SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant: /X/
Filed by a Party other than the Registrant: / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TEXARKANA FIRST FINANCIAL CORPORATION
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / No fee required.
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/X/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies: Common Stock, par value $0.01 per share
2) Aggregate number of securities to which transaction applies:
1,539,342
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: $37,500,000 -
Sale Price
4) Proposed maximum aggregate value of transaction: $37,500,000
5) Total fee paid: $7,500
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
PRELIMINARY COPY - SUBJECT TO COMPLETION
TEXARKANA FIRST FINANCIAL CORPORATION
3RD & OLIVE STREETS
TEXARKANA, ARKANSAS 71854
(870) 773-1103
__________, 2000
Dear Shareholder:
You are cordially invited to attend the special meeting of
shareholders of Texarkana First Financial Corporation, a Texas corporation and
the holding company for First Federal Savings and Loan Association of
Texarkana, to be held at the main offices of First Federal, 3rd & Olive
Streets, Texarkana, Arkansas at 4:00 p.m. (local time) on _____________, 2000.
The attached Notice of Special Meeting of Shareholders and proxy
statement describe the formal business to be transacted at the special
meeting. The purpose of the special meeting is to consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization by and
between First United Bancshares, Inc. and Texarkana First Financial dated as
of May 15, 2000, and the Plan of Merger attached thereto as EXHIBIT A, which
provide for the merger of First United Acquisition Co., Inc., a Texas
corporation to be formed as a wholly-owned subsidiary of First United, with
and into Texarkana First Financial, with Texarkana First Financial continuing
as the surviving corporation and as a wholly-owned subsidiary of First United.
In the merger, the shares of, and options to acquire shares of, Texarkana
First Financial's common stock outstanding at the effective time of the merger
would be converted into the right to receive an aggregate amount of cash equal
to $37,500,000, or (i) $23.35208 per share of common stock outstanding at the
effective time, and (ii) $23.35208 less the per-share exercise price for each
option to acquire a share of common stock that is outstanding and unexercised
at the effective time. The accompanying proxy statement more fully describes
the proposed merger.
Consummation of the merger is subject to certain conditions,
including the approval of all applicable regulatory authorities and the
approval of our shareholders. The Board of Directors believes that the
proposed merger is in the best interests of Texarkana First Financial and its
shareholders, and has unanimously approved the merger agreement and the
merger. The Board of Directors unanimously recommends that you vote "FOR"
approval and adoption of the merger agreement.
You are urged to carefully read the accompanying proxy statement,
which provides important information regarding the merger and related matters.
Your vote is important, regardless of the number of shares that you
own. In order for the merger to be consummated, the merger agreement must be
approved by the holders of two-thirds of the outstanding shares of common
stock entitled to vote. Consequently, a failure to vote or a vote to abstain
will have the same effect as a vote against the merger agreement. On behalf of
the Board of Directors, I urge you to sign, date and return the enclosed proxy
in the enclosed postage-paid envelope as soon as possible, even if you
currently plan to attend the special meeting. This will not prevent you from
voting in person but will assure that your vote is counted if you are not able
to attend the special meeting. Executed proxies with no instructions indicated
on such proxies will be voted "FOR" approval and adoption of the merger
agreement.
We look forward to seeing you at this important special meeting. If
you have any questions regarding the special meeting or the proposed merger,
you are encouraged to call John Harrison, President and Chief Operating
Officer of Texarkana First Financial, at (870) 773-1103.
Sincerely,
JAMES W. MCKINNEY
Chairman and Chief Executive Officer
TEXARKANA FIRST FINANCIAL CORPORATION
3RD & OLIVE STREETS
TEXARKANA, ARKANSAS 71854
(870) 773-1103
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ____________, 2000
A special meeting of the shareholders of Texarkana First Financial
Corporation will be held at the main offices of First Federal Savings and Loan
Association, 3rd & Olive Streets, Texarkana, Arkansas at 4:00 p.m. (local
time) to consider the following proposal:
To approve and adopt the Agreement and Plan of Reorganization by and
between First United Bancshares, Inc. and Texarkana First Financial
Corporation, dated as of May 15, 2000, and the Plan of Merger attached
thereto as EXHIBIT A, pursuant to which:
- First United Acquisition Co., Inc., a Texas
corporation to be formed as a wholly-owned subsidiary
of First United, will merge with and into Texarkana
First Financial, with Texarkana First Financial
continuing as the surviving corporation and a
wholly-owned subsidiary of First United; and
- the outstanding shares of, and options to acquire
shares of, the common stock of Texarkana First
Financial will be exchanged for an aggregate
consideration of $37,500,000 in cash.
The board of directors has fixed ______, 2000, as the record date for
the determination of shareholders entitled to vote at the special meeting.
If you wish to attend the special meeting and your shares are held by
a broker, bank or other nominee, you must bring to the special meeting a
recent brokerage statement or letter from the nominee confirming your
beneficial ownership of the shares of common stock. You must also bring a form
of personal identification. In order to vote your shares at the special
meeting you must obtain from each nominee a proxy issued in your name.
Under Part Five of the Texas Business Corporation Act, if Texarkana
First Financial shareholders dissent from and do not vote in favor of the
approval and adoption of the Agreement and Plan of Reorganization and the
merger, they are entitled to certain appraisal rights, provided that they
strictly comply with certain statutory procedures explained in detail in the
attached proxy statement. A copy of the dissenters' rights provisions of the
Texas Business Corporation Act (Articles 5.11 through 5.13) is attached as
APPENDIX C to the proxy statement.
It will be helpful to us if you read the proxy statement and voting
instructions on the proxy card, and then vote by promptly marking, signing,
dating and returning the proxy in the enclosed, self-addressed, stamped
envelope so that the necessary quorum will be represented at the special
meeting.
By Order of the Board of Directors,
James W. McKinney
Chairman and Chief Executive Officer
Texarkana, Arkansas
_______, 2000
PLEASE DO NOT SEND ANY SHARE CERTIFICATES AT THIS TIME. IF THE MERGER
IS CONSUMMATED, YOU WILL BE SENT INSTRUCTIONS REGARDING YOUR CERTIFICATES.
TEXARKANA FIRST FINANCIAL CORPORATION
3RD & OLIVE STREETS
TEXARKANA, ARKANSAS 71854
(870) 773-1103
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PROXY STATEMENT
-----------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD __________, 2000
This proxy statement and the accompanying form of proxy are being
provided to you in connection with the solicitation of proxies by the Board of
Directors of Texarkana First Financial Corporation from holders of outstanding
shares of its common stock, par value $0.01 per share. The proxies will be
voted at Texarkana First Financial's special meeting of shareholders to be
held on ________, 2000, at the time and place and for the purpose set forth in
the accompanying Notice of Special Meeting of Shareholders and at any
adjournments or postponements of the special meeting. This proxy statement and
the accompanying proxy are first being mailed to shareholders on or about
_______, 2000.
At the special meeting, shareholders will consider and vote upon a
proposal to approve and adopt the Agreement and Plan of Reorganization by and
between Texarkana First Financial and First United Bancshares, Inc., dated as
of May 15, 2000, and the Plan of Merger attached thereto as EXHIBIT A
(together, the "merger agreement"), pursuant to which First United Acquisition
Co., Inc., a Texas corporation to be formed as a wholly-owned subsidiary of
First United, will merge with and into Texarkana First Financial. As a result
of the merger, Texarkana First Financial will continue as the surviving
corporation and as a wholly-owned subsidiary of First United, and First United
Acquisition Co. will cease to exist. In the merger, the shares of, and options
to acquire shares of, Texarkana First Financial's common stock outstanding at
the effective time of the merger will be converted into the right to receive
an aggregate amount of cash equal to $37,500,000, or (i) $23.35208 per share
of Texarkana First Financial common stock outstanding at the effective time of
the merger, and (ii) $23.35208 less the per-share exercise price for each
option to acquire a share of Texarkana First Financial common stock that is
outstanding and unexercised immediately prior to the effective time of the
merger. Shares held by shareholders properly perfecting their dissenters'
rights will be converted into cash pursuant to the dissenters' rights statutes
also described in this proxy statement. For a discussion of the consideration
to be received by Texarkana First Financial's shareholders in the merger, see
"THE PROPOSED MERGER--PURCHASE PRICE." A copy of the merger agreement is
included as APPENDIX A to this proxy statement and is incorporated herein by
reference.
Consummation of the merger is conditioned upon, among other things,
approval and adoption of the merger agreement by the requisite vote of
Texarkana First Financial's shareholders and the receipt of all requisite
regulatory approvals and consents. For further information concerning the
terms and conditions of the merger, see "THE PROPOSED MERGER--THE MERGER."
The Board of Directors knows of no additional matters that will be
presented for consideration at the special meeting. No persons have been
authorized to give any information or to make any representations other than
those contained in this proxy statement in connection with the solicitation of
proxies made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by Texarkana
First Financial or any other person.
SUMMARY TERM SHEET
The following is a brief summary term sheet for the merger, which
highlights selected information from this proxy statement regarding the merger
and the merger agreement. This term sheet may not, however, contain all of the
information that is important to you as a shareholder of Texarkana First
Financial Corporation. Accordingly, we encourage you to carefully read the
entire proxy statement and the appendices to this proxy statement. Page
numbers refer to pages of this proxy statement on which more detailed
information may be found.
THE PROPOSED TRANSACTION
- THE PROPOSAL (page __). You are being asked to consider and
vote upon a proposal to approve the merger agreement that
provides for Texarkana First Financial to be merged with and
into First United Bancshares, Inc.
- WHAT YOU WILL RECEIVE FOR YOUR SHARES OF TEXARKANA FIRST
FINANCIAL STOCK (page __). Upon completion of the merger, you
will be entitled to receive $23.35208 in cash for each of your
shares of Texarkana First Financial stock.
- WHAT YOU WILL RECEIVE FOR YOUR OPTIONS TO ACQUIRE SHARES OF
TEXARKANA FIRST FINANCIAL STOCK (page __). Upon completion of
the merger, you will be entitled to receive, for each of your
options to acquire a share of Texarkana First Financial stock
which is outstanding and unexercised immediately prior to the
effective time of the merger, the amount in cash equal to
$23.35208 less the per-share exercise price of the option.
TEXARKANA FIRST FINANCIAL'S RECOMMENDATION TO SHAREHOLDERS (page __).
Your Board of Directors has determined, by unanimous vote, that the
merger is fair to and in the best interests of Texarkana First Financial and
its shareholders and has unanimously approved and adopted the merger agreement
and the merger. Your Board of Directors unanimously recommends that
shareholders vote FOR approval of the merger agreement at the special meeting.
OPINION OF FINANCIAL ADVISOR (page __ and APPENDIX B).
On ___________, 2000, Stifel, Nicolaus & Company, Incorporated,
Texarkana First Financial's financial advisor, delivered their opinion to
Texarkana First Financial's Board of Directors that, as of the date of this
proxy statement, the consideration to be received by Texarkana First
Financial shareholders in the merger is fair from a financial point of view.
Stifel, Nicolaus provided its advisory services and its opinion for
the information and assistance of the Texarkana First Financial board in
connection with its consideration of the merger. Stifel, Nicolaus's opinion is
not a recommendation as to how any Texarkana First Financial shareholder
should vote at the special meeting. THE OPINION IS ATTACHED AS APPENDIX B TO
THIS PROXY STATEMENT. YOU ARE URGED TO READ THE OPINION IN ITS ENTIRETY.
ii
THE SPECIAL MEETING
- TIME, PLACE AND DATE OF THE SPECIAL MEETING (page __). The
special meeting of Texarkana First Financial shareholders will
be held at 4:00 p.m., central time, on ________, 2000 in the
lobby of First Federal's main office, 3rd & Olive Streets,
Texarkana, Arkansas.
- REQUIRED VOTE (page __). Approval of the merger requires the
affirmative vote of the holders of two-thirds of the
outstanding shares of Texarkana First Financial common stock.
- SHAREHOLDERS ENTITLED TO VOTE (page __). You are entitled to
vote at the special meeting if you owned shares of Texarkana
First Financial common stock at the close of business on
_______, 2000, the record date for the special meeting. You
will have one vote for each share of Texarkana First Financial
common stock you owned on the record date. 1,539,342 shares of
Texarkana First Financial common stock were outstanding as of
the record date and are entitled to vote at the special
meeting.
- PROCEDURE FOR VOTING (page __). You may vote by completing and
returning the enclosed proxy card, or by appearing at the
special meeting and voting in person. If you complete and
return the enclosed proxy but wish to revoke it, you must
either file a written, signed notice of revocation with
Texarkana First Financial's corporate secretary, submit a
later-dated proxy to Texarkana First Financial, or attend the
meeting and vote in person.
- SOLICITATION OF PROXIES (page __). Texarkana First Financial
will pay all of the costs of soliciting proxies. In addition
to soliciting proxies by mail, Texarkana First Financial's
directors, officers and employees, without receiving
additional compensation, may solicit proxies by personal
interview, mail, telephone and facsimile. Arrangements will
also be made with brokerage firms and other custodians,
nominees and fiduciaries to forward solicitation materials to
the beneficial owners of shares held of record by such
persons, and Texarkana First Financial will reimburse such
brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them. Regan &
Associates has been retained by Texarkana First Financial to
assist it in the solicitation of proxies.
THE MERGER
- STRUCTURE OF THE MERGER (page __). Upon completion of the
merger:
- First United Acquisition Co. will be merged with and
into Texarkana First Financial, and Texarkana First
Financial will be the surviving corporation after the
merger;
- Texarkana First Financial will be 100% owned by First
United; and
- Each share of Texarkana First Financial common stock
issued and outstanding immediately prior to the
effective time of the merger (other than shares as to
which dissenters' rights are perfected), and each
option to acquire a share of
iii
Texarkana First Financial common stock that is
outstanding and nexercised immediately prior to the
effective time, will be converted into the right to
receive a cash payment in accordance with the merger
agreement. Texarkana First Financial shareholders
will have no equity interest in Texarkana First
Financial or First United after the merger.
- CERTAIN FEDERAL INCOME TAX CONSEQUENCES (page __). The merger
will be a taxable transaction to you. As a result of the
merger, you will generally recognize a gain or loss for United
States income tax purposes measured by the difference between
the cash received pursuant to the merger agreement and your
adjusted tax basis in the shares of Texarkana First
Financial's common stock exchanged for such cash. Because
determining the tax consequences of the merger can be
complicated, you should consult with your tax advisor as to
the specific tax consequences of the merger to you, including
the applicability and effect of federal, state, local, foreign
and other tax laws.
- ACCOUNTING TREATMENT (page __). The merger will be accounted
for as a "purchase" in accordance with generally accepted
accounting principles. Consequently, the aggregate
consideration paid by First United in connection with the
merger will be allocated to Texarkana First Financial's assets
and liabilities based upon their fair values, with any excess
being treated as goodwill.
- RIGHTS OF DISSENTING SHAREHOLDERS (page __). Under Texas law,
if holders of the shares of Texarkana First Financial's common
stock dissent and do not vote for approval and adoption of the
merger agreement and the merger, they are entitled to
appraisal rights, provided that they strictly comply with
certain statutory procedures further explained in detail in
this proxy statement. A copy of Articles 5.11 through 5.13 of
the Texas Business Corporation Act, which sets forth the
rights of dissenting shareholders under Texas law, is attached
as APPENDIX C to this proxy statement.
- REASONS FOR THE MERGER (page __). In arriving at its
determination that the merger is fair to, and in the best
interests of, the Texarkana First Financial shareholders, the
Texarkana First Financial Board of Directors considered a
number of factors, including, without limitation, the
following:
- The merger represents an opportunity for Texarkana
First Financial shareholders to realize a premium
over recent market prices for their shares;
- In the opinion of Texarkana First Financial's
financial advisor, the price per share of common
stock to be received by you is fair from a financial
point of view;
- Texarkana First Financial and First Federal compete
against many larger and better capitalized financial
institutions and are vulnerable to competitive
factors;
- Texarkana First Financial shares are somewhat
illiquid, and there is no assurance that Texarkana
First Financial shares will appreciate in the future;
and
- The Board of Directors has explored strategic
alternatives and believes that the merger offers a
unique opportunity to maximize the value of Texarkana
First Financial common stock.
iv
- INTERESTS OF CERTAIN PERSONS IN THE MERGER (page __). The
officers and directors of Texarkana First Financial have
interests in the merger as employees and directors that are
different from, or in addition to, your interests as
shareholders.
PARTIES TO THE MERGER
- TEXARKANA FIRST FINANCIAL (page __). Texarkana First Financial
is a thrift holding company subject to supervision by the
Office of Thrift Supervision. Texarkana First Financial
directly owns 100% of the shares of common stock of First
Federal Savings and Loan Association, Texarkana, Arkansas.
- FIRST UNITED (page __). First United is an Arkansas
corporation and registered bank holding company subject to
supervision by the Federal Reserve. First United is based in
El Dorado, Arkansas and conducts its operations through 11
subsidiary banks and a subsidiary trust company.
- FIRST UNITED ACQUISITION CO. (page __). First United
Acquisition Co., Inc. will be organized as a Texas
corporation and wholly-owned subsidiary of First United,
solely for the purpose of effecting the merger.
BANCORPSOUTH, INC.'S ACQUISITION OF FIRST UNITED
- THE BANCORPSOUTH MERGER (page __). On April 16, 2000, First
United entered into an agreement to merge into BancorpSouth,
Inc. That merger, which is subject to several conditions,
including regulatory and shareholder approval, is expected to
be completed during the third quarter of 2000. BancorpSouth
and First United have each scheduled a special meeting of
their shareholders on August 24, 2000, to vote on that merger.
- BANCORPSOUTH, INC. (page __). BancorpSouth, Inc. is a
Mississippi corporation and registered bank holding company,
and conducts its operations through its bank subsidiary,
BancorpSouth Bank, and its banking-related subsidiaries.
- HOW TEXARKANA FIRST FINANCIAL'S MERGER IS AFFECTED (page __).
If First United merges into BancorpSouth before the Texarkana
First Financial merger with First United is completed,
BancorpSouth will succeed to First United's rights and
obligations as a party to the merger with Texarkana First
Financial.
THE MERGER AGREEMENT
- EFFECTIVE TIME OF THE MERGER (page __). The merger of
Texarkana First Financial and Acquisition Co. will become
effective upon the filing of Articles of Merger with the
Secretary of State of the State of Texas. The filing is
expected to occur within ___ business days (but anticipated on
or before September 29, 2000) after approval of the merger
agreement by Texarkana First Financial's shareholders at the
special meeting and satisfaction or waiver of the other
conditions to the merger contained in the merger agreement.
There can be no assurance that all conditions to the merger
contained in the merger agreement will be satisfied or waived.
v
- REPRESENTATIONS AND WARRANTIES OF TEXARKANA FIRST FINANCIAL
AND FIRST UNITED (page __). The merger agreement contains
various customary representations and warranties made by each
of the parties to the merger agreement.
- COVENANTS OF TEXARKANA FIRST FINANCIAL AND FIRST UNITED;
CONDUCT OF BUSINESS PRIOR TO THE MERGER (page __). The merger
agreement contains various customary covenants, including a
covenant that during the period from the date of the merger
agreement until consummation of the merger Texarkana First
Financial will conduct its business in the usual and ordinary
course.
- CONDITIONS TO CONSUMMATION OF THE MERGER (page __). The
completion of the merger depends upon satisfaction of a number
of conditions, including, among other things:
- approval of the merger agreement by the shareholders
of Texarkana First Financial holding not less than
two-thirds of the outstanding shares of common stock;
- receipt of all applicable regulatory approvals; and
- the absence of a material adverse change in the
business, financial condition or results of operation
of Texarkana First Financial since December 31, 1999.
- NO NEGOTIATIONS WITH OTHERS (page __). Subject to certain
exceptions, Texarkana First Financial may not, directly or
indirectly, nor permit either First Federal or their
respective officers, directors or employees to:
- initiate, solicit or encourage, including by way of
furnishing information or assistance, or take any
action to facilitate, any inquiries or the making of
any proposal which constitutes, or may reasonably be
expected to lead to, any competing transaction;
- negotiate with any person in furtherance of such
inquiries or to obtain a competing transaction; or
- agree to or endorse any competing transaction, or
authorize any investment banker, financial advisor,
attorney, accountant or other representative retained
by Texarkana First Financial or First Federal to take
any such action.
- TERMINATION OF MERGER AGREEMENT (page __). The merger
agreement provides that the merger agreement and the merger
may be terminated by the mutual consent of the parties, or by
either party upon the occurrence or non-occurrence of certain
events.
MANAGEMENT OWNERSHIP (page __).
As of the record date, __________, 2000, the directors and executive
officers of Texarkana First Financial owned, in the aggregate, 233,737 shares
of outstanding Texarkana First Financial common stock, representing an
aggregate of approximately 15.2% of the outstanding shares of Texarkana First
Financial common stock.
vi
TABLE OF CONTENTS
SUMMARY TERM SHEET............................................................................................... ii
THE COMPANIES..................................................................................................... 1
SELECTED CONSOLIDATED FINANCIAL DATA
OF TEXARKANA FIRST FINANCIAL............................................................................. 2
SPECIAL MEETING OF SHAREHOLDERS................................................................................... 4
Purpose ................................................................................................ 4
Solicitation and Voting.................................................................................. 4
Revocability of Proxies.................................................................................. 5
Adjournments............................................................................................. 5
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.............................................................. 6
THE PROPOSED MERGER............................................................................................... 8
The Merger............................................................................................... 8
Background of the Merger................................................................................. 9
Reasons for the Merger and Recommendation of the Board of Directors..................................... 12
Opinion of the Financial Advisor........................................................................ 14
Purchase Price.......................................................................................... 21
Funding of the Purchase Price........................................................................... 21
The BancorpSouth Merger................................................................................. 21
Interests of Certain Persons in the Merger.............................................................. 22
Regulatory Approvals.................................................................................... 24
Certain Federal Income Tax Consequences................................................................. 25
Accounting Treatment.................................................................................... 26
Dissenters' Rights...................................................................................... 26
THE MERGER AGREEMENT............................................................................................. 28
Effective Time.......................................................................................... 28
Conversion of Shares of Texarkana First Financial's Common Stock........................................ 28
Treatment of Texarkana First Financial Stock Options.................................................... 29
Representations and Warranties.......................................................................... 30
Employee Matters and Impact on Employee Benefit Plans................................................... 31
Covenants of Texarkana First Financial and First United;
Conduct of Business Prior to the Merger........................................................ 33
Conditions to Consummation of the Merger................................................................ 36
No Negotiations with Others............................................................................. 37
Noncompetition Agreements............................................................................... 38
Termination............................................................................................. 38
MARKET PRICES AND DIVIDENDS...................................................................................... 39
WHERE YOU CAN FIND MORE INFORMATION.............................................................................. 40
vii
FUTURE SHAREHOLDER PROPOSALS..................................................................................... 41
OTHER BUSINESS................................................................................................... 41
FORWARD-LOOKING STATEMENTS--CAUTIONARY STATEMENTS................................................................ 41
APPENDIX A: Agreement and Plan of Reorganization by and between First United Bancshares, Inc. and
Texarkana First Financial Corporation, dated as of May 15, 2000
APPENDIX B: Opinion of Stifel, Nicolaus & Company, Incorporated
APPENDIX C: Dissenter's Rights Provisions -- Articles 5.11 - 5.13 of the Texas Business Corporation Act
viii
THE COMPANIES
TEXARKANA FIRST FINANCIAL CORPORATION
Texarkana First Financial is a thrift holding company subject to
supervision by the Office of Thrift Supervision. Texarkana First Financial
directly owns 100% of the shares of common stock of First Federal. First
Federal operates full-service banking locations in the Arkansas cities of
Texarkana, Ashdown, DeQueen, Hope and Nashville, and in Texarkana, Texas.
Texarkana First Financial's primary activities are to assist First Federal in
the management and coordination of its financial resources and to provide
capital, business development, long range planning and public relations for
First Federal. Texarkana First Financial's executive offices are located at
3rd & Olive Streets, Texarkana, Arkansas, and its telephone number is (870)
773-1103.
FIRST UNITED
First United is an Arkansas corporation and registered bank holding
company subject to supervision by the Federal Reserve. First United is based
in El Dorado, Arkansas and conducts its operations through its 11 subsidiary
banks, The First National Bank of El Dorado, First National Bank of Magnolia,
Merchants and Planters Bank, N.A. of Camden, The City National Bank of Fort
Smith, The Bank of North Arkansas, FirstBank, First United Bank, Fredonia
State Bank, City Bank & Trust of Shreveport, Citizens National Bank of Hope
and First Republic Bank, and through its subsidiary trust company, First
United Trust Company, N.A. First United's subsidiaries conduct a commercial
banking, trust and insurance business through a total of 69 offices in 39
municipalities or communities in 21 counties and parishes in Arkansas,
Louisiana and Texas. As of March 31, 2000, First United had total assets of
approximately $2.72 billion, deposits of approximately $2.27 billion and
shareholders' equity of approximately $264.1 million. First United's executive
offices are located at Main and Washington Streets, El Dorado, Arkansas 71730,
and its telephone number is (870) 863-3181.
ACQUISITION CO.
First United Acquisition Co., Inc. will be organized as a Texas
corporation and wholly-owned subsidiary of First United solely for the purpose
of effecting the merger. It is anticipated that First United Acquisition Co.
will not conduct any business other than in connection with its formation and
capitalization and the transactions contemplated by the merger agreement.
BANCORPSOUTH
BancorpSouth, Inc. is a Mississippi corporation and registered bank
holding company, and conducts its operations through its bank subsidiary,
BancorpSouth Bank, and its banking-related subsidiaries. BancorpSouth Bank
conducts a commercial banking, trust, insurance and investment services
business through 167 banking and mortgage locations and 170 ATM's in 87
communities throughout Mississippi, west Tennessee and portions of Alabama.
Prior to June 20, 1997, BancorpSouth Bank operated under the trade names "Bank
of Mississippi" in Mississippi and "Volunteer Bank" in Tennessee. As of March
31, 2000, BancorpSouth had total assets of approximately $5.84 billion,
deposits of approximately $4.98 billion and shareholders' equity of
approximately $494.1 million. BancorpSouth's executive offices are located at
One Mississippi Plaza, Tupelo, Mississippi 38804, and its telephone number at
that location is (662) 680-2000.
1
SELECTED CONSOLIDATED FINANCIAL DATA
OF TEXARKANA FIRST FINANCIAL
The selected consolidated financial data of Texarkana First Financial
for the years ended September 30, 1999, 1998, 1997, 1996 and 1995, and for the
six-months ended March 31, 2000 and 1999, and the balance sheet data as of
September 30, 1999, 1998, 1997, 1996 and 1995, and as of March 31, 2000 and
1999, are derived from the audited Consolidated Financial Statements of
Texarkana First Financial and the unaudited Consolidated Financial Statements
of Texarkana First Financial, respectively, not included in this proxy
statement.
In thousands, except per share data and percentages
For the Six Months Ended
March 31, For the Year Ended September 30,
---------------------------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
SUMMARY INCOME DATA:
Net interest income........................ $ 3,592 $ 3,395 $ 6,901 $ 6,773 $ 6,435 $ 6,265 $ 5,194
Provision for loan losses.................. - - - (100) - - 177
Noninterest income......................... 440 606 1,118 1,151 755 756 665
Noninterest expense........................ 1,583 1,534 3,020 2,933 2,604 3,335 2,367
Income (loss) before securities gains or
losses, extraordinary items and income
taxes...................................... 2,449 2,467 4,999 5,091 4,586 3,686 3,315
Federal income tax expense................. 856 860 1,778 1,785 1,702 1,283 1,312
Net income (loss) net of income tax
expense.................................... 1,593 1,607 3,221 3,306 2,884 2,403 2,003
Extraordinary items........................ - - - - - - -
Securities gains, net of income tax
expense.................................... - 6 6 - - (2) -
Net income (loss).......................... 1,593 1,613 3,227 3,306 2,884 2,401 2,003
Dividends declared......................... $ .34 $ .32 $ .65 $ .58 $ .50 $ 3.45 -
PER SHARE INCOME DATA:
Weighted average shares outstanding -
diluted.................................... 1,485,156 1,588,098 1,556,569 1,708,687 1,720,070 1,833,786 1,844,928
Net income per share - diluted............. $ 1.072 $ 1.016 $ 2.07 $ 1.94 $ 1.68 $ 1.31 $ .40(1)
SELECTED AVERAGE BALANCE SHEET DATA:
Loans, net of allowance for loan losses.... $ 165,660 $ 155,588 $ 156,073 $ 149,774 $ 141,830 $ 129,182 $ 121,074
Assets..................................... 203,039 193,514 195,698 185,955 169,042 164,377 148,890
Deposits................................... 147,814 151,368 151,481 147,011 138,379 128,109 126,692
Long-term debt............................. - - - - - - -
Shareholders' equity....................... $ 26,933 $ 27,189 $ 26,857 $ 27,907 $ 26,860 $ 32,705 $ 18,341
- -----------------------
(1)Earnings per share for 1995 are calculated from July 7, 1995, the
date of the initial public offering, to September 30, 1995.
2
For the Six Months Ended
March 31, For the Year Ended September 30,
---------------------------------------------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
---------------------------------------------------------------------------------------
PER SHARE DATA:
Shares outstanding at end of period........ 1,539,342 1,588,592 1,539,342 1,675,992 1,787,005 1,884,563 1,983,750
Book value per common share................ $ 17.81 $ 16.77 $ 17.14 $ 16.36 $ 15.32 $ 14.02 $ 16.54
SELECTED FINANCIAL RATIOS:
Net income to shareholders' equity (end of
period).................................... 5.81 6.05 12.23 12.06 10.53 9.09 6.11
Net income to total assets (end of period) .77 .84 1.60 1.75 1.61 1.45 1.25
Total interest expense to gross interest
income..................................... 53.75 54.13 53.57 53.86 52.04 50.84 53.77
Return on average assets................... 1.57 1.67 1.65 1.78 1.71 1.46 1.35
Net interest rate margin................... 3.63 3.62 3.63 3.74 3.90 3.90 3.59
Shareholders' equity to average assets..... 13.26 14.05 13.72 15.01 15.89 19.90 12.32
Net loan charge-offs to average loans...... .008 .001 .005 .014 .015 .003 .004
Allowance for loan losses to total loans... .57 .65 .62 .64 .76 .84 .91
Nonperforming loans to total loans
(exclusive of other real estate)........... .34 .51 .66 .19 .19 .15 .17
3
SPECIAL MEETING OF SHAREHOLDERS
PURPOSE
The special meeting will be held at 4:00 p.m., local time, on
__________, 2000 in the main offices of First Federal, 3rd and Olive Streets,
Texarkana, Arkansas. At the special meeting, shareholders of Texarkana First
Financial will be asked to consider and vote on a proposal to approve and
adopt the merger agreement. The merger agreement provides for the merger of
First United Acquisition Co., Inc. a Texas corporation to be formed as a
wholly-owned subsidiary of First United, with and into Texarkana First
Financial. Upon consummation of the merger, Texarkana First Financial would be
the surviving corporation and would be a wholly-owned subsidiary of First
United. Pursuant to the merger agreement, upon consummation of the proposed
merger (i) each share of Texarkana First Financial's common stock outstanding
immediately prior to the effective time of the merger will be canceled and
converted into the right to receive $23.35208 in cash, and (ii) each option to
acquire shares of Company stock which is outstanding and unexercised
immediately prior to the effective time of the merger will be canceled and
converted into the right to receive the amount in cash equal to $23.35208 less
the per-share exercise price of each such option to acquire shares of Company
stock. The aggregate purchase price to be paid by First United for Texarkana
First Financial's issued and outstanding common stock and all outstanding and
unexercised options to acquire shares of Texarkana First Financial's common
stock will be an amount equal to $37,500,000. See "THE PROPOSED MERGER--THE
MERGER."
The board of directors of Texarkana First Financial believes that the
merger is in the best interests of Texarkana First Financial and its
shareholders and unanimously recommends that you vote "FOR" approval and
adoption of the merger agreement.
SOLICITATION AND VOTING
In addition to the solicitation of proxies by use of the mail,
officers, directors and regular employees of Texarkana First Financial may
solicit the return of proxies by personal interview, mail, telephone and
facsimile. These persons will not be additionally compensated, but will be
reimbursed for out-of-pocket expenses. Texarkana First Financial will also
request brokerage houses and other custodians, nominees and fiduciaries to
forward solicitation material to the beneficial owners of shares. Texarkana
First Financial will reimburse such persons and the transfer agent for their
reasonable out-of-pocket expenses in forwarding such materials.
Regan & Associates has been retained by Texarkana First Financial to
assist it in the solicitation of proxies. Regan & Associates will receive a
fee of $5,000 for its assistance, plus reimbursement for out-of-pocket
expenses. Texarkana First Financial will bear all of the costs of the
solicitation of proxies. Shareholders are urged to send in their proxies
without delay.
The record date for the special meeting is set at the close of
business on _______, 2000. As of the record date, 1,983,750 shares of
Texarkana First Financial's common stock were issued and 1,539,342 shares were
outstanding. At that date, such shares were held of record by approximately
391 shareholders. The presence, in person or by proxy, of at least a majority
of all the outstanding shares of Texarkana First Financial's common stock
entitled to vote at the special meeting is necessary to constitute a quorum at
the special meeting. Shareholders as of the record date are entitled to one
vote for each share of Texarkana First Financial's common stock that they own.
4
The affirmative vote of the holders of at least two-thirds of the
outstanding shares of Texarkana First Financial's common stock entitled to
vote is required to approve and adopt the merger agreement and the merger. A
failure to return a properly executed proxy or to vote in person at the
special meeting will have the same effect as a vote "AGAINST" approval and
adoption of the merger agreement.
Abstentions and broker nonvotes will be counted as shares present at
the special meeting for purposes of determining the presence of a quorum.
Abstentions and broker nonvotes will have the same effect as a vote "AGAINST"
approval of the merger agreement. A broker nonvote occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that
particular item and has not received instructions from the beneficial owner.
As of the record date, directors and executive officers, together
with their respective affiliates, and Texarkana First Financial's Employee
Stock Ownership/401(k) Plan collectively own approximately 325,678 shares of
Texarkana First Financial common stock, or 21.2% of the total currently
outstanding shares.
REVOCABILITY OF PROXIES
Texarkana First Financial encourages the personal attendance of its
shareholders at the special meeting. An execution of the accompanying proxy
will not affect a shareholder's right to attend the special meeting and to
vote in person.
Proxies may be revoked if you:
- Deliver a signed, written revocation letter, dated any time
before the proxy is voted, to Ms. Debbie Rose, Corporate
Secretary, Texarkana First Financial Corporation, at Texarkana
First Financial's principal executive offices, 3rd and Olive
Streets, Texarkana, Arkansas 71854;
- Sign and deliver a proxy, dated later than the first one, to
Texarkana First Financial's Corporate Secretary at the above
address; or
- Attend the meeting and vote in person. Attending the special
meeting alone will not revoke your proxy. A revocation letter
or a later-dated proxy will not be effective until received by
Texarkana First Financial prior to the shareholder vote at the
special meeting.
ADJOURNMENTS
Although it is not expected, the special meeting may be adjourned
for the purpose of soliciting additional proxies to a date after the date of
the special meeting. Any adjournment may be made without notice, other than
by an announcement made at the special meeting, by the chairman of the board
of directors of Texarkana First Financial, by the whole board of directors,
or by approval of the holders of 50 percent of all votes entitled to be cast
on any issue proposed to be considered at the special meeting. Any
adjournment of the special meeting for the purpose of soliciting additional
proxies will allow Texarkana First Financial shareholders who have already
sent in their proxies to revoke them at any time prior to their use.
5
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table includes, as of the record date, certain
information as to Texarkana First Financial's common stock beneficially owned
by (i) the only persons or entities, including any "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
("1934 Act"), who or which were known to Texarkana First Financial to be the
beneficial owner of more than 5% of the issued and outstanding shares of
common stock, (ii) the directors of Texarkana First Financial, and (iii) all
directors and executive officers of Texarkana First Financial as a group.
COMMON STOCK
BENEFICIALLY OWNED AS OF
_______, 2000(1)
NAME OF BENEFICIAL OWNER AMOUNT PERCENT
-------------------------------------------------- ------------ -------------
Texarkana First Financial Corporation 91,941 (2) 6.0%
Employee Stock Ownership Plan Trust
3rd and Olive Streets
Texarkana, Arkansas 71854-5917
First Manhattan Capital Management 145,098 9.4%
437 Madison Avenue, 31st floor
New York, NY 10022
John Hancock Financial Services 124,800 8.1%
101 Huntington Avenue
Boston, MA 02199
Gabriel Capital Corp. 111,900 7.3%
450 Park Avenue
New York, NY 10022
Directors:
James W. McKinney (Chairman and CEO) 79,524 (3) 5.2%
John E. Harrison (President and COO) 74,530 (4) 4.8%
John M. Andres 12,829 (5) .8%
Arthur L. McElmurry 15,829 (6) 1.0%
Donald N. Morriss 21,829 (7) 1.4%
Josh R. Morriss, Jr. 15,805 (8) 1.0%
Certain other executive officers:
Travis L. Mauldin 10,074 (9) .7%
James L. Sangalli 3,317 (10) .2%
All directors and executive officers
of Texarkana First Financial as a group (8 persons) 233,737 (11) 15.2%
- ---------------
(1) For purposes of this table, pursuant to rules promulgated under the
1934 Act, an individual is considered to beneficially own shares of
common stock if he directly or indirectly has or shares (i) voting
power, which includes the power to vote or to direct the voting of the
shares; or (ii) investment power, which includes the
6
power to dispose or direct the disposition of the shares. Unless
otherwise indicated, an individual has sole voting power and sole
investment power with respect to the indicated shares. Shares which
may be acquired by the exercise of stock options which are
exercisable within 60 days of the record date are deemed to be
beneficially owned by the holder and are outstanding for the purpose
of computing the percentages of common stock beneficially owned by
the respective individual and group. Percentages are based upon
1,539,342 shares issued and outstanding as of the record date.
(2) The Texarkana First Financial Corporation Employee Stock Ownership
Plan Trust ("Trust") was established pursuant to the ESOP by an
agreement between Texarkana First Financial and Messrs. McElmurry,
Donald Morriss, and McKinney, who act as trustees of the ESOP
("Trustees"). As of the record date, 70,823 shares held in the Trust
had been allocated to the accounts of participating employees. Under
the terms of the ESOP, the Trustees must vote all allocated shares
held in the ESOP in accordance with the instructions of the
participating employees, and unallocated shares held in the ESOP will
be voted by the ESOP Trustees in the same proportion as the allocated
shares are voted. Allocated shares for which no voting instructions
are received, or for which an abstention is received, shall be
disregarded in determining the proportion of votes for and against to
be cast by the ESOP Trustees.
(3) Includes 25,870 shares held jointly with Mr. McKinney's spouse, with
whom voting and dispositive power is shared; 1,000 shares held jointly
with his daughter; 100 shares held as custodian for his granddaughter;
and 12,879 vested shares allocated within the ESOP. Includes 29,756
shares which are subject to options exercisable within 60 days of the
record date pursuant to Texarkana First Financial's Employee Stock
Program.
(4) Includes 20,580 shares held jointly with Mr. Harrison's spouse, with
whom voting and dispositive power is shared; 1,160 shares owned by his
spouse; 3,500 shares owned by a trust for which voting and dispositive
power is shared; and 8,455 vested shares allocated within the ESOP.
Includes 29,756 shares which are subject to options exercisable within
60 days of the record date pursuant to Texarkana First Financial's
Employee Stock Program.
(5) Includes 7,186 shares which are subject to options exercisable within
60 days of the record date pursuant to Texarkana First Financial's
Directors Stock Plan.
(6) Includes 9,593 shares held in trust for which Mr. McElmurry and his
spouse are trustees and share voting power. Includes 6,236 shares
which are subject to options exercisable within 60 days of the record
date pursuant to Texarkana First Financial's Directors Stock Plan.
(7) Includes 800 shares held by Mr. Morriss as custodian for his children.
Includes 6,736 shares which are subject to options exercisable within
60 days of the voting record date pursuant to Texarkana First
Financial's Directors Stock Plan.
(8) Includes 7,366 shares held in a Family Limited Partnership and 703
shares owned by Mr. Morriss's spouse. Includes 7,736 shares which are
subject to options exercisable within 60 days of the voting record
date pursuant to Texarkana First Financial's Directors Stock Plan.
(9) Includes 757 shares owned by Mr. Mauldin's spouse. Includes 4,000
shares which are subject to options exercisable within 60 days of the
record date pursuant to Texarkana First Financial's Employee Stock
Program. Includes 600 shares which are to vest within 60 days of the
record date pursuant to Texarkana First Financial's Management
Recognition Plan.
(10) Includes 917 vested shares allocated within the ESOP. Includes 1,200
shares which are subject to options exercisable within 60 days of the
record date pursuant to Texarkana First Financial's Employee Stock
Program.
7
(11) Includes 20,567 shares allocated to the accounts of executive officers
as a group in the ESOP.
THE PROPOSED MERGER
The following is a summary description of the material aspects of the
merger. This description does not purport to be complete and is qualified in
its entirety by reference to the appendices attached to this proxy statement,
including the merger agreement, which is attached as APPENDIX A to this proxy
statement. We urge you to read the appendices in their entirety.
THE MERGER
Under the terms of the merger agreement, at the effective time, First
United Acquisition Co., a Texas corporation to be formed as a wholly-owned
subsidiary of First United, will merge with and into Texarkana First Financial
with Texarkana First Financial continuing as the surviving corporation. As a
result of the merger, Texarkana First Financial will become a wholly-owned
subsidiary of First United and will succeed to all of the assets and
liabilities of First United Acquisition Co., Inc. which is to be formed only to
facilitate the merger. The separate corporate existence of First United
Acquisition Co. will cease following consummation of the merger. Upon
completion of the merger, shareholders of Texarkana First Financial will no
longer own any shares of Texarkana First Financial's common stock and will
not, as a result of the merger, own any common stock either of First United or
First United Acquisition Co.
As consideration for the merger of Acquisition Co. with and into
Texarkana First Financial, First United will pay to the shareholders and
option holders of Texarkana First Financial an aggregate amount of $37,500,000
in cash. Each of the outstanding shares of Texarkana First Financial's common
stock will, therefore, be converted at the effective time of the merger into
the right to receive $23.35208 in cash, and each option to acquire a share of
Texarkana First Financial's common stock that is outstanding and unexercised
immediately prior to the effective time of the merger will be converted into
the right to receive $23.35208 less the per-share exercise price for the
option. For a discussion of the consideration to be received by Texarkana
First Financial's shareholders in the merger, see "THE PROPOSED
MERGER--PURCHASE PRICE" and "THE PROPOSED MERGER--FUNDING OF THE PURCHASE
PRICE."
Immediately after the merger of First United Acquisition Co. with and
into Texarkana First Financial, and on the same day thereof, First United
will cause First Federal to be merged with and into FirstBank, a Texas
banking association and wholly-owned subsidiary of First United, with
FirstBank as the surviving entity. Simultaneously with the merger of First
Federal into FirstBank, First United will cause Texarkana First Financial to
be merged with and into First United. Immediately after the consummation of
these transactions, FirstBank will be a wholly-owned subsidiary of First
United.
8
On April 16, 2000, First United entered into an Agreement and Plan
of Merger with BancorpSouth, Inc., a Mississippi corporation and registered
bank holding company. Pursuant to that agreement, First United is to merge
with and into BancorpSouth, with BancorpSouth being the surviving entity, and
the banking subsidiaries and trust company subsidiary of First United will
each merge with and into BancorpSouth Bank, with BancorpSouth Bank being the
surviving entity. If the BancorpSouth merger is completed before the merger
of First United Acquisition Co. with and into Texarkana First Financial, then
BancorpSouth will assume the rights, interests and obligations of First
United with respect to the merger of First United Acquisition Co. with and
into Texarkana First Financial, First Federal will be merged with and into
BancorpSouth Bank, and Texarkana First Financial will be merged with and into
BancorpSouth. See "THE PROPOSED MERGER--THE BANCORPSOUTH MERGER."
BACKGROUND OF THE MERGER
The management and the Board of Directors have, from time to time,
discussed intensifying competition in, and the continuing consolidation of,
the bank, thrift and financial services industries. Management and the Board
of Directors are continually reviewing strategic alternatives in order to
enhance shareholder value, and at various times in the past, management and
the Board of Directors have considered the possibility of a sale of the
Company as a way to enhance shareholder value. The management and certain
members of the Board of Directors also have been contacted from time to time
by officers and other representatives of various financial institutions, with
inquiries about the willingness of the Board of Directors to consider a sale
of the Company; however, none of such inquiries matured into a formal offer
or resulted in a letter of intent for the sale of the Company.
In late 1999, after receiving inquiries with respect to the
Company's interest in a potential business combination from Bank of the
Ozarks, Inc., Mr. James McKinney, Chairman of the Board of Directors,
contacted investment bankers, among them Stifel, Nicolaus, and requested that
they assist the Board of Directors in exploring strategic alternatives
available to the Company, and advise the Board of Directors on matters
relating to the enhancement of shareholder value. Representatives of the
Company informed Bank of the Ozarks, Inc. that the Company was considering
its strategic alternatives at that time and that, should a sale of the
Company be one of the options, they would be contacted.
In early December 1999, Stifel, Nicolaus furnished the Board of
Directors with an analysis of strategic alternatives for the Company. On
December 7, 1999, representatives of Stifel, Nicolaus met with the full Board
of Directors in person and reviewed and discussed the analysis. Among other
things, Stifel's analysis discussed a range of potential values for the sale
of the Company, should the Company determine that a sale was in the best
interest of the Company and its shareholders. The preliminary range of values
discussed at that time was $25-$30 per share. Stifel, Nicolaus was
subsequently retained as the Company's financial advisor on December 14, 1999.
At the request of the Board of Directors, in January and February
2000, Stifel, Nicolaus contacted, from a list of potential acquirers
presented to the Board of Directors on December 7, 1999, ten potential
acquirers to seek indications of interest in acquiring the Company. After
contacting the list of potential acquirers, Stifel, Nicolaus informed the
Board of Directors that, of the ten companies initially contacted, four,
including Bank of the Ozarks, Inc. and First United, had indicated an
interest in receiving more information and entering into discussions. At that
time, the Board, through Mr. McKinney, instructed Stifel, Nicolaus to attempt
to determine the level of interest and range of values that the four
potential acquirers would consider in an acquisition of the Company.
Per Mr. McKinney's instructions, Stifel, Nicolaus obtained
confidentiality agreements with the four financial organizations that had
previously expressed an interest in the Company. Following the
9
execution of those confidentiality agreements, Stifel, Nicolaus supplied
certain financial and other information regarding the Company and First
Federal to these organizations. At the same time, Stifel, Nicolaus requested
indications of interest from the various organizations concerning the
possible acquisition of the Company.
During late February and early March 2000, First United responded
with a preliminary aggregate deal value of $40 million, or approximately
$24.81 per Company share, in cash. Upon further analysis, First United
reduced their indication of interest to $37.5 million. Bank of the Ozarks,
Inc. responded with a preliminary proposal for an exchange of 1.19 shares of
Bank of the Ozarks, Inc. stock for each share of Company stock, or a
preliminary value at the time of the proposal of approximately $20.23 per
Company share. First Federal Bancshares of Arkansas, Inc. responded with a
preliminary value of $25 per Company share, in cash. A fourth company
responded with an oral indication of approximately $20-21 per Company share
in stock. The fourth company was informed by Stifel, Nicolaus that they would
be contacted if their preliminary indication of interest compared favorably
with the others already received.
By March 2000, due to a decline in the market price of Bank of the
Ozarks, Inc.'s stock, the value of a possible stock transaction with Bank of
the Ozarks, Inc. was below that of a possible cash transaction with First
United or First Federal Bancshares. Consequently, in early to mid March,
Stifel, Nicolaus notified Bank of the Ozarks, Inc. that the Company had
decided to pursue other alternatives. The Company scheduled separate on-site
due diligence reviews with First United and First Federal Bancshares. The due
diligence reviews commenced on March 14, 2000, and ended on March 29, 2000,
with both parties conducting due diligence.
Upon conclusion of the due diligence reviews and further
negotiations, Stifel, Nicolaus solicited final offers from First United and
First Federal Bancshares. First Federal Bancshares withdrew its indication of
interest and First United reaffirmed its indication of interest for an
aggregate deal value of $37.5 million in cash, or $23.35208 per share.
On April 11, 2000, representatives of Stifel, Nicolaus were
contacted by James V. Kelley, Chairman, President and CEO of First United, to
inform them of negotiations for a potential merger between First United and
BancorpSouth, and to ask Stifel, Nicolaus to provide a fairness opinion to
First United in that transaction. On the same day, Stifel, Nicolaus contacted
James McKinney, Chairman and CEO of Texarkana First Financial, to inform him
that First United was participating in merger discussions with an undisclosed
acquiror, and to ascertain whether Mr. McKinney was opposed to Stifel,
Nicolaus agreeing to provide a fairness opinion to First United. Prior to
that time the Board of Directors had no knowledge of the BancorpSouth
transaction.
At a meeting of the Board of Directors on April 18, 2000, the Board
of Directors was informed by counsel of the status of the potential merger
opportunity with First United. Counsel advised the Board of Directors of the
importance of maintaining the confidentiality of the discussions with regard
to the proposed transaction. Counsel advised that insider trading liability
could attach if information is provided to others, and that the directors and
their affiliates could not at that point trade in the securities of the
Company, First United or BancorpSouth.
Counsel then advised the Board of Directors of their duty of due
care to make a well-informed decision with regard to the potential merger,
and that it would be imprudent to proceed in the transaction without a
fairness opinion rendered by an independent financial advisor. The Board of
Directors was then advised by counsel of possible conflicts of interest on
the part of Stifel, Nicolaus, given (i) Stifel, Nicolaus' economic interest
in the transaction, because they are to receive a 1% commission in the event
10
the proposed transaction is successful, but only a $75,000 fee if the
transaction is not successful, and (ii) given the fact that Stifel, Nicolaus
would be providing a fairness opinion to First United in the context of First
United's transaction with BancorpSouth. Counsel advised the Board of
Directors that steps had been taken to minimize the effects of any conflicts
of interest of Stifel, Nicolaus, by ensuring that all amounts due and owing
to Stifel, Nicolaus in connection with its work with First United on the
BancorpSouth transaction would be paid before Stifel, Nicolaus would deliver
its fairness opinion analysis to the Board of Directors of the Company and
before the Board of Directors would approve the transaction with First United
(which delivery and approval took place on April 25, 2000). Counsel cautioned
the Board of Directors, however, that conflicts are still present. The Board
of Directors considered the risks associated with relying on Stifel,
Nicolaus' opinion despite the presence of conflicts of interest, and weighed
those risks against the benefits of relying on Stifel, Nicolaus' fairness
opinion in this transaction. The Board of Directors was concerned principally
that, if they did not use Stifel, Nicolaus' fairness opinion, additional time
would be necessary to obtain such an opinion from another investment banker,
and the resulting delay in the negotiation process with First United might
jeopardize the transaction as a whole, or might adversely impact the final
merger consideration, since prices for bank and thrift stocks had fallen over
the preceding months. The additional cost associated with engaging another
investment banker for purposes of obtaining a fairness opinion was also
considered, as was Stifel, Nicolaus' strong reputation in the field and the
integrity of the Stifel, Nicolaus representatives with whom the Board of
Directors had dealt to that point.
The Board of Directors also considered the fact that representatives
of Stifel, Nicolaus, in their December 7, 1999 presentation to the Board of
Directors, suggested that an appropriate sale price for the Company would be
in the range of $25 to $30 per share, but that the consideration to be paid
in the transaction with First United would be $23.35208 per share. Counsel
advised the Board of Directors that, since Stifel, Nicolaus would receive a
1% brokerage commission if the transaction were consummated, but a $75,000
fee if it were not, Stifel, Nicolaus had an economic incentive to render a
fairness opinion. Counsel also advised the Board of Directors that
representatives of Stifel, Nicolaus had assured them that the lower value
could be justified objectively, based on macroeconomic changes that had taken
place in the market for bank and thrift stocks since December 1999, and that
the same methodology that was used to generate values of $25-$30 in December
1999 would also justify a fairness opinion in April 2000 with regard to the
$23.35208 to be paid in the First United transaction. The Board of Directors
considered the fact that stock prices for publicly-traded financial
institution holding companies had declined by more than 10% since December
1999, and that the Company's own stock price had dropped significantly over
that period. The Board of Directors also considered as a primary indicator of
the fairness of the transaction the fact that the Company had essentially
entered into an auction process, and that First United was the only
competitive bidder that remained.
The Board of Directors also was advised of the background of merger
discussions to date, and it thoroughly discussed the acquisition proposal of
First United. After extensive deliberation, the Board of Directors voted to
continue with Stifel, Nicolaus to provide the fairness opinion.
At a special meeting of the Board of Directors held on April 25,
2000, a merger agreement with First United, substantially final in form, was
presented to the Board of Directors, and representatives of Stifel, Nicolaus
discussed the opinion of Stifel, Nicolaus regarding the fairness from a
financial point of view of the proposed First United transaction. At that
meeting, Stifel, Nicolaus delivered its oral opinion to the effect that, as
of that date, and subject to various assumptions, matters considered and
limitations described in the opinion, that the $37.5 million cash offer from
First United was fair, from a financial point of view, to the holders of the
Company's common stock. Stifel, Nicolaus also discussed with the Board of
Directors the declining prices for bank stocks generally, and for the
Company's stock in
11
particular, since December 1999, when Stifel, Nicolaus made its initial
presentation to the Board of Directors. Counsel advised the Board of
Directors regarding, and the Board of Directors discussed, various
substantive matters governed by the merger agreement. The Board of Directors'
discussion included, among other things, discussions regarding the status of
negotiations with First United, timing of a potential transaction, tax
treatment of the proposal, the Company's projected future performance and
other available strategic alternatives, including remaining independent,
background information on First United, their plans and prospects for
financing the acquisition, post-signing and preclosing covenants, termination
provisions, employee benefit matters, director and officer indemnification
and director and officer insurance coverage, various ancillary agreements,
and other open issues. After a lengthy discussion, the Board of Directors
unanimously approved the merger agreement and the merger of a subsidiary of
First United into the Company, and empowered management, through counsel, to
negotiate the final open issues with regard to the agreement. Counsel to the
Company then completed negotiations with regard to the remaining open issues,
and, upon the approval of management, prepared a final agreement for
execution, and prepared the Company's disclosure schedules to accompany the
final agreement. The agreement was then executed as of May 15, 2000.
REASONS FOR THE MERGER AND RECOMMENDATION OF THE BOARD OF DIRECTORS
At a special board meeting on April 25, 2000, the Texarkana First
Financial Board of Directors determined that the merger is fair to and in the
best interests of Texarkana First Financial and its shareholders and, by the
unanimous vote of all the directors , approved and adopted the merger
agreement and the transactions contemplated by the merger agreement.
ACCORDINGLY, THE TEXARKANA FIRST FINANCIAL BOARD RECOMMENDS THAT TEXARKANA
FIRST FINANCIAL SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT AT THE
SPECIAL MEETING.
The Board of Directors believes that the terms of the merger
agreement, which are the product of arm's length negotiations between
representatives of First United and Texarkana First Financial, are fair and
in the best interests of Texarkana First Financial and its shareholders. In
the course of reaching its determination, the Board of Directors consulted
with its legal counsel, with respect to its legal duties, the terms of the
merger agreement and related issues; with its financial advisor Stifel,
Nicolaus with respect to the financial aspects and fairness of the transaction;
and with senior management regarding, among other things, operational matters.
The financial services industry has changed significantly in recent
years. Such changes include:
- - consolidation of the banking industry through mergers;
- - deregulation of competition among banking, securities and insurance
services providers; and
- - a trend towards banks and others offering a broad range of different
financial services and products to customers.
In the future, many expect the extensive use of technology to
continue to transform the delivery of banking services. For these reasons,
the Board of Directors developed concerns about Texarkana First Financial's
small size and limited resources and its ability to meet the challenges
facing it. The Board of Directors was also concerned about Texarkana First
Financial's ability to meet its shareholders' expectations. Increasing
shareholder value in future years would require increases in profitability
and growth, which would be difficult for Texarkana First Financial to achieve
given its small size, current market conditions and increasing consumer
demand for sophisticated financial services. The Board of Directors believes
that
12
the merger at this time is in the best interests of the shareholders.
Texarkana First Financial's financial advisor has advised us that First
United's offer of $23.35208 per share for Texarkana First Financial's
outstanding common stock is fair from a financial point of view to Texarkana
First Financial's shareholders.
In reaching its determination to approve the merger agreement, the
Board of Directors considered all factors it deemed material. The Board of
Directors analyzed information with respect to the financial condition,
results of operations, cash flow, businesses and prospects of Texarkana First
Financial. In this regard, the Board of Directors considered the performance
trends of Texarkana First Financial over the past several years. The Board of
Directors compared Texarkana First Financial's current and anticipated future
operating results to publicly available financial and other information for
other similarly sized banking institutions in Arkansas and East Texas. The
Board of Directors used this information in analyzing the options of selling
Texarkana First Financial, remaining independent on a stand-alone basis or
pursuing acquisitions, and the business strategies that could reasonably be
implemented by Texarkana First Financial. The Board of Directors concluded
that although Texarkana First Financial has been successful in reducing its
operating costs, competition from larger financial institutions would make it
difficult for Texarkana First Financial over time to earn an adequate return
as an independent entity, which, in the future, may decrease the value of
Texarkana First Financial's common stock.
The Board of Directors concluded that the merger represents an
opportunity for Texarkana First Financial's shareholders to realize a premium
over recent market prices for their common stock. The shareholders of
Texarkana First Financial will receive approximately a 40% premium over the
$16.625 closing price of Texarkana First Financial's common stock on May 5,
2000, the lowest point the stock reached during the two weeks prior to the
announcement that Texarkana First Financial had received a merger proposal
from First United.
The Board of Directors considered the opinion of Stifel, Nicolaus
that, as of April 25, 2000, and updated through the date of this proxy
statement, the purchase price to be received by holders of Texarkana First
Financial's common stock pursuant to the merger agreement was fair to
Texarkana First Financial's shareholders from a financial point of view. See
"THE PROPOSED MERGER--OPINION OF THE FINANCIAL ADVISOR." The Board of
Directors reviewed the assumptions and results of the various valuation
methodologies employed by Stifel, Nicolaus in arriving at its opinion and
found those assumptions and results to be reasonable and complete.
The Board of Directors considered the current operating environment,
including but not limited to, the continued consolidation and increasing
competition in the banking and financial services industries, the prospects
for further changes in these industries, and the importance of being able to
capitalize on developing opportunities in these industries. This information
had been periodically reviewed by the Board of Directors at its regular
meetings and was also discussed between the Board of Directors and Texarkana
First Financial's advisors. The Board of Directors also considered the
current and prospective economic and competitive conditions facing Texarkana
First Financial in its market areas.
The Board of Directors also considered provisions made for benefits
to and obligations of employees, management and members of the Board of
Directors. The Board of Directors concluded that those terms are fair and
reasonable.
The Board of Directors considered the likelihood of the merger being
approved by the appropriate regulatory authorities. See "THE PROPOSED
MERGER--REGULATORY APPROVALS."
13
The Board of Directors considered the specific terms of the merger
agreement, including the taxable nature of the purchase price. The Board of
Directors also considered the ability of First United to pay the aggregate
purchase price, and accordingly reviewed First United's financial condition,
results of operation, liquidity and capital position.
The Board of Directors also considered the fact that the merger
consideration is all cash, which provides certainty of value to Texarkana
First Financial's shareholders as compared to a stock transaction.
In addition, the Board of Directors considered the fact that the
merger agreement prohibits Texarkana First Financial and First Federal from
initiating, soliciting, or encouraging discussions with third parties which
may be reasonably expected to lead to an alternative business combination.
The above discussion of the factors considered by the Board of
Directors is not intended to be exhaustive. In determining whether to approve
and recommend the merger agreement, the Board of Directors did not assign any
relative or specific weights to any of the foregoing factors, and individual
directors may have weighed factors differently. After deliberating with
respect to the merger and the merger agreement, considering, among other
things, the reasons discussed above and the opinion of Stifel, Nicolaus
referred to above, the Board of Directors unanimously approved and adopted
the merger agreement and the merger as being in the best interests of
Texarkana First Financial and its shareholders.
For the reasons set forth above, the Board of Directors has
unanimously approved the merger agreement and the merger as advisable and in
the best interests of Texarkana First Financial and its shareholders and
recommends that the shareholders of Texarkana First Financial vote "FOR" the
approval and adoption of the merger agreement and the merger.
OPINION OF THE FINANCIAL ADVISOR
Texarkana First Financial retained Stifel, Nicolaus & Company,
Incorporated as its financial advisor in connection with the merger because
Stifel, Nicolaus is a nationally recognized investment-banking firm with
substantial expertise in transactions similar to the merger. Stifel, Nicolaus
is an investment banking and securities firm with membership on all principal
U.S. securities exchanges. As part of its investment banking activities,
Stifel, Nicolaus is regularly engaged in the independent valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes.
At a meeting of Texarkana First Financial's Board of Directors on
April 25, 2000, Stifel, Nicolaus rendered to Texarkana First Financial's
Board of Directors an oral opinion that, as of such date and subject to
various assumptions, matters considered and limitations described, the $23.35
to be paid for each share of Texarkana First Financial's common stock
pursuant to the merger agreement, referred to below as the cash
consideration, was fair to the holders of Texarkana First Financial's common
stock from a financial point of view.
Stifel, Nicolaus has confirmed its April 25, 2000 oral opinion by
delivery of its written opinion to Texarkana First Financial's Board of
Directors, dated the date of this proxy statement, that, based upon
14
and subject to various assumptions, matters considered and limitations
described therein, the cash consideration of $23.35 per share to be received
by the shareholders of Texarkana First Financial pursuant to the merger
agreement is fair to such shareholders from a financial point of view.
The full text of Stifel, Nicolaus's opinion as of the date hereof, which
sets forth the assumptions made, matters considered and limitations of the
review undertaken, is attached as APPENDIX B to this proxy statement and is
incorporated herein by reference, and should be read in its entirety in
connection with this proxy statement. The summary of the opinion of Stifel,
Nicolaus set forth in this proxy statement is qualified in its entirety by
reference to the full text of such opinion.
No limitations were imposed by Texarkana First Financial on the
scope of Stifel, Nicolaus's investigation or the procedures to be followed by
Stifel, Nicolaus in rendering its opinion. Stifel, Nicolaus was not requested
to and did not make any recommendation to Texarkana First Financial's Board
of Directors as to the form or amount of the consideration to be paid to
Texarkana First Financial or its shareholders, which was determined through
arm's length negotiations between the parties. In arriving at its opinion,
Stifel, Nicolaus did not ascribe a specific range of values to Texarkana
First Financial. Its opinion is based on the financial and comparative
analyses described below. Stifel, Nicolaus's opinion was directed solely to
Texarkana First Financial's Board of Directors for its use in connection with
its consideration of the merger. Stifel, Nicolaus's opinion addressed only
the fairness of the consideration to be received from a financial point of
view, did not address any other aspect of the merger, and was not intended to
be and does not constitute a recommendation to any shareholder of Texarkana
First Financial as to how such shareholder should vote with respect to the
merger. Stifel, Nicolaus was not requested to opine as to, and its opinion
does not address, Texarkana First Financial's underlying business decision to
proceed with or effect the merger or the relative merits of the merger
compared to any alternative transaction that might be available to Texarkana
First Financial.
In connection with its April 25, 2000 oral opinion and its written
opinion dated the date hereof, Stifel, Nicolaus, among other things:
- reviewed the merger agreement;
- reviewed the financial statements of Texarkana First Financial
included in its Annual Reports on Form 10-K for each of the
five years ended September 30, 1999, internal financial
statements for the three months ended March 31, 2000 and (in
connection with the written opinion dated the date hereof) the
financial statements included in its Quarterly Report on Form
10-Q for the quarter ended March 31, 2000;
- reviewed the financial statements of First United included in
its Annual Reports on Form 10-K for each of the five years
ended December 31, 1999, internal financial statements for the
three months ended March 31, 2000 and (in connection with the
written opinion dated the date hereof) the financial
statements included in its Quarterly Report on Form 10-Q for
the quarter ended March 31, 2000;
- reviewed various internal financial analyses and forecasts for
Texarkana First Financial and First United prepared by their
respective managements;
- reviewed pro forma financial forecasts for the pro forma
combined company resulting from the merger of First United
with BancorpSouth Inc. prepared by their respective
15
managements which utilized First United's and BancorpSouth
Inc.'s internal financial forecasts;
- conducted conversations with Texarkana First Financial's and
First United's senior management regarding their respective
business plans and financial forecasts;
- compared financial and securities data of Texarkana First
Financial and First United with various other companies whose
securities are traded in public markets and reviewed the
historical stock prices and trading volumes of the common
stock of Texarkana First Financial and First United;
- reviewed the financial terms of certain other business
combinations; and
- conducted such other financial studies, analyses and
investigations as it deemed appropriate for purposes of its
opinion.
Stifel, Nicolaus also took into account its assessment of general
economic, market and financial conditions and its experience in other
transactions, as well as its experience in securities valuations and its
knowledge of the bank and thrift industries generally.
In rendering its opinion, Stifel, Nicolaus relied upon and assumed,
without independent verification, the accuracy and completeness of all of the
financial and other information that was provided to it or that was otherwise
reviewed by it. Stifel, Nicolaus did not assume any responsibility for
independently verifying any of such information. With respect to the
financial forecasts supplied to it, Stifel, Nicolaus assumed with Texarkana
First Financial's consent that they were reasonably prepared on the basis
reflecting the best currently available estimates and judgments of the
management of Texarkana First Financial and First United as to the future
operating and financial performance of Texarkana First Financial and First
United, that they would be realized in the amounts and time periods estimated
and that they provided a reasonable basis upon which Stifel, Nicolaus could
form its opinion. Stifel, Nicolaus also assumed that there were no material
changes in the assets, liabilities, financial condition, results of
operations, business or prospects of either Texarkana First Financial or
First United since the date of the last financial statements made available
to it. Stifel, Nicolaus also assumed, without independent verification and
with Texarkana First Financial's consent, that the aggregate allowances for
loan losses set forth in the financial statements of Texarkana First
Financial and First United are in the aggregate adequate to cover all such
losses. Stifel, Nicolaus did not make or obtain any independent evaluation,
appraisal or physical inspection of Texarkana First Financial's or First
United's assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did it review loan
or credit files of Texarkana First Financial or First United. Stifel,
Nicolaus relied on advice of Texarkana First Financial's counsel and
accountants as to all legal and accounting matters with respect to Texarkana
First Financial, the merger agreement and the transactions and other matters
contained or contemplated therein. Stifel, Nicolaus assumed, with Texarkana
First Financial's consent, that there are no factors that would delay or
subject to any adverse conditions any necessary regulatory or governmental
approval and that all conditions to the merger will be satisfied and not
waived.
In rendering its opinion, Stifel, Nicolaus assumed that the merger
will be consummated as provided in the merger agreement, will constitute a
taxable reorganization as contemplated by the merger agreement and will be
accounted for under the purchase accounting method. Stifel, Nicolaus's
opinion was necessarily based on economic, market, financial and other
conditions as they existed on, and on the information made available to it as
of, the date of its opinion, and does not imply any conclusion as to the
16
price or trading range of the stock of Texarkana First Financial or First
United, which may vary depending upon various factors, including changes in
interest rates, dividend rates, market conditions, economic conditions and
other factors that influence the price of securities.
As a matter of policy, Texarkana First Financial and First United do
not publicly disclose internal management forecasts, projections or estimates
of the type furnished to Stifel, Nicolaus in connection with its analysis of
the financial terms of the merger, and such forecasts and estimates were not
prepared with a view towards public disclosure. These forecasts and estimates
were based on numerous variables and assumptions which are inherently
uncertain and which may not be within the control of the management of either
Texarkana First Financial or First United, including, without limitation,
factors related to the integration of Texarkana First Financial and First
United and general economic, regulatory and competitive conditions.
Accordingly, actual results could vary materially from those set forth in
such forecasts and estimates.
In connection with rendering its April 25, 2000 oral opinion,
Stifel, Nicolaus performed a variety of financial analyses that are
summarized below. Such summary does not purport to be a complete description
of such analyses. Stifel, Nicolaus believes that its analyses and the summary
set forth herein must be considered as a whole and that selecting portions of
such analyses and the factors considered therein, without considering all
factors and analyses, could create an incomplete view of the analyses and
processes underlying its opinion. The preparation of a fairness opinion is a
complex process involving subjective judgments and is not necessarily
susceptible to partial analysis or summary description. In its analyses,
Stifel, Nicolaus made numerous assumptions with respect to industry
performance, business and economic conditions, and other matters, many of
which are beyond the control of Texarkana First Financial or First United.
Any estimates contained in Stifel, Nicolaus's analyses are not necessarily
indicative of actual future values or results, which may be significantly
more or less favorable than suggested by such estimates. Estimates of values
of companies do not purport to be appraisals or necessarily reflect the
actual prices at which companies or their securities actually may be sold. No
company or transaction utilized in Stifel, Nicolaus's analyses was identical
to Texarkana First Financial or First United or the merger, respectively.
Accordingly, such analyses are not based solely on arithmetic calculations;
rather, they involve complex considerations and judgments concerning
differences in financial and operating characteristics of the relevant
companies, the timing of the relevant transactions, and prospective buyer
interest, as well as other factors that could affect the public trading
values of Texarkana First Financial or companies to which they are being
compared. None of the analyses performed by Stifel, Nicolaus was assigned a
greater significance by Stifel, Nicolaus than any other. The analyses
described below do not purport to be indicative of actual future results, or
to reflect the prices at which Texarkana First Financial's common stock or
First United's common stock may trade in the public markets.
The following is a summary of the financial analyses performed by
Stifel, Nicolaus in connection with providing its oral opinion on April 25,
2000.
ANALYSIS OF BANK MERGER TRANSACTIONS. Stifel, Nicolaus analyzed
various information relating to recent transactions in the thrift industry,
consisting of (1) 60 acquisitions announced between April 13, 1999 and April
13, 2000, involving sellers in all regions of the United States with
announced transaction values and excluding merger of equals transactions,
referred to below as Group A, (2) a second group of 19 thrift acquisitions
announced between April 13, 1999 and April 13, 2000, involving sellers in all
regions of the United States with announced transaction values between $25
million and $75 million and excluding merger of equals transactions, referred
to below as Group B, and (3) a third group of 13 thrift acquisitions
announced between April 13, 1999 and April 13, 2000, involving sellers with
an equity /
17
assets ratio greater than 12% in all regions of the United States
with announced transaction values between $25 million and $75 million and
excluding merger of equals transactions, referred to below as Group C. These
transactions are referred to below as the selected transactions. Stifel,
Nicolaus calculated the following ratios with respect to the merger and the
selected transactions:
Texarkana/ GROUP A SELECTED TRANSACTIONS
First United -----------------------------
Ratios 25th Percentile Median 75th Percentile
- ------ --------------- ------ ---------------
Deal Price Per Share/Book Value
Per Share 136.8% 122.3% 152.3% 195.6%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 124.1% 155.3% 196.9%
Adjusted Deal Price/6.50% Equity 175.2% 161.0% 185.6% 225.5%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 19.2x 25.3x 30.5x
Deal Price/Assets 18.2% 14.5% 18.6% 24.5%
Premium over Tangible Book
Value/Deposits 6.6% 5.4% 8.4% 12.7%
Deal Price/Deposits 24.5% 20.2% 24.5% 32.0%
Texarkana/ GROUP B SELECTED TRANSACTIONS
First United -----------------------------
Ratios 25th Percentile Median 75th Percentile
- ------ -------------- ------ ---------------
Deal Price Per Share/Book Value
Per Share 136.8% 121.5% 135.1% 166.2%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 122.7% 135.1% 174.6%
Adjusted Deal Price/6.50% Equity 175.2% 153.1% 170.7% 232.0%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 19.8x 25.3x 29.0x
Deal Price/Assets 18.2% 16.1% 20.1% 25.6%
Premium over Tangible Book
Value/Deposits 6.6% 5.3% 8.1% 12.8%
Deal Price/Deposits 24.5% 21.8% 27.7% 33.8%
Texarkana/ GROUP C SELECTED TRANSACTIONS
First United -----------------------------
Ratios 25th Percentile Median 75th Percentile
- ------ --------------- ------ ---------------
Deal Price Per Share/Book Value
Per Share 136.8% 117.3% 124.6% 150.8%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 117.3% 126.1% 150.8%
Adjusted Deal Price/6.50% Equity 175.2% 149.8% 170.7% 223.4%
Deal Price Per Share/Latest 12
18
Months Earnings Per Share 11.0x 21.1x 27.8x 29.8x
Deal Price/Assets 18.2% 19.3% 22.9% 27.5%
Premium over Tangible Book
Value/Deposits 6.6% 5.0% 5.8% 12.4%
Deal Price/Deposits 24.5% 27.7% 30.0% 38.6%
This analysis resulted in a range of imputed values for Texarkana First
Financial's common stock of between $23.31 and $53.78 based on the median
multiples for Group A, between $22.98 and $53.78 based on the median
multiples for Group B, and between $21.27 and $59.21 based on the median
multiples for Group C.
PRESENT VALUE ANALYSIS. Applying discounted cash flow analysis to
the theoretical future earnings and dividends of Texarkana First Financial,
Stifel, Nicolaus compared the $23.35 consideration to be received in exchange
for one share of Texarkana First Financial's common stock under the terms of
the merger agreement as of April 25, 2000 to the calculated future value of
one share of Texarkana First Financial's common stock on a stand-alone basis.
The analysis was based upon management's projected earnings growth, a range
of assumed price/earnings ratios, and a 15.0%, 17.5%, 20.0% and 22.5%
discount rate. Stifel, Nicolaus selected the range of terminal price/earnings
ratios on the basis of past and current trading multiples for other publicly
traded comparable thrifts. The stand-alone present value of Texarkana First
Financial's common stock calculated on this basis ranged from $13.06 to
$24.94 per share.
DISCOUNTED CASH FLOW ANALYSIS. Using a discounted cash flow
analysis, Stifel, Nicolaus estimated the net present value of the future
streams of after-tax cash flow that Texarkana First Financial could produce
to benefit a potential acquiror, referred to below as dividendable net
income. In this analysis, Stifel, Nicolaus assumed that Texarkana First
Financial would perform in accordance with management's estimates and
calculated assumed after-tax distributions to a potential acquiror such that
its tangible common equity ratio would be maintained at 6.5% of assets.
Stifel, Nicolaus calculated the sum of the assumed perpetual dividendable net
income streams per share beginning in the year 2000, discounted to present
values at assumed discount rates ranging from 11.0% to 15.0%. This discounted
cash flow analysis indicated an implied equity value reference range of
$17.72 to $29.18 per share of Texarkana First Financial's common stock. This
analysis did not purport to be indicative of actual future results and did
not purport to reflect the prices at which shares of Texarkana First
Financial's common stock may trade in the public markets. A discounted cash
flow analysis was included because it is a widely used valuation methodology,
but the results of such methodology are highly dependent upon the numerous
assumptions that must be made, including estimated revenue enhancements,
earnings growth rates, dividend payout rates and discount rates.
ANALYSIS OF PREMIUM TO MARKET PRICE FOR MERGER TRANSACTIONS. Stifel,
Nicolaus analyzed the premiums paid to the then current market price one day,
one week and one month prior to the date of announcement of a transaction for
549 transactions in the bank and thrift industries announced in the U.S.
between April 13, 1995 and April 13, 2000. Stifel, Nicolaus calculated the
following ratios with respect to the merger and such transactions:
19
TRANSACTIONS ANNOUNCED BETWEEN
Texarkana/ ------------------------------
First United 4/13/95 AND 4/13/00
-------------------
Market Premium Data 25th Percentile Median 75th Percentile
- ------------------- --------------- ------ ---------------
Premium to stock price 1 day prior to announcement 39.4% 11.0% 21.5% 34.6%
Premium to stock price 1 week prior to announcement 43.7% 14.3% 25.4% 41.2%
Premium to stock price 1 month prior to announcement 53.1% 18.0% 30.5% 46.2%
This analysis resulted in a range of imputed values for Texarkana
First Financial's common stock of between $19.90 and $20.35 based on the
median premiums for such transactions.
COMPARISON OF SELECTED COMPANIES. Stifel, Nicolaus reviewed and
compared various multiples and ratios for the merger with a peer group of
seven thrifts and two banks headquartered in the central part of the U.S.,
which Stifel, Nicolaus deemed to be relevant. The group of selected thrifts
and banks consisted of Acadiana Bancshares, Inc., Bank West Financial
Corporation, Chester Bancorp, Inc., Citizens First Financial Corp., First
Federal Bancshares of Arkansas, Inc., Jacksonville Bancorp, Inc., National
Bancshares Corporation of Texas, North Central Bancshares, Inc., and
Pocahontas Bancorp, Inc. In order to calculate a range of imputed values for
a share of Texarkana First Financial's common stock, Stifel, Nicolaus applied
a 30.5% control premium to the trading prices of the selected group of
comparable companies and compared the resulting theoretical offer price to
each of book value, tangible book value, adjusted 6.5% equity, latest 12
month earnings, estimated 2000 earnings as provided by Institutional Brokers
Estimate System, assets, tangible book value to deposits and deposits.
Stifel, Nicolaus then applied the resulting range of multiples and ratios for
the peer group specified above to the appropriate financial results of
Texarkana First Financial. This analysis resulted in a range of imputed
values for Texarkana First Financial's common stock of between $14.31 and
$29.06 based on the median multiples and ratios for the peer group. The 30.5%
control premium selected by Stifel, Nicolaus was based on a 5 year analysis
of market premiums paid in bank and thrift merger transactions.
Additionally, Stifel, Nicolaus calculated the following ratios with
respect to the nine selected comparable companies after application of the
30.5% control premium:
Texarkana/ NINE SELECTED COMPARABLE COMPANIES
First United -----------------------------------
Ratios Minimum Median Maximum
- ------ ------- ------ -------
Deal Price Per Share/Book Value
Per Share 136.8% 87.5% 106.4% 144.4%
Deal Price Per Share/Tangible Book
Value Per Share 136.8% 92.2% 112.4% 173.3%
Adjusted Deal Price/6.50% Equity 175.2% 79.9% 110.3% 218.5%
Deal Price Per Share/Latest 12
Months Earnings Per Share 11.0x 9.7x 13.6x 25.4x
Deal Price per share/Estimated
2000 Earnings Per Share 11.1x 9.5x 13.7x 28.9x
Deal Price/Assets 18.2% 9.2% 11.1% 25.0%
Premium over Tangible Book
Value/Deposits 6.6% -1.6% 1.6% 10.2%
Deal Price/Deposits 24.5% 14.6% 16.2% 33.2%
In connection with its written opinion dated as of the date of this
proxy statement, Stifel, Nicolaus performed procedures to update, as
necessary, its analyses and reviewed the assumptions on which such analyses
were based and the factors considered in connection therewith. Stifel,
Nicolaus did not utilize any methods of analysis in addition to those
described above in updating its April 25, 2000 oral opinion.
20
Pursuant to the terms of Stifel, Nicolaus's engagement, Texarkana
First Financial paid Stifel, Nicolaus a nonrefundable cash fee of $50,000
upon the signing of the definitive agreement and a nonrefundable cash fee of
$25,000 at the time of mailing of the proxy statement. In addition, Texarkana
First Financial has agreed to pay Stifel, Nicolaus an additional fee of 1.00%
of the total aggregate consideration paid in the transaction, less the fees
already paid, subject to and conditioned upon consummation of the merger.
Texarkana First Financial has also agreed to reimburse Stifel, Nicolaus for
various out-of-pocket expenses and has agreed to indemnify Stifel, Nicolaus,
its affiliates and their respective partners, directors, officers, agents,
consultants, employees and controlling persons against certain liabilities,
including liabilities under the federal securities laws.
Stifel, Nicolaus was also retained by First United as a financial
advisor and provided a fairness opinion in connection with the proposed
merger of First United and BancorpSouth Inc. Texarkana First Financial
consented to the retention of Stifel, Nicolaus by First United and waived any
claim of a conflict of interest with respect to the First United engagement
or any activities undertaken by Stifel, Nicolaus in connection therewith.
Prior to Stifel, Nicolaus's delivery of its oral opinion to the Texarkana
First Financial Board of Directors on April 25, 2000, First United paid
Stifel, Nicolaus a nonrefundable cash fee of $250,000 upon the signing of a
definitive agreement with regard to the merger of First United and
BancorpSouth Inc. See "THE PROPOSED MERGER - BACKGROUND OF THE MERGER."
In the ordinary course of its business, Stifel, Nicolaus actively
trades equity securities of Texarkana First Financial and First United in its
own account and for the accounts of its customers and, accordingly, may at
any time hold a long or short position in such securities.
PURCHASE PRICE
The merger agreement provides that the aggregate purchase price to
be paid by First United for Texarkana First Financial's common stock issued
and outstanding immediately prior to the effective time and for all existing
options to acquire shares of Texarkana First Financial's common stock
outstanding and unexercised immediately prior to the effective time will be
an amount equal to $37,500,000. On a per share, per option basis, the
purchase price is equivalent to: (i) $23.35208 in cash for each of share of
Texarkana First Financial common stock outstanding; and (ii) $23.35208 less
the per-share exercise price in cash for each option to acquire a share of
Texarkana First Financial common stock which is outstanding and unexercised
immediately prior to the effective time of the merger. For those option
holders whose options have different exercise prices, the total cash payment
to be received for their options will be equal to the mathematical result
obtained by multiplying (x) $23.35208 less the weighted average per share
exercise price of all options held by the option holder, by (y) the total
number of shares subject to options held by the option holder.
FUNDING OF THE PURCHASE PRICE
First United intends to borrow $37,500,000 from First Tennessee
Bank, N.A., to fund the full amount of the purchase price for the merger.
If First United merges into BancorpSouth prior to the effective time
of the merger of Texarkana First Financial and First United Acquisition Co.,
then the purchase price of the merger will be funded by BancorpSouth from
cash on hand.
THE BANCORPSOUTH MERGER
On April 16, 2000, First United entered into an Agreement and Plan
of Merger with BancorpSouth, pursuant to which First United is to merge with
and into BancorpSouth with BancorpSouth being the surviving entity, and each
of the following First United subsidiaries is to merge with and into
BancorpSouth Bank with BancorpSouth Bank being the surviving entity in each
merger: (i) The First National Bank of El Dorado, a national banking
association organized under the laws of the United States, (ii) First
National Bank of Magnolia, a national banking association organized under the
laws of the United States, (iii) Merchants and Planters Bank, National
Association, a national banking association organized under the laws of the
United States, (iv) The City National Bank of Fort Smith, a
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national banking association organized under the laws of the United States,
(v) The Bank of North Arkansas, an Arkansas banking corporation, (vi) First
United Bank, an Arkansas banking corporation, (vii) Citizens National Bank of
Hope, a national banking association organized under the laws of the United
States, (viii) City Bank & Trust of Shreveport, a Louisiana banking
corporation, (ix) First Republic Bank, a Louisiana banking corporation, (x)
First United Trust Company, N.A., a national association organized under the
laws of the United States, (xi) Fredonia State Bank, a Texas banking
association and (xii) FirstBank, a Texas banking association. As
consideration for the merger of First United with and into BancorpSouth,
First United common stock is to be converted into shares of BancorpSouth
common stock at an exchange ratio of 1.125 shares of BancorpSouth common
stock per share of First United common stock.
On July 21, 2000, BancorpSouth received approval from the FDIC for
the mergers of the various banking and trust company subsidiaries of First
United with and into BancorpSouth. BancorpSouth and First United have each
scheduled a special meeting of their respective shareholders on August 24,
2000, to vote on the merger of First United with and into BancorpSouth. If
their respective shareholders approve the merger, and if the merger is
completed before the merger of Texarkana First Financial and First United
Acquisition Co., BancorpSouth would succeed First United as a party to the
merger agreement between First United and Texarkana First Financial. First
United Acquisition Co. would then be a wholly-owned subsidiary of
BancorpSouth immediately prior to the merger of First United Acquisition Co.
and Texarkana First Financial. Immediately after the merger of First United
Acquisition Co. and Texarkana First Financial, BancorpSouth would then cause
First Federal to be merged with and into BancorpSouth Bank, and would cause
Texarkana First Financial to be merged with and into BancorpSouth.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
BENEFICIAL OWNERSHIP. As of the record date, the executive officers
and directors of Texarkana First Financial, together with their respective
affiliates, beneficially owned 233,737 shares of Texarkana First Financial's
common stock, or 15.2% of the outstanding shares. The directors and executive
officers will receive the same consideration for their shares as the other
shareholders of Texarkana First Financial. See "BENEFICIAL OWNERSHIP OF
COMMON STOCK BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
EMPLOYEE RETENTION AGREEMENTS. On May 15, 2000, Texarkana First
Financial entered into employee retention agreements with selected executive
officers to provide additional incentives to such officers to continue their
employment with Texarkana First Financial in the event that Texarkana First
Financial experienced a change of control, i.e., a merger, consolidation, or
sale of the assets or stock of Texarkana First Financial. Each employee
retention agreement provides that in certain cases the officer will receive a
cash lump sum payment equal to one or three times the officer's monthly
compensation, excluding bonus or extraordinary compensation. This amount is
payable on the effective date of the change in control unless such officer is
terminated sooner for cause.
The following executive officers are entitled to payment of the
specified retention benefit in the event of a change in control:
James Sangalli 1x monthly compensation
Travis Mauldin 3x monthly compensation
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INSURANCE; DIRECTORS' AND OFFICERS' INDEMNIFICATION. At the present
time, Texarkana First Financial maintains a directors' and officers liability
insurance policy. Prior to the effective date, Texarkana First Financial may
obtain an extended reporting period (otherwise known as "tail coverage")
under this policy for a period of up to four years from the effective time.
In addition, for a period of five years after the effective time, First
United shall indemnify, defend and hold harmless the officers and directors
of Texarkana First Financial against all liabilities arising out of actions
or omissions out of their employment by or service with Texarkana First
Financial and occurring at or prior to the effective time of the merger to the
full extent permitted under applicable law and by Texarkana First Financial's
Articles of Incorporation and Bylaws as in effect on the date of the merger
agreement. No such indemnification shall be made by First United for actions
or omissions which constitute fraud, are intentionally taken or omitted in
bad faith, constitute a knowing breach of the merger agreement or constitute
violations of criminal law, unless the indemnified party had no reasonable
cause to believe his or her conduct was unlawful.
EMPLOYMENT AGREEMENTS. Texarkana First Financial and First Federal
entered into employment agreements with each of Messrs. McKinney and Harrison
effective May 5, 1995 in connection with First Federal's conversion from
mutual to stock form in 1995. Texarkana First Financial and First Federal
agreed to employ Messrs. McKinney and Harrison for a term of three years,
which term is extended each year for an additional one-year period unless
Texarkana First Financial and First Federal or the officer elect, not less
than 30 days prior to the annual anniversary date, not to extend the
employment term.
Each employment agreement is terminable with or without cause by
Texarkana First Financial and First Federal. The officer shall have no right
to compensation or other benefits pursuant to the employment agreement for
any period after voluntary termination or termination by Texarkana First
Financial and First Federal for cause, disability, retirement or death,
provided, however, that (i) in the event that the officer terminates his
employment because of the failure of Texarkana First Financial and First
Federal to comply with any material provision of the employment agreement or
(ii) the employment agreement is terminated by Texarkana First Financial and
First Federal other than for cause, disability, retirement or death or by the
officer as a result of certain adverse actions which are taken with respect
to the officer's employment following a change of control of Texarkana First
Financial, the respective officer will be entitled to a cash severance amount
equal to three times his average annual compensation over the most recent
five taxable years (or such shorter time as he has been employed by Texarkana
First Financial and First Federal), payable in equal monthly installments
over 36 months. In addition, the respective officer will be entitled to a
continuation of benefits similar to those he is receiving at the time of such
termination for the remaining term of the agreement or until the officer
obtains full-time employment with another employer, whichever occurs first.
A "change in control" is generally defined in the employment
agreements to include any change in control required to be reported under the
federal securities laws, as well as (i) the acquisition by any person of 25%
or more of Texarkana First Financial's outstanding voting securities and (ii)
a change in a majority of the directors of Texarkana First Financial during
any two-year period without the approval of at least two-thirds of the
persons who were directors of the Texarkana First Financial at the beginning
of such period. The merger of Texarkana First Financial and First United
Acquisition Co. is considered to be a change in control for purposes of the
employment agreements.
The merger agreement provides that it is a condition to First
United's obligation to consummate the merger that Mr. McKinney enter into an
agreement providing that Mr. McKinney shall retire on the later of November
1, 2000 or one month after the closing date of the merger, and that Mr.
McKinney's existing employment agreement with Texarkana First Financial shall
terminate on that date. Mr. McKinney will receive his normal compensation and
benefits through the date his employment agreement
23
terminates but will receive no compensation or other benefits under his
employment agreement after such date, due to his retirement thereunder
pursuant to the terms of the employment agreement. Mr. Harrison's employment
agreement will remain in effect following the merger.
Each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment
are deemed to constitute a "parachute payment" within the meaning of Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"), then such
payments and benefits received thereunder shall be reduced, in the manner
determined by the employee, by the amount, if any, which is the minimum
necessary to result in no portion of the payments and benefits being
non-deductible by Texarkana First Financial and First Federal for federal
income tax purposes. Parachute payments generally are payments equal to or
exceeding three times the base amount, which is defined to mean the
recipient's average annual compensation from the employer includable in the
recipient's gross income during the most recent five taxable years ending
before the date on which a change of control of the employer occurred (or
such lesser time as the recipient has been employed). Recipients of parachute
payments are subject to a 20% excise tax on the amount by which such payments
exceed the base amount, in addition to regular income taxes, and payments in
excess of the base amount are not deductible by the employer as compensation
expense for federal income tax purposes.
REGULATORY APPROVALS
Completion of the merger is conditioned on, among other things, the
receipt of approvals by the Federal Deposit Insurance Corporation and the
Texas Department of Banking. The Board of Governors of the Federal Reserve
System has waived its notification filing requirements with respect to the
merger.
As a Texas state nonmember bank, FirstBank has filed an application
with the FDIC for approval of the merger of First Federal with and into
FirstBank under Section 18(c) of the Federal Deposit Insurance Act, as
amended. The FDIC may disapprove the application if it finds that the merger
tends to create or result in a monopoly, substantially lessen competition or
would be in restraint of trade. FirstBank filed this application with the
FDIC on June 16, 2000. Following approval of the application by the FDIC, the
United States Department of Justice has between 15 and 30 calendar days to
submit any adverse comments relating to competitive factors resulting from
the merger. Based on their current knowledge, management of Texarkana First
Financial believes that the merger will likely be approved by the FDIC, and
that the merger will not likely be challenged by the Department of Justice
under federal antitrust laws. However, no assurance can be provided that the
FDIC will provide its approval or that the Department of Justice will not
challenge the merger or that, in connection with the grant of any approval,
the FDIC will not impose conditions, which are materially burdensome to First
United within the meaning of the merger agreement.
Section 32.301 of the Texas Finance Code provides that a Texas state
banking association must obtain prior written approval from the Texas Banking
Commissioner in order to merge with another financial institution in a
transaction in which the Texas banking association is the surviving entity.
FirstBank filed an application with the Texas Banking Commissioner on June 16,
2000 for approval of the merger of First Federal with and into FirstBank. That
application consisted primarily of a copy of the application filed with the
FDIC, certified copies of board and shareholder resolutions, an opinion of
counsel and proof of publication of notice to the public. Based on their
current knowledge management of Texarkana First Financial believe that the
merger will likely be approved by the Texas Banking Commissioner.
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FirstBank also filed on June 16, 2000 a notification with the Office
of Thrift Supervision regarding the merger of First Federal with and into
FirstBank. That notification consisted primarily of a copy of the application
filed with the FDIC. The prior written approval of the OTS is not required to
complete the merger of FirstBank and First Federal. The OTS has acknowledged
receipt of notification of the merger, and has not expressed any objection to
the merger.
First United and Texarkana First Financial have agreed that, in the
event the banking regulatory agencies require a divestiture of any of the
assets or liabilities of First Federal associated with its branch in Hope,
Arkansas as a condition to approval of the merger, that condition will be
accepted by First United and will not be considered by First United to be an
unacceptable condition to consummation of the merger. Further, First United
and Texarkana First Financial have agreed that, in the event the Federal
Reserve requires a divestiture of any of the assets or liabilities of First
Federal associated with its offices in Texarkana as a condition to approval
of the merger, that condition will not be acceptable to First United under
the merger agreement.
First United and Texarkana First Financial are not aware of any
other governmental approvals or actions that are required for consummation of
the merger except as described above. Should any such approval or action be
required, it is presently contemplated that such approval or action would be
sought or taken. There can be no assurance that any such approval or action,
if needed, could be obtained, would not delay consummation of the merger, or
would not be conditioned in a manner that could cause First United to abandon
the merger.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of the material United States federal
income tax consequences of the merger to Company shareholders. This summary
is based upon the provisions of the Internal Revenue Code of 1986, as
amended, applicable current and proposed United States Treasury Regulations,
judicial authority, and administrative rulings and practice. Legislative,
judicial or administrative rules and interpretations are subject to change,
possibly on a retroactive basis, at any time, and, therefore, the following
statements and conclusions could be altered or modified. It is assumed that
the shares of Company common stock are held as capital assets by a United
States person (i.e., a citizen or resident of the United States or a domestic
corporation). This discussion does not address all aspects of United States
federal income taxation that may be relevant to a particular Company
shareholder in light of that shareholder's personal investment circumstances,
or those Company shareholders subject to special treatment under the United
States federal income tax laws (for example, life insurance companies,
tax-exempt organizations, financial institutions, United States expatriates,
foreign corporations and nonresident alien individuals), Company shareholders
who hold shares of Company common stock as part of a hedging, "straddle,"
conversion or other integrated transaction, or Company shareholders who
acquired their shares of Company common stock through the exercise of
employee stock options or other compensation arrangements. In addition, the
discussion does not address any aspect of foreign, state or local taxation or
estate and gift taxation that may be applicable to a Company shareholder.
TAX CONSEQUENCES OF THE MERGER TO COMPANY SHAREHOLDERS
The receipt of cash for Texarkana First Financial's common stock
pursuant to the merger will be a taxable transaction for United States
federal income tax purposes to shareholders (and may be a taxable transaction
for state, local and foreign tax purposes as well). In general, a holder of
Texarkana First
25
Financial's common stock will recognize a gain or loss measured by the
difference between such shareholder's adjusted tax basis for Texarkana First
Financial's common stock owned by him or her at the effective time and the
amount of cash received for the stock. Gain or loss will be calculated
separately for each block of shares converted in the merger (i.e., shares
acquired at the same cost in a single transaction). The gain or loss will be
a capital gain or loss if the stock is a capital asset of the shareholder. If
the shares have been held for one year or less at the effective time of the
merger, the gain or loss will be a short-term capital gain or loss. If the
shares have been held for more than one year, the gain or loss will be
long-term capital gain or loss. Shareholders who are individuals are subject
to tax on net long-term capital gains at a maximum United States federal
income tax rate of 20%. Capital losses are deductable only to the extent of
capital gains plus (in the case of non-corporate taxpayers) the lower of the
excess of capital losses over capital gains or $3,000 ($1,500 in the case of
a married individual filing a separate tax return).
BACKUP TAX WITHHOLDING
Under the United States federal income tax backup withholding rules,
the cash payments due the holders of Texarkana First Financial's common stock
upon the exchange of such common stock pursuant to the merger (unless certain
exemptions apply) will be subject to "backup withholding" for federal income
tax purposes unless certain requirements are met under federal law. First
United as paying agent is required to and will withhold 31% of all payments
to which a Company shareholder or other payee is entitled in the merger,
unless Texarkana First Financial shareholder or other payee provides a tax
identification number (social security number, in the case of an individual,
or employer identification number, in the case of other stockholders), and
certifies under penalties of perjury that that number is correct. Each
Company shareholder and, if applicable, each other payee, should complete and
sign the substitute Form W-9 that will be part of the letter of transmittal
to be returned to the exchange agent (or other agent) in order to provide the
information and certification necessary to avoid backup withholding, unless
an applicable exemption exists and is otherwise proved in a manner
satisfactory to the exchange agent (or other agent). The exemptions provide
that certain Company shareholders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding
requirements. In order for a foreign individual to qualify as an exempt
recipient, however, he or she must submit a signed statement (such as a
Certificate of Foreign Status on Form W-8) attesting to his or her exempt
status. Any amounts withheld will be allowed as a credit against the holder's
United States federal income tax liability for that year.
No ruling has been or will be requested from the Internal Revenue
Service as to any of the tax effects to Texarkana First Financial's
shareholders of the transactions discussed in this proxy statement, and no
opinion of counsel has been or will be rendered to Texarkana First
Financial's shareholders with respect to any of the tax effects of the merger
to shareholders.
THE TAX CONSEQUENCES OF THE MERGER MAY VARY DEPENDING UPON THE
PARTICULAR CIRCUMSTANCES OF EACH SHAREHOLDER. THEREFORE, EACH SHAREHOLDER IS
URGED TO CONSULT HIS OR HER TAX ADVISOR TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES OF THE MERGER TO SUCH HOLDER, INCLUDING THOSE RELATING TO STATE,
LOCAL AND/OR OTHER TAXES.
ACCOUNTING TREATMENT
It is anticipated the merger will be accounted for as a "purchase"
transaction under generally accepted accounting principles. Under such method of
accounting, the assets and liabilities of Texarkana
26
First Financial will be revalued on First United's consolidated balance sheet
at their fair values as of the date the transaction is consummated. The
excess purchase price, if any, paid over the fair value of the net assets
acquired (including values assigned to core deposits and other such
intangible assets) will be reported as goodwill in First United's
consolidated balance sheet. The results of operations of Texarkana First
Financial will be reported in First United's consolidated statement of
operations only after the effective time of the merger.
DISSENTERS' RIGHTS
Pursuant to Article 5.11 of the Texas Business Corporation Act, any
holder of Texarkana First Financial's common stock who does not wish to
accept the consideration to be paid pursuant to the merger agreement may
dissent from the merger and elect to have the fair value agreed upon by the
shareholder and Texarkana First Financial or judicially determined by a court
of competent jurisdiction and paid to the shareholder in cash, provided that
the shareholder complies with the provisions of Articles 5.11 through 5.13 of
the TBCA.
The following is a brief summary of the statutory procedures to be
followed by a holder of common stock in order to dissent from the merger and
perfect his or her appraisal rights under the TBCA. This summary is not
intended to be complete and is qualified in its entirety by reference to
Articles 5.11 through 5.13 of the TBCA, the text of which is attached as
APPENDIX C to this proxy statement.
If any holder of common stock desires to exercise the right to
dissent from the merger and demand appraisal, such shareholder must comply
with the following procedures:
- - deliver to Texarkana First Financial, prior to the special meeting, a
written objection to the merger, setting out that the shareholder's
right to dissent will be exercised and the address to which notice that
the merger has been effected shall be delivered or mailed;
- - vote against or abstain from voting in favor of the merger (failure to
vote "AGAINST" the merger will not constitute waiver of dissenters'
rights); and
- - make written demand on Texarkana First Financial for payment of the
fair value of the shareholder's shares after the effective time and
within ten days from the delivery or mailing by Texarkana First
Financial of the notice to the shareholders that the merger has been
effected. The demand must state the number of shares of common stock
owned by the shareholder and the fair value of stock as estimated by
the shareholder. Any shareholder failing to make a demand within the
ten day period will be bound by the terms of the merger. A vote by the
shareholder "AGAINST" the merger will not satisfy the notice
requirement.
If, within sixty days after the effective time, the value of the
shares is agreed upon by the shareholder and Texarkana First Financial,
payment for the shares of common stock must be made within ninety days after
the date on which the action was effected and upon surrender of the
certificates duly endorsed. Upon payment of the agreed value, the shareholder
will cease to have any interest in the shares or in Texarkana First Financial.
If, within the period of sixty days after the effective time, the
shareholder and Texarkana First Financial do not agree on the value of the
shares, then either the shareholder or Texarkana First Financial may, within
one hundred twenty days after the effective time, file a petition in any
court of competent jurisdiction asking for a finding and determination of the
fair value of the shareholder's shares.
27
Any shareholder who has demanded payment for his or her shares may
not thereafter vote or exercise any other rights of a shareholder except the
right to receive the merger consideration in payment for his or her shares or
the right to maintain an appropriate action to obtain relief on the ground
that the corporate action was fraudulent, and the respective shares for which
payment has been demanded will not thereafter be considered outstanding for
the purpose of any subsequent vote of shareholders. Within twenty days after
demanding payment for his or her shares, each holder of certificates
representing shares so demanding payment must submit the certificates to
Texarkana First Financial for notation on such certificates that the demand
has been made. If uncertified shares for which payment has been demanded or
shares represented by a certificate on which notation has been so made are
transferred, any new certificate issued for the transferred certificate must
bear similar notation together with the name of the original dissenting
holder of such shares and a transferee of such shares will acquire by such
transfer no rights in Texarkana First Financial other than those that the
original dissenting shareholder had after making a demand for payment of the
fair value. Any shareholder who demanded payment for his or her shares may
withdraw such demand at any time before payment for his or her shares.
All written demands for appraisal (i.e., the notice of intent to
dissent) should be addressed to: Debbie Rose, Corporate Secretary, Texarkana
First Financial Corporation, 3rd & Olive Streets, Texarkana, Arkansas 71854,
before the taking of the vote concerning the merger at the special meeting,
and should be executed by, or on behalf of, the holder of record who held
such shares on the date of making such demand, and who continuously holds
such shares through the time the certificates for such shares are submitted
to Texarkana First Financial for endorsement as dissenting shares, fully and
correctly, as such shareholder's name appears on his or her stock
certificate(s). Such demand must reasonably inform Texarkana First Financial
of the identity of the shareholder and that such shareholder is thereby
demanding appraisal of his or her shares.
Failure to comply with these procedures will cause the shareholder
to lose his or her dissenters' rights. Consequently, any shareholder who
desires to exercise his or her dissenters' rights is urged to consult a legal
advisor before attempting to exercise such rights.
THE MERGER AGREEMENT
The following is a summary of the material terms of the merger
agreement. The summary is qualified in its entirety by reference to the
merger agreement, a copy of which is attached to this proxy statement as
APPENDIX A.
EFFECTIVE TIME
The merger agreement provides that the closing of the merger will
take place as soon as reasonably practicable after all regulatory, corporate
and other approvals have been obtained and required waiting periods have
passed. As soon as practicable on or after the closing date, articles of
merger will be prepared, executed by representatives of Texarkana First
Financial and Acquisition Co., and filed with the Secretary of State of the
State of Texas. The merger will then become effective upon the approval of
the articles of merger by the Secretary of State, and upon the issuance by
the Secretary of State of a certificate of merger. The date on which the
certificate of merger is issued and the merger is effective is referred to
herein as the "effective time." The merger agreement provides that the
closing date shall occur as soon as practicable, but in no event later than
December 31, 2000, unless approved by both Texarkana First Financial and
First United. Although the parties have not adopted any formal timetable, it
is presently anticipated that the merger will be consummated on or prior to
September 29, 2000,
28
assuming all conditions set forth in the merger agreement are satisfied or
waived; however, it is possible that the effective time may extend beyond
such date.
CONVERSION OF SHARES OF TEXARKANA FIRST FINANCIAL'S COMMON STOCK
No later than twenty (20) days prior to the effective time, First
United will furnish to Texarkana First Financial a letter of transmittal, and
instructions for use in effecting the surrender of the Texarkana First
Financial common stock and option certificates held by Texarkana First
Financial's shareholders in exchange for the merger consideration. Texarkana
First Financial will then mail the letter of transmittal and instructions to
its shareholders and option holders of record. The letter of transmittal and
instructions will specify that delivery of certificates representing
ownership of Texarkana First Financial common stock or options shall be
effected only upon delivery, on or after the effective time of the merger, of
the certificates to First United Trust Company, N.A., the paying agent for
the merger, and that, until the certificates are delivered by the shareholder
or option holder in accordance with the letter of transmittal and
instructions, the risk of loss of the certificates will remain with the
shareholder or option holder. The instructions will request shareholders and
option holders to deliver their certificates, along with a properly completed
and duly executed letter of transmittal and any other documentation that the
instructions may require, to First United Trust Company, N.A. The
instructions will provide that, in the event the merger is terminated prior
to the effective time, the completed letter of transmittal and other items
will be returned to the shareholder or option holder.
First United will instruct the paying agent that, on and after the
effective time, upon the delivery to the paying agent of the properly
completed letter of transmittal and other required documentation, the paying
agent will pay the shareholder or option holder the amount of cash that
the holder is entitled to receive in accordance with the terms of the merger
agreement, minus any withholding taxes required by law, payable by check or
direct deposit into the shareholder's or option holder's account with First
Federal, and the surrendered certificates will be canceled. If shareholders
or option holders deliver their properly completed letter of transmittal and
other required documentation to the paying agent no later than ten (10) days
prior to the effective time, the paying agent will be instructed to mail
checks or make direct deposits to those holders immediately after the
effective time, and in no event later than the next business day after the
effective time. For all other holders, the paying agent will mail checks or
make direct deposits promptly, but in no event more than ten (10) days
following the later of (i) the effective time, or (ii) the date on which the
properly completed letter of transmittal and other required documents are
delivered to the paying agent. No payment will be made to an individual
until the paying agent has received from such holder the letter of
transmittal and all other required documentation, properly completed in
accordance with the instructions. No payment will be made for share or
option certificates prior to the effective time of the merger. No interest
will be payable with respect to the payment of the merger consideration made
to Texarkana First Financial shareholders and option holders under the merger
agreement.
TREATMENT OF TEXARKANA FIRST FINANCIAL STOCK OPTIONS
The merger agreement provides that the right to exercise all
Texarkana First Financial options shall be accelerated, and all
29
Texarkana First Financial options will be deemed exercised immediately prior
to the effective time of the merger. All holders of Texarkana First Financial
options prior to the effective time will cease to have any rights with
respect to their options, except the right to receive a cash payment computed
in the manner provided in the merger agreement, without interest. It is a
condition to First United's obligation to consummate the merger that each
holder of Texarkana First Financial options execute an agreement and waiver,
in the form attached as an exhibit to the merger agreement, providing that
the option holder accepts the cash payment due under the merger agreement in
full satisfaction of all rights the option holder has under their Texarkana
First Financial options.
REPRESENTATIONS AND WARRANTIES
REPRESENTATIONS AND WARRANTIES OF TEXARKANA FIRST FINANCIAL. The
merger agreement contains representations and warranties of Texarkana First
Financial, the material ones of which relate to:
- - Texarkana First Financial's proper organization, qualification, good
standing, authority and other corporate organizational matters;
- - Texarkana First Financial's capital structure and the number of its
authorized and outstanding shares of its common stock and designated
preferred stock;
- - First Federal's capital structure and the number of its authorized and
outstanding shares of its common stock;
- - Texarkana First Financial's compliance with applicable laws and its
possession of all requisite corporate power and authority to enter
into the merger agreement;
- - the consistency of the merger agreement with Texarkana First
Financial's charter documents and its agreements;
- - the absence of any default by Texarkana First Financial or First
Federal under any material agreement, ordinance, resolution, decree,
bond, note, indenture, order or judgment to which either is a party,
is bound or to which its assets are subject;
- - compliance of Texarkana First Financial's financial statements with
generally accepted accounting principles;
- - the absence of undisclosed material liabilities, except as provided
in Texarkana First Financial's financial statements and as incurred
in the ordinary course of business;
30
- - Texarkana First Financial's and First Federal's compliance with all
filing requirements with governmental regulatory agencies, and the
absence of material misstatements or omissions from any required
reports and from any documents to be filed in connection with the
merger;
- - Texarkana First Financial's and First Federal's material compliance
with applicable environmental laws;
- - the absence of continuing orders against Texarkana First Financial
and First Federal by any federal or state banking or insurance
regulatory authority, and the absence of claims of any kind against
Texarkana First Financial or First Federal which could be reasonably
expected to have a material adverse effect on Texarkana First
Financial and First Federal;
- - the filing by Texarkana First Financial and First Federal of all
required tax returns, and the absence of material tax liens on the
property of Texarkana First Financial and First Federal, except for
statutory liens for taxes not yet delinquent;
- - the absence of any undisclosed professional services agreements,
collective bargaining agreements, stock option or employee benefit
plans, or noncompetition agreements;
- - the absence of any material prohibited transactions, breaches of
fiduciary duty or violations of law related to the employee benefit
plans of Texarkana First Financial or First Federal;
- - the validity and enforceability of the material contracts, employee
benefit plans and insurance policies;
- - the conduct of business in the ordinary course since December 31,
1999;
- - the absence, since December 31, 1999, of any material adverse change
to the financial condition, results of operations or business of
Texarkana First Financial or First Federal;
- - Texarkana First Financial's and First Federal's good title, free of
encumbrances, to all of the personal and real property reflected in
Texarkana First Financial's financial statements, except as
disclosed in the Texarkana First Financial financial statements,
except for property disposed of in the ordinary course of business,
and except for encumbrances and title imperfections that do not
materially affect the value of the property; and
- - the absence of any untrue statements of a significant fact or any
omission of a significant fact relating to the representations and
warranties of Texarkana First Financial in the merger agreement.
REPRESENTATIONS AND WARRANTIES OF FIRST UNITED. The merger agreement
contains representations and warranties of First United, the material ones of
which relate to:
- - its proper organization, qualification, good standing and other
corporate organizational matters;
- - the execution, delivery and performance of the merger agreement;
- - consistency of the merger agreement with First United's charter
documents and agreements and any laws applicable to First United;
- - required consents and approvals in connection with the execution,
delivery and performance of the merger agreement, and the absence of
any reason, to First United's knowledge, that would prevent First
United from obtaining regulatory approval for the merger;
- - the absence, since December 31, 1999, of a material adverse change
in the financial condition, results of operations or business of
First United; and
- - the absence of any untrue statements of a material fact or any omission
of a material fact relating to the representations and warranties made
by First United in the merger agreement.
EMPLOYEE MATTERS AND IMPACT ON EMPLOYEE BENEFIT PLANS
BENEFIT PLANS. After the effective time, neither First United, the
Company nor First Federal will make additional contributions to Texarkana
First Financial's employee benefits plans. Each employee of Texarkana First
Financial or First Federal who after the merger becomes an employee of First
United or a subsidiary of First United (or of BancorpSouth or a BancorpSouth
Subsidiary) or who remains an employee of First Federal, to the extent
permissible under the terms of the First United employee benefit plans (or
upon the merger of First United with BancorpSouth, under the terms of the
BancorpSouth or BancorpSouth Bank plans), will be entitled to participate in
the employee benefit plans and programs maintained for similarly situated
employees of First United (or of BancorpSouth or BancorpSouth Bank)
31
and its affiliates to the same extent as similarly situated employees of
First United (or of BancorpSouth or BancorpSouth Bank), in accordance with
the respective terms of such plans and programs. The merger agreement
provides that First United will take all actions necessary or appropriate to
facilitate coverage of such continuing employees in such plans and programs
from and after the effective time (it being understood that inclusion of
Texarkana First Financial and First Federal employees in First United's,
BancorpSouth's, or BancorpSouth Bank's plans may occur at different times
with respect to different plans based on the specific eligibility
requirements and entry dates of each plan) subject to the following:
(a) Each continuing employee shall be given vesting and eligibility
service credit for time during which the employee was employed by Texarkana
First Financial and/or First Federal for purposes of determining benefits due
under the First United Employee Stock Ownership Plan and the First United 401(k)
Plan (or, upon the merger of First United with BancorpSouth, the BancorpSouth or
BancorpSouth Bank plans). Continuing employees shall not receive service credit,
for any purpose under the First United Defined Benefit Retirement Plan, which
has been frozen (or, upon the merger of First United with BancorpSouth,
continuing employees shall not receive service credit for the purpose of accrual
of pension benefits under the BancorpSouth or BancorpSouth Bank defined benefit
plan).
(b) Each continuing employee shall receive credit for all time employed
with Texarkana First Financial or First Federal for purposes of the application
of First United's or a First United subsidiary's (or, if applicable,
BancorpSouth's or BancorpSouth Bank's) severance and vacation policies
applicable to employees generally, and for all purposes under the employee
welfare benefit plans and other employee benefit plans and programs sponsored by
First United or its affiliates (or by BancorpSouth or BancorpSouth Bank) (but
not for any purpose under the First United Defined Benefit Retirement Plan or
for accrual of pension benefits under any defined benefit plan of BancorpSouth
or BancorpSouth Bank). Such service, however, shall not be recognized to the
extent that such recognition would result in a duplication or increase of
benefits or such service would not be recognized under an Employee Benefit Plan
(or a plan of BancorpSouth or BancorpSouth Bank). Any preexisting condition
exclusion applicable to such plans and programs shall be waived with respect to
any continuing employee to the same extent waived under Texarkana First
Financial or First Federal employee benefit plans. For purposes of determining
each continuing employee's benefit for the year in which the merger occurs under
First United's (or, if applicable, BancorpSouth's or BancorpSouth Bank's)
vacation program, any vacation taken by a continuing employee preceding the
closing date of the merger for the calendar year in which the merger occurs will
be deducted from the total First United (or, if applicable, BancorpSouth or
BancorpSouth Bank) vacation benefit available to such employee for such calendar
year.
(c) On or before, but effective as of the closing date of the merger,
Texarkana First Financial may take such actions as may be necessary (i) to cause
each individual employed by Texarkana First Financial or First Federal
immediately prior to the closing date to have a fully vested and nonforfeitable
interest in such employee's account balance in the Texarkana First Financial
ESOP and the First Federal Financial Institutions Thrift Plan sponsored by
Texarkana First Financial as of the closing date and (ii) to contribute amounts
accrued on the books of Texarkana First Financial from January 1, 2000 to the
closing date to such plan(s). These provisions do not create or modify any
employee benefit plan of First United or any of its affiliates (or of
BancorpSouth or BancorpSouth Bank), and should not be construed as creating any
employment contract or third party beneficiary right between First United or
Texarkana First Financial (or BancorpSouth or BancorpSouth Bank), on one hand,
and any such employee, on the other hand.
(d) Any continuing employee who is terminated for any reason other than
for cause within one year from the closing date shall be entitled to receive
severance pay equal to the product of (x) the
32
continuing employee's weekly base salary, and (y) the number of weeks
applicable to the continuing employee as set forth in the following schedule:
Salary Ranges
Length of Service $15,000 or less $15,001 to $40,000 $40,001 or greater
----------------- --------------- ------------------ ------------------
90 days but less than 5 years 2 weeks 4 weeks 8 weeks
5 years but less than 10 years 5 weeks 8 weeks 14 weeks
10 years or greater 8 weeks 12 weeks 20 weeks
Any continuing employee who receives severance pay under this schedule shall
not be entitled to additional severance pay under any other policy of First
United (or BancorpSouth) as a result of the termination. For purposes of this
provision of the merger agreement, "cause" is defined as (i) any act or
omission by the continuing employee constituting fraud under the laws of the
State of Arkansas or the United States of America; or (ii) a finding of
probable cause, or a plea of nolo contendere to, a felony or other crime
involving moral turpitude by the continuing employee; or (iii) the negligent
performance by the continuing employee of the material responsibilities of
his or her position or the negligent failure by the continuing employee to
adhere to the policies of First United (or BancorpSouth); or (iv) the willful
or reckless failure by the continuing employee to substantially perform his
duties, the willful or reckless failure by the continuing employee to adhere
to First United's (or BancorpSouth's) policies, or the willful or reckless
engaging by the continuing employee in misconduct which is materially
injurious to First United (or BancorpSouth); or (v) failure by the continuing
employee to comply with First United's (or BancorpSouth's) policies
concerning employment discrimination or harassment; or (vi) the receipt by
the continuing employee of a materially and substantially unfavorable
performance review, provided, however, that the continuing employee shall be
given a thirty-day probationary period within which the continuing employee
shall be allowed an opportunity to correct any performance deficiencies
included in the review.
EMPLOYEE STOCK OWNERSHIP PLAN. Pursuant to the merger agreement,
upon execution of the agreement, Texarkana First Financial amended the
Texarkana First Financial ESOP to provide that: (i) effective with the
closing date of the merger, amounts received by the ESOP on the sale of the
shares held as collateral for any outstanding ESOP loan will be used first to
repay the outstanding balance on the ESOP loan; (ii) then any proceeds from
the sale of pledged unallocated shares held by the ESOP in excess of the
outstanding balance on the ESOP loan will be allocated directly to
participants' accounts under the ESOP, as earnings, in accordance with the
terms of the ESOP; and (iii) none of the proceeds received on the sale of the
shares held as collateral for the outstanding ESOP loan will be treated as
annual additions for purposes of Internal Revenue Code section 415. Texarkana
First Financial has filed this amendment with the Internal Revenue Service
for a determination as to the effect of the amendment on the qualified status
of the ESOP. Following the receipt of a favorable determination letter, all
proceeds received by the ESOP will be allocated to participants' accounts
under the ESOP, in accordance with the terms of the approved amendment. In
the event a favorable determination letter is not received, all proceeds
received by the ESOP will be allocated to participants' accounts under the
ESOP in accordance with its terms. Following such allocation, the ESOP may
either be terminated or merged into a First United plan (or upon the merger
of First United with BancorpSouth, a BancorpSouth plan or BancorpSouth Bank
plan) at the request of First United in accordance with the terms of ERISA
and all other applicable law.
COVENANTS OF TEXARKANA FIRST FINANCIAL AND FIRST UNITED; CONDUCT OF BUSINESS
PRIOR TO THE MERGER
33
The merger agreement contains covenants of First United and
Texarkana First Financial concerning, among other things:
- - cooperation to obtain government approvals to consummate the merger;
- - provision of information about themselves and their subsidiaries;
- - use of best efforts to consummate the merger;
- - prompt notification of any event that would cause or constitute a
breach of any representation, warranty or covenant; and
- - prompt notification of any pending or threatened legal action,
obligation, claim or controversy pending or threatened against that
party.
The merger agreement provides that Texarkana First Financial will (and
will cause First Federal to), among other things:
- - conduct their banking and related business in the ordinary course and
consistent with past practices;
- - use all reasonable efforts to preserve their business organizations
intact;
- - perform all of their obligations under agreements and contracts;
- - timely file reports, including tax returns, required to be filed with
governmental authorities;
- - promptly pay taxes and withhold taxes; and
- - maintain all tangible assets in good repair and maintain insurance
policies in effect.
The merger agreement further provides that prior to the effective time
neither Texarkana First Financial nor First Federal will, without the prior
written consent of First United:
- - incur any material liabilities or material obligations, whether
directly or by way or guaranty, including any obligations for borrowed
money whether or not evidenced by a note, bond, debenture or similar
instrument, except in the ordinary course of business consistent with
past practice;
- - (i) except as disclosed in the disclosure schedule of Texarkana First
Financial delivered to First United in connection with the merger
agreement, and except for merit or promotion increases in accordance
with existing policy, grant any bonuses or increases in compensation to
their employees, officers or directors, (ii) effect any change in
retirement or any other benefits to any class of employees or officers
(unless any such change shall be required by the merger agreement or
applicable law) which would increase their retirement benefit
liabilities, (iii) adopt, enter into, amend or modify any Texarkana
First Financial employee benefit plan except as provided in the merger
agreement, or (iv) hire any executive officer or elect any new
director;
34
- - except as set forth in Texarkana First Financial's disclosure schedule,
declare or pay any dividend on, or make any other distribution in
respect of, their outstanding shares of capital stock or equity
interests other than cash dividends by First Federal;
- - except as contemplated by the merger agreement or as set forth in
Texarkana First Financial's disclosure schedule, (i) redeem, purchase
or otherwise acquire any shares of its capital stock or equity
interests or any securities or obligations convertible into or
exchangeable for any shares of its capital stock or equity interests,
or any options, warrants, conversion or other rights to acquire any
shares of its capital stock or equity interests or any such securities
or obligations; (ii) merge with or into or consolidate with any other
corporation or bank, or effect any reorganization or recapitalization;
(iii) purchase or otherwise acquire any substantial portion of the
assets or any class of stock, of any corporation, bank or other
business; (iv) liquidate, sell, dispose of, or encumber any assets or
acquire any assets, other than in the ordinary course of business
consistent with past practice; or (v) split, combine or reclassify any
of its capital or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock;
- - issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale of, any shares of its capital
stock of any class (including shares held in treasury), any equity
interests, any voting debt or any securities convertible into, or any
rights, warrants or options to acquire, any such shares, equity
interests, voting debt or convertible securities;
- - initiate, solicit or encourage, or take any action to facilitate, any
inquiries or the making of any proposal which constitutes, or may
reasonably be expected to lead to, any competing transaction, except
pursuant to a written opinion of legal counsel that failure to take
such action would violate the directors' fiduciary duties;
- - propose or adopt any amendments to its corporate charter or bylaws
except as provided in the merger agreement;
- - authorize, recommend, propose or announce an intention to authorize,
recommend or propose, or enter into an agreement in principle with
respect to any acquisition of a material amount of assets of securities
or any release or relinquishment of any material contract rights not in
the ordinary course of business;
- - except in their fiduciary capacities, purchase any shares of First
United common stock;
35
- - change any method of accounting in effect at December 31, 1999, or
change any method of reporting income or deductions for federal income
tax purposes from those employed in the preparation of the federal
income tax returns for the taxable year ending September 30, 1999,
except as may be required by law, rule or regulation or GAAP;
- - change the lending, investment, asset/liability management and other
material policies concerning the business of Texarkana First Financial
or First Federal, unless required by law or order or unless such change
does not cause a material adverse effect on Texarkana First Financial
or First Federal;
- - make any single new loan or series of loans not in accordance with
existing loan policies to one borrower or related series of borrowers
in an aggregate amount greater than $500,000;
- - sell or otherwise dispose of securities owned as investments except at
maturity dates or in accordance with past practices for securities held
for sale or trading or in accordance with GAAP for securities
classified as "held to maturity";
- - sell or dispose of any real estate or other assets having a value in
excess of $100,000;
- - make any capital expenditure other than those set forth in Texarkana
First Financial's disclosure schedule or those that are made in the
ordinary course of business or are necessary to maintain existing
assets in good repair, and in any event are in an amount of no more
than $100,000 in the aggregate, or except as necessary to comply with
applicable regulatory guidelines; or
- - agree in writing or otherwise to do any of the foregoing.
CONDITIONS TO CONSUMMATION OF THE MERGER
The closing of the merger will occur only if, among other things:
- - the merger shall have been approved and adopted by the required vote of
the shareholders of Texarkana First Financial;
- - the merger, the merger of First Federal with FirstBank and the other
transactions described herein shall have received all necessary
regulatory approvals, without any condition not reasonably acceptable
to First United;
- - no temporary restraining order, preliminary or permanent injunction or
other order preventing the consummation of the merger shall be in
effect; and
- - no material action, suit or proceeding before any governmental
authority shall have been commenced against First United, Texarkana
First Financial or any affiliate, subsidiary, officer or director of
either of them, seeking to restrain or enjoin the transactions
contemplated by the merger agreement.
The obligation of First United to consummate the merger is subject to,
among other things, the following conditions:
36
- - the representations and warranties of Texarkana First Financial in the
merger agreement must be true and correct as of the closing date;
- - Texarkana First Financial must have performed its obligations under the
merger agreement;
- - Texarkana First Financial must have delivered to First United an
opinion of legal counsel;
- - there must not have been, since December 31, 1999, a material adverse
change in the financial condition, results of operations or business of
Texarkana First Financial;
- - Phase I environment audits on those portions of Texarkana First
Financial's properties selected by First United for audit must have
been conducted and must show no material environmental problems;
- - First United shall have obtained all consents or approvals required
under any loan or credit agreement, note, mortgage, indenture, lease or
other agreement or instrument;
- - the number of dissenting shares of the outstanding Texarkana First
Financial common stock must not exceed 11% of the outstanding
Texarkana First Financial common stock, excluding options to purchase
Texarkana First Financial common stock;
- - each of the directors of Texarkana First Financial and of First Federal
shall have executed and delivered to First United a noncompetition
agreement, which agreements will be effective as of the closing date of
the merger;
- - each holder of options to purchase Texarkana First Financial common
stock shall have entered into a written agreement and waiver with
First United and Texarkana First Financial, providing that such option
holder will accept the consideration due under the merger agreement in
full satisfaction of all rights under their Texarkana First Financial
options;
- - each director and executive officer of Texarkana First Financial shall
have executed and delivered to First United a letter describing all
known claims such persons may have against Texarkana First
Financial; and
- - James McKinney shall have entered into an agreement amending his
employment agreement to provide that the employment agreement will
terminate on the later of November 1, 2000 or one month after the
closing date, and that Mr. McKinney will receive no change of
control benefits under his employment agreement as a result of the
merger.
The obligation of Texarkana First Financial to consummate the merger is
subject to, among other things, the following conditions:
- - the representations and warranties of First United in the merger
agreement shall be true and correct as of the closing date of the
merger;
- - First United shall have performed its obligations under the merger
agreement;
- - Texarkana First Financial shall have obtained the opinion of Stifel,
Nicolaus that the terms of the merger and the other transactions
contemplated by the merger agreement are fair from a financial point of
view to the shareholders of Texarkana First Financial;
- - First United shall have delivered to Texarkana First Financial an
opinion of legal counsel; and
- - there shall have been no material adverse change since December 31,
1999 in the financial condition, results of operations or business of
First United.
NO NEGOTIATIONS WITH OTHERS
37
Except upon advice of counsel to the extent required to fulfill the
fiduciary duties owed to the shareholders of Texarkana First Financial,
Texarkana First Financial will not, directly or indirectly, nor will it
permit First Federal or their respective officers, directors, employees,
representatives or agents to directly or indirectly:
- initiate, solicit or encourage, including by way of furnishing
information or assistance, or take any action to facilitate,
any inquiries or the making of any proposal which constitutes,
or may reasonably be expected to lead to, any "Competing
Transaction" (as that term is defined below);
- negotiate with any person in furtherance of such inquiries or
to obtain a Competing Transaction; or
- agree to or endorse any Competing Transaction, or authorize
any of its officers, directors or employees, or any investment
banker, financial advisor, attorney, accountant or other
representative retained by Texarkana First Financial or First
Federal to take any such action.
For purposes of the merger agreement, "Competing Transaction" means any of
the following involving Texarkana First Financial or First Federal: any
merger, consolidation, share exchange or other business combination; a sale,
lease, exchange, mortgage, pledge, transfer or other disposition of a
substantial portion of assets; or a sale of shares of capital stock (or
securities convertible or exchangeable into or otherwise evidencing, or any
agreement or instrument evidencing, the right to acquire capital stock) or
equity interests.
If any of the above actions are engaged in by a representative of
Texarkana First Financial or First Federal, upon learning of such action by
the representative, Texarkana First Financial must take appropriate steps to
terminate such action and must promptly notify First United orally of all of
the relevant details relating to all inquiries and proposals which it may
receive relating to the matter.
38
NONCOMPETITION AGREEMENTS
As a condition to First United's obligation to consummate the
merger, the directors of Texarkana First Financial and First Federal have,
effective as of May 15, 2000, entered into certain noncompetition agreements
with First United. Under these agreements each of the directors of Texarkana
First Financial and First Federal has agreed that, for a period of two years
after the director ceases to be a director, officer or consultant of
Texarkana First Financial, First Federal or First United, the director will
not:
- disclose any confidential information regarding Texarkana
First Financial, First Federal or First United; or
- own, manage, or serve as director, officer or consultant for,
any business engaged in banking in Hempstead, Howard, Little
River, Miller or Sevier Counties, Arkansas or Bowie County,
Texas, except with the prior written consent of First United.
For these agreements, each director has received consideration of
ten dollars ($10.00). The noncompetition agreements are effective as of the
closing date of the merger, and are null and void if the merger is not
consummated.
TERMINATION
The merger agreement provides that it may be terminated at any time
prior to the effective time:
- by mutual consent of the boards of directors of First United
and Texarkana First Financial;
- by either First United or Texarkana First Financial (i) if
there has been a breach by the other party in any material
respect of any representation, warranty, covenant or agreement
set forth in the merger agreement, or (ii) if any
representation or warranty of the other party is discovered to
have become untrue in any material respect, and the breach or
other condition has not been cured within 10 business days
following receipt by the nonterminating party of notice of the
breach or other condition from the terminating party;
- by either First United or by Texarkana First Financial if any
permanent injunction preventing the consummation of the merger
has become final and nonappealable;
- by either First United or by Texarkana First Financial if the
merger has not have been consummated on or before December 31,
2000, for a reason other than the failure of the terminating
party to comply with its obligations under the merger
agreement;
- by either First United or by Texarkana First Financial if the
FDIC or other regulatory authority has denied approval of the
merger and such denial has become final and nonappealable; or
- by either First United or by Texarkana First Financial if any
condition precedent to the terminating party's obligation to
effect the merger has not been satisfied, and the condition
cannot reasonably be expected to be satisfied prior to
December 31, 2000.
39
AMENDMENT
The merger agreement may be amended by the boards of directors of
Texarkana First Financial and First United at any time prior to the closing
date of the merger, by an instrument in writing signed on behalf of each of
Texarkana First Financial and First United. However, the consideration to be
received by the Texarkana First Financial shareholders may not be changed
after the special shareholders' meeting.
MARKET PRICES AND DIVIDENDS
Texarkana First Financial's common stock trades on the AMEX under
the symbol "FTF." The following table sets forth, for the periods indicated,
the high and low sales prices for the common stock as quoted on the AMEX and
the amount of cash dividends paid per share.
Common Stock
-----------------------------------------------------------------------------
Cash Dividends
High Low Per Share
-------------------- ---------------------- ----------------------
Year Ended September 30, 1998
First Quarter $27.125 $23.875 $0.14
Second Quarter $29.625 $24.75 $0.14
Third Quarter $30.63 $27.875 $0.14
Fourth Quarter $28.25 $21.875 $0.16
Year Ended September 30, 1999
First Quarter $24.25 $20.00 $0.16
Second Quarter $24.125 $22.25 $0.16
Third Quarter $24.50 $23.25 $0.16
Fourth Quarter $24.50 $21.25 $0.17
Year Ending September 30, 2000
First Quarter $21.00 $19.25 $0.17
Second Quarter $19.25 $13.75 $0.17
Third Quarter $22.8125 $15.75 $0.17
Fourth Quarter $__.___ $__.___ $__.___
(to ____, 2000)
The closing price per share for the common stock as reported on the
AMEX on April 17, 2000, the lowest price the stock reached in the month
immediately preceding the public announcement of the proposed merger, was
$15.875. The closing price per share on May 5, 2000, ten days before public
announcement of the proposed merger, was $16.625. The closing price per share
on May 15, 2000, the last full trading day prior to the public announcement
of the proposed merger, was $21.50. As of the record date, ________, 2000,
there were approximately 391 holders of record of the common stock.
40
WHERE YOU CAN FIND MORE INFORMATION
Each of Texarkana First Financial, First United and BancorpSouth is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, and in accordance therewith files reports, proxy
statements, and other information with the SEC. You may read and copy these
reports, proxy statements and other information at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, DC 20549, and the SEC's Regional offices located at Seven World
Trade Center, 13th Floor, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of this material can also be obtained at prescribed rates by writing
to the Public Reference Section of the SEC at 450 Fifth Street, N.W.,
Washington, D.C., 20549 or by calling the SEC at 1-800-SEC-0330. In addition,
the SEC maintains a World Wide Web site at http://www.sec.gov, which contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC.
FUTURE SHAREHOLDER PROPOSALS
Texarkana First Financial intends to hold an annual meeting in 2001
only if the merger is not completed. Any Texarkana First Financial
shareholder intending to submit a proposal for inclusion in the proxy
statement and form of proxy for our 2001 annual meeting of shareholders, in
the event that it is held, must submit the proposal to the attention of our
Corporate Secretary at our principal executive office sufficiently far in
advance so that it is received by us not later than August 29, 2000, and such
proposal must comply with the requirements of Rule 14a-8 of the Securities
Exchange Act of 1934.
OTHER BUSINESS
No other business may be presented for consideration at the special
meeting other than as stated in the accompanying Notice of Special Meeting of
Shareholders.
FORWARD-LOOKING STATEMENTS--CAUTIONARY STATEMENTS
This proxy statement contains certain forward-looking statements and
information relating to Texarkana First Financial and its subsidiaries that
are based on the beliefs of Texarkana First Financial's management as well as
assumptions made by and information currently available to Texarkana First
Financial's management. When used in this proxy statement, the words
"anticipate," "believe," "estimate," "expect" and "intend" and words or
phrases of similar import, as they relate to Texarkana First Financial or its
subsidiaries or Company management, are intended to identify forward-looking
statements. Such statements reflect the current view of Texarkana First
Financial with respect to future events and are subject to certain risks,
uncertainties and assumptions related to certain factors including, without
limitation, competitive factors, general economic conditions, customer
relations, the interest rate environment, governmental regulation and
supervision, nonperforming asset levels, loan concentrations, changes in
industry practices, one time events and other factors described herein. Based
upon changing conditions, should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described herein as
anticipated, believed, estimated, expected or intended. Texarkana First
Financial does not intend to update these forward-looking statements.
WE HAVE AUTHORIZED NO ONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ABOUT THE MERGER, TEXARKANA FIRST FINANCIAL OR FIRST
41
FEDERAL, THAT DIFFERS FROM OR ADDS TO THE INFORMATION CONTAINED IN THIS PROXY
STATEMENT OR IN THE DOCUMENTS WE HAVE PUBLICLY FILED WITH THE SEC. THEREFORE,
IF ANYONE SHOULD GIVE YOU ANY DIFFERENT OR ADDITIONAL INFORMATION, YOU SHOULD
NOT RELY ON IT.
THE INFORMATION CONTAINED IN THIS PROXY STATEMENT SPEAKS ONLY AS OF
THE DATE INDICATED ON THE COVER OF THIS PROXY STATEMENT UNLESS THE
INFORMATION SPECIFICALLY INDICATES THAT ANOTHER DATE APPLIES.
42
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
BY AND BETWEEN
FIRST UNITED BANCSHARES, INC.
AND
TEXARKANA FIRST FINANCIAL CORPORATION
Dated as of May 15, 2000
AGREEMENT AND PLAN OF REORGANIZATION
BETWEEN
FIRST UNITED BANCSHARES, INC.,
AND
TEXARKANA FIRST FINANCIAL CORPORATION
TABLE OF CONTENTS
SECTION PAGE *
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ARTICLE I
THE MERGER
SECTION 1.01. The Merger ........................................... 2
SECTION 1.02. Conversion of FFC Stock .............................. 2
SECTION 1.04. Exchange Procedures .................................. 4
SECTION 1.04. Effective Time of the Merger ......................... 5
SECTION 1.05. Closing .............................................. 6
SECTION 1.06. Subsidiary Mergers ................................... 6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FFC
SECTION 2.01. Organization of FFC .................................. 6
SECTION 2.02. Capital Structure of FFC ............................. 7
SECTION 2.03. Ownership and Organization of FSA .................... 7
SECTION 2.04. Capital Structure of FSA ............................. 8
SECTION 2.05. Subsidiaries ......................................... 8
SECTION 2.06. Authority ............................................ 8
SECTION 2.07. No Default ........................................... 9
SECTION 2.08. FFC Financial Statements ............................. 10
SECTION 2.09. FFC Reports .......................................... 11
SECTION 2.10. Information Supplied ................................. 11
SECTION 2.11. Authorizations; Compliance with Applicable Laws ...... 12
SECTION PAGE
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SECTION 2.12. Compliance With Environmental Laws ................... 13
SECTION 2.13. Litigation and Claims ................................ 16
SECTION 2.14. Taxes ................................................ 16
SECTION 2.15. Certain Agreements ................................... 17
SECTION 2.16. Employee Benefit Plans ............................... 18
SECTION 2.17. Insurance ............................................ 25
SECTION 2.18. Conduct of FFC to Date ............................... 25
SECTION 2.19. Material Adverse Change .............................. 27
SECTION 2.20. Properties, Leases and Other Agreements .............. 27
SECTION 2.21. No Untrue Statements ................................. 28
SECTION 2.22. Proper Documentation ................................. 28
SECTION 2.23 Material Contracts ................................... 30
SECTION 2.24. Regulatory Approvals ................................. 31
SECTION 2.25. Federal Financial Assistance ......................... 31
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANCSHARES
SECTION 3.01. Organization of Bancshares ........................... 32
SECTION 3.02. Authority ............................................ 32
SECTION 3.03. No Default ........................................... 32
SECTION 3.04. Bancshares Financial Statements ...................... 33
SECTION 3.05. No Untrue Statements ................................. 33
SECTION 3.06. Material Adverse Change .............................. 34
SECTION PAGE
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SECTION 3.07. Authorizations; Compliance with Applicable Laws ...... 34
SECTION 3.08. Regulatory Approval .................................. 34
SECTION 3.09. Accredited Investor .................................. 34
ARTICLE IV
AGREEMENTS OF FFC
SECTION 4.01. Affirmative Covenants of FFC ......................... 35
SECTION 4.02. Negative Covenants of FFC ............................ 36
SECTION 4.03. Access and Information ............................... 39
SECTION 4.04. FFC Shareholders Meeting ............................. 40
SECTION 4.05. Proxy Statement ...................................... 40
SECTION 4.06. Termination or Merger of Employee Benefit Plans ...... 41
SECTION 4.07. FFC ESOP ............................................. 42
SECTION 4.08. FFC's Disclosure Schedule ............................ 43
ARTICLE V
AGREEMENTS OF BANCSHARES
SECTION 5.01. Regulatory Approvals ................................. 43
SECTION 5.02. Bancshares Employee Benefit Plans .................... 44
SECTION 5.03. Indemnification ...................................... 47
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Legal Conditions to Merger ........................... 49
SECTION 6.02. Reports .............................................. 50
SECTION PAGE
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SECTION 6.03. Update Disclosure; Breaches .......................... 51
SECTION 6.04. Ability to Perform ................................... 51
SECTION 6.05. Brokers or Finders ................................... 51
SECTION 6.06. Reasonable Efforts ................................... 51
SECTION 6.07. Governmental and Other Third Party Approvals ......... 52
SECTION 6.08. Nonpublic Information ................................ 52
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01. Conditions to Each Party's Obligation to
Effect the Merger .................................... 53
SECTION 7.02. Conditions to Obligations of Bancshares .............. 54
SECTION 7.03. Conditions to Obligations of FFC ..................... 56
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01. Termination .......................................... 57
SECTION 8.02. Effect of Termination ................................ 58
SECTION 8.03. Amendment ............................................ 58
SECTION 8.04. Extension; Waiver .................................... 59
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Notices .............................................. 59
SECTION 9.02. Interpretation ....................................... 60
iv
SECTION PAGE
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SECTION 9.03. Counterparts ......................................... 60
SECTION 9.04. Entire Agreement ..................................... 60
SECTION 9.05. Governing Law ........................................ 61
SECTION 9.06. Publicity ............................................ 61
SECTION 9.07. Assignment ........................................... 61
SECTION 9.08. Knowledge of FFC ..................................... 61
SECTION 9.09. Material Adverse Change .............................. 61
SECTION 9.10. Severability ......................................... 62
SECTION 9.11. Successors and Assigns ............................... 62
SECTION 9.12. Expenses ............................................. 62
SECTION 9.13. Non-Survival of Representations and Warranties ....... 62
EXHIBIT A Plan of Merger
EXHIBIT 7.02(c) Legal Opinion of Jenkens & Gilchrist, P.C.
EXHIBIT 7.02(h) Noncompetition Agreement
EXHIBIT 7.02(i) FFC Option Holder Agreement and Waiver
EXHIBIT 7.03(d) Legal Opinion of Mitchell, Williams, Selig, Gates &
Woodyard, P.L.L.C.
v
INDEX OF DEFINED TERMS
SECTION
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Act ..................................................................... 3.09
Agreement ............................................................. Page 1
Articles of Merger ...................................................... 1.04
BHC Act .............................................................. 2.07(a)
Bancshares ............................................................ Page 1
Bancshares Financial Statements ......................................... 3.04
Bancshares Permits ...................................................... 3.07
Certificate, Certificates ............................................... 1.03
Closing ................................................................. 1.05
Closing Date ............................................................ 1.05
Code .................................................................... 2.16
Competing Transaction ................................................ 4.02(f)
Continuing Employee ..................................................... 5.02
Effective Time .......................................................... 1.04
Employee Benefit Plans .................................................. 2.16
Environmental Laws ................................................... 2.10(f)
ERISA ................................................................... 2.16
ESOP .................................................................... 4.06
Exchange Act ............................................................ 2.07
401(k) Plan .......................................................... 5.02 C.
FDIC .................................................................... 2.09
INDEX OF DEFINED TERMS SECTION
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vi
FFC ................................................................... Page 1
FFC Disclosure Schedule ................................................. 4.08
FFC Financial Statements ................................................ 2.08
FFC Material Contracts .................................................. 2.23
FFC Merger .............................................................. 1.06
FFC Options ............................................................. 1.02
FFC Permits ............................................................. 2.11
FFC Property ......................................................... 2.12(h)
FFC Reports ............................................................. 2.09
FFC Shareholder ......................................................... 1.02
FFC Stock ............................................................. Page 1
FSA .................................................................. 3.12(a)
FSA Merger .............................................................. 1.06
FRB ..................................................................... 2.10
GAAP .................................................................... 2.08
Governmental Entity ..................................................... 2.07
Hazardous Materials .................................................. 2.10(g)
Held to Maturity ..................................................... 4.02(m)
HOL Act ................................................................. 2.01
Indemnified Parties ..................................................... 5.03
Injunction ........................................................... 7.01(c)
VII
INDEX OF DEFINED TERMS SECTION
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Instructions ............................................................ 1.03
IRS ..................................................................... 2.14
Laws .............................................................. 2.11, 3.07
Merger ................................................................ Page 1
Merger Agreements ..................................................... Page 1
Option Consideration ............................................. 1.02(a)(ii)
OTS ..................................................................... 1.03
Paying Agent ............................................................ 1.03
Per Share Purchase Price .......................................... 1.02(a)(i)
Plan of Merger ........................................................ Page 1
Proxy Statement ...................................................... 2.10(b)
Purchase Price .......................................................... 1.02
SEC ..................................................................... 2.09
Securities Act .......................................................... 2.07
Sub ................................................................... Page 1
Subsidiary Mergers ...................................................... 1.06
Tax, Taxes, Taxable ..................................................... 2.14
TBCA .................................................................... 1.01
Transmittal Items ....................................................... 1.03
Transmittal Letter ...................................................... 1.03
Violation ............................................................... 3.04
Voting Debt ............................................................. 3.03
viii
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") is made as of
May __, 2000 by and between First United Bancshares, Inc. ("Bancshares") and
Texarkana First Financial Corporation ("FFC").
WHEREAS, FFC owns one hundred percent (100%) of the issued and
outstanding shares of capital stock of First Federal Savings & Loan Association
of Texarkana, Texarkana, Arkansas ("FSA"); and
WHEREAS, Bancshares desires to acquire one hundred percent (100%) of
the capital stock of FFC (the "FFC Stock") upon the terms and conditions
hereinafter set forth through the merger of a newly created subsidiary of
Bancshares ("Sub") with and into FFC with FFC to be the surviving corporation,
(the "Merger"), pursuant to a Plan of Merger in substantially the form attached
hereto as Exhibit A (the "Plan of Merger"); and
WHEREAS, it is the intention of the parties to this Agreement that the
Merger shall not subject either party or Sub to any federal income tax pursuant
to provisions of the Internal Revenue Code; and
WHEREAS, the respective Boards of Directors of Bancshares and FFC
believe that such proposed Merger and the exchange of cash for the FFC Stock,
pursuant and subject to the terms of this Agreement and the Plan of Merger (the
"Merger Agreements"), is in the best interests of their respective corporations
and shareholders; and
WHEREAS, Bancshares and FFC desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
various conditions to the Merger;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
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ARTICLE I
TERMS OF THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of this
Agreement, Bancshares and FFC agree to effect the Merger of Sub, a wholly-owned
subsidiary of Bancshares to be created by Bancshares, with and into FFC in
accordance with the Texas Business Corporation Act (the "TBCA"). FFC shall be
the surviving corporation under the Merger. The separate corporate identity of
Sub shall cease upon consummation of the Merger. The Merger will not effect any
changes in FFC's Articles of Incorporation.
1.02. CONVERSION OF FFC STOCK.
(a) PURCHASE PRICE. At the Effective Time (as defined in
Section 1.04), by virtue of the Merger and without any action on the part of any
holder of FFC Stock ("FFC Shareholder"), but subject to the rights of dissenting
shareholders of FFC, all of the shares of the FFC Stock issued and outstanding
and all options to purchase shares of FFC Stock (the "FFC Options") which are
outstanding and unexercised immediately prior to the Effective Time, shall be
converted into the right to receive from Bancshares, an aggregate amount in cash
equal to $37,500,000 (the "Purchase Price"). The Purchase Price shall be
allocated to the holders of the FFC Stock and FFC Options as follows:
(i) FFC STOCK. For each share of FFC Stock issued and
outstanding at the Effective Time, an amount in cash of $23.35208 per share (the
"Per Share Purchase Price"). Subject only to dissenter's rights under Articles
5.11 through 5.13 of the TBCA, at the Effective Time all shares of FFC Stock
shall no longer be outstanding and shall be canceled and retired and all rights
with respect thereto shall cease to exist, and each holder of FFC Stock shall
cease to have any
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rights thereto, except the right to receive, upon surrender of the
certificate(s) representing any such shares of FFC Stock, his pro rata share of
the Purchase Price.
(ii) FFC OPTIONS. For each FFC Option outstanding and
unexercised immediately prior to the Effective Time, an amount in cash
calculated in the manner provided in this Section 1.02(a)(ii). The amount of
cash to be received by each holder of an FFC Option shall be equal to the
mathematical result obtained by multiplying (x) the Per Share Purchase Price
less the weighted average per-share exercise price of all FFC Options held by
such holder, by (y) the number of shares subject to FFC Options held by such
holder (such amount of cash to be received by a holder of FFC Options with
respect to such holder's total FFC Options being the "Option Consideration").
(b) CANCELLATION OF SHARES. All shares of FFC Stock issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except dissenter's rights or the right
to receive a pro rata cash payment as provided in this Section 1.02 and Section
1.03 and in accordance with the Plan of Merger, without interest.
(c) ACCELERATION AND CANCELLATION OF OPTIONS. The right to
exercise all FFC Options shall be accelerated and all FFC Options shall be
deemed exercised immediately prior to the Effective Time. All holders of FFC
Options prior to the Effective Time shall cease to have any rights with respect
thereto except the right to receive a pro rata cash payment as provided in this
Section 1.02 and Section 1.03 and in accordance with the Plan of Merger, without
interest.
(d) CONVERSION OF STOCK OF SUB. At the Effective Time, the
shares of Sub common stock validly issued and outstanding immediately prior to
the Effective Time will, by virtue of the Merger and without any action by the
holder thereof, be converted into the capital stock of FFC, so
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that all shares of capital stock of FFC will be owned by Bancshares. The
outstanding certificates representing shares of Sub common stock will, after the
Effective Time, be deemed to represent the number of shares of FFC into which
they have been converted and may be exchanged for new certificates of FFC upon
request of the holder thereof.
(e) DISSENTING SHAREHOLDERS. Any shares of FFC Stock held by
FFC Shareholders who perfect their dissenters' rights under the TBCA shall not
be converted as provided herein but shall, after the Effective Time, represent
such rights as are granted to dissenting shareholders by the TBCA.
1.03. EXCHANGE PROCEDURES. No later than twenty (20) days prior to the
Effective Time, Bancshares shall furnish to FFC, and FFC shall mail to each
holder of record of the FFC Stock and FFC Options, addressed to the most current
address of such persons according to the records of FFC, the following: (i) a
letter of transmittal specifying that delivery of certificates representing
ownership of FFC Stock or FFC Options ("Certificates" or, individually, a
"Certificate") shall be effected and risk of loss shall pass, on or after the
Effective Time only upon delivery of the Certificates to First United Trust
Company, N.A. (the "Paying Agent"), which shall be in a form and contain any
other provisions as Bancshares may reasonably require (the "Transmittal
Letter"), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for cash in the amount of the consideration due
hereunder (the "Instructions"). The Instructions shall request holders to
deliver their Certificates, a properly completed, duly executed Transmittal
Letter, and any other documentation that may be required from such holder
pursuant to the Instructions (collectively, the "Transmittal Items") to the
Paying Agent, and shall state that (x) occurrence of the Effective Time is
contingent upon the satisfaction of significant conditions, including regulatory
approval of the Merger and expiration of statutory waiting periods, and (y) the
Transmittal Items will be returned to
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the holders thereof if the Agreement is terminated prior to the Effective Time.
Bancshares shall instruct the Paying Agent that, on and after the Effective
Time, upon the delivery to the Paying Agent of the properly completed
Transmittal Items, the Paying Agent is to pay the holder of such Certificate in
exchange therefor the amount of cash such holder is entitled to receive in
respect of the Certificate surrendered, pursuant to the provisions of Section
1.02 and this Section 1.03, payable by check or direct deposit into such
shareholder's or option holder's account with FSA, and the Certificate so
surrendered shall forthwith be canceled. Such payments shall be made, in the
case of holders whose properly completed Transmittal Items are delivered to the
Paying Agent no later than ten (10) days prior to the Effective Time, by mailing
checks or making the direct deposit immediately after the Effective Time and in
no event later than the next business day after the Effective Time, and in all
other cases, by mailing checks or making the direct deposit promptly, but in no
event more than ten (10) days following the later of (i) the Effective Time, or
(ii) the date on which the properly completed Transmittal Items are delivered to
the Paying Agent. Only holders of Certificates who have delivered their properly
completed Transmittal Items to the Paying Agent no later than ten (10) days
prior to the Effective Time shall be eligible to receive payment at the
Effective Time as herein provided. Notwithstanding the foregoing, no payment
shall be made to an individual under this section until the Paying Agent has
received from such holder all of the required Transmittal Items properly
completed in accordance with the instructions. No payment shall be made for the
Certificates prior to the Effective Time, and no interest shall be payable with
respect to the payment of the Purchase Price.
1.04. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, articles of merger shall be duly prepared and executed by Sub and FFC
(the "Articles of Merger") and thereafter delivered to the Secretary of State of
Texas for filing, as provided in the TBCA, as soon
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as practicable on or after the Closing Date (as defined in Section 1.05). The
Merger shall become effective upon the approval and filing of the Articles of
Merger by the Secretary of State of Texas (the "Effective Time").
1.05. CLOSING. The closing of the Merger (the "Closing") will take
place at the offices of Bancshares at a time and on a date (the "Closing Date")
to be specified in writing by the parties as soon as reasonably practicable
after the later to occur of all regulatory and other approvals and the
expiration of all waiting periods but in no event later than ten (10) business
days after the satisfaction of all conditions set forth in Article VII.
1.06. SUBSIDIARY MERGERS. Immediately after the Effective Time FFC
shall be merged with and into Bancshares in accordance with the provisions of
the TBCA and the Arkansas Business Corporation Act, with Bancshares to be the
surviving corporation (the "FFC Merger"). Also, immediately after the Effective
Time FSA shall be merged with and into FirstBank, Texarkana, Texas, with
FirstBank to be the surviving entity (the "FSA Merger"). FFC and Bancshares will
take and will, respectively, cause FSA and FirstBank to take, all such actions
as are necessary to effect the FFC Merger and the FSA Merger (which together are
referred to herein as the "Subsidiary Mergers") immediately after the Effective
Time, including the filing of all necessary applications for approval by banking
regulators, providing information, and taking all necessary corporate action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF FFC
FFC hereby represents and warrants to Bancshares and United the
following:
2.01. ORGANIZATION OF FFC. FFC is a corporation duly organized, validly
existing and in good standing under the laws of the state of Texas and has the
corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as now being conducted. FFC
-6-
is qualified to do business in Arkansas and FFC is not qualified to do business
in any other state or foreign jurisdiction, and its ownership or leasing of
property or the conduct of its business does not require it to be so qualified.
FFC is registered as a savings and loan holding company with the Office of
Thrift Supervision ("OTS") under the Home Owners Loan Act of 1933, as amended
(the "HOL Act"). FFC has delivered to Bancshares true, accurate and complete
copies of its currently effective Articles of Incorporation and Bylaws,
including all amendments thereto.
2.02. CAPITAL STRUCTURE OF FFC. The authorized capital stock of FFC
consists of (i) 15,000,000 shares of common stock, $0.01 par value, of which
1,983,750 shares are issued, 1,539,342 shares are outstanding and 444,408 shares
are held by FFC in its treasury and (ii) 5,000,000 shares of preferred stock, no
par value, none of which are issued and outstanding. Options to purchase 172,614
shares of FFC common stock are outstanding, all of which shall be deemed to be
exercised immediately prior to Closing. All outstanding shares of FFC common
stock are validly issued, fully paid, nonassessable, and have not been issued in
violation of any preemptive rights. FFC has not issued and has no outstanding
bonds, debentures, notes or other indebtedness having the right to vote (or
convertible into securities having the right to vote) on any matters on which
shareholders may vote ("Voting Debt"). Except as described herein, there are no
outstanding options, warrants, calls, rights, or agreements of any character
whatsoever to which FFC is a party or by which FFC is obligated to issue,
deliver or sell additional shares of capital stock or any Voting Debt or by
which FFC is obligated to grant, extend or enter into any such option, warrant,
call, right or agreement.
2.03. OWNERSHIP AND ORGANIZATION OF FSA. FFC directly and beneficially
owns all of the shares of the outstanding capital stock of FSA. FSA is a federal
savings association duly organized and in good standing under the laws of the
United States and has the corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as now being
-7-
conducted. FFC has caused FSA to deliver to Bancshares true, accurate and
complete copies of its currently effective Articles of Association and Bylaws,
including all amendments thereto.
2.04. CAPITAL STRUCTURE OF FSA. The authorized capital stock of FSA
consists of (i) 10,000,000 shares of common stock $0.01 par value, of which 100
shares are issued and outstanding and no shares are held by FSA in its treasury
and (ii) 5,000,000 shares of preferred stock, $0.01 par value, none of which are
issued and outstanding. All of the outstanding shares of common stock of FSA are
fully paid and nonassessable and are owned by FFC free and clear of any claim,
lien, encumbrance or agreement with respect thereto and were not issued in
violation of any preemptive rights. FSA has not issued and has no outstanding
Voting Debt. There are no outstanding options, warrants, calls, rights, or
agreements of any character whatsoever to which FSA is a party or by which FSA
is obligated to issue, deliver or sell additional shares of capital stock or any
Voting Debt or by which FSA is obligated to grant, extend or enter into any such
option, warrant, call, right or agreement.
2.05. SUBSIDIARIES. FFC has no subsidiaries other than FSA. Except as
described herein and except for securities held in FSA's capacity as a fiduciary
or as investments made and held in the ordinary course of business, neither FFC
nor FSA owns beneficially, directly or indirectly, any class of equity
securities, partnership interests or similar interests of any corporation, bank,
partnership, limited partnership, business trust, association or similar
organization.
2.06. AUTHORITY. FFC has all requisite corporate power and authority to
enter into this Agreement and the Plan of Merger and, subject only to approval
of this Agreement and the Plan of Merger by the shareholders of FFC and by
applicable regulatory authorities, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the Plan of
Merger and the consummation of the transactions contemplated hereby and thereby
have been
-8-
duly authorized by all necessary corporate action on the part of FFC's board of
directors. This Agreement and the Plan of Merger have been duly executed and
delivered by FFC, and, subject to such shareholder approval, each constitutes a
valid and binding obligation of FFC enforceable in accordance with its terms,
except as the enforceability of the Agreement may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights of creditors and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
2.07. NO DEFAULT.
(a) Except as set forth in Schedule 2.07 of FFC's Disclosure
Schedule, the execution and delivery of this Agreement and the Plan of Merger do
not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict with, or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or the creation of a lien, pledge, security interest or
other encumbrance on assets (any such conflict, violation, default, right of
termination, cancellation or acceleration, loss or creation, a "Violation"),
pursuant to any provision of (i) the Articles of Incorporation, Articles of
Association, or Bylaws of FFC or FSA or (ii) any loan or credit agreement, note,
mortgage, indenture, lease, or other agreement, obligation, instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to FFC or FSA or their respective
properties or assets, except where such violation would not have a material
adverse effect on the business, operations or financial condition of FFC and FSA
taken as a whole. Other than in connection or in compliance with the provisions
of the TBCA, the Securities Act of 1933, as amended and the regulations
thereunder (the "Securities Act"), the Securities and Exchange Act of 1934, as
amended,
-9-
and the rules and regulations thereunder (the "Exchange Act"), the securities or
blue sky laws of the various states, and consents, authorizations, approvals,
notices or exemptions required under the Bank Merger Act, the Bank Holding
Company Act of 1956 (the "BHC Act"), the HOL Act, Arkansas banking laws, Texas
banking laws, and from other Governmental Entities (as defined below), no
consent, approval, order or authorization of, or registration, declaration or
filing with, any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (a "Governmental
Entity"), is required by or with respect to FFC or FSA in connection with the
execution and delivery of this Agreement and the Plan of Merger by FFC or the
consummation by FFC of the transactions contemplated hereby and thereby.
(b) Neither FFC nor FSA is in default under any material
agreement, ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party, by which it is bound, or to which its
properties or assets are subject.
2.08. FFC FINANCIAL STATEMENTS.
(a) The (i) consolidated balance sheet of FFC as of September
30, 1999 and 1998 and the related consolidated statements of income,
consolidated statements of cash flows and consolidated statements of
shareholders equity for the years then ended certified Wilf & Henderson, P.C.,
and (ii) the internally prepared and unaudited financial statements for FFC and
FSA dated February 29, 2000, (items (i) - (ii) being called collectively the
"FFC Financial Statements"), copies of which have been furnished by FFC to
Bancshares, have been prepared in accordance with generally accepted accounting
principles ("GAAP") (except as otherwise noted therein and, except for year-end
adjustments of the unaudited financial statements of a non-material nature),
present fairly the consolidated financial condition of FFC and the financial
condition of FSA, at the dates, and the results of operations and cash flows for
the periods, stated therein.
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(b) Neither FFC nor FSA has any liability of any nature,
whether direct, indirect, accrued, absolute, contingent or otherwise, which is
material to FFC and is required to be so disclosed under GAAP, except as
provided for or disclosed in the FFC Financial Statements and except for such
liabilities as are incurred in the ordinary course of business.
2.09. FFC REPORTS. FFC and FSA have filed all reports, registrations
and statements, together with any amendments required to be made with respect
thereto, that were and are required to be filed with (i) the OTS, (ii) the
Federal Deposit Insurance Corporation ("FDIC"), (iii) the Securities and
Exchange Commission ("SEC") and (iv) any other applicable Governmental Entity
(all such reports and statements are collectively referred to herein as the "FFC
Reports"), except where such failure to file would not have a material adverse
effect on the business operations or financial condition of FFC or FSA. The FFC
Reports complied in all material respects with all of the statutes, rules and
regulations enforced or promulgated by the Governmental Entity with which they
were filed and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
2.10. INFORMATION SUPPLIED.
(a) None of the information provided or to be provided by FFC
for inclusion or incorporation by reference in any document to be filed with the
SEC, the Board of Governors of the Federal Reserve System ("FRB"), the FDIC, the
Texas Banking Commissioner or any regulatory agency or officer in connection
with the transactions contemplated hereby, contains or will contain any untrue
statement of any material fact or omit to state a material fact required to be
stated therein in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
-11-
(b) None of the information with respect to FFC or FSA to be
included in the Proxy Statement (as defined below) will, at the time of the
mailing of the Proxy Statement or any amendments or supplements thereto, and at
the time of the FFC Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act. The letter to shareholders, notice of meeting, proxy statement and
form of proxy to be distributed to shareholders in connection with the Merger
and any schedules required to be filed with the SEC in connection therewith are
collectively referred to herein as the "Proxy Statement."
2.11. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS. FFC and FSA hold
all authorizations, permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities which are material to the operations of
the businesses of FFC or FSA (the "FFC Permits"). FFC and FSA are in compliance
with the terms of the FFC Permits, except where the failure so to comply would
not have a material adverse effect on FFC or FSA. To the knowledge of FFC, the
businesses of FFC and FSA are not being conducted in violation of any federal,
state or local law, statute, ordinance or regulation of any Governmental Entity
(collectively "Laws"), except for possible violations which individually or in
the aggregate do not and, insofar as reasonably can be foreseen, in the future
will not, have a material adverse effect on FFC or FSA. Other than routine,
scheduled examinations by banking regulators, no investigation or review by any
Governmental Entity with respect to FFC or FSA is pending or, to the knowledge
of FFC, threatened, nor has any Governmental Entity indicated an intention to
conduct the same.
-12-
2.12 COMPLIANCE WITH ENVIRONMENTAL LAWS. Except as disclosed in
Schedule 2.12 of FFC's Disclosure Schedule:
(a) To the knowledge of FFC, FFC and FSA are, and at all times
have been, in material compliance with, and have not been and are not in
violation of or liable under, any Environmental Law as defined below. FFC and
FSA do not have any basis to expect, nor has either received, any actual or
threatened order, notice or other communication from (a) any Governmental Entity
or private citizen acting in the public interest, or (b) the current or prior
owner or operator of any of the FFC Property, as defined below, of any actual or
potential violation or failure to comply with any Environmental Law, or of any
actual or threatened obligation to undertake or bear any costs or expenses to
comply with or as a result of such Environmental Law with respect to any of the
FFC Property, or with respect to any of the FFC Property to or at which
Hazardous Materials were generated, manufactured, refined, transferred,
imported, used or processed by FFC or FSA or any person for whose conduct they
are or may be held responsible, or from or at which Hazardous Materials have
been transported, treated, stored, handled, transferred, disposed, recycled or
received.
(b) None of the FFC Property contains Hazardous Materials 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 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 $250,000 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 FFC or FSA.
(c) To the knowledge of FFC, none of the outstanding loans of
FFC or FSA are secured by properties (such term shall include properties held by
FFC or FSA as trustee) that contain
-13-
Hazardous Materials 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.
(d) To the knowledge of FFC, FFC and FSA do not hold in the
capacity of trustee, and have 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 Environmental Laws
relating to emissions, discharges, wetlands, releases or threatened releases of
pollutants, contaminants or Hazardous Materials 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 Materials.
(e) To the knowledge of FFC, FFC and FSA do not hold in the
capacity of trustee, and have not loaned money against, the securities or assets
of any company or other association, and have not at any time owned property,
that is presently, or for which there is a reasonable basis to believe that it
will be in the future, 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 Material or
violation of Environmental Laws.
(f) As used in this Agreement, "Environmental Laws" means any
and all federal, state and local environmental, health and/or safety-related
laws, standards, ordinances, rules, codes, judicial or administrative orders or
decrees, directives, guidelines, and permits or permit conditions, which are or
become applicable to the FFC Property, including, without limitation, (i) the
-14-
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended (42 U.S.C. Sections 9601, ET SEQ.), (ii) the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801, ET SEQ.), (iii) the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, ET
SEQ.), (iv) the Federal Water Pollution Control Act, as amended (33 U.S.C.
Sections 1251, ET SEQ. and Sections 1321, ET SEQ.), (v) the Occupational Safety
and Health Act of 1970, as amended (29 U.S.C. Sections 651 ET SEQ.), (vi) the
Toxic Substances Control Act, as amended (15 U.S.C.Section 2601 ET SEQ.), and in
the regulations adopted and promulgated pursuant thereto, as such laws or
regulations now exist or may be amended, enacted, issued or adopted in the
future.
(g) As used in this Agreement, "Hazardous Materials" means any
chemical, substance, material, controlled substance, object, condition, waste,
living organism or combination thereof which is or may be hazardous to human
health or safety or to the environment due to its radioactivity, ignitability,
corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially harmful properties
or effects, including, without limitation, petroleum and petroleum products,
asbestos and asbestos-containing materials, radon, underground storage tanks and
the contents thereof, polychlorinated biphenyls (PCBs), and all of those
chemicals, substances, materials, controlled substances, objects, conditions,
wastes, living organisms or combinations thereof, which are listed, defined or
regulated in any manner, based directly or indirectly upon such properties or
effects, pursuant to any Environmental Law.
(h) As used in this Agreement, "FFC Property" means any and
all real estate currently or previously owned, leased or otherwise used in the
ordinary course of business by FFC or FSA, or in which FFC or FSA has or had an
investment or security interest (by mortgage, deed of trust or otherwise),
including, without limitation, properties owned pursuant to foreclosure,
properties held by FFC or FSA in the capacity of a trustee or properties in
which any venture capital
-15-
or similar unit of FFC or FSA had an interest. Warranties given herein with
respect to the FFC Property in which FFC or FSA has only a security interest
shall be to the knowledge of FFC.
(i) There shall be no breach of any warranty given in this
Section 2.12 unless as a result of the acts or omissions in question FFC and/or
FSA are subject to or reasonably likely to incur a material liability, or suffer
a diminution in value of any interests, exceeding $300,000.
2.13. LITIGATION AND CLAIMS. Except as disclosed in Schedule 2.13 of
FFC's Disclosure Schedule, (a) neither FFC nor FSA is subject to any continuing
order of, or written agreement or memorandum of understanding with, or
continuing material investigation by, any federal or state banking or insurance
authority or other Governmental Entity, or any judgment, order, writ,
injunction, decree or award of any Governmental Entity or arbitrator, including,
without limitation, cease-and-desist or other orders of any bank regulatory
authority, (b) there is no claim of any kind, action, suit, litigation,
proceeding, arbitration, investigation, or controversy affecting FFC or FSA
pending or, to the knowledge of FFC, threatened, which will have or can
reasonably be expected to have a material adverse effect on FFC or FSA, and (c)
there are no uncured material violations, or violations with respect to which
material refunds or restitutions may be required, cited in any compliance report
to FFC or FSA as a result of the examination by any bank regulatory authority.
2.14. TAXES. FFC and FSA have filed all tax returns required to be
filed by them and have paid or have set up an adequate reserve for the payment
of, all taxes required to be paid as shown on such returns, and the most recent
FFC Financial Statements reflect an adequate reserve for all taxes payable by
FFC and FSA accrued through the date of such financial statements. There has
been no audit by the United States Internal Revenue Service ("IRS") of FFC or
FSA. There is no audit pending by the IRS with respect to FFC or FSA. Neither
FFC nor FSA has executed or filed with the IRS any agreement which is still in
effect extending the period for assessment and collection of
-16-
any federal tax, and there are no existing material disputes as to federal,
state, or local taxes due from FFC or FSA. There are no material liens for taxes
upon the assets of FFC or FSA, except for statutory liens for taxes not yet
delinquent. Neither FFC nor FSA is a party to any action or proceeding by any
Governmental Entity for assessment and collection of taxes, and no claim for
assessment and collection of taxes has been asserted against any of them. For
the purpose of this Agreement, the term "tax" (including, with correlative
meaning, the terms "taxes" and "taxable") shall include all federal, state, and
local income, profits, franchise, gross receipts, payroll, sales, employment,
use, personal and real property, withholding, excise and other taxes, duties or
assessments of any nature whatsoever, together with all interest, penalties and
additions imposed with respect to such amounts. FFC and FSA have withheld from
their employees and timely paid to the appropriate governmental agency proper
and accurate amounts for all periods through the date hereof in material
compliance with all tax withholding provisions of applicable federal, state, and
local laws (including without limitation income, social security and employment
tax withholding for all types of compensation).
2.15. CERTAIN AGREEMENTS. Except as disclosed in Schedule 2.15 of FFC's
Disclosure Schedule or as otherwise contemplated by this Agreement, neither FFC
nor FSA is a party to any written, or to their knowledge, oral (i) consulting,
professional services, employment or other agreement providing any term of
employment, compensation, guarantee, or severance or supplemental retirement
benefit not terminable at will, (ii) union, guild or collective bargaining
agreement, (iii) agreement or plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of the
transactions contemplated by this Agreement, (iv) any stock option plan, stock
appreciation rights
-17-
plan, restricted stock plan, stock purchase plan or similar
plan granting rights to acquire stock or other equity in FFC or FSA, or (v)
contract containing covenants which limit the ability of FFC or FSA to compete
in any line of business or with any person or which involve any restriction of
the geographical area in which, or method by which, FFC or FSA may carry on its
business (other than as may be required by law or applicable regulatory
authorities). FFC and FSA shall terminate all existing consulting, professional
services and employment contracts other than at will employment contracts and
other than those disclosed in Schedule 2.15 of FFC's Disclosure Schedule, by no
later than the Closing Date unless otherwise requested by Bancshares.
2.16. EMPLOYEE BENEFIT PLANS.
(a) Schedule 2.16(a) of FFC's Disclosure Schedule sets forth a
true, complete and correct list (all of which are collectively referred to as
the "Employee Benefit Plans") of all "employee benefit plans", as defined in
Section 3(3) of the Employee Retirement Security Act of 1974, as amended and the
rules and regulations promulgated thereunder (collectively, "ERISA") all benefit
plans as defined in Section 6039D of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder (collectively the
"Code"), and all other bonus, incentive compensation, deferred compensation,
profit sharing, stock option, severance, supplemental unemployment, layoff,
salary continuation, retirement, pension, health, life insurance, disability,
group insurance, vacation, holiday, sick leave, fringe benefit or welfare plan
or employment, consulting, change in control, independent contractor,
professional services, confidentiality, or non-competition agreement or any
other similar plan, agreement, policy or understanding (whether oral or written,
qualified or non-qualified) and any trust, escrow or other funding arrangement
related thereto except to the extent previously disclosed under Section 2.15,
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(i) which is currently or has been at any time within the
last sixty (60) months maintained or contributed to
by FFC, FSA or any ERISA Affiliate (as herein
defined), or
(ii) with respect to which FFC, FSA or any ERISA
Affiliate, to the knowledge of FFC, has any liability
or obligations to any current or former officer,
Employee, or service provider of FFC, FSA or any
ERISA Affiliate, or the dependents of any thereof,
and regardless of whether funded, or
(iii) which to the knowledge of FFC could result in the
imposition of liability or obligation of any kind or
nature, whether accrued, absolute, contingent,
direct, indirect, known or unknown, perfected or
inchoate or otherwise and whether or not now due or
to become due, to FFC, FSA or an ERISA Affiliate
which would have a material adverse effect on FFC,
FSA or Bancshares.
(b) No Employee Benefit Plan is a defined benefit plan within
the meaning of Section 3(35) of ERISA. Except as disclosed in Schedule 2.16(b)
of FFC's Disclosure Schedule, during the last sixty (60) months, FFC, FSA and
all ERISA Affiliates have not maintained, sponsored or been obligated to
contribute to any Employee Benefit Plans that are subject to Title IV of ERISA,
that are multi-employer plans, or that are multiple employer plans as defined
under the Code and ERISA.
(c) FFC has heretofore provided to Bancshares, or will provide
to Bancshares, within fourteen days following the date hereof (or for purposes
of Section 2.16(c)(xv), the date of request by Bancshares, if later) with
respect to each of the Employee Benefit Plans, true, accurate and complete
copies of the following documents as applicable:
(i) the Employee Benefit Plan document and all amendments,
-19-
(ii) the actuarial report, if any, for such Employee Benefit Plan
for each of the last three (3) years,
(iii) the most recent determination letter from the Internal Revenue
Service for such Employee Benefit Plan,
(iv) the Internal Revenue Service Form 5500 annual reports for such
Employee Benefit Plan for each of the last three years,
(v) the most recent summary plan description and related summaries
of material modifications,
(vi) all personnel, payroll and employment manuals and policies,
(vii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred by FFC,
FSA or any ERISA Affiliates, and all collective bargaining
agreements pursuant to which contributions are being made or
obligations are owed by such entities,
(viii) a written description of any Employee Benefit Plan that is not
otherwise in writing,
(ix) all registration statements filed with respect to any Employee
Benefit Plan,
(x) all insurance policies purchased by or to provide benefits
under any Employee Benefit Plan,
(xi) all contracts with third party administrators, actuaries,
investment managers, consultants, and other independent
contractors that relate to any Employee Benefit Plan,
(xii) all tests for compliance for the past three (3) years under
Code Sections 401(a)(4), 401(a)(26), 401(k), 401(m), 404,
410(b), 415 and 416, if applicable and reports submitted
within the three (3) years preceding the date of this
Agreement by third
-20-
party administrators, actuaries, investment managers,
consultants, or other independent contractors with respect to
any Employee Benefit Plan,
(xiii) sample notices that were given by FFC, FSA, or any ERISA
Affiliate to the Internal Revenue Service (the "IRS"), the
Pension Benefit Guaranty Corporation ("PBGC"), the Department
of Labor ("DOL") or any participant or beneficiary, pursuant
to statute, within the three (3) years preceding the date of
this Agreement, including notices that are expressly mentioned
elsewhere in this Section 2.16,
(xiv) all closing agreements and documentation regarding any IRS,
DOL or PBGC audits or self-correction programs and all
notices that were given by the IRS, the PBGC, or the DOL to
FFC, FSA, or any ERISA Affiliate within the three (3) years
preceding the date of this Agreement, and
(xv) such other documents, records or other materials related
thereto reasonably requested by Bancshares prior to the
Merger.
(d) Except as disclosed in Schedule 2.16(d) of FFC's
Disclosure Schedule, there have been no material prohibited transactions,
breaches of fiduciary duty or any other breaches or violations of any law
applicable to the Employee Benefit Plans. None of the facts disclosed in
Schedule 2.16(d) of FFC's Disclosure Schedule have had or could reasonably be
expected to have a material adverse effect on FFC and FSA taken as a whole.
Except as disclosed in Schedule 2.16(d) of FFC's Disclosure Schedule, each
Employee Benefit Plan is in compliance with all applicable material
provisions of the Code and ERISA; each Employee Benefit Plan intended to be
qualified under Code Section 401(a) has a current favorable determination
letter and any subsequent amendments are within the remedial amendment
period; and nothing has occurred which could reasonably be expected to result
in the revocation of such favorable determination letter. There are no
pending or,
-21-
to the knowledge of FFC, threatened or anticipated claims, lawsuits or actions
relating to, by, on behalf of or against any Employee Benefit Plan (other than
routine claims for benefits). There is no medical, dental, life or disability
coverage for any period of time beyond termination of employment (except to the
extent of coverage required under the Family and Medical Leave Act, Section
4980B of the Code and Section 601 of ERISA).
(e) To the knowledge of FFC and except as disclosed in
Schedule 2.16(e) of FFC's Disclosure Schedule:
(i) FFC and FSA have performed all of their
respective obligations under all Employee
Benefit Plans, and have made appropriate
entries in their financial records and
statements for all obligations and
liabilities under such Employee Benefit
Plans, that have accrued but are not due.
(ii) No statement, either written or oral, has
been made by FFC or FSA with regard to any
Employee Benefit Plan that was not in
accordance with the Employee Benefit Plan
that could have a material adverse economic
consequence to FFC, FSA or to Bancshares.
(iii) Each Employee Benefit Plan is in full
compliance with ERISA, the Code, all
securities laws, and other applicable laws
including the provisions of such laws
expressly mentioned in this Section 2.16 and
with any applicable collective bargaining
agreement.
(iv) All filings required by ERISA and the Code
as to each Employee Benefit Plan have been
timely filed, and all notices and
disclosures to participants required by
either ERISA or the Code have been timely
provided.
-22-
(v) All contributions and payments made or
accrued with respect to all Employee Benefit
Plans, are deductible under Code Section 162
or Section 404. No amount, or any asset of
any Employee Benefit Plan is subject to tax
as unrelated business taxable income.
(vi) Except to the extent disclosed pursuant to
this Agreement, each Employee Benefit Plan
can be terminated within thirty (30) days,
without payment of any additional
contribution or amount and without the
acceleration of any benefits promised by
such Employee Benefit Plan.
(viii) No event has occurred or circumstance exists
that could result in a material increase in
premium costs of Employee Benefit Plans that
are insured, or a material increase in
benefit costs of any other Employee Benefit
Plan.
(ix) FFC and FSA have not filed a notice of
intent to terminate any Employee Benefit
Plan or adopted any amendment to treat any
Employee Benefit Plan as terminated.
(x) No payment that is owed or may become due to
any director, officer, Employee, or agent of
FFC or FSA or any ERISA Affiliate will be
non-deductible to the FFC or FSA or subject
to tax under Code Section 280G or Section
4999; nor will FFC or FSA be required to
"gross up" or otherwise compensate any such
person because of the imposition of any
excise tax on a payment to such person.
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(xi) The consummation of the Merger will not
result in the payment, vesting, or
acceleration of any benefit except as
otherwise contemplated by this Agreement.
(xii) Full payment has been made of all amounts
which FFC, FSA or any ERISA Affiliate is
required, under applicable law or under any
Employee Benefit Plan or any agreement
relating to any Employee Benefit Plan to
which FFC, FSA or any ERISA Affiliate is a
party, to have paid as contributions or
premiums thereto as of the last day of the
most recent fiscal year of such Employee
Benefit Plan ended prior to the date hereof.
All such contributions and/or premiums have
been fully deducted for income tax purposes
and no such deduction has been challenged or
disallowed by any Governmental Entity, and
no event has occurred and no condition or
circumstance has existed that could give
rise to any such challenge or disallowance.
FFC and FSA have made adequate provision for
the reserves to meet contributions and
premiums and any other liabilities that have
not been paid or satisfied because they are
not yet due under the terms of any Employee
Benefit Plan, applicable law or related
agreements. Benefits under all Employee
Benefit Plans are as represented and have
not been increased subsequent to the date as
of which documents have been provided except
as otherwise contemplated by this Agreement.
(f) For the purpose of this Section 2.16, the term "ERISA
Affiliate" shall mean
(i) any related company or trade or business
that is required to be aggregated
-24-
with FFC or FSA under Code Sections 414(b),
(c), (m) or (o); (ii) any other company,
entity or trade or business that has adopted
or has ever participated in any Employee
Benefit Plan; and (iii) any predecessor or
successor company or trade or business of
FFC or FSA or any entity described in
2.16(f)(i) and (f)(ii).
(g) For the purpose of this Section 2.16, the term
"Employee" shall be considered to include individuals rendering personal
services to FFC or FSA as independent contractors and leased employees as
defined in Code Section 414(n) and the regulations promulgated pursuant
thereto.
(h) No lien, security interests or other encumbrances exist
with respect to any of the assets of FFC or FSA, which were imposed pursuant
to the terms of the Code or ERISA, and to the knowledge of FFC or FSA no
condition exists or could occur that would result in the imposition of such
liens, security interests or encumbrances arising from or relating to the
Employee Benefit Plans which could have a material adverse effect on FFC, FSA
or Bancshares.
2.17. INSURANCE. FFC has delivered to Bancshares correct and complete
copies of all material policies of insurance of FFC and FSA currently in effect,
including, but not limited to, directors and officers liability policies and
blanket bond policies. Neither FFC nor FSA has any liability for unpaid premiums
or premium adjustments not properly reflected on the FFC Financial Statements.
2.18. CONDUCT OF FFC TO DATE. Except as contemplated by this Agreement
and the Plan of Merger, from and after December 31, 1999: (a) FFC and FSA have
carried on their respective businesses in the ordinary and usual course
consistent with past practices, (b) FFC and FSA have not
-25-
issued or sold any capital stock or equity interests or issued or sold any
corporate debt securities which would be classified as long term debt on the
balance sheet of FFC or FSA other than in connection with FFC Employee Benefit
Plans, (c) FFC and FSA have not granted any option for the purchase of capital
stock, effected any stock split, or otherwise changed their capitalization, (d)
except as set forth in Schedule 2.18 of FFC's Disclosure Schedule, FFC has not
declared, set aside, or paid any cash or stock dividend or other distribution in
respect to its capital stock, (e) neither FFC nor FSA has incurred any material
obligation or liability (absolute or contingent), except normal trade or
business obligations or liabilities incurred in the ordinary course of business
or mortgaged, pledged, or subjected to lien, claim, security interest, charge,
encumbrance or restriction any of its assets or properties, (f) neither FFC nor
FSA has discharged or satisfied any material lien, mortgage, pledge, claim,
security interest, charges, encumbrance, or restriction or paid any material
obligation or liability (absolute or contingent), other than in the ordinary
course of business, (g) neither FFC nor FSA has since December 31, 1999, sold,
assigned, transferred, leased, exchanged, or otherwise disposed of any of its
properties or assets other than for a fair consideration in the ordinary course
of business, (h) except as set forth in Schedule 2.18 of FFC's Disclosure
Schedule, neither FFC nor FSA has increased the rate of compensation of, or paid
any bonus to, any of its directors, executive officers, or other employees,
except merit, promotion, or periodic increases in accordance with existing
policy; entered into any new, or amended or supplemented any existing,
employment, management, consulting, deferred compensation, severance, or other
similar contract; adopted, entered into, terminated, amended or modified (other
than as legally required to do so with respect to the qualified plans) any
Employee Benefit Plan in respect of any of their present or former directors,
officers or other employees; or agreed to do any of the foregoing, (i) neither
FFC nor FSA has suffered any material damage, destruction, or loss, whether as
the result of flood, fire, explosion, earthquake,
-26-
accident, casualty, labor trouble, requisition or taking of property by any
government or any agency of any government, windstorm, embargo, riot, act of
God, or other similar or dissimilar casualty or event or otherwise, whether or
not covered by insurance, (j) except as set forth in Schedule 2.18 of FFC's
Disclosure Schedule, neither FFC nor FSA has cancelled or compromised any debt
to an extent exceeding $250,000.00 owed to FFC or FSA or claim to an extent
exceeding $250,000.00 asserted by FFC or FSA, (k) neither FFC nor FSA has
entered into any transaction, contract, or commitment outside the ordinary
course of its business, (1) neither FFC nor FSA has entered, or agreed to enter,
into any agreement or arrangement granting any preferential right to purchase
any of its material assets, properties or rights or requiring the consent of any
party to the transfer and assignment of any such material assets, properties or
rights, (m) there has not been any material change in the method of accounting
or accounting practices of FFC or FSA other than as a result of changes or
pronouncements by a Governmental Entity, and (n) FFC and FSA have kept all
records substantially in accordance with all regulatory and statutory
requirements and substantially in accordance with industry standards, and have
retained such records for the periods required by statute, regulation industry
standards.
2.19. MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has been
no material adverse change in the financial condition, results of operations or
business of FFC or FSA.
2.20. PROPERTIES, LEASES AND OTHER AGREEMENTS. Except (i) with respect
to debts reflected in the FFC Financial Statements, (ii) for any lien for
current taxes not yet delinquent, (iii) for pledges to secure deposits and (iv)
for such other liens, security interests, claims, charges, options or other
encumbrances and imperfections of title which do not materially affect the value
or interfere with or impair the present and continued use of personal or real
property reflected in the FFC Financial Statements or acquired since the date of
such FFC Statements, FFC and FSA have good title, free
-27-
and clear of any liens, security interests, claims, charges, options or other
encumbrances to all of the personal and real property reflected in the FFC
Financial Statements, and all personal and real property acquired since the date
of such FFC Financial Statements, except such personal and real property as has
been disposed of in the ordinary course of business. All of the buildings and
equipment in regular use by FFC and FSA have been reasonably maintained and are
in good and serviceable condition, reasonable wear and tear excepted. All leases
material to FFC and FSA pursuant to which FFC or FSA, as lessee, leases real or
personal property are valid and effective in accordance with their respective
terms and there is not, under any of such leases, any material existing default
by FFC or FSA, or, to their knowledge, any other party thereto, or any event
which with notice or lapse of time or both would constitute such a material
default. No options to renew said leases have lapsed and the terms of the leases
govern the rights of the respective landlords of FFC and FSA.
2.21. NO UNTRUE STATEMENTS. To the knowledge of FFC, no representation
or warranty hereunder in any financial statement or any other document delivered
to Bancshares pursuant to this Agreement contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading.
2.22. PROPER DOCUMENTATION. With respect to all loans to borrowers
which are payable to FFC or FSA either directly or as a participant and except
for such imperfections in documentation which when considered as a whole would
not have a material adverse effect on the business, operations or financial
condition of either FFC or FSA:
(a) All loans were made for good, valuable and adequate
consideration in the normal and ordinary course of business, and the notes and
other evidences of indebtedness and any loan agreements or security documents
executed in connection therewith are true and genuine and,
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to the knowledge of FFC, constitute the valid and legally binding obligations of
the borrowers to whom the loans were made and are legally enforceable against
such borrowers in accordance with their terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar debtor relief laws from time
to time in effect, as well as general principles of equity applied by a court of
proper jurisdiction (regardless of whether such enforceability is considered in
a proceeding in equity or at law);
(b) The amounts reflected in the FFC Statements as the
balances owing on the loans are the correct amounts actually and unconditionally
owing, are undisputed, and are not subject to any offsets, credits, deductions
or counterclaims;
(c) The collateral securing each loan as referenced in a
security agreement is in fact the collateral held by FFC or FSA to secure each
loan;
(d) Except for loans originated by others in which FSA
participates, FFC or FSA has possession of reasonably complete loan document
files and credit files for all loans held by them containing promissory notes
and other relevant evidences of indebtedness with original signatures of their
borrowers and guarantors;
(e) To the knowledge of FFC, FFC and FSA hold validly
perfected liens or security interests in the collateral granted to them to
secure all loans as referenced in the security agreements and the loan or credit
files contain the original security agreements, mortgages, or other lien
creation and perfection documents unless originals of such documents are filed
of public record;
(f) To the knowledge of FFC, each lien or security interest of
FFC or FSA in the collateral held for each loan is properly perfected in the
priority described as being held by FFC or FSA in the security agreements
contained in the loan document or credit files;
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(g) FFC and FSA are in possession of all collateral that the
loan document files or credit files indicate they have in their possession;
(h) To the knowledge of FFC, all guaranties granted to FFC and
FSA to insure payment of loans constitute the valid and legally binding
obligations of the guarantors and are enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium,
and similar debtor relief laws from time to time in effect, as well as general
principles of equity applied by a court of proper jurisdiction (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
(i) With respect to any loans in which FFC and FSA have sold
participation interests to another bank or other financial institution, to the
knowledge of FFC, none of the buyers of such participation interests are in
default under any participation agreements.
2.23. MATERIAL CONTRACTS. Except as set forth in the FFC Reports and
except for contracts with data processing providers, neither FFC nor FSA is a
party to or bound by any "material contract" (as such term is defined in item
601(b)(10) of Regulation S-K of the SEC) (all contracts of the type described in
this Section 2.23 being referred to herein as "FFC Material Contracts").
Schedule 2.23 of FFC's Disclosure Schedule sets forth, as of the date of this
Agreement, a true and complete list of all contracts (other than those disclosed
in FFC's SEC reports) to which FFC or FSA is a party relating to the business or
assets of FFC or FSA (except, with respect to clauses (ii) and (iv) below, any
of the foregoing calling for aggregate payments of less than $100,000),
including, without limitation, all written or oral, express or implied (i)
contracts not made in the ordinary course of business consistent with past
practice; (ii) purchase, supply and customer contracts; (iii) contracts relating
to the borrowing of money or for lines of credit; (iv) contracts involving
leases and subleases of real or personal property; (v) contracts for the sale of
any assets other than in the ordinary course
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of business consistent with past practice or for the grant of any options or
preferential rights to purchase any assets, property or rights; (vi) contracts
granting any power of attorney with respect to the affairs of either FFC or FSA;
(vii) suretyship contracts, working capital maintenance or other forms of
guaranty contracts; (viii) contracts limiting or restraining FFC or FSA from
engaging or competing in any lines of business or with any person, firm or
corporation, (ix) partnership and joint venture contracts; (x) indentures,
mortgages, notes, installment obligations, or other instruments relating to the
borrowing of money in excess of $100,000 by FFC or FSA; (xi) contracts which
have remaining terms, as of the date of this Agreement, of over one year in
length of obligation on the part of FFC or FSA and provide for aggregate
payments in excess of $100,000; and (xii) all amendments, modifications,
extensions or renewals of any of the foregoing. Each contract described above is
valid and binding on FFC or FSA and is in full force and effect, and FFC and FSA
have in all material respects performed all obligations required to be performed
by them to date under each FFC Material Contract, except where such
noncompliance, individually or in the aggregate, would not have a material
adverse effect on FFC or FSA. Neither FFC nor FSA knows of, or has received
notice of, any violation or default under any such contract except for such
violations or defaults as would not in the aggregate have a material adverse
effect on FFC or FSA.
2.24. REGULATORY APPROVALS. FFC is not aware of any reason that would
prevent Bancshares from obtaining the necessary regulatory approval for the
consummation of the Merger.
2.25. FEDERAL FINANCIAL ASSISTANCE. FFC has never received any Federal
Financial Assistance as that term is defined in Section 597 of the Code and the
regulations adopted thereunder.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BANCSHARES
Bancshares hereby represents and warrants to FFC as follows:
3.01. ORGANIZATION OF BANCSHARES. Bancshares is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Arkansas and has the corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as now being conducted.
Bancshares is registered as a bank holding company with the FRB under the BHC
Act.
3.02. AUTHORITY. Subject to the approval of this Agreement and the Plan
of Merger by applicable regulatory authorities, Bancshares has the corporate
power and authority to enter into this Agreement and the Plan of Merger and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Plan of Merger and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Bancshares' board of directors. This
Agreement and the Plan of Merger have been duly executed and delivered by
Bancshares and each constitutes a valid and binding obligation of Bancshares
enforceable in accordance with its terms, except as the enforceability of the
Agreement may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights of creditors and by general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
3.03. NO DEFAULT. The execution and delivery of this Agreement and the
Plan of Merger do not, and the consummation of the transactions contemplated
hereby and thereby will not, result in any Violation pursuant to any provision
of (i) the Articles of Incorporation or Bylaws of Bancshares or any of its
subsidiaries or (ii) any loan or credit agreement, note, mortgage, indenture,
lease, or other
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agreement, obligation, instrument, permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Bancshares or any of its subsidiaries or their respective properties or
assets, except where such violation would not have a material adverse effect on
the business, operations or financial condition of Bancshares and its
subsidiaries taken as a whole. Other than in connection or in compliance with
the provisions of the TBCA, the Securities Act, the Exchange Act, the securities
or blue sky laws of the various states, and consents, authorizations, approvals,
notices or exemptions required under the Bank Merger Act, BHC Act, the HOL Act,
Arkansas banking laws, Texas banking laws, and from other Governmental Entities,
no consent, approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to
Bancshares in connection with the execution and delivery of this Agreement and
the Plan of Merger by Bancshares or the consummation by Bancshares of the
transactions contemplated hereby and thereby.
3.04. BANCSHARES FINANCIAL STATEMENTS. (a) The (i) consolidated balance
sheets of Bancshares as of December 31, 1999 and 1998 and the related
consolidated statements of income, consolidated statements of cash flows and
consolidated statements of shareholders equity for the years then ended
certified by Arthur Andersen LLP ("Bancshares Financial Statements") copies of
which have been furnished by Bancshares to FFC, have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as otherwise noted therein and except for year end adjustments of a non-material
nature), and present fairly the consolidated financial condition of Bancshares,
at the dates, and the consolidated results of operations and cash flows for the
periods, stated therein.
3.05. NO UNTRUE STATEMENTS. To Bancshares' knowledge, no representation
or warranty hereunder or in any financial statement or any other document
delivered to FFC pursuant to this
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Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading.
3.06. MATERIAL ADVERSE CHANGE. Since December 31, 1999, there has been
no material adverse change in the financial condition, results of operations or
business of Bancshares.
3.07. AUTHORIZATIONS; COMPLIANCE WITH APPLICABLE LAWS. Bancshares and
its subsidiaries hold all authorizations, permits, licenses, variances,
exemptions, orders and approvals of all Governmental Entities which are material
to the operations of the business of Bancshares and its subsidiaries (the
"Bancshares Permits"). Bancshares and its subsidiaries are in compliance with
the terms of the Bancshares Permits, except where the failure so to comply would
not have a material adverse effect on Bancshares or a Bancshares subsidiary. To
the knowledge of Bancshares, the businesses of Bancshares and its subsidiaries
are not being conducted in violation of any federal, state or local law,
statute, ordinance or regulation of any Governmental Entity (collectively
"Laws"), except for possible violations which individually or in the aggregate
do not and, insofar as reasonably can be foreseen, in the future will not, have
a material adverse effect on Bancshares or a Bancshares subsidiary. Other than
routine, scheduled examinations by banking regulators, no investigation or
review by any Governmental Entity with respect to Bancshares or a Bancshares
subsidiary is pending or, to the knowledge of Bancshares, threatened, nor has
any Governmental Entity indicated an intention to conduct the same.
3.08. REGULATORY APPROVAL. Bancshares is not aware of any reason that
would prevent Bancshares from obtaining the necessary regulatory approvals for
the consummation of the Merger and the Subsidiary Mergers.
3.09. ACCREDITED INVESTOR. Bancshares is an accredited investor as
defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as
amended ("Act").
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ARTICLE IV
AGREEMENTS OF FFC
4.01. AFFIRMATIVE COVENANTS OF FFC. FFC hereby covenants and agrees
with Bancshares that prior to the Effective Time, unless the prior written
consent of Bancshares shall have been obtained, which consent shall not be
unreasonably withheld, and except as otherwise contemplated herein, FFC will and
FFC will cause FSA to:
(a) operate its business only in the usual, regular and
ordinary course consistent with past practices;
(b) use reasonable efforts to preserve intact its business
organization and assets, maintain its rights and franchises, retain the services
of its officers and key employees (except that it shall have the right to
lawfully terminate the employment of any officer or key employee if such
termination is in accordance with existing employment procedures of FFC or FSA)
and maintain its relationships with customers;
(c) use reasonable efforts to maintain and keep its properties
in as good repair and condition as at present, except for depreciation due to
ordinary wear and tear;
(d) use reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that now
maintained;
(e) perform in all material respects all obligations required
to be performed by it under all material contracts, leases, and documents
relating to or affecting its assets, properties, and business;
(f) use reasonable efforts to comply with and perform in all
material respects all obligations and duties imposed upon it by all Laws; and
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(g) give Bancshares notice of all board of directors meetings,
allow Bancshares to have a non-voting representative at each such meeting except
to the extent that FFC's legal counsel advises the directors that permitting
Bancshares' presence would constitute a breach of its fiduciary duties, and
provide Bancshares with all written materials and communications provided to the
directors in connection with such meetings; provided, however, that such
representative will not receive written materials relating solely to the Merger
and will be excused from the portion of such meetings at which the sole matter
to be considered is action related to the Merger.
4.02. NEGATIVE COVENANTS OF FFC. Except as specifically contemplated by
this Agreement, from the date hereof until the earlier of the termination of the
Agreement or the Effective Time, FFC shall not do, and FFC will cause FSA not to
do, any of the following acts without the prior written consent of Bancshares,
which consent shall not be unreasonably withheld:
(a) incur any material liabilities or material obligations,
whether directly or by way of guaranty, including any obligation for borrowed
money whether or not evidenced by a note, bond, debenture or similar instrument,
except in the ordinary course of business consistent with past practice;
(b) (i) except as disclosed in Schedule 2.18 of FFC's
Disclosure Schedule and except for merit or promotion increases in accordance
with existing policy, grant any bonuses or increase in compensation to their
employees, officers or directors, (ii) effect any change in retirement or any
other benefits to any class of employees or officers (unless any such change
shall be required by this Agreement or applicable law) which would increase
their retirement benefit liabilities, (iii) adopt, enter into, amend or modify
any FFC Employee Benefit Plan except as provided herein, or (iv) hire any
executive officer or elect any new director;
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(c) except as set forth in Schedule 4.02(c) of FFC's
Disclosure Schedule, declare or pay any dividend on, or make any other
distribution in respect of, their outstanding shares of capital stock or equity
interests other than cash dividends by FSA;
(d) except as contemplated by this Agreement or as set forth
in Schedule 4.02(d) of FFC's Disclosure Schedule, (i) redeem, Purchase or
otherwise acquire any shares of its capital stock or equity interests or any
securities or obligations convertible into or exchangeable for any shares of its
capital stock or equity interests, or any options, warrants, conversion or other
rights to acquire any shares of its capital stock or equity interests or any
such securities or obligations; (ii) merge with or into or consolidate with any
other corporation or bank, or effect any reorganization or recapitalization;
(iii) Purchase or otherwise acquire any substantial portion of the assets or any
class of stock, of any corporation, bank or other business; (iv) liquidate,
sell, dispose of, or encumber any assets or acquire any assets, other than in
the ordinary course of business consistent with past practice; or (v) split,
combine or reclassify any of its capital or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock;
(e) issue, deliver, award, grant or sell, or authorize or
propose the issuance, delivery, award, grant or sale of, any shares of its
capital stock of any class (including shares held in treasury), any equity
interests, any Voting Debt or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, equity interests, Voting Debt
or convertible securities;
(f) except pursuant to a written opinion of legal counsel that
failure to take such action would violate the directors' fiduciary duties,
initiate, solicit or encourage (including by way of furnishing information or
assistance), take any action to facilitate, any inquiries or the making of any
proposal which constitutes, or may reasonably be expected to lead to, any
Competing Transaction
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(as such term is defined below), or negotiate with any person in furtherance of
such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize any of its officers, directors or employees
or any investment banker, financial advisor, attorney, accountant or other
representative retained by FFC or FSA to take any such action and, upon learning
of such action by any representative, shall take appropriate steps to terminate
such action and shall promptly notify Bancshares orally of all of the relevant
details relating to all inquiries and proposals which it may receive relating to
any of such matters. For purposes of this Agreement, "Competing Transaction"
shall mean any of the following involving FFC or FSA: any merger, consolidation,
share exchange or other business combination; a sale, lease, exchange, mortgage,
pledge, transfer or other disposition of a substantial portion of assets; a sale
of shares of capital stock (or securities convertible or exchangeable into or
otherwise evidencing, or any agreement or instrument evidencing, the right to
acquire capital stock) or equity interests;
(g) propose or adopt any amendments to its corporate charter
or bylaws except as provided in this Agreement;
(h) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle with
respect to any acquisition of a material amount of assets or securities or any
release or relinquishment of any material contract rights not in the ordinary
course of business;
(i) except in their fiduciary capacities, Purchase any shares
of Bancshares common stock;
(j) change any method of accounting in effect at December 31,
1999, or change any method of reporting income or deductions for federal income
tax purposes from those employed
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in the preparation of the federal income tax returns for the taxable year ending
December 31, 1999, except as may be required by law, rule or regulation or GAAP;
(k) change the lending, investment, asset/liability management
and other material policies concerning the business of FFC or FSA, unless
required by Law or order or unless such change does not cause a material adverse
effect on FFC or FSA;
(l) make any single new loan or series of loans not in
accordance with existing loan policies to one borrower or related series of
borrowers in an aggregate amount greater than $500,000;
(m) sell or otherwise dispose of securities owned as
investments except at maturity dates or in accordance with past practices for
securities held for sale or trading or in accordance with GAAP for securities
classified as "held to maturity";
(n) sell or dispose of any real estate or other assets having
a value in excess of $100,000.00;
(o) make any capital expenditure other than those set forth in
Schedule 4.02(o) of FFC's Disclosure Schedule or those that are made in the
ordinary course of business or are necessary to maintain existing assets in good
repair, and in any event are in an amount of no more than $100,000 in the
aggregate, or except as necessary to comply with applicable regulatory
guidelines; or
(p) agree in writing or otherwise to do any of the foregoing.
4.03. ACCESS AND INFORMATION. Upon reasonable notice, FFC shall, and
shall cause FSA to, afford to Bancshares's officers, employees, accountants,
counsel and other representatives, reasonable access, during normal business
hours during the period prior to the Effective Time, to all its properties,
books, contracts, commitments and records. Bancshares agrees that any such
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investigation will be conducted in a manner that is the least disruptive to
FFC's and FSA's business as possible. During such period, FFC shall, and shall
cause FSA to, furnish promptly to Bancshares (i) a copy of each FFC Report filed
by it during such period pursuant to the requirements of all applicable federal
or state banking laws or bank holding company laws promptly after such documents
are available, (ii) the monthly financial statements of FSA promptly after such
financial statements are available, (iii) minutes of the meetings of the Boards
of Directors, or any committee thereof, of FFC or FSA, and (iv) all other
information concerning its business, properties and personnel as Bancshares may
reasonably request.
4.04. FFC SHAREHOLDERS MEETING. FFC shall call a meeting of its
shareholders to be held as promptly as practicable, which date may be after
Bancshares has filed its regulatory applications related to the Merger, for the
purpose of voting upon the Merger Agreements. Consummation of the Merger shall
be contingent upon its approval by the legally required votes of the shares of
FFC Stock at such shareholder meeting. FFC will with the cooperation and
assistance of Bancshares, prepare and file a Proxy Statement soliciting proxies
from FFC's shareholders in connection with the FFC shareholders meeting. The
Board of Directors of FFC shall recommend approval of the Plan of Merger to
FFC's shareholders, provided, however, that FFC's Board of Directors may submit
this Agreement and the transactions contemplated therein to its shareholders for
approval without recommendation pursuant to Article 5.03(B) of the TBCA if such
Board of Directors determines in good faith that it must do so in order to
comply with its fiduciary duties.
4.05. PROXY STATEMENT. As soon as practicable after the date hereof,
after Bancshares files its applications, FFC shall prepare and file the Proxy
Statement with the SEC under the Exchange Act and shall use its reasonable best
efforts to have the Proxy Statement cleared by the SEC. Bancshares and FFC shall
cooperate with each other in the preparation of the Proxy Statement. FFC shall
notify
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Bancshares promptly of the receipt of any comments of the SEC with respect to
the Proxy Statement and of any request by the SEC for any amendment or
supplement thereto or for additional information. FFC shall provide to
Bancshares promptly copies of all correspondence between FFC or any
representative of FFC and the SEC. FFC shall give Bancshares and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give Bancshares and its counsel the opportunity to review all
amendments and supplements to the Proxy Statement and all responses to requests
for additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of Bancshares and FFC agrees to use its
reasonable best efforts, after consultation with the other party hereto, to
respond promptly to all such comments of and requests by the SEC and to cause
the Proxy Statement and all required amendments and supplements thereto to be
mailed to the holders of FFC Stock entitled to vote at the FFC shareholders
meeting referred to in Section 4.04 at the earliest practicable time.
4.06. TERMINATION OR MERGER OF EMPLOYEE BENEFIT PLANS. If requested by
Bancshares, prior to the Effective Time, FFC hereby covenants and agrees to
cooperate with Bancshares and take all reasonable actions to effect the merger
of any Employee Benefit Plan that is intended to be qualified under Code Section
401(a) into the appropriate tax qualified retirement plan of Bancshares (or upon
merger of Bancshares with BancorpSouth, Inc. of BancorpSouth, Inc. or
BancorpSouth Bank) after the Merger is completed, so that such plan merger
satisfies the requirements of Code Section 414(l); PROVIDED, HOWEVER, that
Bancshares shall not be obligated to effect any such merger of an Employee
Benefit Plan.
If requested by Bancshares (or, upon merger of Bancshares with
BancorpSouth, Inc., by BancorpSouth, Inc.), prior to the Effective Time, FFC
hereby covenants and agrees to freeze, terminate, amend or take other action
with respect to any Employee Benefit Plan that Bancshares (or
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BancorpSouth, Inc.), in its sole discretion, deems advisable and not
inconsistent with this Agreement; to take all steps necessary to accomplish such
requests, including terminating FFC's and FSA's participation in any Employee
Benefit Plan with respect to FFC and FSA Employees; to provide all the required
notices to participants and appropriate governmental agencies, to adopt all
necessary resolutions and Employee Benefit Plan amendments, and to provide to
Bancshares (or BancorpSouth, Inc.) satisfactory evidence of the executed
documents described in this Section 4.06.
4.07 FFC ESOP. Upon execution of this Agreement, FFC will amend the FFC
ESOP to provide that: (i) effective with the Closing Date, amounts received by
the FFC ESOP on the sale of the shares held as collateral for the outstanding
FFC ESOP loan will be used first to repay the outstanding balance on the FFC
ESOP loan; (ii) then any proceeds from the sale of pledged unallocated shares
held by the FFC ESOP in excess of the outstanding balance on the FFC ESOP loan,
will be allocated directly to participants' accounts under the FFC ESOP, as
earnings, in accordance with the terms of the FFC ESOP; and (iii) that none of
the proceeds received on the sale of the shares held as collateral for the
outstanding FFC ESOP loan will be treated as annual additions for purposes of
Code section 415. FFC shall then promptly file such amendment with the Internal
Revenue Service for a determination as to the effect of the amendment on the
qualified status of the FFC ESOP. Following the receipt of a favorable
determination letter, all proceeds received by the FFC ESOP will be allocated to
participants' accounts under the FFC ESOP, in accordance with the terms of the
approved amendment. In the event a favorable determination letter is not
received, all proceeds received by the FFC ESOP will be allocated to
participants' accounts under the FFC ESOP in accordance with its terms.
Following such allocation, and subject to Section 4.06 and Section 5.02(c)
hereof, the FFC ESOP may either be terminated or merged into a Bancshares plan
(or upon the merger of Bancshares with BancorpSouth, Inc., a BancorpSouth, Inc.
Plan or BancorpSouth
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Bank plan) at the request of Bancshares in accordance with the terms of ERISA
and all other applicable law.
4.08. FFC'S DISCLOSURE SCHEDULE. On or prior to the date hereof, FFC
has delivered to Bancshares a schedule ("FFC's Disclosure Schedule") setting
forth, among other things, items the disclosure of which is necessary or
appropriate in relation to any or all of its representations and warranties.
ARTICLE V
AGREEMENTS OF BANCSHARES
5.01. REGULATORY APPROVALS. Bancshares shall file all regulatory
applications required to consummate the Merger, including but not limited to an
application for the prior approval of the FDIC and the Texas Banking
Commissioner, and shall use its reasonable best efforts to have the applications
approved. Bancshares and FFC shall cooperate with each other in the preparation
of the applications and Bancshares shall notify FFC promptly of the receipt of
any comments of any regulatory agency with respect to an application and of any
request for any amendment or supplement thereto or for additional information.
Bancshares shall provide to FFC promptly copies of all correspondence between
Bancshares or any representative of Bancshares and any regulatory agency
regarding an application. Bancshares shall give FFC and its counsel the
opportunity to review the applications prior to their being filed and shall give
FFC and its counsel the opportunity to review all amendments and supplements to
any application and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the regulatory
agency. Each of Bancshares and FFC agrees to use its reasonable best efforts,
after consultation with the other party hereto, to respond promptly to all such
comments of and requests by a regulatory agency.
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5.02. BANCSHARES EMPLOYEE BENEFIT PLANS. Bancshares presently intends
that, whether the Employee Benefit Plans are terminated or merged, after the
Merger, neither Bancshares, FFC nor FSA will make additional contributions to
the Employee Benefit Plan, under the terms of the Employee Benefit Plans. Each
employee of FFC or FSA who after the Merger becomes an employee of Bancshares or
a Bancshares subsidiary (or of BancorpSouth or a BancorpSouth subsidiary) or who
remains an employee of FSA, (each, a "Continuing Employee"), to the extent
permissible under the terms of the Bancshares plans (or upon the merger of
Bancshares with BancorpSouth, Inc., under the terms of the BancorpSouth, Inc. or
BancorpSouth Bank plans), will be entitled to participate in the employee
benefit plans and programs maintained for similarly situated employees of
Bancshares (or of BancorpSouth, Inc. or BancorpSouth Bank) and its affiliates to
the same extent as similarly situated employees of Bancshares (or of
BancorpSouth, Inc. or BancorpSouth Bank), in accordance with the respective
terms of such plans and programs, and Bancshares shall take all actions
necessary or appropriate to facilitate coverage of the Continuing Employees in
such plans and programs from and after the Effective Time (it being understood
that inclusion of FFC and FSA employees in Bancshares', BancorpSouth, Inc.'s, or
BancorpSouth Bank's plans may occur at different times with respect to different
plans based on the specific eligibility requirements and entry dates of each
plan) subject to the following:
(a) Each Continuing Employee shall be given vesting and eligibility
service credit for time during which the employee was employed by FFC and/or FSA
for purposes of determining benefits due under the Bancshares' Employee Stock
Ownership Plan and the Bancshares' 401(k) Plan (or upon the merger of Bancshares
with BancorpSouth, Inc., the BankcorpSouth, Inc. or BancorpSouth Bank plans).
Continuing Employees shall not receive service credit, for any purpose under the
Bancshares' Defined Benefit Retirement Plan, which has been frozen (or upon
merger of Bancshares
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with BancorpSouth, Inc., Continuing Employees shall not receive service credit
for the purpose of accrual of pension benefits under the BancorpSouth, Inc. or
BancorpSouth Bank defined benefit plan).
(b) Each Continuing Employee shall receive credit for all time employed
with FFC or FSA for purposes of the application of Bancshares' or a Bancshares'
subsidiary's (or, if applicable, BancorpSouth, Inc.'s or BancorpSouth Bank's)
severance (as limited by Section 5.02(d)) and vacation policies applicable to
employees generally, and for all purposes under the employee welfare benefit
plans and other employee benefit plans and programs sponsored by Bancshares or
its affiliates (or by BancorpSouth, Inc. or BancorpSouth Bank) (but not for any
purpose under the Bancshares' Defined Benefit Retirement Plan or for accrual of
pension benefits under any defined benefit plan of BancorpSouth, Inc. or
BancorpSouth Bank); PROVIDED HOWEVER, that such service shall not be recognized
to the extent that such recognition would result in a duplication or increase of
benefits or such service would not be recognized under an Employee Benefit Plan
(or a plan of BancorpSouth, Inc. or BancorpSouth Bank). Any preexisting
condition exclusion applicable to such plans and programs shall be waived with
respect to any Continuing Employee to the same extent waived under the FFC or
FSA Employee Benefit Plans. For purposes of determining each Continuing
Employee's benefit for the year in which the Merger occurs under the Bancshares'
(or, if applicable, BancorpSouth, Inc.'s or BancorpSouth Bank's) vacation
program, any vacation taken by a Continuing Employee preceding the Closing Date
for the calendar year in which the Merger occurs will be deducted from the total
Bancshares' (or, if applicable, BancorpSouth, Inc.'s or BancorpSouth Bank's)
vacation benefit available to such employee for such calendar year.
(c) On or before, but effective as of the Closing Date, FFC may take
such actions as may be necessary (a) to cause each individual employed by FFC or
FSA immediately prior to the Closing
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Date to have a fully vested and nonforfeitable interest in such employee's
account balance in the FFC ESOP and the First Federal Savings & Loan Association
of Texarkana Financial Institutions Thrift Plan ("401(k) Plan") sponsored by FFC
as of the Closing Date and (b) to contribute amounts accrued on the books of FFC
from January 1, 2000 to the Closing Date to such plan(s).
The provisions of this Section are solely for the purpose of setting
forth the understanding between Bancshares and FFC, and shall not create or
modify any employee benefit plan of Bancshares or any of its affiliates (or of
BancorpSouth, Inc. or BancorpSouth Bank), and shall not be construed as creating
any employment contract or third party beneficiary right between Bancshares or
FFC (or BancorpSouth, Inc. or BancorpSouth Bank), on one hand, and any such
employee, on the other hand.
(d) Any Continuing Employee who is terminated for any reason other than
for cause within one year from the Closing Date shall be entitled to receive
severance pay ("Severance Pay") equal to the product of (x) such Continuing
Employee's weekly base salary, and (y) the number of weeks applicable to such
Continuing Employee as set forth in the following schedule:
Salary Ranges
-------------
Length of Service $15,000 or less $15,001 to $40,000 $40,001 or greater
- ----------------- --------------- ------------------ ------------------
90 days but less than 5 years 2 weeks 4 weeks 8 weeks
5 years but less than 10 years 5 weeks 8 weeks 14 weeks
10 years or greater 8 weeks 12 weeks 20 weeks
Any Continuing Employee who receives Severance Pay under this schedule shall not
be entitled to additional severance pay under any other policy of Bancshares (or
BancorpSouth) as a result of the termination described herein. For purposes of
this Section 5.02(d), "cause" shall be defined as (i) any act or omission by
such Continuing Employee constituting fraud under the laws of the State of
Arkansas or the United States of America; or (ii) a finding of probable cause,
or a plea of nolo
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contendere to, a felony or other crime involving moral turpitude by such
Continuing Employee; or (iii) the negligent performance by such Continuing
Employee of the material responsibilities of his or her position or the
negligent failure by such Continuing Employee to adhere to the policies of
Bancshares (or BancorpSouth); or (iv) the willful or reckless failure by such
Continuing Employee to substantially perform his duties hereunder, the willful
or reckless failure by such Continuing Employee to adhere to Bancshares' (or
BancorpSouth's) policies, or the willful or reckless engaging by such Continuing
Employee in misconduct which is materially injurious to Bancshares (or
BancorpSouth); or (v) failure by such Continuing Employee to comply with
Bancshares' (or BancorpSouth's) policies concerning employment discrimination or
harassment; or (vi) the receipt by such Continuing Employee of a materially and
substantially unfavorable performance review, provided, however, that such
Continuing Employee shall be given a thirty day probationary period within which
said Continuing Employee shall be allowed an opportunity to correct any
performance deficiencies included in the review.
5.03. INDEMNIFICATION.
(a) For a period of five years after the Effective Time,
Bancshares shall indemnify, defend and hold harmless the officers and directors
of FFC (each, an "Indemnified Party") against all liabilities arising out of
actions or omissions out of their employment by or service with FFC and
occurring at or prior to the Effective Time to the full extent permitted under
applicable law and by Bancshares' Articles of Incorporation and Bylaws as in
effect on the date hereof, including provisions relating to advances of expenses
incurred in the defense of any litigation; provided that no such indemnification
shall be made for actions or omissions which constitute fraud, are intentionally
taken or omitted in bad faith, constitute a knowing breach of this Agreement or
constitute violations of
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criminal law, unless the Indemnified Party had no reasonable cause to believe
his or her conduct was unlawful.
(b) Any Indemnified Party wishing to claim indemnification
under this Section 5.03, upon learning of any such liability of litigation,
shall promptly notify Bancshares thereof (provided, however, that the failure to
so notify shall release Bancshares only to the extent it actually prejudiced
thereby). In the event of any such litigation (whether arising before or after
the Effective Time), (i) Bancshares shall have the right to assume the defense
thereof and Bancshares shall not be liable to such Indemnified Party for any
legal expenses for other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof, except that if
Bancshares elects not to assume such defense or counsel for the Indemnified
Parties advises that there are substantive issues which raise conflicts of
interest between Bancshares and the Indemnified Parties, the Indemnified Parties
may retain counsel satisfactory to them, and Bancshares shall pay all reasonable
fees and expenses of such counsel for the Indemnified Parties; PROVIDED,
HOWEVER, that Bancshares shall be obligated pursuant to this Section 5.03 to pay
for such additional counsel for Indemnified Parties in any jurisdiction as
counsel for Bancshares shall determine is necessary under law and professional
ethics; (ii) the Indemnified Parties will cooperate in the defense of any such
litigation, and (iii) Bancshares shall not be liable for any settlement effected
without its prior written consent; and provided, further, that Bancshares shall
not have obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall determine, and such determination shall have become
final, that the indemnification of such Indemnified Party in the manner
contemplated hereby is prohibited by applicable law.
(c) In consideration of the indemnification obligations
provided by Bancshares in this Section 5.03 and as a condition precedent
thereto, each officer and director of FFC shall have
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delivered to Bancshares on or prior to the date of this Agreement a letter (in
form reasonably satisfactory to Bancshares) describing all known claims such
officers and directors may have against FFC. In the letter, the officer or
director shall; (a) acknowledge the assumption by Bancshares of all liability
(to the extent FFC would be so liable) for claims for indemnification arising
under Section 5.03 hereof; (b) affirm that he or she is not aware of any claims
he or she might have against FFC; (c) identify any other facts or circumstances
of which he or she is aware and which he or she reasonably believes could give
rise to a claim for indemnification under Section 5.03 hereof; and (d) release
as of the Effective Time any and all claims that he or she may have against FFC
known to him or her which he or she knowingly did not disclose to Bancshares.
(d) FFC hereby represents and warrants to Bancshares that it
has no knowledge of any claim, pending or threatened, or of any facts or
circumstances that it reasonably believes could give rise to any obligation by
Bancshares to provide the indemnification required by this Section 5.03.
(e) Bancshares shall cause the persons serving as officers and
directors of FFC immediately prior to the Effective Time to be covered for a
period of four years from the Effective Time by the directors' and officers'
liability insurance policy maintained by Bancshares with respect to acts or
omissions occurring prior to the Effective Time which were committed by such
officers and directors in their capacity as such.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01. LEGAL CONDITIONS TO MERGER. Each of FFC and Bancshares will take
all reasonable actions necessary to comply promptly with all legal requirements
it may have with respect to the Merger (including furnishing all information
required by the FDIC or in connection with approvals of or filings with any
other Governmental Entity) and will promptly cooperate with and furnish
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information to each other in connection with any such requirements imposed upon
either of them or any of their subsidiaries in connection with the Merger. Each
of FFC and Bancshares will, respectively, cause their subsidiaries to take in a
prompt manner all reasonable actions necessary to obtain (and will cooperate
with each other in obtaining) any agreement, consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by Bancshares, FFC or any
of their subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement and the Plan of Merger.
6.02. REPORTS.
(a) Prior to the Effective Time, FFC shall prepare and file as
and when required all FFC Reports.
(b) FFC shall prepare such FFC Reports such that (i) they
comply in all material respects with all of the statutes, rules and regulations
enforced or promulgated by the Governmental Entity with which they are filed and
do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) with respect to any FFC Report containing financial
information of the type included in the FFC Financial Statements, the financial
information (A) will be prepared in accordance with GAAP, applied on a
consistent basis with past practices (except as stated therein or in the notes
thereto) (B) will present fairly the consolidated financial condition of FFC, at
the dates, and the consolidated results of operations and cash flows for the
periods, stated therein and (C) in the case of interim fiscal periods, will
reflect fairly the consolidated financial condition of FFC, at the dates, and
the consolidated results of operations and cash flows for the periods stated
therein, subject to year-end audit adjustments.
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6.03. UPDATE DISCLOSURE; BREACHES. From and after the date hereof until
the earlier of the termination of this Agreement or the Effective Time, FFC and
Bancshares shall provide to the other party prompt notice of any matters which
have become known or have occurred after the date hereof which (i) are material
to the financial condition or operations of the disclosing party, (ii) which
have a material bearing on any matter dealt with herein, (iii) would cause or
constitute a failure of a condition precedent to either party's obligation to
effect the Merger, or (iv) would cause or constitute a material breach, or would
have caused or constituted a material breach had such matter been known prior to
the date hereof, of any of its representations, warranties or agreements
contained herein.
6.04. ABILITY TO PERFORM. Neither FFC nor Bancshares will knowingly
take action which would or is reasonably likely to (i) adversely affect the
ability of either of Bancshares or FFC to obtain any necessary approvals of
Governmental Entities required for the transactions contemplated hereby; (ii)
adversely affect FFC's or Bancshares' ability to perform their covenants and
agreements under this Agreement; or (iii) result in any of the conditions to the
Merger set forth in Article VII not being satisfied.
6.05. BROKERS OR FINDERS. Except as set forth in Section 7.03(c),
Bancshares and FFC represent that no agent, broker, investment banker, financial
advisor or other firm or person is or will be entitled to any broker's or
finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement.
6.06. REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other party. In case at any time after the
Effective Time any
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further action is reasonably necessary or desirable to carry out the purposes of
this Agreement or to vest Bancshares with full title to all properties, assets,
rights, approvals, immunities and franchises of either of FFC or FSA, the proper
officers and directors of each party to this Agreement shall take all such
necessary action.
6.07. GOVERNMENTAL AND OTHER THIRD PARTY APPROVALS. FFC and Bancshares
shall each use their reasonable best efforts to obtain all governmental and
other third party approvals, authorizations and consents that may be necessary
or reasonably required of them in order to effect the transactions contemplated
by this Agreement. FFC and Bancshares agree to make all filings and applications
for such approvals and reviews as soon as practicable, to prosecute the same
with reasonable diligence and to notify each other when such approvals,
authorizations and consents have been received. FFC and Bancshares will provide
each other with copies of all regulatory notices and filings made in connection
with the transactions contemplated by this Agreement prior to filing. Bancshares
and FFC will each provide to the other copies of any correspondence received
from any regulatory agency relating to such filings, and shall use its best
efforts to keep the other party advised of the progress of obtaining all
regulatory and third party approvals required for the consummation of all
transactions contemplated by this Agreement. Within ten days from the date of
this Agreement Bancshares will make an initial request of FFC for FFC to provide
to Bancshares information Bancshares needs to prepare its applications for
regulatory approval of the Merger. Bancshares agrees to file its applications
for regulatory approval of the Merger within 45 days from the date of this
Agreement or within 30 days from the date it receives the information required
in the initial request for information from FFC, whichever is later.
6.08. NONPUBLIC INFORMATION. Unless otherwise required by law, each
party will hold any nonpublic information obtained from the other in connection
with the transaction in confidence until
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such time as such information otherwise becomes publicly available through no
wrongful act of the party holding nonpublic information of the other party, and
in the event of termination of this Agreement for any reason, each party shall
promptly return all nonpublic documents obtained from the other party, and any
copies made of such documents, to such other party or destroy such documents and
copies.
ARTICLE VII
CONDITIONS PRECEDENT
7.01. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) SHAREHOLDER APPROVAL. The Merger shall have been approved
and adopted by the legally required vote of the holders of the outstanding
shares of FFC Stock at a shareholders meeting duly called for the purpose of
voting on the Merger.
(b) BANKING REGULATORS. The Merger, the Subsidiary Mergers and
the transactions contemplated hereby shall have been approved by the FDIC, the
Texas Banking Commissioner, and any other necessary federal or state banking
authorities without any condition not reasonably acceptable to Bancshares. All
conditions required to be satisfied prior to the Effective Time imposed by the
terms of such approvals shall have been satisfied and all waiting periods
relating to such approvals shall have expired.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition (an "Injunction")
preventing the consummation of the Merger shall be in effect.
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(d) NO PROCEEDING OR LITIGATION. No material action, suit or
proceeding before any court or any governmental or regulatory authority shall
have been commenced against Bancshares or FFC or any affiliate, subsidiary,
associate, officer or director of either of them, seeking to restrain, enjoin,
prevent, change or rescind the transactions contemplated hereby or questioning
the validity or legality of any such transactions.
(e) CLOSING DATE. The Closing Date shall occur as soon as
practicable but in no event later than December 31, 2000 unless extended by FFC
and Bancshares.
(f) CONSENTS UNDER AGREEMENTS. Bancshares, FFC and their
subsidiaries shall have obtained the consent or approval of each person whose
consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease or other agreement or instrument.
7.02. CONDITIONS TO OBLIGATIONS OF BANCSHARES. The obligation of
Bancshares to effect the Merger is subject to the satisfaction of the following
conditions unless waived in writing by Bancshares:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of FFC set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as of the Closing Date,
except for changes expressly contemplated by this Agreement, and Bancshares
shall have received a certificate signed on behalf of FFC by its chief executive
officer and chief financial officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF FFC. FFC shall have
performed in all material respects each of the obligations required to be
performed by it under this Agreement and the Plan of
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Merger at or prior to the Closing Date, and Bancshares shall have received a
certificate signed on behalf of FFC by its chief executive officer and chief
financial officer to such effect.
(c) OPINION OF COUNSEL. FFC shall have delivered to Bancshares
an opinion of its counsel, Jenkens & Gilchrist, P.C., dated as of the Closing
Date and in substantially the form and substance attached hereto as Exhibit
7.02(c).
(d) NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since December 31, 1999 in the financial condition,
results of operations or business of FFC.
(e) ENVIRONMENTAL AUDITS. Phase I environmental audits of such
portions of the FFC Property as are selected by Bancshares shall have been
conducted at Bancshares' expense and shall, to Bancshares' satisfaction, reflect
no material problems under Environmental Laws.
(f) CONSENTS UNDER AGREEMENTS. Bancshares and its subsidiaries
shall have obtained the consent or approval of each person whose consent or
approval of any transaction contemplated herein is required under any loan or
credit agreement, note, mortgage, indenture, lease or other agreement or
instrument.
(g) DISSENTING SHARES. The number of dissenting shares shall
not exceed eleven percent (11%) of the outstanding FFC Stock, not including the
FFC Options.
(h) NONCOMPETITION AGREEMENTS OF FFC DIRECTORS AND OFFICERS.
Each of the directors of FFC and FSA as of the date of this Agreement shall have
executed and delivered to Bancshares a non-competition agreement substantially
in the form of Exhibit 7.02(h) hereto. Such non-competition agreements shall be
effective as of the Closing Date and shall be null and void in the event the
Merger is not consummated.
(i) FFC OPTIONS. Each holder of an FFC Option shall have
entered into a written agreement and waiver with Bancshares and FFC in the form
attached hereto as Exhibit 7.02(i) that
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said holder will accept in full satisfaction of all rights under the FFC Options
the Option Consideration due to said holder.
(j) DIRECTORS AND OFFICERS LETTERS. Each of the Directors and
Officers of FFC shall have executed and delivered to Bancshares the letter
described in Section 5.03(c).
(k) TERMINATION OF EMPLOYMENT AGREEMENT. James W. McKinney,
FFC, FSA and Bancshares shall have entered into an agreement amending the
provisions of McKinney's employment agreement ("Employment Agreement") to
provide (i) on the later of November 1, 2000 or one month after the Closing Date
McKinney shall retire, (ii) the Employment Agreement shall terminate on the
later of November 1, 2000 or one month after the Closing Date, (iii) McKinney
shall receive usual compensation and benefits through the later of November 1,
2000 or one month after the Closing Date, and (iv) no compensation or other
benefits shall be paid to or provided for McKinney under Section 5(c) of the
Employment Agreement.
7.03. CONDITIONS TO OBLIGATIONS OF FFC. The obligations of FFC to
effect the Merger are subject to the satisfaction of the following conditions
unless waived in writing by FFC:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Bancshares set forth in this Agreement shall
be true and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as of the Closing
Date, except for changes expressly contemplated by this Agreement, and FFC shall
have received a certificate signed on behalf of Bancshares by its chief
executive officer and chief financial officer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BANCSHARES. Bancshares shall
have performed in all material respects each of the obligations required to be
performed by it under this Agreement
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and the Plan of Merger at or prior to the Closing Date, and FFC shall have
received a certificate signed on behalf of Bancshares by its chief executive
officer and chief financial officer to such effect.
(c) FAIRNESS OPINION. FFC shall have obtained, at its expense,
on or before the Closing Date, the opinion of Stifel, Nicolaus & Company,
acceptable to it to the effect that the terms of the transaction contemplated by
this Agreement are fair from a financial point of view to the FFC Shareholders.
(d) OPINION OF COUNSEL. Bancshares shall have delivered to FFC
an opinion of its counsel, Mitchell, Williams, Selig, Gates & Woodyard,
P.L.L.C., dated as of the Closing Date in substantially the form and substance
attached hereto as Exhibit 7.03(d).
(e) NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change since December 31, 1999 in the financial condition,
results of operations or business of Bancshares.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.01. TERMINATION. This Agreement and the Plan of Merger may be
terminated at any time prior to the Effective Time:
(a) by mutual consent of the Boards of Directors of
Bancshares, United and FFC;
(b) by either Bancshares and United or by FFC (A) if there has
been a breach by the other party in any material respect of any representation,
warranty, covenant or agreement set forth in this Agreement, or (B) if any
representation or warranty of the other party shall be discovered to have become
untrue in any material respect, and in either case such breach or other
condition has not been cured within 10 business days following receipt by the
nonterminating party of notice of such breach or other condition from the
terminating party;
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(c) by either Bancshares and United or by FFC if any permanent
injunction preventing the consummation of the Merger shall have become final and
nonappealable;
(d) by either Bancshares and United or by FFC if the Merger
shall not have been consummated on or before December 31, 2000, for a reason
other than the failure of the terminating party to comply with its obligations
under this Agreement;
(e) by either Bancshares and United or by FFC if the FDIC or
other Governmental Entity has denied approval of the Merger and such denial has
become final and nonappealable; or
(f) by either Bancshares and United or by FFC if any condition
precedent to the terminating party's obligation to effect the Merger has not
been satisfied and such condition cannot reasonably be expected to be satisfied
prior to the date specified in Subsection 8.01(d).
8.02. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either FFC or Bancshares as provided in Section 8.01, this
Agreement and the Plan of Merger shall forthwith become void and there shall be
no liability or obligation on the part of FFC, Bancshares, United or their
respective officers or directors, except to the extent that such termination
results from the willful breach by a party hereto of any of its representations,
warranties, covenants or agreements set forth in this Agreement; provided,
however, that the duties of the parties with respect to nonpublic information as
set forth in Section 6.09 will not be terminated.
8.03. AMENDMENT. Subject to the next following sentence, this Agreement
and the Plan of Merger may be amended by the parties hereto by action taken or
authorized by the Boards of Directors of Bancshares and FFC at any time prior to
the Closing Date, except that the consideration to be received by the FFC
shareholders may not be changed after the FFC shareholders' meeting. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
8.04. EXTENSION; WAIVER. At any time prior to the Effective Time,
Bancshares or FFC by action taken or authorized by its Board of Directors, may,
to the extent legally allowed, (i) extend
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the time for the performance of any of the obligations or other acts of the
other party hereto, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered by
the other pursuant hereto, and (iii) waive compliance by the other party with
any of the agreements or conditions contained herein. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in a written instrument signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
9.01. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Bancshares or United, to
First United Bancshares, Inc.
Attention: John G. Copeland
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
(b) if to FFC, to:
Texarkana First Financial Corporation
Third & Olive Streets
Texarkana, Arkansas 71854
Attention: Mr. James W. McKinney
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with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attention: Financial Institutions Department
9.02. INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available.
9.03. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one counterpart has been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart.
9.04. ENTIRE AGREEMENT. Except for those provisions of the letter
agreement dated January 26, 2000 between the parties under which First United is
obligated to maintain the confidentiality of certain information and to refrain
from soliciting the employment of employees of FFC, this Agreement (including
the Plan of Merger and the other documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof.
9.05. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Arkansas, except that the Plan of
Merger shall be filed in accordance with and comply with the corporate laws of
the State of Texas.
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9.06. PUBLICITY. The parties hereto agree that they will consult with
each other concerning any proposed press release or public announcement
pertaining to the Merger and will use their best efforts to agree upon the text
of such press release or public announcement prior to the publication of such
press release or the making of such public announcement. However, the
determination by Bancshares as to when and whether it will make a public
statement and the contents of any such public statement shall be final and
binding.
9.07. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise, without the prior written
consent of the other parties, provided, however, that Bancshares may assign this
Agreement and its rights, interests, and obligations hereunder to BancorpSouth,
Inc., by operation of law or otherwise, without the prior written consent of FFC
and, in the event of an assignment other than by operation of law, so long as
BancorpSouth, Inc. expressly assumes Bancshares' obligations hereunder. No such
assignment shall alter or terminate Bancshares' obligations under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective heirs, successors and assigns.
9.08. KNOWLEDGE OF FFC. Wherever in this Agreement any representation
or warranty is made to the knowledge of FFC, such knowledge shall be limited to
the actual knowledge of the directors of FFC and FSA as of the date of this
Agreement and the individuals listed in Schedule 9.08 of FFC's Disclosure
Schedule.
9.09. MATERIAL ADVERSE CHANGE. Material Adverse Change shall not be
deemed to include the impact of (a) changes in banking and similar laws of
general applicability or interpretations thereof by courts or governmental
authorities, (b) changes in GAAP or regulatory accounting principles generally
applicable to banks and their holding companies, (c) actions and omissions of a
party (or any of its subsidiaries) taken with the prior informed consent of the
other party in contemplation of
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the transactions contemplated hereby, and (d) the Merger and compliance with the
provisions of this Agreement on the operating performance of the parties.
9.10. SEVERABILITY. In the event that any provisions of this Agreement
or any portion thereof shall be finally determined to be unlawful or
unenforceable, such provision or portion thereof shall be deemed to be severed
from this Agreement, and every other provision, and any portion of a provision,
that is not invalidated by such determination, shall remain in full force and
effect.
9.11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. There shall be no third party beneficiaries hereof.
9.12. EXPENSES. Except as otherwise provided herein, all expenses
incurred by Bancshares and FFC in connection with or related to the
authorization, preparation and execution of this Agreement, the Plan of Merger,
and all other matters related to the closing of the transactions contemplated
hereby, including, without limitation of the generality of the foregoing, all
fees and expenses of agents, representatives, counsel and accountants employed
by either such party or its affiliates, shall be borne solely and entirely by
the party which has incurred the same.
9.13. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in this Agreement and all other terms,
covenants and conditions hereof shall merge in the closing documents and shall
not survive Closing or, after Closing be the basis for any action by any party,
except as to any matter which is based upon willful fraud by a party with
respect to which the representations, warranties, terms, covenants and
conditions set forth in this Agreement shall expire only upon expiration of the
applicable statute of limitations and except for those covenants and agreements
contained herein which by their terms apply in whole or in part after the
Effective Time.
-62-
IN WITNESS WHEREOF, FFC and Bancshares have caused this Agreement to be
signed by their respective officers thereunto duly authorized, all as of the
date first written above.
FIRST UNITED BANCSHARES, INC.
By: /s/ JAMES V. KELLEY
---------------------------------
James V. Kelley
Chairman, President and Chief
Executive Officer
ATTEST:
/s/ JOHN G. COPELAND
- -----------------------------------
John G. Copeland, Secretary
TEXARKANA FIRST FINANCIAL CORPORATION
By: /s/ JAMES W. MCKINNEY
-----------------------------------
ATTEST: James W. McKinney
Chairman
/s/ DEBBIE ROSE
- -------------------------------------
Debbie Rose, Secretary
-64-
EXHIBIT A
PLAN OF MERGER
This Plan of Merger, dated as of __________, 2000 ("Plan of Merger"),
by and between First United Bancshares, Inc., an Arkansas corporation
("Bancshares"), Texarkana First Financial Corporation, a Texas corporation
("FFC"), and Acquisition Co., Inc., a Texas corporation and wholly-owned
subsidiary of Bancshares ("Sub").
WHEREAS, FFC is a corporation with authorized capital stock
consisting of 15,000,000 shares of common stock, $0.01 par value of which
1,539,342 shares of common stock ("FFC Stock") are validly issued and
outstanding and 444,408 shares are held by FFC in its treasury on the date
hereof;
WHEREAS, Sub is a corporation with authorized capital stock of 1,000
shares of common stock, $1.00 par value, of which 1,000 shares of common
stock are validly issued and outstanding on the date hereof;
WHEREAS, Sub is a corporation duly organized and existing under the
laws of Texas;
WHEREAS, Bancshares and FFC have entered into an Agreement and Plan
of Reorganization (the "Agreement" and, together with this Plan of Merger,
the "Merger Agreements") that contemplates the merger of Sub with and into
FFC (the "Merger") upon the terms and conditions provided in this Plan of
Merger and the Agreement and pursuant to the Texas Business Corporation Act
(the "TBCA"), with FFC to be the surviving corporation and, upon consummation
of the Merger, become a wholly-owned subsidiary of Bancshares;
WHEREAS, the Boards of Directors of Bancshares, FFC and Sub deem it
fair and equitable to, and in the best interests of, their respective
corporations and shareholders that Sub be merged with and into FFC with FFC
being the surviving corporation, and the Boards of Directors and shareholders
of FFC and Sub have approved this Plan of Merger and have authorized its
execution and delivery.
NOW, THEREFORE, in consideration of the agreements herein contained,
the parties hereto adopt and agree to the following agreements, terms and
conditions relating to the Merger and the mode of carrying the same into
effect:
ARTICLE I
THE MERGER
1.01. THE MERGER. Subject to the terms and conditions of the Merger
Agreements, Sub will be merged with and into FFC , which will continue as the
surviving corporation, in accordance with and with the effect provided in the
TBCA.
1.02. EFFECTIVE TIME OF THE MERGER. Subject to the provisions of the
Merger Agreements, articles of merger (the "Articles of Merger") shall be duly
prepared and executed by FFC and Sub and thereafter delivered to the Secretary
of State of Texas for filing, as provided in the TBCA as soon as practicable on
or after the Closing Date (as defined in the Agreement). The Merger shall become
effective upon the filing of the Articles of Merger with the Secretary of State
of Texas (the "Effective Time").
1.03. EFFECTS OF THE MERGER. (a) At the Effective Time, (i) the
separate existence of Sub shall cease and Sub shall be merged with and into FFC
( FFC and Sub are sometimes referred to herein as the "Constituent Corporations"
and FFC is sometimes referred to herein as the "Surviving Corporation"); (ii)
the Articles of Incorporation of Sub in effect as of the Effective Time (the
"Articles") shall become the Articles of Incorporation of the Surviving
Corporation; (iii) the Bylaws of Sub in effect as of the Effective Time (the
"Bylaws") shall become the Bylaws of the Surviving Corporation; and (iv) the
Directors and officers of FFC immediately after the Effective Time shall be the
Directors and officers of FFC prior to the Effective Time.
(b) At and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises of a public as well as
of a private nature, and be subject
to all the restrictions, disabilities and duties of each of the Constituent
Corporations; and all and singular rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real, personal and mixed
and all debts due to either of the Constituent Corporations on whatever account,
as well as for stock subscriptions and all other things in action or belonging
to each of the Constituent Corporations, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and franchises, and
all and every other interest shall be thereafter as effectually the property of
the Surviving Corporation as they were of the Constituent Corporations, and the
title to any real estate vested by deed or otherwise, in either of the
Constituent Corporations, shall not revert or be in any way impaired; but all
rights of creditors and all liens upon any property of either of the Constituent
Corporations shall be preserved unimpaired, and all debts, liabilities and
duties of the Constituent Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent as if said debts
and liabilities had been incurred by it. Any action or proceeding, whether
civil, criminal or administrative, pending by or against either Constituent
Corporation shall be prosecuted as if the Merger had not taken place, and the
Surviving Corporation may be substituted as a party in such action or proceeding
in place of any Constituent Corporation.
ARTICLE II
EFFECT OF THE MERGER ON THE COMMON STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
2.01. CONVERSION. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any shares of FFC Stock or
options to purchase FFC Stock ("FFC Options"), but subject to the rights of
dissenting shareholders of FFC:
(a) CONVERSION OF FFC STOCK AND FFC OPTIONS. All FFC Stock and
all FFC Options shall be converted in accordance with the Agreement into the
right to receive the amount of cash
consideration provided in Section 1.02 of the Agreement.
(b) CANCELLATION OF FFC SHARES AND FFC OPTIONS. All shares of
FFC Stock issued and outstanding immediately prior to the Effective Time
shall no longer be outstanding and all FFC Options in effect immediately
prior to the Effective Time shall no longer be effective and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such FFC Stock or FFC Options (a
"Certificate") shall cease to have any rights with respect thereto, except
the right to receive a pro rata amount of the consideration provided therefor
upon the surrender of such Certificate in accordance with the Plan of Merger.
2.02. THE EXCHANGE.
(a) PAYING AGENT. At the Effective Time, Bancshares shall deposit
with First United Trust Company, N.A. (the "Paying Agent") for the benefit of
the holders of FFC Stock and FFC Options the cash consideration to be paid
pursuant to Section 1.02 of the Agreement (the "Exchange Fund").
(b) EXCHANGE PROCEDURES. No later than twenty (20) days prior to the
Effective Time, Bancshares shall furnish to FFC, and FFC shall mail to each
holder of record of the FFC Stock and FFC Options, addressed to the most
current address of such persons according to the records of FFC, the
following: (i) a letter of transmittal specifying that delivery of
Certificates shall be effected and risk of loss shall pass, on or after the
Effective Time only upon delivery of the Certificates to First United Trust
Company, N.A. (the "Paying Agent"), which shall be in a form and contain any
other provisions as Bancshares may reasonably require (the "Transmittal
Letter"), and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for cash in the amount of the consideration due
pursuant to the Agreement (the "Instructions"). The Instructions shall
request holders to deliver their Certificates, a properly completed, duly
executed Transmittal Letter, and any other documentation that may be required
from such holder pursuant to the Instructions (collectively, the "Transmittal
Items") to the Paying Agent, and shall state that (x) occurrence of the
Effective Time is contingent upon the satisfaction of significant
conditions, including regulatory approval of the Merger and expiration of
statutory waiting periods, and (y) the Transmittal Items will be returned to
the holders thereof if the Agreement is terminated prior to the Effective
Time. Bancshares shall instruct the Paying Agent that, on and after the
Effective Time, upon the delivery to the Paying Agent of the properly
completed Transmittal Items, the Paying Agent is to pay the holder of such
Certificate in exchange therefor the amount of cash such holder is entitled
to receive in respect of the Certificate surrendered, pursuant to the
provisions of Article I of the Agreement and this Section 2.02, payable by
check or direct deposit into such shareholder's or option holder's account
with FSA, and the Certificate so surrendered shall forthwith be canceled.
Such payments shall be made, in the case of holders whose properly completed
Transmittal Items are delivered to the Paying Agent no later than ten (10)
days prior to the Effective Time, by mailing checks or making the direct
deposit immediately after the Effective Time and in no event later than the
next business day after the Effective Time, and in all other cases, by
mailing checks or making the direct deposit promptly, but in no event more
than ten (10) days following the later of (i) the Effective Time, or (ii) the
date on which the properly completed Transmittal Items are delivered to the
Paying Agent. Only holders of Certificates who have delivered their properly
completed Transmittal Items to the Paying Agent no later than ten (10) days
prior to the Effective Time shall be eligible to receive payment at the
Effective Time as herein provided. Notwithstanding the foregoing, no payment
shall be made to an individual under this section until the Paying Agent has
received from such holder all of the required Transmittal Items properly
completed in accordance with the instructions. No payment shall be made for
the Certificates prior to the Effective Time, and no interest shall be
payable with respect to the payment of the Purchase Price.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES.
No cash payment of any kind shall be made to the holder of any unsurrendered
Certificate until the holder of record or owner of such Certificate shall
surrender such Certificate.
(d) NO FURTHER OWNERSHIP RIGHTS. The consideration paid upon
the surrender of Certificates in accordance with the terms hereof shall be
deemed to have been paid in full
satisfaction of all rights pertaining to the Certificates, and there shall be
no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of FFC Stock, or issuance of any stock
pursuant to FFC Options, which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and payment
shall be made as provided in this Plan of Merger.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange
Fund which remains undistributed as provided herein for six months after the
Effective Time shall be delivered to Bancshares and holders of FFC Stock and
holders of FFC Options who have not theretofore complied with this Section
2.02 shall thereafter look only to Bancshares for payment of the cash due.
(f) NO LIABILITY. Neither Bancshares, FFC nor Sub shall be
liable to any holder of FFC Stock or FFC Options for cash due to said holders
that is delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(g) LOST CERTIFICATES. In the event any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Certificate to be lost, stolen or destroyed
and, if required by Bancshares, the posting by such person of a bond in such
amount as Bancshares may direct as indemnity against any claim that may be
made against it with respect to such Certificate, the Paying Agent will issue
in exchange for such lost, stolen or destroyed Certificate the cash payable
in respect thereof pursuant to the Agreement and this Plan of Merger.
ARTICLE III
CONDITIONS; TERMINATION; AMENDMENT
3.01. CONDITIONS TO THE MERGER. Consummation of the Merger is
conditional upon the fulfillment or waiver of the conditions precedent set
forth in Article VII of the Agreement.
3.02. TERMINATION. If the Agreement is terminated in accordance with
Article VIII thereof, then this Plan of Merger will terminate simultaneously
and the Merger will be
abandoned without further action by FFC, Sub or Bancshares.
3.03. AMENDMENT. Subject to the next following sentence and to the
provisions of the Agreement, this Plan of Merger may be amended by the
parties hereto by action taken or authorized by their respective Boards of
Directors at any time before the Closing Date. This Plan of Merger may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
3.04. EXTENSION; WAIVER. Subject to the provisions of the Agreement,
at any time prior to the Closing Date, Bancshares and Sub, by action taken or
authorized by their respective Board of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto and (ii) waive compliance by the other
with any of the agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid
only if set forth in a written instrument signed on behalf of such party.
ARTICLE IV
GENERAL PROVISIONS
4.01. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally (with receipt
confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Bancshares, to
First United Bancshares, Inc.
Attention: John G. Copeland
Chief Financial Officer
P. O. Box 751
El Dorado, Arkansas 71731
with a copy to:
Hermann Ivester, Esq.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
(b) if to FFC, to
Texarkana First Financial Corporation
Third & Olive Streets
Texarkana, Arkansas 71854
Attention: Mr. James W. McKinney
with a copy to:
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attn: Financial Institutions Department
4.02. INTERPRETATION. When a reference is made in this Plan of
Merger to Sections, such reference shall be to a Section of this Plan of
Merger unless otherwise indicated. The headings contained in this Plan of
Merger are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Plan of Merger.
4.03. COUNTERPARTS. This Plan of Merger may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
4.04. CAPITALIZED TERMS. Capitalized terms used in this Plan of
Merger that are not defined herein shall have the meaning given to them in
the Agreement.
4.05. GOVERNING LAW. This Plan of Merger shall be governed and
construed in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, FFC, Sub and Bancshares have caused this Plan of
Merger to
be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
ACQUISITION CO., INC.
By:
--------------------------------------
ATTEST: James V. Kelley
President
- -----------------------------------
__________________, Secretary
TEXARKANA FIRST FINANCIAL CORPORATION
By:
--------------------------------------
ATTEST: -----------------------
Title:
-------------------
- -----------------------------------
__________________, Secretary
FIRST UNITED BANCSHARES, INC.
By:
--------------------------------------
ATTEST: James V. Kelley
Chairman, President and Chief
Executive Officer
- ------------------------------
John G. Copeland, Secretary
APPENDIX B
FAIRNESS OPINION OF STIFEL, NICOLAUS
(Form of Stifel, Nicolaus & Company, Incorporated Opinion)
August , 2000
Board of Directors
Texarkana First Financial Corporation
3rd & Olive Street
Texarkana, Arkansas 75502
Members of the Board:
You have requested our opinion as to the fairness from a financial
point of view to the shareholders of Texarkana First Financial Corporation
("FTF") of the right to receive an amount of cash equal to $23.35 from First
United Bancshares, Inc. ("UNTD") for each outstanding share of common stock, par
value $0.01 per share, of FTF ("FTF Common Stock") pursuant to the terms of the
Agreement and Plan of Reorganization by and between UNTD and FTF, dated as of
May 15, 2000 (the "Agreement"). For the purposes of our opinion, we have assumed
that the merger of FTF with a subsidiary of UNTD (the "Merger") will be
consummated pursuant to the terms of the Agreement and will constitute a taxable
reorganization as contemplated by the Agreement and the Merger will be accounted
for under the purchase accounting method.
Stifel, Nicolaus & Company, Incorporated ("Stifel"), as part of its
investment banking services, is regularly engaged in the independent valuation
of businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for estate, corporate and other purposes. In
the ordinary course of its business, Stifel actively trades equity securities of
FTF and UNTD for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
In rendering our opinion, we have reviewed, among other things: the
Agreement; the financial statements of FTF and UNTD included in their respective
Annual Reports on Form 10-K for the 5 years ended September 30, 1999 and
December 31, 1999; their respective Quarterly Reports on Form 10-Q for the
quarter ended March 31, 2000; certain internal financial analyses and forecasts
for FTF and UNTD prepared by their respective managements; and certain pro forma
financial forecasts for the pro forma combined company resulting from the merger
of UNTD with BancorpSouth, Inc. prepared by the respective managements of UNTD
and BancorpSouth, Inc. which utilized UNTD's and BancorpSouth, Inc.'s internal
financial forecasts. We have conducted conversations with FTF's and UNTD's
senior management regarding their respective business plans and financial
forecasts. We have also compared certain financial and securities data of FTF
and UNTD with various other companies whose securities are traded in public
markets, reviewed the historical stock prices and trading volumes of the common
stock of FTF and UNTD, reviewed the
financial terms of certain other business combinations and conducted such other
financial studies, analyses and investigations as we deemed appropriate for
purposes of this opinion. We also took into account our assessment of general
economic, market and financial conditions and our experience in other
transactions, as well as our experience in securities valuations and our
knowledge of the bank and thrift industries generally.
In rendering our opinion, we have relied upon and assumed, without
independent verification, the accuracy and completeness of all of the financial
and other information that was provided to us or that was otherwise reviewed by
us and have not assumed any responsibility for independently verifying any of
such information. With respect to the financial forecasts supplied to us
(including without limitation, projected cost savings and operating synergies
resulting from the Merger), we have assumed with your consent that they were
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of FTF and UNTD as to the future
operating and financial performance of FTF and UNTD, that they would be realized
in the amounts and time periods estimated and that they provided a reasonable
basis upon which we could form our opinion. We also assumed that there were no
material changes in the assets, liabilities, financial condition, results of
operations, business or prospects of either FTF or UNTD since the date of the
last financial statements made available to us. We have also assumed, without
independent verification and with your consent, that the aggregate allowances
for loan losses set forth in the financial statements of FTF and UNTD are in the
aggregate adequate to cover all such losses. We did not make or obtain any
independent evaluation, appraisal or physical inspection of FTF's or UNTD's
assets or liabilities, the collateral securing any of such assets or
liabilities, or the collectibility of any such assets nor did we review loan or
credit files of FTF or UNTD. We relied on advice of FTF's counsel and
accountants as to all legal and accounting matters with respect to FTF, the
Agreement and the transactions and other matters contained or contemplated
therein. We have assumed, with your consent, that there are no factors that
would delay or subject to any adverse conditions any necessary regulatory or
governmental approval and that all conditions to the Merger will be satisfied
and not waived. As you are aware and with your consent, we have acted as
financial advisor to UNTD for the purpose of rendering a fairness opinion with
respect to the acquisition of UNTD by BancorpSouth, Inc.
Our opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on the information made available to us
as of, the date of this letter. Our opinion is directed to the Board of
Directors of FTF for its information and assistance in connection with its
consideration of the financial terms of the Merger and does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
proposed transaction, nor have we expressed any opinion as to the prices at
which any securities of FTF or UNTD might trade in the future. Except as
required by applicable law, including without limitation federal securities
laws, our opinion may not be published or otherwise used or referred to, nor
shall any public reference to Stifel be made, without our prior written consent.
Based upon the foregoing and such other factors as we deem relevant, we
are of the opinion, as of the date hereof, that the right to receive an amount
of cash equal to $23.35208 per share pursuant to the Agreement is fair to the
holders of FTF Common Stock from a financial point of view.
Very truly yours,
DRAFT
STIFEL, NICOLAUS & COMPANY, INCORPORATED
APPENDIX C
ARTICLES 5.11-5.13
OF THE
TEXAS BUSINESS CORPORATION ACT
ART. 5.11 RIGHTS OF DISSENTING SHAREHOLDERS IN THE EVENT OF CERTAIN CORPORATE
ACTIONS
A. Any shareholder of a domestic corporation shall have the right to dissent
from any of the following corporate actions:
(1) Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and the
shareholder holds shares of a class or series that was entitled to vote thereon
as a class or otherwise;
(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust or trust indenture unless otherwise provided in
the articles of incorporation) of all, or substantially all, the property and
assets, with or without good will, of a corporation if special authorization of
the shareholders is required by this Act and the shareholder hold shares of a
class or series that was entitled to vote thereon as a class or otherwise;
(3) Any plan of exchange pursuant to Article 5.02 of this Act in which
the shares of the corporation of the class or series held by the shareholder are
to be acquired.
B. Notwithstanding the provisions of Section A of this Article, a shareholder
shall not have the right to dissent from any plan of merger in which there is a
single surviving or new domestic or foreign corporation, or from any plan of
exchange, if:
(1) the shares held by the shareholder are part of a class or series,
shares of which are on the record date fixed to determine the shareholders
entitled to vote on the plan of merger or plan of exchange:
(a) listed on a national securities exchange;
(b) listed on the Nasdaq Stock Market (or successor quotation)
or designated as a national market security on an interdealer quotation system
by the National Association of Securities Dealers, Inc., or successor entity; or
(c) held of record by not less than 2,000 holders;
(2) the shareholder is not required by the terms of the plan of merger
or plan of exchange to accept for the shareholder's shares any consideration
that is different than the consideration (other than cash in lieu of fractional
shares that the shareholder would otherwise be entitled to receive) to be
provided to any other holder of shares of the same class or series of shares
held by such shareholder; and
(3) the shareholder is not required by the terms of the plan of merger
or the plan of exchange to accept for the shareholder's shares any consideration
other than:
(a) shares of domestic or foreign corporation that,
immediately after the effective time of the merger or exchange, will be part of
a class or series, shares of which are:
(i) listed, or authorized for listing upon official
notice of issuance national securities exchange;
(ii) approved for quotation as a national market
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc., or successor entity; or
(iii) held of record by not less than 2,000 holders;
(b) cash in lieu of fractional shares otherwise entitled to be
received; or
(c) any combination of the securities and cash described in
Subdivisions (a) and (b) of this subsection.
ART. 5.12 PROCEDURE FOR DISSENT BY SHAREHOLDER AS TO SAID CORPORATE ACTIONS
A. Any shareholder of any domestic corporation who has the right to dissent only
by complying with the following procedures:
(1) (a) With respect to proposed corporate action that is submitted to
a vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action, setting
out that the shareholder's right to dissent will be exercised if the action is
effective and giving the shareholder's address, to which notice thereof shall be
delivered or mailed in that event. If the action is effected and the shareholder
shall not have voted in favor of the action, the corporation, in the case of
action other than a merger, or the surviving or new corporation (foreign or
domestic) or other entity that is liable to discharge the shareholder's right of
dissent, in the case of a merger, shall, within ten (10) days after the action
is effected, deliver or mail to the shareholder written notice that the action
has been effected, and the shareholder may, within ten (10) days from the
delivery or mailing of the notice, make written demand on the existing,
surviving, or new corporation (foreign or domestic) or other entity, as the case
may be, for payment of the fair value of the shareholder's shares. The fair
value of the shares shall be the value thereof as of the day immediately
preceding the meeting, excluding any appreciation or depreciation in
anticipation of the proposed action. The demand shall state the number and class
of the shares owned by the shareholder and the fair value of the shares as
estimated by the shareholder. Any shareholder failing to make demand within the
ten (10) day period shall be bound by the action.
(b) With respect to proposed corporate action that is approved pursuant
to Section A of Article 9.10 of this Act, the corporation, in the case of action
other than a merger, and
the surviving or new corporation (foreign or domestic) or other entity that is
liable to discharge the shareholder's right of dissent, in the case of a merger,
shall, within ten (10) days after the date the action is effected, mail to each
shareholder of record as of the effective date of the action notice of the fact
and date of the action and that the shareholder may exercise the shareholder's
right to dissent from the action. If the shareholder shall not have consented to
the taking of the action, the shareholder may, within twenty (20) days after the
mailing of the notice, make written demand on the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, for
payment of the fair value of the shareholder's shares. The fair value of the
shares shall be the value thereof as of the date the written consent authorizing
the action was delivered to the corporation pursuant to Section A of Article
9.10 of this Act, excluding any appreciation or depreciation in anticipation of
the action. The demand shall state the number and class of shares owned by the
dissenting shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the twenty (20) day
period shall be bound by the action.
(2) Within twenty (20) days after receipt by the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may be, of
a demand for payment made by a dissenting shareholder in accordance with
Subsection (1) of this Section, the corporation (foreign or domestic) or other
entity shall deliver or mail to the shareholder a written notice that shall
either set out that the corporation (foreign or domestic) or other entity
accepts the amount claimed in the demand and agrees to pay that amount within
ninety (90) days after the date on which the action was effected, and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed, or shall contain an estimate by the corporation
(foreign or domestic) or other entity of the fair value of the shares, together
with an offer to pay the amount of that estimate within ninety (90) days after
the date on which the action was effected, upon receipt of notice within sixty
(60) days after that date from the shareholder that the shareholder agrees to
accept that amount and, in the case of shares represented by certificates, upon
the surrender of the certificates duly endorsed.
(3) If, within sixty (60) days after the date on which the corporate
action was effected, the value of the shares is agreed upon between the
shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall be
made within ninety (90) days after the date on which the action was effected
and, in the case of shares represented by certificates, upon surrender of the
certificates duly endorsed. Upon payment of the agreed value, the shareholder
shall cease to have any interest in the shares or in the corporation.
B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition in any court of competent jurisdiction in the county
in which the principal office of the domestic corporation is located, asking for
a finding and
determination of the fair value of the shareholder's shares. Upon the filing of
any such petition by the shareholder, service of a copy thereof shall be made
upon the corporation (foreign or domestic) or other entity, which shall, within
ten (10) days after service, file in the office of the clerk of the court in
which the petition was filed a list containing the names and addresses of all
shareholders of the domestic corporation who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the corporation (foreign or domestic) or other entity. If the
petition shall be filed by the corporation (foreign or domestic) or other
entity, the petition shall be accompanied by such a list. The clerk of the court
shall give notice of the time and place fixed for the hearing of the petition by
registered mail to the corporation (foreign or domestic) or other entity and to
the shareholders named on the list at the addresses therein stated. The forms of
the notices by mail shall be approved by the court. All shareholders thus
notified and the corporation (foreign or domestic) or other entity shall
thereafter be bound by the final judgment of the court.
C. After the hearing of the petition, the court shall determine the shareholders
who have complied with the provisions of this Article and have become entitled
to the valuation of and payment for their shares, and shall appoint one or more
qualified appraisers to determine that value. The appraisers shall have power to
examine any of the books and records of the corporation the shares of which they
are charged with the duty of valuing, and they shall make a determination of the
fair value of the shares upon such investigation as to them may seem proper. The
appraisers shall also afford a reasonable opportunity to the parties interested
to submit to them pertinent evidence as to the value of the shares. The
appraisers shall also have such power and authority as may be conferred on
Masters in Chancery by the Rules of Civil Procedure or by the order of their
appointment.
D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment of that value by the existing, surviving, or new corporation (foreign or
domestic) or other entity, together with interest thereon, beginning 91 days
after the date on which the applicable corporate action from which the
shareholder elected to dissent was effected to the date of such judgment, to the
shareholders entitled to payment. The judgment shall be payable to the holders
of uncertificated shares immediately but to the holders of shares represented by
certificates only upon, and simultaneously with, the surrender to the existing,
surviving, or new corporation (foreign or domestic) or other entity, as the case
may be, of duly endorsed certificates for those shares. Upon payment of the
judgment, the dissenting shareholders shall cease to have any interest in those
shares or in the corporation. The court shall allow the appraisers a reasonable
fee as court costs, and all court costs shall be allotted between the parties in
the manner that the court determines to be fair and equitable.
E. Shares acquired by the existing, surviving or new corporation (foreign or
domestic) or
other entity, as the case may be, pursuant to the payment of the agreed value of
the shares or pursuant to payment of the judgment entered for the value of the
shares, as in this Article provided, shall in the case of a merger, be treated
as provided in the plan of merger and, in all other cases, may be held and
disposed of by the corporation as in the case of other treasury shares.
F. The provisions of this Article shall not apply to a merger if, on the date of
the filing of the articles of merger, the surviving corporation is the owner of
all the outstanding shares of the other corporations, domestic or foreign, that
are parties to the merger.
G. In the absence of fraud in the transaction, the remedy provided by this
Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the shareholder with respect to the action. If
the existing, surviving, or new corporation (foreign or domestic) or other
entity, as the case may be, complies with the requirements of this Article, any
shareholder who fails to comply with the requirements of this Article shall not
be entitled to bring suit for the recovery of the value of his shares or money
damages to the shareholder with respect to the action.
ART. 5.13 PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS
A. Any shareholder who has demanded payment for his shares in accordance with
either Article 5.12 or 5.16 of this Act shall not thereafter be entitled to vote
or exercise any other rights of a shareholder except the right to receive
payment for his shares pursuant to the provisions of those articles and the
right to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective shares for which
payment has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.
B. Upon receiving a demand for payment from any dissenting shareholder, the
corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with either Article 5.12 or 5.16 of this Act, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the corporation, terminate such shareholder's rights under Articles
5.12 and 5.16 of this Act unless a court of competent jurisdiction for good and
sufficient cause shown shall otherwise direct. If uncertificated shares for
which payment has been demanded or shares represented by a certificate on which
notation has been so made shall be transferred, any new certificate issued
thereof shall bear similar notation together with the name of the original
dissenting holder of such shares and transferee of such shares shall acquire by
such transfer no rights in the corporation other than those which the original
dissenting shareholder had after making demand for payment of the fair value
thereof.
C. Any shareholder who has demanded payment for his shares in accordance with
either Article 5.12 or 5.16 of this Act may withdraw such demand at any time
before payment for his shares or before any petition has been filed pursuant to
Article 5.12 or 5.16 or this Act asking for a finding and determination of the
fair value of such shares, but no such demand may be withdrawn after such
payment has been made or, unless the corporation shall consent thereto, after
any such petition has been filed. If, however, such demand shall be withdrawn as
hereinbefore provided, or if pursuant to Section B of this Article the
corporation shall terminate the shareholder's rights under Article 5.12 or 5.16
of this Act, as the case may be, or if no petition asking for a finding and
determination of fair value of such shares by a court shall have been filed
within the time provided in Article 5.12 or 5.16 of this Act, as the case may
be, or if after the hearing of a petition filed pursuant to Article 5.12 or
5.16, the court shall determine that such shareholder is not entitled to the
relief provided by those articles, then, in any such case, such shareholder and
all persons claiming under him shall be conclusively presumed to have approved
and ratified the corporate action from which he dissented and shall be bound
thereby, the right of such shareholder to be paid the fair value of his shares
shall cease, and his status as a shareholder shall be restored without prejudice
to any corporate proceedings which may have been taken during the interim, and
such shareholder shall be entitled to receive any dividends or other
distributions made to shareholders in the interim.
TEXARKANA FIRST FINANCIAL CORPORATION
3rd & Olive Streets
Texarkana, Arkansas 71854
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James Sangalli and Travis Mauldin and
each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes each of them to represent and vote, as designated below,
all of the shares of the common stock of Texarkana First Financial
Corporation held of record by the undersigned on _____, 2000, at the Special
Meeting of Shareholders to be held on _______, 2000, or any adjournment(s)
thereof.
Proposal to approve and adopt the Agreement and Plan of Reorganization by and
between First United Bancshares, Inc. and Texarkana First Financial
Corporation, dated as of May 15, 2000, and the Plan of Merger attached
thereto as EXHIBIT A, pursuant to which:
- First United Acquisition Co., Inc., a Texas corporation to be
formed as a wholly-owned subsidiary of First United, will merge
with and into Texarkana First Financial, with Texarkana First
Financial continuing as the surviving corporation and a
wholly-owned subsidiary of First United; and
- the outstanding shares of, and options to acquire shares of, the
common stock of Texarkana First Financial will be exchanged for an
aggregate consideration of $37,500,000 in cash.
FOR [_] AGAINST [_] ABSTAIN [_]
Please execute this proxy as your name appears hereon. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by the president or
other authorized officer. If a partnership, please sign in partnership name
by authorized persons. Please mark, sign, date and return this proxy promptly
using the enclosed envelope.
This proxy, when properly executed,
will be voted in the manner directed
herein by the undersigned shareholder(s).
If no direction is made, this proxy will
be voted "for" the approval and adoption
of the Agreement and Plan of Reorganization.
DATED: _____________________, 2000
______________________________
Signature
______________________________
Signature if Held Jointly