instruments
involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount
recognized in the statement of financial position.
The contract or notional amounts of those
instruments reflect the extent of the Bank's
involvement in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial
instrument for commitments to extend credit and
standby letters of credit, is represented by the
contractual notional amount of those instruments.
The Bank uses the same credit policies in making
commitments and conditional obligations as it does
for on-balance-sheet instruments.
Commitments to Extend Credit and Financial
Guarantees. At December 31, 1995, the Bank was
exposed to credit risk on commitments to extend
credit having contract amounts of $4,285,138 and
standby letters of credit of $251,584.
Commitments to extend credit are agreements to lend
to a customer as long as there is no violation of
any condition established in the contract.
Commitments generally have fixed expiration dates or
other termination clauses and may require payment of
a fee. Since many of the commitments are expected
to expire without being drawn upon, the total
commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each
customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained, if it is
deemed necessary by the Bank upon extension of
credit, is based on management's credit evaluation
of the counter party. Collateral held varies but
may include accounts receivable, inventory,
property, plant, and equipment; and income-producing
commercial properties.
The estimated fair values of the Bank's financial
instruments were as follows:
December 31, 1995 December 31, 1994
----------------- -----------------
Carrying Fair Carrying Fair
Amount Value Amount Value
------ ----- ------ -----
Financial Assets:
Cash and short-term
investments 7,489,315 7,489,315 7,106,985 7,106,985
Investment securities 95,426,967 95,744,811 97,443,132 96,343,246
Loans, net of
allowance 126,922,482 119,866,946 113,115,968 106,284,754
----------- ----------- ----------- -----------
229,838,764 223,101,072 217,666,085 209,734,985
=========== =========== =========== ===========
Financial Liabilities:
Demand deposits 90,314,502 90,314,502 89,186,491 89,186,491
Certificates of deposit 123,287,689 123,716,237 108,131,936 107,563,939
Unrecognized financial
instruments: N/A N/A N/A N/A
Note L CHANGE IN DEPRECIATION METHOD
Depreciation was computed by the straight-line
method in 1994. Depreciation in prior years was
computed using accelerated depreciation as specified
by the Internal Revenue Code. The new method was
adopted in accordance with generally accepted
accounting principles. The effect of the
retroactive changes on the bank's Balance Sheet for
1994 was as follows:
Increase in book value of Fixed Assets $ 275,630
Less: Deferred income tax 93,714
-------
Increase in equity $ 181,916
=======
ATTACHMENT I
Arkansas Business Corporation Act of 1965
4-26-1007. Rights of dissenting shareholders.
(a) If a shareholder of a corporation which is a
party to a merger or consolidation files with the
corporation, prior to or at the meeting of shareholders at
which the plan of merger or consolidation is submitted to a
vote, a written objection to the plan of merger or
consolidation and does not vote in favor thereof, and the
shareholder within ten (10) days after the date on which
the vote was taken makes written demand on the surviving or
new domestic or foreign corporation for payment of the fair
value of his shares as of the day prior to the date on
which the vote was taken approving the merger or
consolidation, then, if the merger or consolidation is
effected, the surviving or new corporation shall pay to the
shareholder, upon surrender of his certificate or
certificates representing the shares, the fair value
thereof.
(b) The demand shall state the number and class of
the shares owned by the dissenting shareholder.
(c) Any shareholder failing to make demand within the
ten-day period shall be bound by the terms of the merger or
consolidation.
(d) Within ten (10) days after the merger or
consolidation is effected, the surviving or new
corporation, as the case may be, shall give notice to each
dissenting shareholder who has made demand as herein
provided for the payment of the fair value of his shares.
(e)(1) If within thirty (30) days after the date on
which the merger or consolidation was effected the value of
such shares is agreed upon between the dissenting
shareholder and the surviving or new corporation, payment
shall be made within ninety (90) days after the date on
which such merger or consolidation was effected, upon the
surrender of his certificate or certificates representing
those shares.
(2) Upon payment of the agreed value, the dissenting
shareholder shall cease to have any interest in those
shares or in the corporation.
(f)(1) If within the period of thirty (30) days the
shareholder and the surviving or new corporation do not so
agree, then the dissenting shareholder, within sixty (60)
days after the expiration of the thirty-day period, may
file a petition in the circuit court of the county in which
the registered office of the surviving corporation is
located, if the surviving corporation is a domestic
corporation or in the Pulaski County Circuit Court if the
surviving corporation is a foreign corporation, asking for
a finding and determination of the fair value of the shares
and shall be entitled to judgment against the surviving or
new corporation for the amount of the fair value as of the
day prior to the date on which the vote was taken approving
such merger or consolidation, together with interest
thereon to the date of the judgment.
(2) The judgment shall be payable only upon and
simultaneously with the surrender to the surviving or new
corporation of the certificate or certificates representing
the shares.
(3) Upon payment of the judgment, the dissenting
shareholder shall cease to have any interest in the shares
or in the surviving or new corporation.
(4) Unless the dissenting shareholder files the
petition within the time herein limited, the shareholder
and all persons claiming under him shall be bound by the
terms of the merger or consolidation.
(g) Shares acquired by the surviving or new
corporation pursuant to the payment of the agreed value
thereof or to payment of the judgment entered, as in this
section provided, may be held and disposed of by the
corporation as in the case of other treasury shares.
(h) The provisions of this section shall not apply to
a merger if, on the date of the filing of the articles of
merger, the surviving corporation is the owner of all the
outstanding shares of the other domestic or foreign
corporations that are parties to the merger.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 4-27-850 of the Arkansas Business Corporation
Act contains detailed provisions for indemnification of
directors and officers of Arkansas corporations against
expenses, judgments, fines and settlements in connection
with litigation. Article TWELFTH of First Commercial's
Second Amended and Restated Articles of Incorporation, as
amended, provides for indemnification of the directors and
executive officers of First Commercial to the fullest
extent legally permissible under the relevant provisions of
the Arkansas Business Corporation Act. Additionally, the
Company has in place directors' and officers' liability
insurance coverage.
Item 21. Exhibits and Financial Statement Schedules.
Number
2 Plan and Agreement of Merger
between First Commercial
Corporation and First Central
Corporation.
* 4.1 First Commercial's Second Amended
and Restated Articles of
Incorporation, as amended
(incorporated by reference to
Exhibit 3(i) to Form 10-Q for the
quarterly period ended June 30,
1996.
* 4.2 First Commercial's By-Laws as
currently in effect (incorporated
by reference to Exhibit 3(d) to
Form 10-K for the fiscal year
ended December 31, 1991, as
amended, in 0-9676).
* 4.3 Rights Agreement (incorporated by
reference to Exhibit 4 to Form 8-K
dated September 18, 1990, in 0-
9676).
5 Opinion and Consent of Friday,
Eldredge & Clark.
8 Opinion and Consent of Friday,
Eldredge & Clark regarding certain
tax matters.
23.1 Consent of Friday, Eldredge &
Clark (included in Exhibits 5 and
8 to this Registration Statement).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Angel, Humphries,
Hamilton & Company, Ltd.
24 Powers of Attorney.
99 Form of Proxy.
---------------
*Incorporated herein by reference as indicated.
Item 22. Undertakings
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed
that which was registered) and any deviation from the
low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement.
2. That, for the purpose 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.
3. To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
4. That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that
is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
5. That prior to any public reoffering of the
securities registered hereunder through the use of a
prospectus which is a part of this registration statement,
by any person or party who is deemed to be an underwriter
within the meaning of Rule 145(c), the issuer undertakes
that such reoffering prospectus will contain the
information called for by Form S-4 with respect to
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items
of Form S-4.
6. That every prospectus (i) that is filed pursuant
to paragraph (5) immediately preceding, or (ii) that
purports to meet the requirements of Section 10(a)(3) of
the Act 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.
7. 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 foregoing provisions referred to
in Item 20 above, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 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.
8. To respond to requests for information that is
incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business
day of receipt of such request, and to send the
incorporated documents by first class mail or other equally
prompt means. This includes information contained in
documents filed subsequent to the effective date of the
registration statement through the date of responding to
the request.
9. 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Little Rock,
State of Arkansas, on the 10th day of April, 1997.
FIRST COMMERCIAL CORPORATION
/s/ J. Lynn Wright
________________________________
J. Lynn Wright
Chief Financial Officer
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities indicated on the 10th
day of April, 1997.
*
___________________________ Chairman of the Board, Chief
Barnett Grace Executive Officer, President
and Director
(Principal Executive Officer)
/s/ J. Lynn Wright
____________________________ Chief Financial Officer
J. Lynn Wright Principal Financial and
Accounting Officer)
*
____________________________ Director
John W. Allison
*
____________________________ Director
Truman Arnold
*
____________________________ Director
William H. Bowen
*
____________________________ Director
Peggy Clark
*
____________________________ Director
Robert G. Cress
*
____________________________ Director
Cecil W. Cupp, Jr.
*
____________________________ Director
Frank D. Hickingbotham
*
____________________________ Director
Walter E. Hussman, Jr.
*
____________________________ Director
Frederick E. Joyce, M.D.
*
____________________________ Director
Jack G. Justus
*
____________________________ Director
William M. Lemley
*
____________________________ Director
Michael W. Murphy
*
____________________________ Director
Sam C. Sowell
*
____________________________ Director
Paul D. Tilley
*By: /s/ Edwin P. Henry
________________________
Edwin P. Henry
Attorney-in-Fact
Edwin P. Henry, by signing his name hereto, does sign this
document on behalf of each of the persons indicated above
pursuant to powers of attorney duly executed by such
persons, filed or to be filed with the Securities and
Exchange Commission as supplemental information.
INDEX TO EXHIBITS
Number Description
2 Plan and Agreement of Merger between
First Commercial Corporation and First
Central Corporation.
* 4.1 First Commercial's Second Amended and
Restated Articles of Incorporation, as
amended (incorporated by reference to
Exhibit 3(i) to Form 10-Q for the
quarterly period ended June 30, 1996.
* 4.2 First Commercial's By-Laws as currently
in effect (incorporated by reference to
Exhibit 3(d) to Form 10-K for the
fiscal year ended December 31, 1991, as
amended, in 0-9676).
* 4.3 Rights Agreement (incorporated by
reference to Exhibit 4 to Form 8-K
dated September 18, 1990, in 0-9676).
5 Opinion and Consent of Friday, Eldredge
& Clark.
8 Opinion and Consent of Friday, Eldredge
& Clark regarding certain tax matters.
23.1 Consent of Friday, Eldredge & Clark
(included in Exhibits 5 and 8 to this
Registration Statement).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Angel, Humphries, Hamilton &
Company, Ltd.
24 Powers of Attorney.
99 Form of Proxy.
________________
*Incorporated herein by reference as indicated.
EXHIBIT 2
PLAN AND
AGREEMENT OF MERGER
BETWEEN
FIRST COMMERCIAL CORPORATION
AND
FIRST CENTRAL CORPORATION
Date: FEBRUARY 5, 1997
TABLE OF CONTENTS
Page
ARTICLE I
THE PLAN OF MERGER
Section 1.01. The Merger . . . . . . . . . . . . . . . . 1
Section 1.02. Effect of the Merger . . . . . . . . . . . 2
Section 1.03. Consummation of the Merger . . . . . . . . 2
Section 1.04. Articles of Incorporation; Bylaws;
Directors and Officers . . . . . . . . . . 3
Section 1.05. Merger Consideration; Conversion
of Securities . . . . . . . . . . . . . . 3
Section 1.06. Exchange of Certificates . . . . . . . . . 4
Section 1.07. Rights of First Central Shareholders to
Dividends . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
APPROVAL OF MERGER
Section 2.01. Shareholder Approval . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of First
Central . . . . . . . . . . . . . . . . . . . . . . 5
(a) Authority for Transaction . . . . . . 5
(b) Organization and Capitalization . . 5
(c) Financial Statements . . . . . . . 6
(d) Dividends . . . . . . . . . . . . . 7
(e) Loans . . . . . . . . . . . . . . . 7
(f) Taxes . . . . . . . . . . . . . . . 7
(g) Litigation and Regulatory Matters . 8
(h) Compliance . . . . . . . . . . . . 8
(i) Properties and Other Assets . . . . 9
(j) Agreement Does Not Violate Other
Instruments . . . . . . . . . . . . 10
(k) Insurance . . . . . . . . . . . . 11
(l) Employee Benefit Plans . . . . . . 11
(m) Employee Relations . . . . . . . . 12
(n) No Material Events . . . . . . . . 13
(o) Liabilities . . . . . . . . . . . . 13
(p) Marketability of Securities . . . . 14
(q) Interested Party Transactions . . . 14
(r) Material Contracts . . . . . . . . 15
(s) Environmental Matters . . . . . . . 15
(t) Property Sites Owned by First
Central
and FNB Searcy . . . . . . . . . . 16
(u) Representations Not Misleading . . 17
Section 3.02. Representations and Warranties of First
Commercial . . . . . . . . . . . . . . . . 17
(a) Organization and Capitalization of First
Commercial . . . . . . . . . . . . 17
(b) Authority for Transaction . . . . . 18
(c) Agreement Does Not Violate Other
Instruments . . . . . . . . . . . . 18
(d) Representations Not Misleading . . 19
(e) Financial Statements . . . . . . . 19
(f) Litigation and Regulatory Matters . 20
(g) Compliance . . . . . . . . . . . . 20
(h) No Material Events . . . . . . . . 21
(i) Taxes . . . . . . . . . . . . . . . 21
(j) Insurance . . . . . . . . . . . . . 21
(k) ERISA Plans . . . . . . . . . . . . 21
(l) Employee Relations . . . . . . . . 22
(m) Properties and Other Assets . . . . 22
(n) Environmental Matters . . . . . . . 22
(o) Pending Acquisitions by FCC . . . . 22
(p) Regulatory Approval . . . . . . . . 22
(q) Availability of First Commercial
Stock . . . . . . . . . . . . . . . 23
ARTICLE IV
COVENANTS
Section 4.01. Covenants of First Central . . . . . . . 23
(a) Approval of Transaction and Consents 23
(b) Access to Corporate Records . . . . 23
(c) Monthly Financial Statements . . . 24
(d) Closing Financial Statements . . . 24
(e) Conduct of Business . . . . . . . . 24
(f) Cooperation and Furnishing
Information . . . . . . . . . . . . . . 25
(g) Related Party Transactions . . . . 26
(h) Notice of Changes . . . . . . . . . 26
(i) Limit on First Central's Attorneys'
Fees . . . . . . . . . . . . . . . 26
(j) Completion and Delivery of
Schedules . . . . . . . . . . . . . 26
Section 4.02. Covenants of First Commercial . . . . . . 27
(a) Consents and Approvals . . . . . . 27
(b) Quarterly Reports; Current Reports 27
(c) Conduct of Business . . . . . . . . 27
(d) Notice of Changes . . . . . . . . . 28
(e) Access to Corporate Records . . . . 28
(f) Registration of First Commercial Stock 28
(g) Pooling of Interests . . . . . . . 29
(h) Employee Benefits . . . . . . . . . 29
(i) Completion and Delivery of Schedules 29
(j) Election to First Commercial Board 29
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Obligation of First
Commercial . . . . . . . . . . . . . . . . 30
(a) Performance of Covenants . . . . . 30
(b) Representations True at Closing . . 30
(c) Material Changes in Financial
Condition, Business or Prospects . 30
(d) Certified Resolutions . . . . . . . 30
(e) Government Approvals; Other Consents 30
(f) No Injunction . . . . . . . . . . . 31
(g) Litigation . . . . . . . . . . . . 31
(h) No Material Misstatements or
Omissions . . . . . . . . . . . . 31
(i) Opinion of First Central's Counsel 31
(j) Financial Confirmation . . . . . . 31
(k) Due Diligence Review . . . . . . . 32
(l) Title Opinion . . . . . . . . . . . 32
(m) Pooling of Interests Opinion . . . 33
(n) Delivery of Continuity of
Interest Letters . . . . . . . . . 33
(o) Articles of Merger . . . . . . . . 33
(p) Change in Market Price for
First Commercial Stock . . . . . . 33
Section 5.02. Conditions Precedent to Obligation
of First Central .. . . . . . . . . 34
(a) Performance of Covenants . . . . . 34
(b) Representations True at Closing . . 34
(c) Material Changes in Financial
Condition . . . . . . . . . . . . 34
(d) Certified Resolutions . . . . . . . 34
(e) No Injunction . . . . . . . . . . . 35
(f) No Material Misstatements or
Omissions . . . . . . . . . . . . . 35
(g) Opinion of First Commercial's
Counsel . . . . . . . . . . . . . 35
(h) Tax Opinion . . . . . . . . . . . . 35
(i) Securities Registration Opinion . 36
(j) Articles of Merger . . . . . . . . 36
(k) Due Diligence Review . . . . . . . 36
(l) Change in Market Price for
First Commercial Stock . . . . . . 36
(m) Litigation . . . . . . . . . . . . 37
(n) Receipt of Government Approval . . 37
ARTICLE VI
TERMINATION
Section 6.01. Procedure for Termination . . . . . . . . 37
Section 6.02. Termination by Mutual Agreement . . . . . 39
Section 6.03. Effect of Termination for Non-Willful
Breach . . . . . . . . . . . . . . . . . . 39
Section 6.04. Effect of Termination for Willful Breach . 39
Section 6.05. Enforcement Expenses . . . . . . . . . . 40
ARTICLE VII
BROKERS AND EXPENSES
Section 7.01. Brokers . . . . . . . . . . . . . . . . . 40
Section 7.02. Expenses . . . . . . . . . . . . . . . . . 40
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Announcements . . . . . . . . . . . . . . 40
Section 8.02. Notices . . . . . . . . . . . . . . . . . 40
Section 8.03. Binding Effect . . . . . . . . . . . . . . 41
Section 8.04. Headings . . . . . . . . . . . . . . . . . 41
Section 8.05. Counterparts . . . . . . . . . . . . . . . 41
Section 8.06. Integration of Agreement . . . . . . . . . 41
Section 8.07. Amendments; Waivers . . . . . . . . . . . 42
Section 8.08. Governing Law . . . . . . . . . . . . . . 42
Section 8.09. Incorporation by Reference . . . . . . . . 42
Section 8.10. Confidentiality of Information . . . . . . 42
Section 8.11. No Assignment . . . . . . . . . . . . . . 42
Section 8.12. Severability . . . . . . . . . . . . . . . 42
Section 8.13. Survival of Representations and Warranties 43
Section 8.14. Definition of To The Knowledge Of . . . . 43
List of Exhibits:
A Form of Articles of Merger (Section 1.01)
B Form of Opinion of Lightle, Beebe, Raney & Bell
(Section 5.01(i))
C Form of Opinion of Friday, Eldredge & Clark (Section
5.02(g))
List of Schedules:
A Schedule of Ownership of Common Stock (Delivered
Pursuant to Section 3.01(b)(ii))
B Schedule of Dividends (Delivered Pursuant to Section
3.01(d))
C Schedule of Loans (Delivered Pursuant to Section
3.01(e))
D Schedule of Internal Revenue Service and/or State
Taxing Authority Audits (Delivered Pursuant to Section
3.01(f)
E Schedule of Litigation (Delivered Pursuant to Section
3.01(g))
F Schedule of Consents and Approvals to be Obtained by
First Central and FNB Searcy (Delivered Pursuant to
Section 3.01(j))
G Schedule of Insurance Policies (Delivered Pursuant to
Section 3.01(k))
H Schedule of Employee Benefit Plans (Delivered Pursuant
to Section 3.01(l))
I Schedule of Employees (Delivered Pursuant to Section
3.01(m))
J Schedule of Material Changes (Delivered Pursuant to
Section 3.01(n))
K Schedule of Pledges of Investment (Delivered Pursuant
to Section 3.01(p))
L Schedule of Interested Party Transactions and Loans
(Delivered Pursuant to Section 3.01(q))
M Schedule of Material Contracts (Delivered Pursuant to
Section 3.01(r))
N Schedule of Properties Containing Hazardous Materials
(Delivered Pursuant to Section 3.01(s))
O Schedule of Property Sites Owned by First Central and
FNB Searcy (Delivered Pursuant to Section 3.01(t))
P Schedule of Consents and Approvals to Be Obtained by
First Commercial (Delivered Pursuant to Section
3.02(c))
Q Schedule of Litigation (Delivered Pursuant to Section
3.02(f)).
DEFINITIONS
Acquisition . . . . . . . . . . . . . . . . . . . . . . . 25
Articles of Merger . . . . . . . . . . . . . . . . . . 2
Closing . . . . . . . . . . . . . . . . . . . . . . . . . 2
Closing Date . . . . . . . . . . . . . . . . . . . . . . 2
Closing Financial Statements . . . . . . . . . . . . . . 24
COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Code . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Dissenting Shares . . . . . . . . . . . . . . . . . . . . 3
Effective Time . . . . . . . . . . . . . . . . . . . . . 2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 9
Federal Reserve Board . . . . . . . . . . . . . . . . . . 19
First Central . . . . . . . . . . . . . . . . . . . . . 1
First Central Balance Sheet . . . . . . . . . . . . . . . 8
First Central Due Diligence Review . . . . . . . . . . 36
First Central Financial Statements . . . . . . . . . . . 6
First Central Schedules . . . . . . . . . . . . . . . . 26
First Central Stock . . . . . . . . . . . . . . . . . . . 1
First Commercial . . . . . . . . . . . . . . . . . . . . 1
First Commercial Banks . . . . . . . . . . . . . . . . . 19
First Commercial Due Diligence Review . . . . . . . . . . 32
First Commercial Financial Statements . . . . . . . . . . 19
First Commercial Schedules . . . . . . . . . . . . . . . 29
First Commercial Stock . . . . . . . . . . . . . . . . . 1
FNB Searcy . . . . . . . . . . . . . . . . . . . . . . . 1
Insurance Policies . . . . . . . . . . . . . . . . . . 11
Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
Merger Consideration . . . . . . . . . . . . . . . . . 3
Monthly Financial Statements . . . . . . . . . . . . . 24
Pension Plan . . . . . . . . . . . . . . . . . . . . . 11
Plan . . . . . . . . . . . . . . . . . . . . . . . . . 11
Registration Statement . . . . . . . . . . . . . . . . 28
SFAS . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Surviving Corporation . . . . . . . . . . . . . . . . . . 2
PLAN AND
AGREEMENT OF MERGER
BETWEEN
FIRST COMMERCIAL CORPORATION
AND
FIRST CENTRAL CORPORATION
This AGREEMENT is made as of this 5th day of February,
1997, between FIRST COMMERCIAL CORPORATION, an Arkansas
corporation having its principal office in Little Rock,
Arkansas ("First Commercial"), and FIRST CENTRAL
CORPORATION, an Arkansas corporation having its principal
office in Searcy, Arkansas ("First Central").
W I T N E S S E T H:
WHEREAS, First Central owns all of the issued and
outstanding common stock of First National Bank, Searcy,
Arkansas ("FNB Searcy"); and
WHEREAS, for good and sound reasons germane to the
business of the parties hereto, the Boards of Directors of
First Commercial and First Central have each determined that
it would be in the best interests of such corporations,
their respective shareholders, subsidiaries and customers
and the communities they serve for First Central to be
merged with and into First Commercial with the shareholders
of First Central receiving shares of common stock of First
Commercial, par value $3.00 per share ("First Commercial
Stock"), in exchange for the outstanding shares of common
stock of First Central, par value $1.00 per share ("First
Central Stock"), owned by them (the "Merger"), thereby
permitting First Commercial to acquire First Central and FNB
Searcy; and
WHEREAS, the Boards of Directors of First Commercial
and First Central have, or will have, adopted resolutions
approving the Merger upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of these premises and
the mutual promises, representations, covenants and actions
hereinafter set forth, the parties hereto, each intending to
be legally bound hereby, agree as follows:
ARTICLE I
THE PLAN OF MERGER
Section 1.01. The Merger. At the Effective Time (as
defined in Section 1.03 hereof) in accordance with this
Agreement and Arkansas law, First Central shall be merged
with and into First Commercial pursuant to the Articles of
Merger to be entered into by First Central and First
Commercial in substantially the form attached hereto as
Exhibit A (the "Articles of Merger"), the separate existence
of First Central shall cease, and First Commercial shall
continue as the surviving corporation under the corporate
name it possesses immediately prior to the Effective Time.
First Commercial, as at the Effective Time and thereafter,
hereinafter may sometimes be referred to as the "Surviving
Corporation."
Section 1.02. Effect of the Merger. At the Effective
Time the effect of the Merger shall be that (i) the
Surviving Corporation shall possess all the rights,
privileges and franchises possessed by each of First
Commercial and First Central, (ii) all of the property and
assets of whatsoever kind or description of each of First
Commercial and First Central, and all debts due on whatever
account to any of them, including subscriptions for shares
or other choses in action belonging to any of them, shall be
taken and be deemed to be transferred to, and vested in, the
Surviving Corporation without further act or deed, and (iii)
the Surviving Corporation shall be responsible for all of
the liabilities and obligations of each of First Commercial
and First Central, as provided by applicable law, in the
same manner as if the Surviving Corporation had itself
incurred such liabilities or obligations; but the
liabilities of First Commercial and First Central, or of
their shareholders, directors or officers, shall not be
affected, nor shall the rights of the creditors thereof, or
of any persons dealing with such corporations be impaired by
the Merger, and any claim existing, or action or proceeding
pending, by or against either of First Commercial or First
Central may be prosecuted to judgment as if the Merger had
not taken place, or the Surviving Corporation may be
proceeded against, or substituted, in place of First
Commercial or First Central, as the case may be.
Section 1.03. Consummation of the Merger. The Merger
will be closed in accordance herewith (the "Closing") on the
first business day of the month immediately following the
month in which all approvals and consents, and the
expiration of all waiting periods, necessary to consummate
the transactions contemplated herein have been received, or
such other date as the parties may mutually agree in writing
(the "Closing Date") subject to the fulfillment of each
condition set forth in Article V hereafter. The parties
hereto will use their best efforts to accomplish the Closing
before June 30, 1997. The parties hereto will cause the
Merger to be consummated by filing with the Secretary of
State of the State of Arkansas on the Closing Date
appropriate Articles of Merger. The "Effective Time" shall
be 5:00 p.m., Little Rock time, on the date of such filing.
The Closing will take place at 10:00 a.m., Little Rock time,
on the Closing Date, at the offices of Friday, Eldredge &
Clark in Little Rock, Arkansas, or at such other mutually
agreeable time or place.
Section 1.04. Articles of Incorporation; Bylaws;
Directors and Officers. The Articles of Incorporation of
First Commercial, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of
the Surviving Corporation after the Effective Time until
thereafter amended as provided therein and under Arkansas
law. The Bylaws of First Commercial, as in effect
immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Corporation after the Effective Time until
thereafter amended as provided therein and under Arkansas
law. The directors and officers of First Commercial
immediately prior to the Effective Time shall be the initial
directors and officers of the Surviving Corporation after
the Effective Time until their successors are elected and
qualified.
Section 1.05. Merger Consideration; Conversion of
Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of First Commercial,
First Central or the holder of any of the securities of such
corporations:
(a) Each share of First Central Stock issued and
outstanding immediately prior to the Effective Time (other
than shares as to which dissenters' rights have been
perfected and not withdrawn or otherwise forfeited under
applicable Arkansas law ("Dissenting Shares")) shall be
canceled and extinguished and be converted into the right to
receive that number of shares of First Commercial Stock
equal to the result obtained by dividing (Y) 1,650,000 (the
number of shares of First Commercial Stock to be issued in
the Merger) by (Z) the number of outstanding shares of First
Central Stock on the Closing Date (such consideration, as
well as any payment due in lieu of fractional shares of
First Commercial Stock as hereinafter provided being herein
referred to as the "Merger Consideration"); provided,
however, that in the event after the date hereof the shares
of First Commercial Stock at any time outstanding prior to
the Closing Date shall be subdivided, by reclassification,
recapitalization, stock dividend, or otherwise, into a
greater number of shares without the actual receipt by First
Commercial of consideration (at least equal to book value)
for the additional number of shares so issued, or the number
of shares of First Commercial Stock at any time outstanding
shall be reduced, by reclassification, recapitalization,
reduction of capital stock, or otherwise, or the outstanding
shares of First Commercial Stock shall be reclassified or
changed other than in such manner, then the number of shares
of First Commercial Stock that each holder of First Central
Stock shall be deemed to have the right to receive shall be
adjusted accordingly to the nearest 10,000th share of First
Commercial Stock.
(b) No fractional shares of First Commercial Stock
shall be issued as part of the Merger, and in lieu of
fractional shares, First Commercial shall pay a sum in cash
equal to the value of any such fractional share of First
Commercial Stock to which any holder of First Central Stock
shall be entitled determined on the basis of the last
reported sales price on the Closing Date for shares of First
Commercial Stock on the Nasdaq National Market.
(c) At and after the Effective Time, there shall be no
transfers on the stock transfer books of First Central with
respect to shares of First Central Stock issued and
outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates formerly representing
shares of First Central Stock are presented to First
Commercial or its transfer agent, they shall be canceled and
exchanged for the Merger Consideration as provided in
Section 1.06 and following, subject to applicable law in the
case of Dissenting Shares.
Section 1.06. Exchange of Certificates. From and
after the Effective Time, all certificates representing
shares of First Central Stock, with the exception of
certificates representing Dissenting Shares or shares of
First Central Stock held by First Commercial, shall
represent the right to receive shares of First Commercial
Stock on the basis set forth above, and the right to receive
cash in lieu of fractional shares in exchange therefor, upon
the terms and conditions of this Agreement, subject to
applicable abandoned property, escheat and similar laws.
Upon delivery of certificates representing shares of First
Central Stock to the transfer agent of First Commercial,
including shares delivered at the Closing provided the
transfer agent of First Commercial has been given at least
ten (10) days notice of the intent to make such delivery,
First Commercial shall cause the transfer agent to issue
certificates representing the requisite number of shares of
First Commercial Stock for each share of First Central Stock
represented by the certificates therefor properly delivered,
and First Commercial shall pay by certified or cashier's
check the amount entitled to be received in lieu of
fractional shares. Notwithstanding the foregoing, neither
First Commercial's transfer agent nor any party hereto shall
be liable to a holder of shares of First Central Stock for
any of the Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat
and similar laws.
Section 1.07. Rights of First Central Shareholders to
Dividends. Holders of First Central Stock on the Effective
Date shall be entitled to receive, subject to applicable
abandoned property, escheat and similar laws, payment of
dividends declared by First Commercial subsequent to the
Effective Date, but delivery of payment of such dividends
will not be required of First Commercial until such persons
have delivered their certificates representing shares of
First Central Stock in exchange for certificates
representing shares of First Commercial Stock in accordance
with the provisions of Section 1.06 above. Notwithstanding
the foregoing, First Commercial shall not be liable to a
holder of shares of First Central Stock for any such
dividends delivered to a public official pursuant to any
abandoned property, escheat and similar laws.
ARTICLE II
APPROVAL OF MERGER
Section 2.01. Shareholder Approval. The shareholders
of First Central shall approve the Merger in accordance with
Arkansas law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of First
Central. No representation or warranty is made by any
director, officer or employee of First Central, or FNB
Searcy, as an individual. First Central, for itself and on
behalf of FNB Searcy, represents and warrants to First
Commercial the following, each of which representations and
warranties shall be continuing and shall (except as
otherwise stated herein) be true as of the date of this
Agreement and on the Closing Date:
(a) Authority for Transaction. The Board of Directors
of First Central has duly approved this Agreement and the
transactions contemplated hereby, and this Agreement
constitutes the valid and binding obligation of First
Central enforceable in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws from
time to time in effect which affect creditors' rights
generally and by legal and equitable limitations on the
availability of injunctive relief, specific performance and
other equitable remedies which are available only in the
discretion of the court. First Central has full corporate
power, authority and legal right to enter into this
Agreement and, upon approval thereof by its shareholders and
by appropriate regulatory authorities, to consummate the
transactions contemplated hereby. The Board of Directors of
First Central and its shareholders shall have taken all
action required by law or by the Articles of Incorporation
and Bylaws of First Central or otherwise to authorize the
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
(b) Organization and Capitalization.
(i) First Central has delivered to First
Commercial complete and correct copies of the Articles of
Incorporation, and all amendments thereto or restatements
thereof, and Bylaws of First Central as in effect on the
date hereof. First Central is a corporation duly organized
and validly existing in good standing under the laws of the
State of Arkansas, with full corporate power and authority
to carry on its business as and where it is now being
conducted and to own and lease its properties and assets in
the places where such properties and assets are now or will
be owned or leased. As of the date of this Agreement, the
authorized capital stock of First Central consists of 80,000
shares of First Central Stock, 71,926 shares of which are
issued and outstanding. All such issued and outstanding
shares of First Central Stock have been fully paid, are
validly authorized and duly issued and are non-assessable
and such shares of First Central Stock have not been issued
in violation of any preemptive rights. First Central does
not have outstanding any subscriptions, options or other
arrangements or commitments obligating it to issue or
dispose of, and it is not obligated to issue, any shares of
First Central Stock or other securities.
(ii) First Central has delivered to First
Commercial a complete and correct copy of the Articles of
Incorporation, and all amendments thereto, and Bylaws of FNB
Searcy as in effect on the date hereof. FNB Searcy is a
national banking association duly organized and validly
existing in good standing under the laws of the United
States of America with full power and authority to carry on
its business as and where it is now being conducted and to
own and lease its properties and assets in the places where
such properties and assets are now or will be owned or
leased. As of the date of this Agreement, the authorized
capital stock of FNB Searcy consists of 40,000 shares of
common stock, $25.00 par value per share, all of which are
outstanding and owned by First Central, and all of which
have been fully paid, are validly authorized and duly issued
and are not subject to assessment, and such shares have not
been issued in violation of any preemptive rights of
stockholders. To the knowledge of First Central and FNB
Searcy, no regulatory agency has threatened or considered
any assessment against the owner of the stock of FNB Searcy.
There are no subscriptions, options or other arrangements or
commitments obligating First Central or FNB Searcy to issue
or to acquire or dispose of, and FNB Searcy is not otherwise
obligated to issue, any shares of its common stock or other
securities.
(iii)First Central has no direct or indirect
subsidiary other than FNB Searcy.
(c) Financial Statements. First Central has delivered
to First Commercial its consolidated financial statements
for the years ended December 31, 1995, 1994, and 1993 with
the unqualified report of its independent auditors, Angel,
Humphries, Hamilton & Company, Ltd. (the "First Central
Financial Statements"). Contemporaneously with its
execution and delivery hereof, First Central will also
deliver to First Commercial copies of all of the periodic
public reports filed by First Central or FNB Searcy with
banking regulators and agencies since January 1, 1994. The
First Central Financial Statements are complete and correct
and were prepared from the books and records of First
Central and FNB Searcy, which accurately and fairly reflect
the transactions and dispositions of assets of First Central
and FNB Searcy, taken as a whole, and fairly present on a
consolidated basis the financial condition, results of
operations and changes in capital accounts and undivided
profits of First Central and FNB Searcy, at their respective
dates and for the periods to which they relate. The First
Central Financial Statements were prepared in accordance
with generally accepted accounting principles consistently
applied. There are no material obligations or liabilities of
First Central or FNB Searcy, taken as a whole, whether
absolute, accrued or contingent (including, without
limitation, unfunded obligations under employee benefit
plans or arrangements or liabilities for federal, state,
local or foreign taxes or assessments) or any "loss
contingencies" considered "probable" or "reasonably
estimable" within the meaning of the Financial Accounting
Standards Board's Statement of Financial Accounting
Standards No. 5, which, in accordance with generally
accepted accounting principles, were required to be
reflected or disclosed in the First Central Financial
Statements and which were not so reflected or disclosed
therein, except such as have been reported in writing to
First Commercial. All reserves and allowances included in
the First Central Financial Statements, taken as a whole,
are adequate and appropriate pursuant to generally accepted
accounting principles.
(d) Dividends. Since December 31, 1995, no dividend
has been declared or paid on any equity securities of First
Central, nor has First Central purchased or redeemed any of
its equity securities, except as disclosed in Schedule B
attached hereto.
(e) Loans. First Central has delivered to First
Commercial complete and correct copies of the most current
written policies of FNB Searcy relating to the making,
collection, classification and charge off of loans and other
evidences of indebtedness. To the knowledge of First
Central and FNB Searcy, all loans and other evidences of
indebtedness of FNB Searcy have been appropriately and
correctly classified pursuant to the written policies of FNB
Searcy. FNB Searcy has no loans or other evidences of
indebtedness in their respective portfolios that (i) are
considered nonperforming or have been placed on a nonaccrual
status in accordance with their written policies; (ii) are
classified as other loans especially mentioned, substandard,
doubtful, or loss loans in accordance with its written
policies; (iii) are sixty (60) days or more past due; (iv)
have been renegotiated as to payment terms or collateral
because of credit risks associated with such loans; or (v)
to the knowledge of First Central and FNB Searcy, are
subject to any defenses, offsets or counterclaims that may
be asserted against the present holder thereof, except in
each case such loans or evidences of indebtedness as have
been disclosed in Schedule C attached hereto.
(f) Taxes. First Central and FNB Searcy have timely
filed returns for all federal, state and local taxes of
First Central and FNB Searcy to the extent such filings and
payments were required prior to the date of this Agreement,
and such returns are true and correct in all material
respects. Neither First Central nor FNB Searcy has had any
tax deficiencies proposed or assessed against it and neither
First Central nor FNB Searcy has executed any waiver of or
extended the statute of limitations on the audit of any tax
return or the assessment or collection of any tax. All
taxes and governmental charges levied or assessed against
the property or the business of First Central or FNB Searcy
have been paid in full, other than taxes or charges the
payment of which are not yet due or which, if due, are not
yet delinquent or are being contested in good faith or have
not been finally determined. Except as has been indicated
to First Commercial in writing, the amount set up as
accruals for taxes on the balance sheet of First Central as
at December 31, 1995, contained in the First Central
Financial Statements ("First Central Balance Sheet") is
sufficient in all material respects for the payment of all
unpaid taxes applicable to the property or business of First
Central and FNB Searcy for the period ended on December 31,
1995, and all periods prior thereto. Except as disclosed in
Schedule D attached hereto, no tax returns or reports of
First Central or FNB Searcy have been audited by the
Internal Revenue Service or any state taxing authority
within the past five years.
(g) Litigation and Regulatory Matters. First Central
has disclosed in Schedule E attached hereto all material
actions, suits, proceedings and investigations pending or,
to the knowledge of First Central or FNB Searcy, threatened
against or affecting First Central or FNB Searcy or any
property or rights or stock of First Central or FNB Searcy,
or their respective officers or directors (in their capacity
as such) at law or in equity, or before or by any court or
other governmental instrumentality, excluding actions
affecting the banking industry generally. Except to the
extent so disclosed in Schedule E, none of such actions,
suits, proceedings or investigations, either (i) involves a
claim for an amount exceeding the amount recoverable by
First Central or FNB Searcy under any applicable insurance
policies, subject to the deductible amounts under such
policies, (ii) results or would result, if adversely
determined, in any material adverse change in the business,
operations, prospects or assets or the condition, financial
or otherwise, of First Central and FNB Searcy, taken as a
whole, or (iii) would prevent the First Central shareholders
from approving and consummating the transactions
contemplated herein. Except as so disclosed in Schedule E,
neither First Central nor FNB Searcy is subject to any
continuing court or administrative order, writ, injunction,
decree, agreement, memorandum or letter applicable
specifically to it or to its business, property or
employees, and neither First Central nor FNB Searcy is in
default with respect to any order, writ, injunction or
decree, agreement, memorandum or letter of any court or
other governmental instrumentality.
(h) Compliance. First Central and FNB Searcy, taken
as a whole, have complied in all material respects with, and
First Central and FNB Searcy, taken as a whole, are not in
default in any material respect under, any law, ordinance,
requirement, rule, regulation or order applicable to their
respective businesses or to the assets owned, used or
occupied by them (including, without limitation, the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), licensing requirements with respect to their
personnel and all federal and state consumer credit laws,
rules and regulations), and First Central and FNB Searcy
have filed with the proper authorities all statements and
reports required by the laws, regulations, licensing
requirements and orders to which they or any of their
employees (because of their activities on behalf of First
Central or FNB Searcy) are subject where the failure to do
so would have a material adverse effect on First Central and
FNB Searcy, taken as a whole, and First Central and FNB
Searcy possess all licenses, franchises, permits and
governmental authorizations necessary to conduct its
business in the manner in which and in the jurisdictions and
places where such businesses are now conducted where the
failure to do so would have a material adverse effect on
First Central and FNB Searcy, taken as a whole.
(i) Properties and Other Assets. First Central and
FNB Searcy have good and marketable fee simple title to, or,
as the case may be, valid and enforceable leasehold
interests in, all its respective properties, interests in
properties and other assets, real and personal, as owned or
leased by First Central or FNB Searcy, as applicable (i)
reflected on the First Central Balance Sheet, or (ii)
acquired since the date thereof,except to the extent such
properties and assets are or were thereafter disposed of for
fair value in the ordinary course of business. All such
properties and assets are free and clear of all liens,
charges and encumbrances, except (i) those set forth or
reflected in the First Central Balance Sheet, (ii) liens for
taxes not yet due and payable or being contested in good
faith and (iii) defects in title and liens, charges and
encumbrances, if any, as do not materially detract from the
value, or materially interfere with the present or proposed
use, of the property or asset subject thereto or affected
thereby or as do not otherwise materially impair business
operations of either First Central or FNB Searcy. The
operation of the properties and businesses of First Central
and FNB Searcy in the manner in which they are now operated
does not violate any zoning ordinances or municipal
regulations in such a way as could, if such ordinances or
regulations were enforced, foreseeably result in any
material impairment of the uses of their respective
properties for the purposes for which they are now operated.
No asset included in the First Central Balance Sheet was
valued in excess of its cost less depreciation or, in the
case of investment securities, in excess of cost, adjusted
for amortization of premiums or accretion of discounts, with
the exception of securities classified as available for sale
in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 115, which are carried at fair market
value. All real and tangible personal property owned or
used by First Central or FNB Searcy in their respective
businesses is in good condition, normal wear and tear
excepted, and is in good operating order. There are no (i)
patents, trademarks, trade names or copyrights, or
applications therefor, owned by or registered in the name of
either First Central or FNB Searcy, or in which either First
Central or FNB Searcy has rights, which have not been
disclosed in writing to First Commercial (other than rights
held by FNB Searcy as a secured party in the ordinary course
of its lending business), (ii) license agreements, other
than those usually required in normal operations in the
banking industry, to which either First Central or FNB
Searcy is a party, either as a licensor or licensee, with
respect to any patents, trademarks, tradenames or copyrights
which have not been disclosed in writing to First Commercial
or (iii) to the knowledge of First Central, claims that in
the conduct of its business, as now conducted, either First
Central or FNB Searcy is infringing on any patents,
trademarks, trade names or copyrights of others which have
not been disclosed in writing to First Commercial. First
Central and FNB Searcy have obtained all necessary permits
and certificates for the use and occupancy of the real
estate owned, leased or used by it and the improvements
thereon and systems therein, and such use and occupancy is
in full compliance with all federal, state and local laws,
rules and regulations. To the knowledge of First Central,
no material fact or condition exists which would result in
the termination or material impairment in the furnishing of
any water, sewer, gas, electricity, telephone, drainage or
other services and equipment to the real estate owned,
leased or occupied by First Central or FNB Searcy.
(j) Agreement Does Not Violate Other Instruments.
Subject to obtaining any required consents and approvals
(which necessary consents and approvals are disclosed in
Schedule F attached hereto and will be obtained by First
Central prior to Closing), the execution and delivery of
this Agreement by First Central does not, and the
consummation of the transactions contemplated hereby will
not, (i) violate any provision of the Articles of
Incorporation or Bylaws of First Central, (ii) violate any
provision of the Articles of Association or Bylaws of FNB
Searcy, (iii) violate any provision of, or result in any
breach or termination of, or constitute a default under, or
constitute an event which with notice or lapse of time, or
both, would become a default under, or result in the
creation of any material lien, security interest, charge or
encumbrance upon any property of First Central or FNB Searcy
under, any material lease, indenture, or other agreement
(written or oral) or instrument to which First Central or
FNB Searcy is a party or by which First Central or FNB
Searcy may be bound or affected or under which First Central
or FNB Searcy receives benefits, (iv) violate any material
law, rule, regulation, order, writ, injunction or decree or
administrative memorandum, agreement or letter to which
First Central or FNB Searcy is a party or by which First
Central or FNB Searcy may be bound or affected or under
which First Central or FNB Searcy receives benefits, or (v)
result in the material loss or material adverse modification
of any license, franchise, permit or other authorization
granted to or otherwise held by First Central or FNB Searcy.
(k) Insurance. During each of the past three calendar
years First Central and FNB Searcy and their properties have
been insured for customary risks, all with limits,
deductibles, and exclusions as are customary in the banking
industry. Such insurance protection continues in effect,
and neither First Central nor FNB Searcy is aware of any
facts or events relating to its operations or financial
condition which reasonably can be expected to increase
materially the premiums or reduce the coverage under any of
such policies, except as has been indicated in writing to
First Commercial. Schedule G attached hereto sets forth a
complete and accurate schedule, including the type of
policy, policy number, the limits of coverage, the insurance
carrier, the insurance agent or broker and the expiration
date, of all insurance policies, letters of credit,
performance bonds and fidelity bonds at any time held by,
for the benefit of, or issued to First Central or FNB Searcy
and now in force (collectively, the "Insurance Policies").
Except as disclosed in Schedule G, neither First Central nor
FNB Searcy has forfeited or waived any claim under any
Insurance Policy and each has fully complied with the terms
and conditions thereof.
(l) Employee Benefit Plans. First Central and FNB
Searcy have disclosed in Schedule H attached hereto each
employee benefit plan (as defined in Section 3(3) of ERISA)
or other plan maintained for their respective employees or
under which any one of them has any present or future
liability (each a "Plan"), and true and complete copies of
all Plans will be delivered to First Commercial, together
with the most recent Internal Revenue Service determination
letters, annual reports (Form 5500 Series) and accompanying
schedules, summary plan descriptions, certified financial
statements (if available) and actuarial reports related
thereto, within five (5) business days following the
execution and delivery hereof by First Central. With
respect to each Plan for which an annual report has been
filed, no material adverse change has occurred with respect
to the matters covered by the annual report since the date
thereof, except as has been disclosed in writing to First
Commercial. There are no unfunded vested benefits under any
Plan which are subject to the vesting and funding standards
of ERISA, and none of the Plans is a multiemployer plan
within the meaning of Section 3(37) of ERISA. Each of the
Plans covered by ERISA (i) has been operated in all material
respects in accordance with ERISA, (ii) has not engaged in
any "prohibited transaction" (as such term is defined in
Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") or in Section 406 of ERISA) which would
result in a material penalty, and (iii) has met the minimum
funding standards of Section 412 of the Code, if applicable.
Each of the Plans which is an employee pension benefit plan
(as defined in Section 3(2) of ERISA) ("Pension Plan") that
is intended to "qualify" under Section 401(a) of the Code,
is qualified within the meaning of Section 401(a) of the
Code, except as heretofore disclosed in writing to First
Commercial, and a favorable determination letter has been
issued by the Internal Revenue Service with respect to each
such qualified Pension Plan. No Pension Plan has been
amended since issuance of the most recent determination
letter by the Internal Revenue Service with respect thereto,
except as disclosed in Schedule H. Each Pension Plan has
been administered in accordance with Section 401(a) of the
Code, where applicable. No Reportable Event (within the
meaning of Section 4043 of ERISA) has occurred with respect
to any Plan which would result in material liability to
First Central and FNB Searcy, taken as a whole. Since the
enactment of ERISA, neither First Central nor FNB Searcy has
completely or partially terminated any employee pension
benefit plan or withdrawn from any multiemployer pension
plan, other than as disclosed in Schedule H. No proceeding
by the Pension Benefit Guaranty Corporation has been
instituted or threatened to terminate, pursuant to Subtitle
C of Title IV of ERISA, any Plan. There is no suit, action
or proceeding pending, threatened against or affecting, or
likely to have an adverse impact on any Plan. One or more
of the Plans may be covered by the Consolidated Omnibus
Budget Reconciliation Act of 1986 ("COBRA"). If so, each
such Plan has been operated in, and is in, material
compliance with COBRA. All notices required to be given
under COBRA have been timely and properly given in
accordance with COBRA, and the rules and regulations
promulgated thereunder, and no employee, former employee or
"qualified beneficiary" (as defined in COBRA) has any claim
or contingent claim against First Central or FNB Searcy for
failure to comply with COBRA or the rules and regulations
promulgated thereunder. Schedule H lists all persons
currently eligible for benefits under COBRA.
(m) Employee Relations.
(i) No employee of First Central or FNB Searcy is
a party to a collective bargaining agreement. There are no
pending or threatened labor disputes with any of the
employees of First Central or FNB Searcy. Except as First
Central has previously disclosed in Schedule I, neither
First Central nor FNB Searcy is obligated to pay any person
employed by First Central or FNB Searcy total annual
compensation for fiscal year 1996 (including bonuses and the
like) in excess of Fifty Thousand Dollars ($50,000). To the
knowledge of First Central and FNB Searcy, there are no
facts that would indicate that any employee of First Central
or FNB Searcy will not continue in his respective employment
on an acceptable basis, subject to normal turnover, except
as has been disclosed in Schedule I.
(ii) Neither First Central nor FNB Searcy has
entered into or agreed to enter into any employment
agreement or covenant not to compete agreement, has, since
December 31, 1995, granted or agreed to grant any increase
in excess of 10% in the wages, salaries or other
compensation of any of its employees or directors, has,
since December 31, 1995, paid or agreed to pay any bonus to
any of its employees, has directly or indirectly paid or
made a commitment to pay any severance or termination
payment to any of its employees, or has, since December 31,
1995, entered into or agreed to enter into any written
consulting agreement or other agreement for the purchase of
services, except as disclosed in Schedule I.
(n) No Material Events. Except as disclosed in
Schedule J attached hereto or in the cases of clauses (i),
(ii), (iii) and (iv) below, except for transactions in the
ordinary course of business consistent with past practices,
since December 31, 1995 (or as otherwise indicated), neither
First Central nor FNB Searcy has (i) incurred or become
subject to, or agreed to incur or become subject to, any
material obligation or liability, absolute or contingent;
(ii) discharged or satisfied or agreed to discharge or
satisfy any lien or encumbrance or paid any obligation or
liability, absolute or contingent; (iii) canceled or agreed
to cancel any material debts or claims or waived any rights
of substantial value; (iv) made or permitted or agreed to
make or permit any material amendment or termination of any
material contract, lease, arrangement, license or other
instrument to which it is a party; (v) made any material
change in its method of accounting; (vi) made any material
capital expenditures or entered into commitments therefor;
(vii) made or agreed to make any loan or loans to any one
person that would cause such person to have outstanding
loans as of the date hereof from FNB Searcy exceeding in the
aggregate Two Hundred Fifty Thousand Dollars ($250,000) (The
term "person," for purposes of this clause, shall include,
in addition to an individual, the persons specified in Rule
144(a)(2) of the Securities and Exchange Commission.);
(viii) purchased or sold or agreed to purchase or sell any
material amounts of tax-exempt bonds; (ix) made, renewed or
extended or agreed to make, renew or extend any
nonadjustable rate loans with maturities exceeding sixty
(60) months; (x) repossessed or purchased in a foreclosure
action any material personal or real property; (xi) charged
any loan to the reserve for loan and lease losses or
established any special allocation thereto; (xii) sold or
transferred or agreed to sell or transfer any loans
(excluding partial participations) or other real estate
owned; (xiii) mortgaged or pledged any of its material
assets, tangible or intangible, or permitted any of its
material assets, tangible or intangible, to become subject
to any lien, charge or other encumbrance (other than liens
for real estate taxes not yet due and payable and
mechanics', materialmen's and similar liens imposed by
statute that are being contested in good faith) and which
remain outstanding as of the date hereof; (xiv) sold,
assigned or transferred any material asset or property of
any nature whatsoever, whether real, personal or mixed,
tangible or intangible; or (xv) made any material change in
its business or operations or entered into any other
material transaction.
(o) Liabilities. The liabilities on the First Central
Balance Sheet consist solely of obligations and liabilities
incurred by First Central and FNB Searcy in the ordinary and
regular course of their businesses, and with regard to such
liabilities, all non-deposit liabilities are to persons who
are not affiliated with First Central or FNB Searcy. As of
December 31, 1995, neither First Central nor FNB Searcy,
taken as a whole, had any material and adverse liabilities
or obligations of any nature whatsoever, including, without
limitation, fixed or contingent, accrued, absolute, matured
or unmatured, or any "loss contingencies" considered
"probable" or "reasonably estimable" within the meaning of
the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 5, which were not
recorded on the First Central Balance Sheet. First Central
and FNB Searcy, taken as a whole, are not obligated to make
any material investment, directly or indirectly, in any
person, corporation, association, partnership, joint
venture, trust or other entity, except for investments in
investment securities and other evidences of indebtedness
made in the ordinary course of business consistent with past
practices.
(p) Marketability of Securities. Except for pledges
to secure public and trust deposits and repurchase
agreements disclosed in Schedule K attached hereto, none of
the investments reflected in the First Central Balance Sheet
under the heading "Investment Securities" and none of the
investments made since such date are subject to any
"investment" or other restriction, whether contractual or
statutory, which impairs the ability of First Central or FNB
Searcy to freely dispose of such investment in the open
market at any time.
(q) Interested Party Transactions. Neither First
Central nor FNB Searcy is a party to, and none of their
property is bound or affected by, nor does First Central or
FNB Searcy receive benefits under, any written or oral or
express or implied contract or other arrangement which is
not in the ordinary course of business in which a material
interest is held by any person or entity which is an
"affiliate" of First Central or FNB Searcy within the
meaning of Rule 144 under the Securities Act of 1933, as
amended, any executive officer or director of First Central
or FNB Searcy or any "affiliate" or "associate" of any such
executive officer or director, as such terms are defined in
Rule 14a-1 under the Securities Exchange Act of 1934, as
amended, which is not on substantially the same terms
(including, without limitation, in the case of lending
transactions, interest rates, maturity schedule and
collateral) as those prevailing at the time for comparable
transactions with unrelated parties or which involves more
than normal risk of collectibility or which involves other
unfavorable features. Schedule L attached hereto contains
(i) a list of all amounts in excess of $10,000 paid or to be
paid by First Central or FNB Searcy to, or received or to be
received by First Central or FNB Searcy from, any executive
officer or director of First Central or FNB Searcy or any
"affiliate" or "associate" of any such executive officer or
director during their 1996 and 1995 fiscal years for
products or services, not including services as an employee,
executive officer or director, and (ii) a description of all
loans from FNB Searcy to any of such persons outstanding at
any quarter end during 1996 or currently outstanding.
(r) Material Contracts. Schedule M attached hereto
contains a list of all written, and a brief description of
all oral, material contracts, agreements, leases,
commitments, licenses, instruments and obligations not
listed in another Schedule hereto to which First Central or
FNB Searcy is a party or by which any of their assets are
bound. For purposes of this Section 3.01(r), "material"
shall mean an amount exceeding $100,000 over the life of the
contract, agreement, lease, commitment, license, insurance
policy or other obligation (as the case may be), and this
Section shall not be deemed to apply to deposits at FNB
Searcy. Neither First Central nor FNB Searcy is a party to,
and none of their respective property is bound or affected
by, and neither First Central nor FNB Searcy receives
benefits under, any written or oral or express or implied
material contract or other arrangement which is not in the
ordinary course of business consistent with its past
practices, except as disclosed in Schedule M. Each of First
Central and FNB Searcy has, in all material respects,
performed all of its obligations required to be performed by
it to date and is not in default in any material respect
under any material contract, lease, insurance policy,
commitment or arrangement to which it is a party or by which
it or its property may be bound or affected or under which
it or its property receives benefits, and there has not
occurred any event which with the lapse of time or giving of
notice or both would constitute such a default. All such
material contracts, leases, insurance policies and other
instruments are in full force and effect, are binding
obligations of the respective parties thereto in accordance
with their terms, and there are no defenses, offsets or
counterclaims thereto which may be made by any party thereto
other than First Central or FNB Searcy, and neither First
Central nor FNB Searcy has waived any substantial rights
thereunder. Neither First Central nor FNB Searcy is a party
to or otherwise bound by any material contract, agreement,
plan, lease, license, commitment or undertaking which, in
the reasonable opinion of First Central or FNB Searcy, is
materially adverse, materially onerous, or materially
harmful to any aspect of the business or prospects of First
Central and FNB Searcy, taken as a whole.
(s) Environmental Matters. To the knowledge of First
Central, except as disclosed in Schedule N attached hereto,
none of the properties of First Central or of FNB Searcy
contains hazardous materials, waste or substances that
cannot be easily remediated, removed or cleaned up, and, in
the case of asbestos, completely abated. For purposes of
this provision, a hazardous material, waste or substance is
deemed easily remediated, removed or cleaned up, and, in the
case of asbestos, completely abated, if the reasonably
estimated cost of such removal, clean-up, remediation,
restoration of natural resources, or abatement does not
exceed Fifty Thousand Dollars ($50,000) in the aggregate and
if such removal, clean-up, remediation, restoration of
natural resources, or abatement does not materially
interfere with the day-to-day operations of First Central or
FNB Searcy. To the knowledge of First Central, except as
disclosed in Schedule N, none of the outstanding loans of
FNB Searcy is secured by properties that contain hazardous
materials, wastes, or substances that cannot be remediated,
removed or cleaned up, and, in the case of asbestos,
completely abated, at an expense not exceeding ten percent
(10%) of the fair market value of such properties. As used
herein, "hazardous substance" or "hazardous material" means
substances subject to reporting under Title III of the
Superfund Amendments and Reauthorization Act of 1986, as
amended, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, or the Resource
Conservation and Recovery Act, as amended; petroleum;
petroleum products; substances regulated by the Toxic
Substance Control Act, as amended; substances regulated by
the Federal Insecticide, Fungicide, and Rodenticide Act, as
amended; or any hazardous, toxic, or dangerous waste,
substance, or material defined as such in the above-
referenced Acts, or any federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability standards of
conduct concerning any hazardous, toxic or dangerous waste,
substance, or material as now in effect. To the knowledge
of First Central, FNB Searcy has not loaned money against
the securities or assets of any company or other association
that has not obtained all permits, licenses, approvals, and
other authorizations that are required under federal, state
and local laws and regulations relating to emissions,
discharges, wetlands, releases or threatened releases of
pollutants, contaminants or hazardous or toxic materials or
waste into ambient air, surface water, ground water or land,
or otherwise relating to the manufacture, processing,
distribution, use, treatment, release, discharge, emission,
storage, disposal, transport or handling of pollutants,
contaminants or hazardous or toxic materials or waste. To
the knowledge of First Central, FNB Searcy has not loaned
money against the securities or assets of any company or
other association, and has not at any time owned property,
that is presently or for which in the future there is a
reasonable basis that it will be subject to any claim,
action, suit, proceeding, hearing, investigation,
injunction, notice of violation, consent administrative
order, or penalty arising out of or relating to the
manufacture, presence, processing, distribution, use,
treatment, release, discharge, emission, storage, disposal,
transport or handling of any pollutant, contaminant, or
hazardous or toxic material or waste. To the extent any
property is listed or referred to in Schedule N hereto, such
listing or reference shall not be deemed an admission by
First Central that it is in violation of any of the
statutes, rules or regulations enumerated in this Section
3.01(s).
(t) Property Sites Owned by First Central and FNB
Searcy. Set forth on Schedule O attached hereto is a
complete and accurate list of locations (identified by
address, owner/operator, type of facilities located on the
property, and period of time owned, leased or occupied by
First Central or FNB Searcy) of all real estate that First
Central or FNB Searcy owned, leased or used at any time
during the previous five (5) years.
(u) Representations Not Misleading. No representation
or warranty by First Central in this Agreement or in any
Schedule attached hereto, nor any statement or disclosure
furnished to First Commercial by or on behalf of First
Central or FNB Searcy under and pursuant to this Agreement
contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact
necessary to make the statements contained herein or therein
not misleading.
Section 3.02. Representations and Warranties of First
Commercial. No representations or warranties are made by
any director, officer, employee or shareholder of First
Commercial as an individual. First Commercial represents
and warrants to First Central the following, each of which
representations and warranties shall (except as otherwise
stated herein) be continuing and shall be true as of the
date of this Agreement hereof and on the Closing Date:
(a) Organization and Capitalization of First
Commercial. First Commercial has delivered to First Central
complete and correct copies of the Second Amended and
Restated Articles of Incorporation, as amended, and Bylaws
of First Commercial as in effect on the date hereof. First
Commercial is an Arkansas corporation duly organized and
validly existing in good standing under the laws of
Arkansas, with full corporate power and authority to carry
on its business as and where conducted and to own and lease
its properties and assets in the places where such
properties and assets are now or will be owned or leased.
As of the date of this Agreement, the authorized capital
stock of First Commercial consists of 50,000,000 shares of
First Commercial Stock, of which 28,810,466 shares are
outstanding, and 400,000 shares of preferred stock, each
$1.00 par value, of which no shares are outstanding. All
issued and outstanding shares of First Commercial Stock are,
and all shares of First Commercial Stock to be issued
pursuant to this Agreement will be, validly authorized, duly
issued, fully paid and nonassessable shares of First
Commercial Stock, and such shares have not been, or will not
be, issued in violation of any preemptive rights of
stockholders. Except as described in the financial
information provided to First Central by First Commercial,
First Commercial does not have outstanding any
subscriptions, options or other arrangements or commitments
obligating First Commercial to issue or dispose of, and it
is not obligated to issue, any shares of First Commercial
Stock or other securities. Since December 31, 1995, no
dividends have been declared or paid on any equity
securities of First Commercial, nor has First Commercial
purchased or redeemed any of its equity securities, except,
in both instances, as disclosed in the First Commercial
Financial Statements (as hereinafter defined) or in writing
to First Central.
(b) Authority for Transaction. The Board of Directors
of First Commercial will have duly approved this Agreement
and the transactions contemplated hereby, and this Agreement
will constitute the valid and binding obligation of First
Commercial enforceable in accordance with its terms, except
as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws from time to time in effect which affect
creditors' rights generally and by legal and equitable
limitations on the availability of injunctive relief,
specific performance and other equitable remedies which are
available only in the discretion of the court. First
Commercial has full corporate power, authority and legal
right to execute and deliver this Agreement and, upon
approval thereof by the necessary regulatory authorities, to
consummate the transactions contemplated hereby.
(c) Agreement Does Not Violate Other Instruments.
Subject to obtaining any required consents and approvals
(which necessary consents and approvals are disclosed in
Schedule P attached hereto and will be obtained by First
Commercial prior to Closing), the execution and delivery of
this Agreement by First Commercial does not, and the
consummation of the transactions contemplated hereby will
not, (i) violate any provision of the Articles of
Incorporation or Bylaws of First Commercial, (ii) violate
any provision of the Articles of Incorporation or
Association or the Bylaws of any subsidiary of First
Commercial, (iii) violate any provision of, or result in any
breach or termination of, or constitute a default under, or
constitute an event which with notice or lapse of time, or
both, would become a default under, or result in the
creation of any material lien, security interest, charge or
encumbrance upon any property of First Commercial or any
subsidiary of First Commercial under, any material lease,
indenture, or other agreement (written or oral) or
instrument to which First Commercial or any subsidiary of
First Commercial is a party or by which First Commercial or
any subsidiary of First Commercial may be bound or affected
or under which First Commercial or any subsidiary of First
Commercial receives benefits, (iv) violate any material law,
rule, regulation, order, writ, injunction or decree or
administrative memorandum, agreement or letter to which
First Commercial or any subsidiary of First Commercial is a
party or by which First Commercial or any subsidiary of
First Commercial may be bound or affected or under which
First Commercial or any subsidiary of First Commercial
receives benefits, or (v) result in the material loss or
material adverse modification of any license, franchise,
permit or other authorization granted to or otherwise held
by First Commercial or any subsidiary of First Commercial.
(d) Representations Not Misleading. No representation
or warranty by First Commercial in or required by this
Agreement, nor any statement, exhibit or disclosure
furnished to First Central by or on behalf of First
Commercial under and pursuant to this Agreement, contains or
will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to
make the statements contained herein or therein not
misleading.
(e) Financial Statements. First Commercial has
delivered to First Central the following financial
statements: the consolidated balance sheets of First
Commercial as of December 31, 1995, 1994 and 1993, together
with the consolidated statements of income, stockholders'
equity and cash flow of First Commercial for the periods
then ended, accompanied by the notes thereto, and an
unqualified audit report of Ernst & Young LLP for such years
(the "First Commercial Financial Statements"). First
Commercial has also delivered to First Central copies of all
periodic and other reports and proxy statements filed by
First Commercial with the Securities and Exchange Commission
and the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") since January 1, 1994, and has
made available copies of all of periodic and other public
reports filed by the banking subsidiaries of First
Commercial (the "First Commercial Banks") with the Arkansas
State Bank Department, the Office of the Comptroller of the
Currency or the Federal Deposit Insurance Corporation since
January 1, 1995. The First Commercial Financial Statements
are complete and correct and have been prepared from the
books and records of First Commercial and the First
Commercial Banks, which accurately and fairly reflect the
transactions and dispositions of assets of First Commercial
and the First Commercial Banks and fairly present the
financial condition, results of operations and changes in
capital accounts and undivided profits of First Commercial
and the First Commercial Banks, taken as a whole, at their
respective dates and for the periods to which they relate.
The First Commercial Financial Statements were prepared in
accordance with generally accepted accounting principles and
general practices within the banking industry consistently
applied. There are no material obligations or liabilities
of First Commercial or the First Commercial Banks, taken as
a whole, whether absolute, accrued or contingent (including,
without limitation, unfunded obligations under employee
benefit plans or arrangements or liabilities for federal,
state, local or foreign taxes or assessments) or any "loss
contingencies" considered "probable" or "reasonably
estimable" within the meaning of the Financial Accounting
Standards Board's Statement of Financial Accounting
Standards No. 5, which, in accordance with generally
accepted accounting principles, were required to be
reflected or disclosed in the First Commercial Financial
Statements and which are not so reflected or disclosed
therein, except as disclosed in writing to First Central.
All allowances and reserves for loan losses, as reflected in
the First Commercial Financial Statements, are adequate and
appropriate as determined by generally accepted accounting
principles.
(f) Litigation and Regulatory Matters. First
Commercial and the First Commercial Banks have disclosed in
Schedule Q attached hereto all material actions, suits,
proceedings and investigations pending or, to the knowledge
of First Commercial or the First Commercial Banks,
threatened against or affecting First Commercial or any
First Commercial Bank or any property or rights or stock of
First Commercial or any First Commercial Bank, or their
respective officers or directors (in their capacity as such)
at law or in equity, or before or by any court or other
governmental instrumentality, excluding actions affecting
the banking industry generally. Except to the extent so
disclosed in Schedule Q, none of such actions, suits,
proceedings or investigations, either (i) involves a claim
for an amount exceeding the amount recoverable by First
Commercial or any First Commercial Bank under any applicable
insurance policies, subject to the deductible amounts under
such policies, or (ii) results or would result, if adversely
determined, in any material adverse change in the business,
operations, prospects or assets or the condition, financial
or otherwise, of First Commercial and the First Commercial
Banks, taken as a whole. Except as so disclosed in Schedule
Q, neither First Commercial nor any First Commercial Bank is
subject to any continuing court or administrative order,
writ, injunction, decree, agreement, memorandum or letter
applicable specifically to it or to its business, property
or employees, and neither First Commercial nor any First
Commercial Bank is in default with respect to any order,
writ, injunction or decree, agreement, memorandum or letter
of any court or other governmental instrumentality.
(g) Compliance. First Commercial and the First
Commercial Banks, taken as a whole, have complied in all
material respects with, and First Commercial and the First
Commercial Banks, taken as a whole, are not in default in
any material respect under, any law, ordinance, requirement,
rule, regulation or order applicable to their respective
businesses or to the assets owned, used or occupied by them
(including, without limitation, ERISA, licensing
requirements with respect to their personnel and all federal
and state consumer credit laws, rules and regulations), and
First Commercial and each First Commercial Bank has filed
with the proper authorities all statements and reports
required by the laws, regulations, licensing requirements
and orders to which they or any of their employees (because
of their activities on behalf of First Commercial or any
First Commercial Bank) are subject, and First Commercial and
each First Commercial Bank possess all licenses, franchises,
permits and governmental authorizations necessary to conduct
its business in the manner in which and in the jurisdictions
and places where such businesses are now conducted.
(h) No Material Events. Except as reflected in the
First Commercial Financial Statements or as may be disclosed
in writing to First Central and except for transactions in
the ordinary course of business consistent with past
practices of First Commercial, since December 31, 1995,
First Commercial has not experienced any material adverse
changes in the condition (financial or otherwise) of its
properties, assets, liabilities, business, operations or
prospects.
(i) Taxes. First Commercial and the First
Commercial Banks have timely filed returns for all federal,
state and local taxes of First Commercial and the First
Commercial Banks to the extent such filings and payments
were required prior to the date of this Agreement, and such
returns are true and correct in all material respects.
Neither First Commercial nor the First Commercial Banks has
had any tax deficiencies proposed or assessed against them
and neither First Commercial nor the First Commercial Banks
has executed any waiver of or extended the statute of
limitations on the audit of any tax return or the assessment
or collection of any tax. All taxes and governmental
charges levied or assessed against the property or the
business of First Commercial or the First Commercial Banks
have been paid in full, other than taxes or charges the
payment of which is not yet due or which, if due, is not yet
delinquent or is being contested in good faith or has not
been finally determined. Except as indicated in writing to
First Central, the amount set up as accruals for taxes on
the December 31, 1995, balance sheet for First Commercial is
sufficient in all material respects for the payment of all
unpaid taxes and governmental charges of all kinds,
applicable to the property or business of First Commercial
and the First Commercial Banks for the period ended on
December 31, 1995, and all periods prior thereto.
(j) Insurance. During each of the past three calendar
years First Commercial and its properties have been insured
for customary risks, all with limits, deductibles, and
exclusions as are customary in the banking industry. Such
insurance protection continues in effect, and First
Commercial is not aware of any facts or events relating to
its operations or financial condition which reasonably can
be expected to increase materially the premiums or reduce
the coverage under any of such policies, except as has been
indicated in writing to First Central.
(k) ERISA Plans. No ERISA Plans of First Commercial,
nor any trustee, administrator or fiduciary thereof, has
engaged in a "prohibited transaction," as such term is
defined in Section 4974 of the Code or Title I of ERISA,
which could subject the ERISA Plans, or any of them, or any
trustee, administrator, or fiduciary thereof, or any party
dealing with the ERISA Plans, or any such trust, to any
material tax or penalty on prohibited transactions imposed
by Section 4975 of the Code or liability under Title I of
ERISA. The execution and delivery of this Agreement and
consummation of the transactions contemplated herein will
not involve any transaction prohibited by ERISA or by
Section 4975 of the Code. None of the ERISA Plans of First
Commercial has been terminated nor have any proceedings to
terminate such plans been instituted, nor have there been
any "reportable events," as that term is defined in Section
4043 of ERISA, since the effective date of ERISA that have
not already been reported by the filing of appropriate Form
5500 in accordance with ERISA requirements.
(l) Employee Relations. Neither First Commercial nor
the First Commercial Banks has agreements with any labor or
other organization representing employees for collective
bargaining or other labor relations purposes.
(m) Properties and Other Assets. First Commercial and
the First Commercial Banks have good and marketable fee
simple title to, or, as the case may be, valid and
enforceable leasehold interest in, all their respective
properties, interests in properties and other assets, real
and personal, (i) reflected on the First Commercial
Financial Statements or (ii) acquired since the date
thereof, except to the extent such properties and assets are
or were thereafter disposed of for fair value in the
ordinary course of business. All such properties and assets
are free and clear of all liens, charges and encumbrances,
except (i) those set forth or reflected in the First
Commercial Financial Statements, (ii) liens for taxes not
yet due and payable or being contested in good faith and
(iii) defects in title and liens, charges and encumbrances,
if any, as do not materially detract from the value, or
materially interfere with the present or proposed use, of
the property or assets subject thereto or affected thereby
or as do not otherwise materially impair business operations
of either First Commercial or the First Commercial Banks.
(n) Environmental Matters. To its knowledge and
except as identified in writing to First Central, First
Commercial has no present or past environmental condition
under which First Commercial has or may become materially
liable to any person or by reason of which any First
Commercial assets may be subjected to any material lien, or
by reason of which First Commercial may materially violate
any environmental law or order.
(o) Pending Acquisitions by FCC. FCC has not entered
into any agreement, letter of intent or other undertaking
with respect to the acquisition of the capital stock of or
other interest in any corporation, business or other entity,
except with respect to its acquisition of City National
Bank, Whitehouse, Texas; W.B.T. Holding Company, Memphis,
Tennessee; and Southwest Bancshares, Inc., Jonesboro,
Arkansas.
(p) Regulatory Approval. To the knowledge of First
Commercial, there is no reason that approval from regulatory
authorities, including but not limited to the Securities and
Exchange Commission, necessary to consummate the
transactions contemplated hereby cannot or will not be
obtained in the ordinary course, except as has been
disclosed in writing to First Central.
(q) Availability of First Commercial Stock. First
Commercial has available a sufficient number of authorized
and unissued shares of First Commercial Stock to pay the
Merger Consideration, and First Commercial will not take any
action during the term of this Agreement that will cause it
not to have a sufficient number of authorized and unissued
shares of First Commercial Stock to pay the Merger
Consideration.
ARTICLE IV
COVENANTS
Section 4.01. Covenants of First Central. First
Central hereby covenants and agrees that between the date
hereof and the Effective Date:
(a) Approval of Transaction and Consents. First
Central will submit to and recommend the approval and
adoption of this Agreement, and the transactions
contemplated hereby, by its shareholders, with such approval
to be evidenced by the vote of the requisite number of its
shareholders at a meeting thereof to be duly called,
properly noticed and held as soon as practicable following
completion of the First Commercial Due Diligence Review and
declaration by the Securities and Exchange Commission of the
effectiveness of the Registration Statement (as defined
elsewhere herein). First Central shall, and shall cause FNB
Searcy to, use its best efforts to obtain all licenses,
approvals and consents of any federal, state or other
regulatory agency having jurisdiction and of any other party
to the extent that such licenses, approvals or consents are
required of First Central to effect the Merger and the
transactions contemplated hereby, or are required pursuant
to Section 3.01(j) hereof.
(b) Access to Corporate Records. Until the Effective
Date, First Central and FNB Searcy will afford to First
Commercial and its employees, agents and representatives,
including its accountants, Ernst & Young LLP, full access
during normal business hours to all of the offices, prop-
erty, documents, contracts, books and records of First
Central and FNB Searcy and such additional information with
respect to the business affairs and properties of First
Central and FNB Searcy as First Commercial from time to time
may reasonably request. First Central and FNB Searcy will
cause their transfer agent and registrar to make stock
transfer records relating to First Central and FNB Searcy
available to the extent necessary to effectuate the intent
of this Agreement. Upon the request of First Commercial,
First Central and FNB Searcy will furnish abstracts of title
or title insurance policies to real property owned or leased
by First Central and FNB Searcy, and copies of any
unrecorded leases to which any of them is a party.
(c) Monthly Financial Statements. First Central shall
promptly provide First Commercial with copies of all of the
monthly financial statements for First Central and FNB
Searcy ("Monthly Financial Statements") for each of the
monthly periods ending between December 31, 1995, and the
Closing Date. The Monthly Financial Statements shall be
accompanied by a certificate of the Chief Financial Officer
of First Central to the effect that they are complete and
correct and accurately and fairly reflect the transactions
and dispositions of assets of First Central and FNB Searcy,
taken as a whole, and the financial condition and results of
operations of First Central and FNB Searcy, taken as a
whole, at their respective dates and for the periods to
which they relate, subject to normal year-end audit
adjustments. In addition, the Monthly Financial Statements
shall be prepared in accordance with generally accepted
accounting principles and general practices within the
banking industry consistently applied, except for any
footnotes that may be required or except as otherwise set
forth in the accompanying Chief Financial Officer's
certificate. First Central shall also promptly provide to
First Commercial copies of all reports and correspondence
filed by First Central or FNB Searcy during such period with
banking regulators and agencies or received by First Central
or FNB Searcy from same.
(d) Closing Financial Statements. At the Closing,
First Central shall deliver to First Commercial consolidated
balance sheets and statements of income of First Central and
FNB Searcy dated as of the last day of the month immediately
preceding the Closing Date (the "Closing Financial
Statements"), which shall be certified by the Chief
Financial Officer of First Central as being true and correct
in all material respects and as fairly reflecting the
consolidated financial condition and results of operations
of First Central and FNB Searcy at the date and for the
period to which they relate, except for any footnotes that
may be required and except as specifically disclosed in the
accompanying Chief Financial Officer's certificate.
(e) Conduct of Business. First Central shall, and
shall cause FNB Searcy to, conduct its business in the
ordinary course so as to maintain its property and business
and to preserve its business organization and the goodwill
of its employees, depositors, customers and others having
dealings with it and to maintain its books and records in
the usual, ordinary and normal course. Without the prior
written consent of First Commercial, First Central shall
not, and shall not permit FNB Searcy to, (i) except for
payment of income or dividends of FNB Searcy, declare or
distribute any cash or stock dividend, authorize a stock
split, or authorize, issue or make any distribution of its
capital stock or any security convertible into or
exercisable for First Central Stock or the common stock of
FNB Searcy or pledge or otherwise encumber any of its
capital stock or any security convertible into or
exercisable for First Central Stock or the common stock of
FNB Searcy, except that First Central may pay cash dividends
(at such time or times as First Central determines
appropriate) on each share of First Central Stock equal to
the cash dividends declared by First Commercial from January
1, 1997 through the Effective Date on each share of First
Commercial Stock multiplied by the result obtained by
dividing 1,650,000 by the number of shares of First Central
Stock outstanding on the date the cash dividend is paid by
First Central; (ii) open or acquire any new branch office;
(iii) make any direct or indirect redemption, purchase or
other acquisition of any of its capital stock, other than
the redemption of qualifying shares of their respective
directors; (iv) intentionally incur any liability or
obligation, make any commitment or disbursement, acquire or
dispose of any property or asset, make any contract or
agreement, subject any of its properties or assets to any
lien, claim, charge, option or encumbrance or engage in any
transaction, except in the ordinary course of its business;
(v) increase or decrease by more than 10% the rate of
compensation of any director or employee or enter into any
agreement to increase or decrease the rate of compensation
of any director or employee; (vi) create or modify any
pension or profit sharing plan, bonus, deferred
compensation, death benefit, or retirement plan, or the
level of benefits under any such plan or increase or
decrease any severance or termination pay benefit or any
other fringe benefit; (vii) amend its articles of
incorporation or bylaws except as may be necessary to carry
out this Agreement or as required by law; or (viii) directly
or indirectly encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information
to, any corporation, partnership, person or other entity or
group (other than First Commercial or an affiliate of First
Commercial) concerning any merger, sale of assets, sale of
shares of capital stock or similar transaction involving
First Central or FNB Searcy (an "Acquisition"). First
Central represents that as of the date hereof First Central
and FNB Searcy have ceased all prior activities, and First
Central and FNB Searcy have no present intention to engage
in activities, of the type contemplated by clause (viii)
with respect to an Acquisition (other than with First
Commercial or an affiliate of First Commercial). First
Central shall, and shall cause FNB Searcy to, advise First
Commercial in writing of (i) the institution of any
litigation or proceedings of any kind whatsoever against
either First Central or FNB Searcy, (ii) the happening of
any event which would have a material adverse effect on the
financial condition, business, prospects or affairs of
either of them, and (iii) the terms of any proposal or
inquiry which it may receive in respect of an Acquisition by
any person (other than First Commercial or any affiliate of
First Commercial). First Central and FNB Searcy will use
their reasonable best efforts to comply with all material
contracts, agreements, commitments or obligations to which
First Central or FNB Searcy is a party or by which First
Central or FNB Searcy may be bound.
(f) Cooperation and Furnishing Information. First
Central agrees to use its reasonable best efforts to
cooperate with First Commercial in furnishing such
information concerning the business and affairs of First
Central and FNB Searcy as is reasonably necessary or
requested by First Commercial in order to prepare and file
any application for regulatory or government approvals
required for consummation of the transactions contemplated
by this Agreement. All such information shall be true and
correct in all material respects and shall not omit any
material fact necessary to make such information not
misleading.
(g) Related Party Transactions. Without the prior
written consent of First Commercial, to the knowledge of
First Central and FNB Searcy, neither First Central nor FNB
Searcy shall enter into any transaction, other than those in
the ordinary course of business, with any of its officers,
directors or any of such person's "affiliates" or
"associates," or with any business of which an officer or
director of First Central or FNB Searcy, or any of such
persons' "affiliates" or "associates," is an officer,
director, employee or ten percent (10%) or more equity
owner, as such terms "affiliates" or "associates" are
defined in Rule 14a-1 under the Securities Exchange Act of
1934, as amended.
(h) Notice of Changes. Until the Effective Date,
First Central shall, and shall cause FNB Searcy to, give
First Commercial prompt written notice of the occurrence of
any event or the failure of any event to occur that results
in a breach of any representation or warranty by First
Central or FNB Searcy or a failure by First Central or FNB
Searcy to comply with any covenant, condition or agreement
contained herein, or any other changes or any inaccuracies
in any information or data previously given or made
available to First Commercial pursuant to this Agreement.
(i) Limit on First Central's Attorney's Fees. First
Central agrees that any fees or expenses it will pay to
attorneys in connection with this Agreement and the
consummation of the transactions contemplated herein shall
not exceed $20,000.
(j) Completion and Delivery of Schedules. First
Central agrees to complete and deliver to First Commercial
within twenty (20) days after the date of this Agreement all
schedules (the "First Central Schedules") required to be
delivered by it pursuant to this Agreement. First Central
agrees that the First Central Schedules shall be subject to
approval by First Commercial, in it sole and absolute
discretion, and such approval shall have been deemed to have
occurred under this Agreement if First Commercial shall fail
to notify First Central in writing on or before the tenth
day following First Commercial's receipt of the First
Central Schedules of any objections that it has to the First
Central Schedules and its intention to terminate this
Agreement, in which event this Agreement shall become null
and void and of no further force and effect, except for such
liabilities or obligations of the parties under Sections
7.02 and 8.10 hereof. The information contained in the
First Central Schedules delivered pursuant to this Agreement
shall constitute representations and warranties of First
Central pursuant to Section 3.01 of this Agreement, which
shall be mutual and continuing and shall be true as of the
date of this Agreement and on the Closing Date. Pursuant to
Section 4.01(h), First Central shall, and shall cause FNB
Searcy to, give First Commercial prompt written notice of
any inaccuracies in any information or data set forth in the
First Central Schedules or of the occurrence of any event or
the failure of any event to occur which results in any
change in the information or data set forth in the
information or data set forth in the First Central Schedules
shall constitute a failure of the condition precedent set
forth in Section 5.01(b) of this Agreement, unless waived by
First Commercial.
Section 4.02. Covenants of First Commercial. First
Commercial hereby covenants and agrees that between the date
hereof and the Effective Date:
(a) Consents and Approvals. First Commercial agrees
to cooperate with First Central in furnishing such
information concerning the business and affairs of First
Commercial and its directors and officers as is reasonably
necessary or requested in order to prepare and file
applications for regulatory and governmental approvals,
including, but not limited to, an application to the Federal
Reserve Board for prior approval of the transaction
contemplated hereunder. First Commercial will use its best
efforts to file such application with the Federal Reserve
Board in a reasonably timely fashion. First Commercial also
will use its best efforts to obtain all licenses, approvals
and consents of any federal, state or other regulatory
agency having jurisdiction and of any other party to the
extent that such licenses, approvals or consents are
required to effect the transactions contemplated hereby, or
are required pursuant to Section 3.02(c) hereof. All such
information shall be true and correct in all material
respects and shall not omit any material fact necessary to
make such information not misleading.
(b) Quarterly Reports; Current Reports. First
Commercial shall, between the date of this Agreement and the
Closing Date, promptly provide First Central with copies of
its Annual Report on Form 10-K, its Quarterly Reports on
Form 10-Q and its Current Reports on Form 8-K filed with the
Securities and Exchange Commission and its regulatory
reports filed with the Federal Reserve Board.
(c) Conduct of Business. First Commercial will, and
will cause the First Commercial Banks to, conduct their
respective businesses in the ordinary course so as to
maintain their respective properties and business and to
preserve their respective business organizations and the
goodwill of their employees, depositors, customers and
others having dealings with them. First Commercial will
maintain its books and records in the usual, ordinary and
normal course. First Commercial shall advise First Central
in writing of (i) the institution of any material litigation
or proceedings of any kind whatsoever against either First
Commercial or the First Commercial Banks, (ii) the happening
of any event which would have a material adverse affect on
the financial condition, business, prospects or affairs of
First Commercial and the First Commercial Banks, taken as a
whole, and (iii) any material contacts with regulatory
agencies regarding their approval of the Merger. First
Commercial and the First Commercial Banks will use their
reasonable best efforts to comply with all material
contracts, agreements, commitments or obligations to which
First Commercial or any First Commercial Bank is a party or
by which First Commercial or any First Commercial Bank may
be bound.
(d) Notice of Changes. Until the Closing Date, First
Commercial will give First Central prompt written notice of
the occurrence of any event or the failure of any event to
occur that results in a breach of any representation or
warranty by First Commercial or a failure by First
Commercial to comply with any covenant, condition or
agreement contained herein, or any other changes or any
inaccuracies in any data previously given or made available
to First Central pursuant to this Agreement.
(e) Access to Corporate Records. Until the Effective
Date, First Commercial will afford to First Central and its
employees, agents and representatives, including its
accountants, Angel, Humphries, Hamilton & Company, Ltd.,
full access during normal business hours to all of the
offices, property, documents, contracts, books and records
of First Commercial and the First Commercial Banks and such
additional information with respect to the business affairs
and properties of First Commercial and the First Commercial
Banks as First Central from time to time may reasonably
request. First Commercial will cause its transfer agent and
registrar to make stock transfer records relating to First
Commercial available to the extent necessary to effectuate
the intent of this Agreement.
(f) Registration of First Commercial Stock. First
Commercial will prepare and file with the Securities and
Exchange Commission, as soon as practicable following the
date hereof, a registration statement on Form S-4 (the
"Registration Statement"), or such other form as it deems
appropriate, for the registration under the Securities Act
of the shares of First Commercial Stock constituting the
Merger Consideration. First Commercial shall use its best
efforts to cause the Registration Statement to become
effective as soon as practicable, and to cause such shares
of First Commercial Stock to be listed or included for
trading on the Nasdaq National Market or any other market on
which shares of First Commercial Stock trade at the time of
effectiveness of the Registration Statement.
(g) Pooling of Interests. Neither First Commercial
nor any First Commercial Bank has taken, and First
Commercial shall not, and shall not allow any First
Commercial Bank to take, unless otherwise required by law,
any action which should prevent the Merger from qualifying
for pooling of interests accounting treatment under
Accounting Principles Board Opinion No. 16 if closed and
consummated in accordance with this Agreement.
(h) Employee Benefits. First Commercial undertakes to
provide First Central and the FNB Searcy employees who
become employed by First Commercial or who remain employed
by FNB Searcy following the Merger with substantially the
same benefits as those provided to other employees of First
Commercial.
(i) Completion and Delivery of Schedules. First
Commercial agrees to complete and deliver to First Central
within twenty (20) days after the date of this Agreement all
schedules (the "First Commercial Schedules") required to be
delivered by it pursuant to this Agreement. First
Commercial agrees that the First Commercial Schedules shall
be subject to approval by First Central, in it sole and
absolute discretion, and such approval shall have been
deemed to have occurred under this Agreement if First
Central shall fail to notify First Commercial in writing on
or before the tenth day following First Central's receipt of
the First Commercial Schedules of any objections that it has
to the First Commercial Schedules and its intention to
terminate this Agreement, in which event this Agreement
shall become null and void and of no further force and
effect, except for such liabilities or obligations of the
parties under Sections 7.02 and 8.10 hereof. The
information contained in the First Commercial Schedules
delivered pursuant to this Agreement shall constitute
representations and warranties of First Commercial pursuant
to Section 3.02 of this Agreement, which shall be mutual and
continuing and shall be true as of the date of this
Agreement and on the Closing Date. Pursuant to Section
4.02(d), First Commercial shall, and shall cause the First
Commercial Banks to, give First Central prompt written
notice of any inaccuracies in any information or data set
forth in the First Commercial Schedules or of the occurrence
of any event or the failure of any event to occur which
results in any change in the information or data set forth
in the information or data set forth in the First Commercial
Schedules shall constitute a failure of the condition
precedent set forth in Section 5.02(b) of this Agreement,
unless waived by First Central.
(j) Election to First Commercial Board. Upon the
closing of the Merger, the Board of Directors of First
Commercial will elect Wayne Pyeatt as a member of such Board
of Directors and of its Executive Committee.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01. Conditions Precedent to Obligation of
First Commercial. The obligation of First Commercial to
consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction, on or before the
Closing Date, of each and every one of the following
conditions, all or any of which may be waived, in whole or
in part, by First Commercial, in its sole and absolute
discretion:
(a) Performance of Covenants. Each of the acts and
undertakings of First Central to be performed on or before
the Closing Date shall have been duly performed and the
Chief Executive Officer of First Central shall have executed
and delivered to First Commercial a certificate, dated as of
the Closing Date, to the effect that the foregoing condition
has been fulfilled.
(b) Representations True at Closing. The
representations and warranties made by First Central and FNB
Searcy herein shall be true and correct in all material
respects on the Closing Date hereunder with the same force
and effect as though such representations and warranties had
been made on and as of such time (except that such
representations and warranties may be untrue or incorrect as
a result of actions or transactions contemplated or
permitted by this Agreement or actions or transactions of
First Central or FNB Searcy made with the written consent of
First Commercial), and the Chief Executive Officer of First
Central shall have executed and delivered to First
Commercial a certificate, dated as of the Closing Date, to
the effect that the foregoing condition has been fulfilled.
(c) Material Changes in Financial Condition, Business
or Prospects. Since December 31, 1995, there shall not have
occurred any material adverse change in the assets,
financial condition, operations, business or prospects of
First Central and FNB Searcy, taken as a whole, regardless
of the cause.
(d) Certified Resolutions. First Central shall
furnish to First Commercial certified copies of resolutions
duly adopted by the Board of Directors and the shareholders
of First Central approving this Agreement and the Merger.
(e) Government Approvals; Other Consents. First
Commercial shall have received in form and substance
reasonably satisfactory to First Commercial and its counsel
all necessary federal and state governmental and regulatory
approvals for the transactions contemplated by this
Agreement (including, but not limited to, the approval of
the Federal Reserve Board and the Office of the Comptroller
of the Currency, if required), and First Central and FNB
Searcy shall have received any and all consents required
pursuant to Section 3.01(j) hereof.
(f) No Injunction. No proceeding shall have been
instituted or threatened before any court, governmental
agency or legislative body to enjoin, restrain or prohibit,
or to obtain substantial damages in respect of, or which is
related to or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, which,
in the reasonable judgment of First Commercial, would make
it inadvisable to consummate such transactions (it being
understood and agreed that a written request by governmental
authorities for information with respect to the transactions
contemplated herein may not be deemed by First Commercial to
be a threat of material litigation or proceeding, regardless
of whether such request is received before or after
execution of this Agreement).
(g) Litigation. On the Effective Date, there shall
not be pending or threatened against First Central or FNB
Searcy or the officers or directors of First Central or FNB
Searcy in their capacity as such, any suit, action or
proceeding which, if successful, would, in the reasonable
judgment of First Commercial, have a material adverse effect
on the financial condition, operations, business or
prospects of First Central and FNB Searcy, taken as a whole.
(h) No Material Misstatements or Omissions. First
Commercial shall not have discovered in any of the
representations or warranties of First Central or FNB Searcy
or in any certificate or information furnished or to be
furnished to First Commercial hereunder or in any
application or report to any governmental agency or
authority (including the Federal Reserve Board and the
Office of the Comptroller of the Currency) relating to the
transactions contemplated by this Agreement any untrue
statement of a material fact or any omission to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, or any material failure to
perform or satisfy any covenants of First Central or FNB
Searcy contained herein.
(i) Opinion of First Central's Counsel. An opinion of
Lightle, Beebe, Raney & Bell, counsel for First Central,
dated the Closing Date, in substantially the form attached
hereto as Exhibit B, shall have been delivered to First
Commercial. In rendering the opinions contained therein,
such counsel may rely as to factual matters upon
certificates of one or more officers of First Central and
FNB Searcy and of public officials and, as to litigation in
which such counsel is not counsel, on opinions of counsel
handling such litigation, copies of which opinions shall be
delivered to First Commercial.
(j) Financial Confirmation. The Chief Financial
Officer of First Central shall have furnished to First
Commercial a certificate, dated the Closing Date, in form
and substance satisfactory to First Commercial, to the
effect that nothing has come to First Central's attention
that would indicate that (a) during the period from December
31, 1995, to the Closing Date there was any change in the
capitalization of First Central and FNB Searcy, taken as a
whole, other than as described in or contemplated by this
Agreement, (b) any material adjustments need to be made to
the financial statements for the period ending at the end of
the most recent month prior to the Closing Date in order for
them to be in conformity with generally accepted accounting
principles applied on a consistent basis with that of prior
periods, other than year-end adjustments, or (c) since
December 31, 1995, there has occurred or there is threatened
to occur a matter that would have a material adverse effect
on the business, financial condition, operations, results of
operations or prospects of First Central and FNB Searcy,
taken as a whole.
(k) Due Diligence Review. First Commercial shall have
the right to inspect and review, including the right to
conduct an audit of, the books and records relating in any
way to the First Central Financial Statements, or to the
business, properties and assets of First Central and FNB
Searcy, and to conduct such other inspection and review of
the business, assets, condition (financial or other),
operations and prospects of First Central and of FNB Searcy,
to the extent First Commercial shall deem necessary (the
"First Commercial Due Diligence Review"). The First
Commercial Due Diligence Review shall not have indicated, in
the reasonable judgment of First Commercial, any matter that
may be reasonably expected to have a material adverse effect
on the business, financial condition, operations, results of
operations or prospects of First Central and FNB Searcy,
taken as a whole, or that may materially impair the
contemplated benefits, taken as a whole, to First Commercial
of the transactions contemplated by this Agreement. First
Commercial shall complete the First Commercial Due Diligence
Review as diligently as possible but at the latest within
ninety (90) days from the date of this Agreement and shall,
upon such completion, advise First Central in writing within
ten (10) days thereafter of its intention either to proceed,
pursuant to this Agreement, with the transactions
contemplated by this Agreement or to terminate this
Agreement due to non-satisfaction of the condition precedent
set forth in this Section 5.01(k). Provided, however, First
Central shall have ten (10) days from the date of a
termination notice to attempt to cure the matter(s)
described in such notice as the reason for termination. If
such matter(s) are not, in the reasonable judgment of First
Commercial, cured within the ten (10) day period, this
Agreement shall be terminated.
(l) Title Opinion. First Commercial shall have
received in form and substance satisfactory to its counsel
an attorney's opinion and/or title policy or policies issued
by a title insurance company acceptable to First Commercial
relating to all of the real property (except for other real
estate owned) owned or leased by First Central or FNB Searcy.
(m) Pooling of Interests Opinion. Ernst & Young LLP,
certified public accountants, shall have delivered to First
Commercial, dated the Closing Date and reasonably
satisfactory in form and substance to First Commercial and
its counsel, an opinion to the effect that the transactions
contemplated by this Agreement shall be recorded on the
books and records of First Commercial and shall be reported
in the financial statements of First Commercial by the
pooling of interests method of accounting under generally
accepted accounting principles, as defined in APB Opinion
No. 16, together with such additional letter of assurances
regarding the financial condition of First Central and FNB
Searcy as First Commercial shall reasonably request. First
Commercial, predicated on its knowledge and the terms of
this Agreement, has no reason to believe as of the date
hereof that such transactions will not be recorded by the
pooling of interests method of accounting.
(n) Delivery of Continuity of Interest Letters.
(i) Each stockholder of First Central who is an
executive officer, director or beneficial owner of ten
percent (10%) or more of First Central Stock shall have
delivered to First Commercial a letter representing and
warranting that he will not sell, transfer or in any way
reduce his risk with respect to the First Commercial Stock
received in connection with the Merger until such time as
First Commercial shall have published financial results
covering at least thirty (30) days of post-transaction
combined operations.
(ii) Each stockholder of First Central who is the
beneficial owner of five percent (5%) or more of First
Central Stock shall have delivered to First Commercial a
letter representing or warranting that (or, if such
shareholder is delivering a letter pursuant to Section
5.01(n)(i) above, include a statement in such letter to the
effect that) he has no present intent to sell, transfer or
otherwise dispose of any of the First Commercial Stock to be
received by him in connection with the Merger nor will he
sell, transfer or otherwise dispose of more than fifty
percent (50%) of such stock for a period of at least one (1)
year following the Closing.
(o) Articles of Merger. The parties shall have
executed and delivered the Articles of Merger.
(p) Change in Market Price for First Commercial Stock.
In the event the average of the individual averages of the
bid and asked prices for shares of First Commercial Stock
reported on the Nasdaq National Market as of the close of
business on each of the twenty (20) trading days immediately
preceding the Closing Date shall be greater than $45.75 per
share, subject to such adjustments as provided in Section
1.05 hereof, then First Commercial may amend and restate
this Agreement to provide in Section 1.05(a) that each share
of First Central Stock shall be converted into the right to
receive that number of shares equal to the result obtained
by dividing (y) the number of whole shares of First
Commercial Stock having an aggregate market value closest
to, but not exceeding, $75,487,500based on the average of
the individual averages of the bid and asked prices for
shares of First Commercial Stock reported on the Nasdaq
National Market as of the close of business on each of the
twenty (20) days immediately preceding the date on which
action is taken by First Commercial by (Z) the number of
shares of First Central Stock outstanding on the Effective
Date. If First Commercial notifies First Central in writing
that First Commercial has so amended and restated this
Agreement, then the Board of Directors of First Central
shall approve a form of amended and restated agreement
incorporating changes consistent herewith and shall
authorize its execution and delivery by officers of First
Central.
Section 5.02. Conditions Precedent to Obligation of
First Central. The obligation of First Central to
consummate the transactions contemplated by this Agreement
shall be subject to the satisfaction, on or before the
Closing Date, of each and every one of the following
conditions, all or any of which may be waived, in whole or
in part, by First Central in its sole and absolute
discretion:
(a) Performance of Covenants. Each of the acts and
undertakings of First Commercial to be performed on or
before the Closing Date shall have been duly performed, and
an authorized officer of First Commercial shall have
executed and delivered to First Central a certificate, dated
as of the Closing Date, to the effect that this condition
has been fulfilled.
(b) Representations True at Closing. The
representations and warranties made by First Commercial
pursuant to this Agreement shall be true and correct in all
material respects on the Closing Date hereunder with the
same force and effect as though such representations and
warranties had been made on and as of such time (except that
such representations and warranties may be untrue or
incorrect as a result of actions or transactions
contemplated or permitted by this Agreement or actions or
transactions of First Commercial made with the written
consent of First Central), and an authorized officer of
First Commercial shall have executed and delivered to First
Central a certificate, dated as of the Closing Date, to the
effect that this condition has been fulfilled.
(c) Material Changes in Financial Condition. Since
December 31, 1995, there shall not have occurred any
material adverse change in the assets, financial condition,
operations, business or prospects of First Commercial or the
First Commercial Banks, taken as a whole, regardless of the
cause.
(d) Certified Resolutions. First Commercial shall
have furnished to First Central a certified copy of
resolutions duly adopted by the Board of Directors of First
Commercial authorizing the transactions contemplated by this
Agreement.
(e) No Injunction. No action, proceeding, regulation
or legislation shall have been instituted or threatened
before any court, governmental agency or legislative body to
enjoin, restrain or prohibit, or to obtain substantial
damages in respect of, or which is related to or arises out
of, this Agreement or the consummation of the transactions
contemplated hereby, which, in the reasonable judgment of
First Central, would make it inadvisable to consummate such
transactions (it being understood and agreed that a written
request by governmental authorities for information with
respect to the transactions contemplated herein may not be
deemed by First Central to be a threat of material
litigation or proceeding, regardless of whether such request
is received before or after execution of this Agreement).
(f) No Material Misstatements or Omissions. First
Central shall not have discovered in any of the
representations or warranties of First Commercial or in any
certificate or information furnished or to be furnished to
First Central hereunder or in any application or report to
any governmental agency or authority (including the Federal
Reserve Board) relating to the transactions contemplated by
this Agreement any untrue statement of a material fact or
any omission to state a material fact necessary in order to
make the statements made therein, in the light of the
circumstances under which they were made, not misleading, or
any material failure to perform or satisfy any covenants of
First Commercial or any First Commercial Bank contained
herein, and such fact shall be certified to First Central
by First Commercial.
(g) Opinion of First Commercial's Counsel. An opinion
of Friday, Eldredge & Clark, counsel for First Commercial,
dated as of the Closing Date, in substantially the form
attached hereto as Exhibit C, shall have been delivered to
First Central. In rendering the opinions contained therein,
such counsel may rely as to factual matters upon
certificates of officers of First Commercial and its
subsidiaries and of public officials and as to litigation in
which they are not counsel on opinions of counsel handling
such litigation, copies of which opinions shall be delivered
to First Central.
(h) Tax Opinion. First Central shall have received an
opinion of Friday, Eldredge & Clark, counsel to First
Commercial, to the effect that the transactions contemplated
herein will be treated for federal income tax purposes as a
tax-free corporate reorganization within the meaning of
Section 368(a)(1)(A) of the Code. The parties agree to
utilize their reasonable best efforts to consummate the
transactions described herein in a manner which will qualify
as a tax-free corporate reorganization within the meaning of
the foregoing provisions.
(i) Securities Registration Opinion. First Central
shall have received an opinion of Friday, Eldredge & Clark,
counsel to First Commercial, to the effect that the shares
of First Commercial Stock issued to the shareholders of
First Central pursuant to this Agreement have been
registered with the Securities and Exchange Commission
pursuant to Section 5 of the Securities Act of 1933, as
amended, and may be sold or transferred by the shareholders
of First Central without further registration under Section
5 of the Securities Act of 1933, as amended, except as may
otherwise be provided by Rules 144 and 145 of the Securities
and Exchange Commission and the terms of the letter to be
delivered by certain stockholders of First Central pursuant
to Section 5.01(n) of this Agreement.
(j) Articles of Merger. The parties shall have
executed and delivered the Articles of Merger.
(k) Due Diligence Review. First Central and its
counsel or agent shall have the right to inspect and review,
including the right to conduct an audit of, the books and
records relating in any way to the First Commercial
Financial Statements, or the business, properties and assets
of First Commercial and the First Commercial Banks, and to
conduct such other inspection and review of the business,
assets, condition (financial or other), operations and
prospects of First Commercial and of the First Commercial
Banks, to the extent First Central shall deem necessary (the
"First Central Due Diligence Review"). The First Central
Due Diligence Review shall not have indicated, in the
reasonable judgment of First Central, any matter that may
reasonably be expected to have a material adverse effect on
the business, financial condition, operations, results of
operations or prospects of First Commercial and the First
Commercial Banks, taken as a whole. First Central shall
complete the First Central Due Diligence Review within
thirty (30) days from the date of this Agreement and shall,
upon such completion, advise First Commercial of its
intention either to proceed, pursuant to this Agreement,
with the transactions contemplated by this Agreement or to
terminate this Agreement due to non-satisfaction of the
condition precedent set forth in this Section 5.02(l).
(l) Change in Market Price for First Commercial Stock.
In the event the average of the individual averages of the
bid and asked prices for shares of First Commercial Stock
reported on the Nasdaq National Market as of the close of
business on each of the twenty (20) trading days immediately
proceeding the Closing Date shall be less than $30.50 per
share, subject to such adjustments as provided in Section
1.05 hereof, then First Central may elect to terminate this
Agreement in accordance with Section 6.01(f) hereof, unless
First Commercial agrees to amend and restate this Agreement
to provide in Section 1.05(a) that each share of First
Central Stock shall be converted into the right to receive
that number of shares equal to the result obtained by
dividing (Y) the number of whole shares of First Commercial
Stock having an aggregate market value closest to, but not
exceeding, $50,325,000 based on the average of the
individual averages of the bid and asked prices for shares
of First Commercial Stock reported on the Nasdaq National
Market as of the close of business on each of the twenty
(20) days immediately proceeding the date on which action is
taken by First Central by (Z) the number of shares of First
Central Stock outstanding on the Effective Date. If First
Commercial notifies First Central in writing that First
Commercial will agree to so amend and restate this
Agreement, then the Board of Directors of First Central
shall approve a form of amended and restated agreement
incorporating changes consistent herewith and shall
authorize its execution and delivery by officers of First
Central.
(m) Litigation. On the Effective Date, there shall
not be pending or threatened against First Commercial or any
First Commercial Bank or the officers or the directors of
First Commercial or any First Commercial Bank in their
capacity as such, any suit, action or proceeding which, if
successful, would, in the reasonable judgment of First
Central, have a material adverse affect on the financial
condition, operations, business or prospects of First
Commercial and the First Commercial Banks, taken as a whole.
First Central acknowledges that it is aware of the Aearth
Development, Inc. legal proceeding disclosed in First
Commercial's Report on Form 10-Q for the quarterly period
ended June 30, 1996, and that such proceeding, in the event
the original verdict rendered at trial is reinstated on
appeal, will not have a material adverse impact on the
financial condition, operations, business or prospects of
First Commercial and the First Commercial Banks, taken as a
whole.
(n) Government Approvals; Other Consents. First
Central shall have received in form and substance reasonably
satisfactory to First Central and its counsel all necessary
federal and state governmental and regulatory approvals for
the transactions contemplated by this Agreement (including,
but not limited to, the approval of the Federal Reserve
Board and the Office of the Comptroller of the Currency, if
required), and First Commercial and the First Commercial
Banks shall have received any and all consents required
pursuant to Section 3.02(c) hereof; provided, however, that
any divestiture of assets mandated by regulatory authority
shall not constitute a failure to receive satisfactory
regulatory approval.
ARTICLE VI
TERMINATION
Section 6.01. Procedure for Termination. This
Agreement may be terminated and abandoned at any time prior
to the Closing, whether before or after approval of the
Merger by the Board of Directors of First Commercial or by
the shareholders of First Central, upon the occurrence of
any of the following by written notice from First Commercial
to First Central (as authorized by the Board of Directors of
First Commercial), or by written notice from First Central
to First Commercial, as the case may be:
(a) If any condition to the obligations of First
Commercial set forth in Section 5.01 is not substantially
satisfied at the time or times contemplated thereby and such
condition is not waived by First Commercial or if any
condition to the obligations of First Central as set forth
in Section 5.02 is not substantially satisfied at the time
or times contemplated thereby and such condition is not
waived by First Central, it being understood that each
party's right to terminate under this Section 6.01(a) shall
relate only to conditions to that party's obligations;
(b) In the event of a material breach by the
other of any representation, warranty or agreement contained
in this Agreement that is not cured within 20 days of the
time that written notice of such breach is received by such
other party from the party giving notice (except that any
such notice shall not have the effect of extending the time
for termination set forth in Section 6.01(c) hereof);
(c) By either First Central or First Commercial
if the Closing Date shall not have occurred, for reasons
other than a breach of this Agreement by the party seeking
termination, on or before September 30, 1997, or such later
date agreed to in writing by the parties; or
(d) By First Commercial if there shall have been
any action taken, or any statute, rule or regulation
proposed or enacted, by any federal, state or foreign
government or governmental or administrative agency that
would (i) render First Commercial substantially unable to
satisfy its obligations hereunder, (ii) in the sole, but
reasonable, judgment of First Commercial, prohibit or delay
for four months, or longer, consummation of the transactions
contemplated by this Agreement, or (iii) materially impair
the contemplated benefits to First Commercial of the
transactions contemplated by this Agreement by limiting the
location at which or manner in which First Commercial
presently conducts its business or by requiring First
Commercial, First Central or FNB Searcy to undertake any
material changes in personnel, organizational structure,
internal controls, accounting systems, operations or
policies, or otherwise.
(e) By First Commercial if there shall have
occurred:
(i) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the
United States,
(ii) a commencement of a war, armed
hostilities, or other international or national
calamity, directly or indirectly involving the United
States, or
(iii) a material change in the United States
or any other currency exchange rates or a suspension
of, or limitation on, the markets thereof;
or, in the case of any of the foregoing existing at the time
of this Agreement, a material acceleration or worsening
thereof.
(f) At the election of First Central upon the
occurrence of the event described in 5.02(l), subject to the
right set forth therein of First Commercial to preclude such
election.
(g) By First Central if its Board of Directors so
determines, in the event that prior to the Effective Date
(i) First Commercial enters into a letter of intent or
comparable document or a definitive (a) purchase and sale
agreement to be acquired, or (b) merger agreement in which
First Commercial is not the surviving corporation, or (ii)
another person publicly announces the intent to acquire
twenty-five percent (25%) or more of the outstanding equity
securities of First Commercial whether by tender offer or
otherwise.
Section 6.02. Termination by Mutual Agreement. This
Agreement may be terminated and abandoned (whether before or
after approval of the Merger by First Commercial or by the
shareholders of First Central) by mutual written consent of
First Central and First Commercial, as authorized by their
respective Board of Directors.
Section 6.03. Effect of Termination for Non-Willful
Breach. In the event of termination of this Agreement
caused otherwise than by a willful breach of this Agreement
by any of the parties hereto, this Agreement shall cease and
terminate, the acquisition of First Central as provided
herein shall not be consummated, and neither First Central
or First Commercial shall have any liability to the other
party under this Agreement of any nature whatever; provided,
however, that the duties of the parties with respect to
confidential information as set forth in Section 8.10 shall
survive any such termination.
Section 6.04. Effect of Termination for Willful
Breach. If termination of this Agreement shall have been
caused by willful breach of this Agreement, then, in
addition to other remedies as may be available at law or
equity for breach of this Agreement, the party so found to
have willfully breached this Agreement shall indemnify the
other party for its costs, fees and expenses of its counsel,
accountants and other experts and advisors, as well as fees
and expenses incident to negotiation, preparation and
execution of this Agreement, and all parties shall be bound
by the confidentiality obligations provided in Section 8.10
of this Agreement.
Section 6.05. Enforcement Expenses. The prevailing
party in any suit or action to enforce this Agreement or to
obtain any remedy which may be available as a result of a
breach of any representation, warranty or covenant contained
herein prior to Closing shall be entitled to recover its
court costs and reasonable attorneys' fees, including costs
and attorneys' fees on appeal from any such suit or action.
ARTICLE VII
BROKERS AND EXPENSES
Section 7.01. Brokers. First Central represents and
warrants to First Commercial that no broker or finder has
acted for it in connection with the execution and delivery
of this Agreement or the transactions contemplated hereby.
Section 7.02. Expenses. Each party hereto will pay
all attorneys' and accountants' fees and all other costs and
expenses incurred by it in connection with this Agreement
and the transactions contemplated hereby, except as provided
in Article VI hereof, and except as limited by Section
4.01(i) hereof.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Announcements. Neither First Commercial
nor First Central will make any press release or other
announcement to the public concerning the transactions
contemplated by this Agreement without the prior written
consent of the other party, except as required by law.
Section 8.02. Notices. All notices, requests,
demands, and other communications hereunder shall be in
writing and shall be deemed to have been duly given upon
receipt when delivered personally or by confirmed
telefacsimile, or one(1) business day following the date it
is given to a nationally-recognized overnight mail or
delivery service (with postage or delivery charge prepaid)
providing proof of delivery, as follows:
(a) If to First Central to:
First Central Corporation
200 West Race Street
Searcy, Arkansas 72143
Attention: Mr. Wayne Hartsfield
with copy to:
Donald P. Raney
Lightle, Beebe, Raney & Bell
211 West Arch Street
Searcy, Arkansas 72143
(b) If to First Commercial, to:
First Commercial Corporation
400 West Capitol Avenue
Little Rock, Arkansas 72201
Attention: Mr. J. Lynn Wright
with copy to:
John Clayton Randolph
Friday, Eldredge & Clark
400 West Capitol Avenue, Suite 2000
Little Rock, Arkansas 72201-3493
or to such other address as any person may designate in
writing to First Commercial and First Central at the
addresses listed above, in accordance with this Section
8.02.
Section 8.03. Binding Effect. All of the terms and
provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns.
Section 8.04. Headings. The Article, Section,
paragraph and other headings in this Agreement are inserted
solely as a matter of convenience and for reference and are
not a part of this Agreement.
Section 8.05. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall
constitute one and the same instrument.
Section 8.06. Integration of Agreement. This
Agreement constitutes the entire understanding of the
parties with respect to the subject matter hereof and
supersedes all prior agreements, arrangements or
communications, oral or written, between the parties hereto
with respect to the subject matter hereof.
Section 8.07. Amendments; Waivers. Any of the terms
or conditions of this Agreement may be waived, but only in
writing of the party against which the enforcement of such
waiver is sought, and any such terms or conditions may be
amended or modified in whole or in part at any time by
agreement in writing, executed in the same manner as this
Agreement.
Section 8.08. Governing Law. This Agreement shall be
governed by and construed and enforced under and pursuant to
the laws of the State of Arkansas.
Section 8.09. Incorporation by Reference. Any and all
schedules, exhibits, annexes, statements, reports,
certificates or other documents or instruments referred to
herein or attached hereto are incorporated herein by
reference thereto as though fully set forth at the point
referred to in this Agreement.
Section 8.10. Confidentiality of Information. Until
the Closing Date, or in the event of termination of this
Agreement without consummation of the transactions
contemplated hereby, First Commercial and First Central each
hereby covenants and agrees that it and its agents shall
keep and shall cause its subsidiaries to keep confidential
any information (unless readily ascertainable from public or
published information or sources) obtained from the other
party or its agents, except for disclosures of information
expressly allowed by such other party. In the event this
Agreement is terminated, then promptly after such
termination First Commercial or First Central (as the case
may be) and its agents shall return to the other party
hereto all documents, work papers and other written material
obtained from such other party or its agents in connection
with this Agreement and not theretofore made public
(including all copies thereof).
Section 8.11. No Assignment. Neither this Agreement
nor any rights or obligations of any party hereunder or
thereunder, may be assigned by the parties, by operation of
law or otherwise, except with the written consent of the
other party.
Section 8.12. Severability. If any portion or
provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or
unenforceable in any jurisdiction, such portion or provision
shall be ineffective as to that jurisdiction to the extent
of such invalidity, illegality or unenforceability, without
affecting in any way the validity or enforceability of the
remaining portions or provisions in such jurisdiction or
rendering that or any other portions or provisions of this
Agreement invalid, illegal or unenforceable in any other
jurisdiction.
Section 8.13. Survival of Representations and
Warranties. None of the representations, warranties or
covenants contained in this Agreement, or in any instrument
or other document delivered pursuant to this Agreement,
shall survive the Closing.
Section 8.14. Definition of To The Knowledge Of.
(i) When used in this Agreement, the phrases "to the
knowledge of First Central," "to the knowledge of First
Central and FNB Searcy," and "nothing has come to First
Central's attention" shall mean the actual knowledge of
Wayne Hartsfield, Donnie Miller and Bill Patton in the case
of First Central and FNB Searcy, including the knowledge
that such individuals should have acquired in the ordinary
course of performing their duties as officers of First
Central and/or FNB Searcy.
(ii) When used in this Agreement, the phrases "to the
knowledge of First Commercial," "to the knowledge of First
Commercial and the First Commercial Banks," and "nothing has
come to First Commercial's attention" shall mean the actual
knowledge of Barnett Grace, Edwin P. Henry and J. Lynn
Wright, including the knowledge that such individuals should
have acquired in the ordinary course of performing their
duties as executive officers of First Commercial.
IN WITNESS WHEREOF, First Commercial and First Central
have caused this Agreement to be executed and delivered in
multiple counterparts as of the date first above written.
FIRST COMMERCIAL CORPORATION
By: /s/ J. Lynn Wright
Title : Chief Financial Officer
ATTEST:
/s/ Donna B. Rodgers
Secretary
FIRST CENTRAL CORPORATION
By: /s/ Wayne Hartsfield
Title: President & CEO
ATTEST:
/s/ Judy Kubisiak
Secretary
EXHIBIT A
ARTICLES OF MERGER
OF
FIRST CENTRAL CORPORATION
WITH AND INTO
FIRST COMMERCIAL CORPORATION
We, ___________, the duly elected __________ of First
Central Corporation, an Arkansas corporation ("First
Central") and ________ _______, the duly elected _________
of First Commercial Corporation, an Arkansas corporation
("First Commercial") do hereby state on oath that the
following information relating to the merger of First
Central with and into First Commercial is true, correct, and
complete to the best of our knowledge and belief:
ARTICLE I
THE PLAN OF MERGER
Section 1.01. The Merger. At the Effective Time (as
defined in Section 1.03 hereof) in accordance with this Plan
of Merger and Arkansas law, First Central shall be merged
with and into First Commercial pursuant to this Plan of
Merger, the separate existence of First Central shall cease,
and First Commercial shall continue as the surviving
corporation under the corporate name "First Commercial
Corporation." First Commercial hereinafter may sometimes be
referred to as the "Surviving Corporation."
Section 1.02. Effect of the Merger. At the Effective
Time the effect of the Merger shall be that (i) the
Surviving Corporation shall possess all the rights,
privileges, and franchises possessed by each of First
Commercial and First Central, (ii) all of the property and
assets of whatsoever kind or description of each of First
Commercial and First Central, and all debts due on whatever
account to any of them, including subscriptions for shares
or other choses in action belonging to any of them, shall be
taken and be deemed to be transferred to, and vested in, the
Surviving Corporation without further act or deed, and (iii)
the Surviving Corporation shall be responsible for all of
the liabilities and obligations of each of First Commercial
and First Central, as provided by applicable law, in the
same manner as if the Surviving Corporation had itself
incurred such liabilities or obligations; but the
liabilities of First Commercial and First Central, or of
their shareholders, directors, or officers, shall not be
affected, nor shall the rights of the creditors thereof, or
of any persons dealing with such corporations be impaired by
the Merger, and any claim existing, or action or proceeding
pending, by or against either of First Commercial or First
Central may be prosecuted to judgment as if the Merger had
not taken place, or the Surviving Corporation may be
proceeded against, or substituted, in place of First
Commercial or First Central, as the case may be.
Section 1.03. Consummation of the Merger, Effective
Time. The parties hereto will cause the Merger to be
consummated by filing with the Secretary of State of the
State of Arkansas these Articles of Merger. The "Effective
Time" shall be 5:00 p.m., Little Rock time, on the date of
such filing.
Section 1.04. Articles of Incorporation; Bylaws;
Directors and Officers. The Articles of Incorporation of
First Commercial, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation of
the Surviving Corporation after the Effective Time until
thereafter amended as provided therein and under Arkansas
law. The Bylaws of First Commercial, as in effect
immediately prior to the Effective Time, shall be the Bylaws
of the Surviving Corporation after the Effective Time until
thereafter amended as provided therein and under Arkansas
law. The directors and officers of First Commercial
immediately prior to the Effective Time shall be the initial
directors and officers of the Surviving Corporation after
the Effective Time until their successors are elected and
qualified.
Section 1.05. Merger Consideration; Conversion of
Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of First Commercial,
First Central, or the holder of any of the securities of
such corporations:
(a) Each share of the common stock of First Central,
par value $1.00 per share ("First Central Stock"), issued
and outstanding immediately prior to the Effective Time
(other than shares as to which dissenters' rights have been
perfected and not withdrawn or otherwise forfeited under
applicable Arkansas law ("Dissenting Shares")) shall be
canceled and extinguished and be converted into the right to
receive that number of shares of common stock of First
Commercial, $3.00 par value ("First Commercial Stock"),
equal to the result obtained by dividing (Y) 1,650,000 by
(Z) _______ (such consideration, as well as any payment due
in lieu of fractional shares of First Commercial Stock as
hereinafter provided being herein referred to as the "Merger
Consideration").
(b) No fractional shares of First Commercial Stock
shall be issued as part of the Merger, and in lieu of
fractional shares, First Commercial shall pay a sum in cash
equal to the value of any such fractional share of First
Commercial Stock to which any holder of First Central Stock
shall be entitled determined on the basis of the last
reported sales price on the date on which the Effective Time
occurs for shares of First Commercial Stock on The Nasdaq
National Market.
(c) At and after the Effective Time, there shall be no
transfers on the stock transfer books of First Central with
respect to shares of First Central Stock issued and
outstanding immediately prior to the Effective Time. If,
after the Effective Time, certificates formerly representing
shares of First Central Stock are presented to First
Commercial or its transfer agent, they shall be canceled and
exchanged for the Merger Consideration as provided in
Section 1.06 and following, subject to applicable law in the
case of Dissenting Shares.
Section 1.06. Exchange of Certificates. From and
after the Effective Time, all certificates representing
shares of First Central Stock, with the exception of
certificates representing Dissenting Shares or shares of
First Central Stock held by First Commercial, shall
represent the right to receive shares of First Commercial
Stock on the basis set forth above, and the right to receive
cash in lieu of fractional shares in exchange therefor, upon
the terms and conditions of this Plan of Merger, subject to
applicable abandoned property, escheat, and similar laws.
Upon delivery of certificates representing shares of First
Central Stock to the transfer agent of First Commercial,
First Commercial shall cause the transfer agent to issue
certificates representing the requisite number of shares of
First Commercial Stock for each share of First Central Stock
represented by the certificates therefor properly delivered,
and First Commercial shall pay by certified or cashier's
check the amount entitled to be received in lieu of
fractional shares. Notwithstanding the foregoing, neither
First Commercial's transfer agent nor any party hereto shall
be liable to a holder of shares of First Central Stock for
any of the Merger Consideration delivered to a public
official pursuant to applicable abandoned property, escheat,
and similar laws.
Section 1.07. Rights of First Central Shareholders to
Dividends. Holders of First Central Stock on the Effective
Date shall be entitled to receive, subject to applicable
abandoned property, escheat and similar laws, payment of
dividends declared by First Commercial subsequent to the
Effective Date, but delivery of payment of such dividends
will not be required of First Commercial until such persons
have delivered their certificates representing shares of
First Central Stock in exchange for certificates
representing shares of First Commercial Stock in accordance
with the provisions of Section 1.06 above. Notwithstanding
the foregoing, First Commercial shall not be liable to a
holder of shares of First Central Stock for any such
dividends delivered to a public official pursuant to any
abandoned property, escheat and similar laws.
ARTICLE II
APPROVAL OF PLAN OF MERGER
Section 2.01. Approval by Board of Directors. The
Plan of Merger incorporated herein has been adopted by the
Board of Directors of each of First Central and First
Commercial.
Section 2.02. Approval by Shareholders.
(a) Pursuant to Ark. Code Ann. Section 4-27-1103G,
shareholder approval of the Plan of Merger was not required
by the shareholders of First Commercial.
(b) The Plan of Merger was approved by the
shareholders of First Central on _________, 1997, pursuant
to Ark. Code Ann. Section 4-27-1103E at a special meeting of
shareholders duly called and held for that purpose. On the
date of approval of the Plan of Merger, First Central's sole
outstanding class of capital stock was common stock, $____
par value per share, each share of which was entitled to one
vote, and _____ shares of which were outstanding.
First Central's shareholders approved the Plan of
Merger by a vote of in favor of the proposal and against the
proposal.
IN WITNESS WHEREOF, we have executed these Articles of
Merger on __________________, 1997.
FIRST CENTRAL CORPORATION
By:
---------------------
[Name], [Title]
FIRST COMMERCIAL CORPORATION
By:
----------------------
[Name], [Title]
EXHIBIT B
Substantive Provisions of First Central's
Counsel's Opinion
The opinion of Lightle, Beebe, Raney & Bell, Counsel
for First Central, shall be dated the Closing Date and shall
opine, in substance, as follows:
1. First Central and FNB Searcy have been duly
organized and are a corporation and national banking
association, respectively, validly existing in good
standing under the laws of the State of Arkansas and the
United States of America. Each of First Central and FNB
Searcy has full corporate power to own its property and
assets and to carry on its business as presently conducted,
and is duly qualified or registered to do business in each
jurisdiction where the nature of its business or the type of
its assets requires such qualification and where the failure
to so qualify would be material to the business of First
Central or FNB Searcy.
2. First Central has full corporate power to execute
and deliver this Agreement. All corporate action of First
Central required to duly authorize and execute this
Agreement has been taken. This Agreement is valid and
binding on First Central and is enforceable in accordance
with its terms, subject, as to the enforcement of remedies,
to applicable bankruptcy, insolvency, moratorium or other
similar laws affecting the enforceability of creditors'
rights generally and to limitations on the availability of
injunctive relief, specific performance and other equitable
remedies, whether applied by a court of law or equity.
3. All shares of First Central Stock and common stock
of FNB Searcy issued and outstanding as of the Closing Date
are duly authorized, validly issued, fully paid and not
subject to assessment. None of such shares has been issued
in violation of any preemptive rights of shareholders. To
the knowledge of such counsel, neither First Central nor FNB
Searcy has outstanding and is not obligated to issue
subscriptions, options or other arrangements or commitments
obligating it to issue or dispose of any shares of its
common stock.
4. The consummation of the Merger will not violate
any provision of either First Central's or FNB Searcy's
Articles of Incorporation or Association or Bylaws, or
violate any provision of, or result in the acceleration of
any material obligation under, any mortgage, loan agreement,
order, judgment, law or decree known to such counsel to
which First Central or FNB Searcy is a party or by which
either of them is bound, and will not violate or conflict
with any other material restriction of any kind or character
known to such counsel to which First Central or FNB Searcy
is subject.
5. To the knowledge of such counsel, each of First
Central and FNB Searcy has all licenses, permits, approvals
and other authorizations from Federal and state agencies and
authorities having jurisdiction in the premises required in
the conduct of its business as presently being conducted
where the failure to do so would have a material adverse
effect on First Central and FNB Searcy, taken as a whole.
6. To the knowledge of such counsel, there is no
claim, action, suit or proceeding pending or threatened
against First Central or FNB Searcy which, if adversely
determined, would have a material adverse effect on the
business, assets, operations or financial condition of First
Central and FNB Searcy, taken as a whole, would question the
validity of the Agreement or would prevent, hinder or delay
consummation of the transactions contemplated by the
Agreement.
7. To the knowledge of such counsel, each of First
Central and FNB Searcy is, in the conduct of its business,
in compliance with all applicable Federal, state and local
laws, statutes, ordinances and regulations, which the
failure to comply with would materially adversely affect the
business or the value of the properties or assets of First
Central and FNB Searcy, taken as a whole.
In rendering such opinions, such counsel may rely as to
factual matters upon certificates of one or more officers of
First Central and any of FNB Searcy and of public officials
and, as to litigation where they are not counsel of record,
on opinions of counsel handling such litigation, copies of
which opinions shall be delivered to First Commercial.
EXHIBIT C
Substantive Provisions of First Commercial
Counsel's Opinion
The opinion of Friday, Eldredge & Clark, Counsel for
First Commercial, shall be dated the Closing Date and shall
opine, in substance, as follows:
1. First Commercial and the First Commercial Banks
have been duly organized and are a corporation, state
chartered banks and national banking associations,
respectively, validly existing in good standing under the
laws of the State of Arkansas and the United States of
America and have full corporate power to own their property
and assets and to carry on their business as presently
conducted.
2. All corporate action of First Commercial required
to authorize the Agreement and to effectuate the Merger
contemplated by the Agreement has been taken. The Agreement
is valid and binding on First Commercial and is enforceable
in accordance with its terms, subject as to the enforcement
of remedies to applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of
creditors' rights generally and to limitations on the
availability of injunctive relief, specific performance and
other equitable remedies, whether applied by a court of law
or equity.
3. The consummation of the Merger will not violate
any provision of the Articles of Incorporation or
Association or Bylaws of First Commercial or any First
Commercial Bank or violate any provision of, or result in
the acceleration of any material obligation under, any
mortgage, loan agreement, order, judgment, law or decree
known to such counsel to which First Commercial or any First
Commercial Bank is a party or by which it is bound, and will
not violate or conflict with any other material restriction
of any kind or character known to such counsel to which
First Commercial or any First Commercial Bank is subject.
4. To the knowledge of such counsel, there is no
claim, action, suit or proceeding pending or threatened
against First Commercial or any of the First Commercial
Banks which, if adversely determined, would have a material
adverse effect on the business, assets, operations or
financial condition of First Commercial and the First
Commercial Banks, taken as a whole, would question the
validity of the Agreement or would prevent, hinder or delay
consummation of the transactions contemplated by the
Agreement.
5. To the knowledge of such counsel, each of First
Commercial and the First Commercial Banks has all licenses,
permits, approvals and other authorizations from Federal and
state agencies and authorities having jurisdiction in the
premises required in the conduct of its business as
presently being conducted where the failure to do so would
have a material adverse effect on First Commercial and the
First Commercial Banks, taken as a whole.
6. To the knowledge of such counsel, each of First
Commercial and the First Commercial Banks is, in the conduct
of its business, in compliance with all applicable Federal,
state and local laws, statutes, ordinances and regulations,
which the failure to comply with would materially adversely
affect the business or the value of the properties or assets
of First Commercial and the First Commercial Banks, taken as
a whole.
7. No facts have come to such counsel's attention
that lead them to believe that the joint proxy
statement/prospectus (other than the financial and
statistical data contained or incorporated therein, as to
which such counsel need not express any opinion or belief)
contains as of this date any untrue statement of material
fact or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances
under which they were made, not misleading. (Such counsel
need not pass upon nor assume any responsibility for the
accuracy, completeness or fairness of the statements
contained in the joint proxy statements/prospectus, and such
opinion may be based upon a limited review of, and
participation and conferences relating to, the joint proxy
statement/prospectus, without independent verification.)
8. The shares of First Commercial Stock to be issued
to the shareholders of First Central following the Closing
will be fully paid, validly authorized and duly issued and
are not subject to assessment and are not issued in
violation of any preemptive rights of First Commercial's
shareholders. Such shares have been registered with the
Security and Exchange Commission pursuant to Section 5 of
the Securities Act of 1933, as amended (the "Act"), and may
be sold or transferred by the shareholders of First Central
without further registration under Section 5 of the Act
except as may otherwise be provided by Rules 144 and 145 of
the Securities and Exchange Commission and the terms of
certain continuity of interest letters to be delivered by
certain shareholders of First Central pursuant to Section
5.01(n) of this Agreement.
In rendering such opinions, such counsel may rely as to
factual matters upon certificates of officers of First
Commercial and of public officials and, as to litigation
where they are not counsel of record, on opinions of counsel
handling such litigation, copies of which opinions shall be
delivered to First Central.
EXHIBIT 5
FRIDAY, ELDREDGE & CLARK
2000 First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201-3493
April 10, 1997
First Commercial Corporation
400 West Capitol Avenue
Little Rock, Arkansas 72201
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-4
(the "Registration Statement") filed with the Securities
and Exchange Commission on or about this date by First
Commercial Corporation (the "Company") for registration
under the Securities Act of 1933, as amended (the "Act"),
of 1,650,000 shares of the Company's common stock, $3.00
par value per share (the "Shares"), to be issued in
connection with the merger of First Central Corporation
with and into the Company.
It is our opinion that all action necessary to
register the Shares under the Act will have been taken
when:
a. The Registration Statement shall have become
effective in accordance with the applicable provisions of
the Act; and
b. Appropriate action shall have been taken by the
Board of Directors of the Company for the purpose of
authorizing the registration of the Shares.
It is our further opinion that the Shares will be,
upon issuance pursuant to the terms of the agreement
governing the aforementioned merger, validly authorized,
validly issued, fully paid and non-assessable. This
opinion does not pass upon the matter of compliance with
"Blue Sky" laws or similar laws relating to the sale or
distribution of the Shares.
We are members of the Arkansas Bar and do not hold
ourselves out as experts on the laws of any other State.
We hereby consent to the use of this opinion as an
exhibit to the Registration Statement, as it may be
amended, and consent to such references to our firm as are
made therein.
Very truly yours,
/s/ FRIDAY, ELDREDGE & CLARK
____________________________
FRIDAY, ELDREDGE & CLARK
JCR/bb
EXHIBIT 8
FRIDAY, ELDREDGE & CLARK
2000 First Commercial Building
400 West Capitol Avenue
Little Rock, Arkansas 72201-3493
April 10, 1997
Barnett Grace
Chairman of the Board
First Commercial Corporation
400 W. Capitol Avenue
Little Rock, AR 72201
Wayne Hartsfield
First Central Corporation
200 West Race Street
Searcy, AR 72143
Re: Merger of First Central Corporation with and into
First Commercial Corporation
Gentlemen:
You have asked for our opinion regarding certain federal
income tax consequences in connection with the proposed merger
of First Central Corporation ("First Central"), an Arkansas
corporation, with and into First Commercial Corporation ("First
Commercial"), an Arkansas corporation, pursuant to a Plan and
Agreement of Merger dated as of February 5, 1997 (the "Merger
Agreement").
This opinion is based upon the following factual
assumptions:
(a) First Commercial and First Central are engaged in the
business of operating as bank holding companies under the laws
of the State of Arkansas and the federal laws of the United
States.
(b) Upon the effective date of the merger, the
shareholders of First Central (other than First Central
shareholders who exercise dissenters' rights under applicable
state law), will receive approximately 22.94024 shares of First
Commercial voting common stock in exchange for each outstanding
share of First Central common stock. First Commercial will
make a cash payment to shareholders of First Central in lieu of
issuing fractional shares of First Commercial common stock.
First Central shares of common stock having a value equal to at
least fifty percent (50%) of the value of the outstanding
shares of First Central common stock shall be exchanged in the
merger solely for First Commercial common stock.
(c) First Central presently has, and within the last
three (3) years has had, only one class of capital stock
outstanding, all of which is common stock having a par value of
$1.00 per share.
(d) First Central will be merged with and into First
Commercial pursuant to laws of the State of Arkansas and the
separate existence of First Central shall cease and First
Commercial shall continue as the surviving corporation with all
the assets and liabilities of First Central and First
Commercial combined. First Commercial will continue to carry
on the business previously conducted by it.
(e) The First Commercial common stock to be received by
the First Central shareholders in connection with the merger
will be voting common stock with all of the rights normally
accorded to First Commercial common stockholders.
(f) The merger is being consummated for valid business
reasons germane to the business of the parties, separate and
apart from tax purposes.
(g) The fair market value of the First Commercial common
stock to be received by each First Central shareholder will be
approximately equal to the fair market value of the First
Central stock surrendered in the exchange.
(h) There is no plan or intention by the shareholders of
First Central to sell, exchange, or otherwise dispose of a
number of shares of First Commercial common stock received in
the transaction that would reduce the First Central
shareholders' ownership of First Commercial stock to a number
of shares having a value, as of the date of the transaction, of
less than 50% of the value of all of the outstanding stock of
First Central as of the same date. For purposes of this
assumption, shares of First Central stock exchanged for cash or
other property, surrendered by dissenters, or exchanged for
cash in lieu of fractional shares of First Commercial stock,
will be treated as outstanding First Central stock on the date
of the transaction. Moreover, shares of First Central stock
and shares of First Commercial stock held by First Central
shareholders and otherwise sold, redeemed, or disposed of prior
or subsequent to the transaction will be considered in making
this assumption. There will have been no transfers, in the
aggregate, of more than fifty percent (50%) of the value of the
First Central stock prior to the effective date of the merger
which were made in contemplation of the merger.
(i) First Commercial has no plan or intention to
reacquire any of its stock issued in the transaction.
(j) First Commercial has no plan or intention to sell or
otherwise dispose of any of the assets of First Central
acquired in the transaction, except for dispositions made in
the ordinary course of business or transfers described in
I.R.C. Section 368(a)(2)(C).
(k) The liabilities of First Central assumed by First
Commercial and the liabilities to which the transferred assets
of First Central are subject were incurred by First Central in
the ordinary course of its business. The assumption by First
Commercial of the liabilities of First Central pursuant to the
merger will be for a bona fide business purpose and not for the
purpose of avoiding federal income tax. No liabilities of any
person other than First Central shall be assumed by First
Commercial in the merger, and none of the shares of First
Central stock surrendered in the merger in exchange for First
Commercial stock will be subject to any liabilities.
(l) Following the transaction, First Commercial will
continue the historic business of First Central or use a
significant portion of First Central's historic business assets
in a business.
(m) First Commercial, First Central and the shareholders
of First Central will pay their respective expenses, if any,
incurred in connection with the transaction.
(n) There is no intercorporate indebtedness existing
between First Commercial and First Central that was issued,
acquired, or will be settled at a discount.
(o) No two parties to the transaction are investment
companies as defined in I.R.C. Section 368(a)(2)(F)(iii) and
(iv).
(p) First Central is not under the jurisdiction of a
court pursuant to a case under Title XI of the United States
Code, or a receivership, foreclosure, or other similar
proceeding in a federal or state court.
(q) The fair market value of the assets of First Central
transferred to First Commercial will exceed the sum of the
liabilities assumed by First Commercial, plus the amount of
liabilities, if any, to which the transferred assets are
subject.
(r) No fractional share interests in First Commercial
common stock will be issued in connection with the transaction.
The payment of cash in lieu of fractional shares of First
Commercial common stock is solely for the purpose of avoiding
the expense and inconvenience to First Commercial of issuing
fractional shares and does not represent separately bargained-
for consideration.
(s) None of the compensation received by any shareholder-
employee of First Central will be separate consideration for,
or allocable to, any of his or her shares of First Central
stock.
(t) None of the shares of First Commercial stock received
by any shareholder-employee of First Central will be separate
consideration for, or allocable to, any employment agreement,
and the compensation paid to any shareholder-employee will be
for services actually rendered and will be commensurate with
the amounts paid to third parties bargaining at arm's length
for similar services.
Based upon the foregoing factual representations and
assumptions, and subject to the comments and qualifications
expressed herein, we are of the opinion that:
1. The proposed merger will constitute a
reorganization with the meaning of I.R.C. Section 368(a)(1)(A).
2. First Central and First Commercial will each be
"a party to a reorganization" within the meaning of I.R.C.
Section 368(b).
3. No gain or loss will be recognized by First
Central on the transfer of its assets to First Commercial in
exchange for First Commercial common stock and the assumption
by First Commercial of the liabilities, if any, of First
Central. I.R.C. Sections 357(a) and 361(a).
4. No gain or loss will be recognized by First
Commercial upon the receipt of the assets of First Central in
exchange for First Commercial common stock. I.R.C. Section
1032(a).
5. The basis of the assets of First Central
acquired by First Commercial will be the same in the hands of
First Commercial as the basis of such assets in the hands of
First Central immediately prior to the exchange. I.R.C.
Section 362(b).
6. The holding period of the assets of First
Central in the hands of First Commercial will, in each
instance, include the period for which such assets were held by
First Central. I.R.C. Section 1223(2).
7. No gain or loss will be recognized by the
shareholders of First Central upon the exchange of First
Central common stock solely for First Commercial common stock.
I.R.C. Section 354(a)(1).
8. The basis of the First Commercial common stock
received by the shareholders of First Central will be the same
as the basis of the First Central stock surrendered in exchange
therefor. I.R.C. Section 358(a)(1).
9. The holding period of the First Commercial
common stock received by the shareholders of First Central will
include the period during which the First Central stock
surrendered in exchange therefor was held, provided the stock
of First Central is a capital asset in the hands of the
shareholders of First Central on the date of the exchange.
I.R.C. Section 1223(1).
10. Where a shareholder of First Central dissents to
the proposed transaction and receives solely cash in exchange
for his stock, such cash will be treated as having been
received by the shareholder as a distribution in redemption of
such shareholder's stock subject to the provisions and
limitations of I.R.C. Section 302. Rev. Rul. 74-515, 1974-2
C.B. 118.
11. The payment of cash to First Central
shareholders in lieu of fractional share interests of First
Commercial common stock will be treated as if the fractional
shares were distributed as part of the exchange and then
redeemed by First Commercial. These cash payments will be
treated as having been received as distributions in full
payment in exchange for the stock redeemed subject to the
provisions and limitations of I.R.C. Section 302. Rev. Rul.
66-365, 1966-2 C.B. 116 and Rev. Proc. 77-41, 1977-2 C.B. 574.
The opinions expressed herein are subject to the following
qualifications:
(i) We have assumed that the express written terms
of the Merger Agreement set forth the entire agreement of the
parties with respect to the proposed transaction, and that
there are no oral or written statements, representations,
agreements, or understandings which modify, amend, or vary any
of the terms thereof.
(ii) This opinion is limited to the matters expressly
set forth herein, and no opinion may be implied or inferred
beyond the specific language and scope so stated.
(iii) The opinions expressed above regarding tax-free
reorganization treatment of the merger assume that the First
Central shareholders have, and will continue following the
merger to maintain, a "continuity of interest" in the business
of the First Central, directly through the ownership of First
Central stock prior to the merger, and indirectly through the
ownership of First Commercial common stock following the
merger. For this purpose, a "continuity of interest" shall
mean the ownership of stock having a value, as of the date of
the transaction, of 50% or more of the value of all of the
formerly outstanding stock of First Central on such date.
(iv) This opinion is based upon the factual
assumptions and representations described herein. Accordingly,
we shall have no liability in rendering this opinion to the
extent it is adversely affected by reason of any such factual
assumptions or representations being false or incorrect.
(v) This opinion is rendered as of the date hereof
and is based upon the current version of the Internal Revenue
Code, regulations promulgated thereunder, current rulings of
the Internal Revenue Service and applicable case law, and,
accordingly, is subject to any changes in such law,
regulations, rulings, or judicial decisions occurring after the
date of this opinion.
(vi) This opinion is provided solely for the benefit
of First Commercial, First Central and the shareholders of
First Central and may not be relied upon by any other person or
entity, quoted in whole or in part, filed with any governmental
agency, or otherwise referred to or utilized for any other
purpose, without, in each instance, or prior written consent.
We consent to the use and filing of this opinion in connection
with filings to be made with the Federal Reserve Board and
Securities and Exchange Commission concerning this transaction
and in connection with the disclosure documents to First
Central shareholders with respect to the proposed transaction.
In addition, we specifically consent to the use of this opinion
as an exhibit to First Commercial's Registration Statement on
Form S-4 which is being filed to register the shares of First
Commercial common stock to be issued in the proposed
transaction, as it may be amended, and consent to such
references to our firm as are made therein.
(vii) This opinion is being furnished as of the date
hereof and we have no obligation or duty to update or
supplement this opinion by reason of events or changes in
applicable law occurring after the date of this letter.
Very truly yours,
FRIDAY, ELDREDGE & CLARK
FEC/WME/mjs
EXHIBIT 23.2
Consent of Ernst & Young LLP, Independent Auditors
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-4) and
related Prospectus of First Commercial Corporation for the
registration of 1,650,000 shares of its common stock and to
the incorporation by reference therein of our report dated
January 30, 1997, with respect to the consolidated financial
statements of First Commercial Corporation included in its
Annual Report (Form 10-K) for the year ended December 31,
1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Little Rock, Arkansas
April 11, 1997
EXHIBIT 23.3
Angel, Humphrey, Hamilton & Co., Ltd.
Certified Public Accountants
Bob Humphrey, CPA Ph: (501) 268-5353
Mitchell Hamilton, CPA Fax: (501) 268-5351
------------- -------------
Jay W. Cherry, CPA 405 North Spring
David L. Spradlin, CPA P.O. Box 310
Debra T. Scaife, CPA Searcy, AR 72145
James D. Bellcock, CPA
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" and to the use of our reports dated December 31,
1996, 1995, and 1994 with respect to the consolidated
financial statements of First Central Corporation and
Subsidiary included in the Registration Statement on Form
S-4 and related Porspectus of First Commercial Corporation
for the registration of 1,650,000 shares of its common
stock.
/s/ Angel, Humphrey, Hamilton & Co., Ltd.
------------------------------------------
ANGEL, HUMPHREY, HAMILTON & CO., LTD.
Searcy, Arkansas
April 10, 1997
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
constitutes and appoints Barnett Grace and Edwin P. Henry,
and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all
capacities, to sign the Registration Statement on Form S-4
of First Commercial Corporation (the "Company") pertaining
to the registration of up to 1,650,000 shares of the
Company's Common Stock, $3.00 par value per share, to be
offered as described in the Registration Statement and to
sign any and all amendments (including post-effective
amendments) to the Registration Statement, and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and
agents, and each of them, 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 such attorneys-in-fact and agents or
any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Date: April 10, 1997
/s/ Barnett Grace /s/ John W. Allison
----------------------- -----------------------
Barnett Grace John W. Allison
Director Director
/s/ Truman Arnold /s/ William H. Bowen
----------------------- -----------------------
Truman Arnold William H. Bowen
Director Director
/s/ Peggy Clark /s/ Robert G. Cress
----------------------- -----------------------
Peggy Clark Robert G. Cress
Director Director
/s/ Cecil W. Cupp, Jr. /s/ Frank D. Hickingbotham
----------------------- ---------------------------
Cecil W. Cupp, Jr. Frank D. Hickingbotham
Director Director
/s/ Walter E. Hussman, Jr. /s/ Frederick E. Joyce, M.D.
-------------------------- ----------------------------
Walter E. Hussman, Jr. Frederick E. Joyce, M.D.
Director Director
/s/ Jack G. Justus /s/ William M. Lemley
----------------------- -----------------------
Jack G. Justus William M. Lemley
Director Director
/s/ Michael W. Murphy /s/ Sam C. Sowell
----------------------- -----------------------
Michael W. Murphy Sam C. Sowell
Director Director
/s/ Paul D. Tilley
-----------------------
Paul D. Tilley
Director
EXHIBIT 99
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
First Central Corporation
200 West Race Street
Searcy, Arkansas 72143
Telephone No. (501)
PROXY
The undersigned hereby constitutes and appoints ---------
and --------------, or either of them, proxies for the
undersigned, with power of substitution, to represent the
undersigned and to vote all of the shares of Common Stock of
First Central Corporation (the "Company) which the undersigned
is entitled to vote at the special meeting of shareholders of
the Company to be held on ----------, 1997, and at any and all
adjournments thereof.
1. Proposal to approve the Plan and Agreement of Merger
between First Commercial Corporation and First Central
Corporation dated February 5, 1997.
----- FOR ----- AGAINST ------ ABSTAIN
2. In their discretion to transact such other business as
may properly come before the meeting and all adjournments
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.
---------------------------- ------------------------------
Signature NAME: PLEASE PRINT
-------------------------- -----------------------------
Signature (if held jointly) NAME (if joint tenant):
PLEASE PRINT
Date: -----------------
Please sign exactly as name appears on the certificates
representing shares to be voted by this proxy. When signing
as executor, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by
president or other authorized officer. If a partnership,
please sign in partnership name by authorized persons.